Executive Summary / Key Takeaways

• Quantum-Si is pioneering Next-Gen Protein Sequencing (NGPS) with its proprietary single-molecule detection platform, aiming to democratize access to the proteome and address limitations of legacy technologies like mass spectrometry.
• The company is accelerating commercial adoption through expanding direct sales, building international distribution (23 partners), and leveraging a North American partnership (Avantor (AVTR)), although near-term U.S. academic sales face headwinds from NIH funding uncertainty.
• A robust innovation roadmap is delivering significant performance improvements through new kits (V3 Sequencing offers >5.5x output, >4.5x lower cost per amino acid vs V1) and advancing the transformative Proteus platform targeting a H2 2026 launch for massively scaled sequencing.
• Despite incurring significant operating losses and negative cash flow ($26.2M used in operations Q1 2025), recent capital raises ($46.8M net from Jan 2025 offering) have bolstered liquidity, providing cash runway into the second half of 2027.
• Key factors for investors include the pace of commercial ramp-up outside the impacted U.S. academic market, successful execution of the Proteus development milestones (protein sequencing on prototype by end 2025), and navigating competition from established players and emerging technologies.

Quantum-Si is carving out a unique position in the rapidly evolving field of proteomics. The company's core mission is to transform single-molecule analysis, specifically Next-Gen Protein Sequencing (NGPS), and make it broadly accessible to researchers and clinicians. This ambition places Quantum-Si at the intersection of a large and growing market, driven by the increasing need to understand proteins – the functional workhorses of biology – at an unprecedented level of detail. The proteomics market, while significant, is still considered to be in its relative infancy, with long-term growth drivers including large-scale screening studies and the increasing integration of AI tools in drug discovery and multiomics analysis, both of which require vast amounts of high-resolution protein data.

At the heart of Quantum-Si's strategy is its proprietary universal single-molecule detection platform. This technology is designed to sequence proteins in a massively parallel fashion, offering a potential paradigm shift from traditional sequential methods. The company believes this approach can unlock significant biological information through improved resolution and unbiased access to the proteome at a speed and scale not previously available. This stands in contrast to legacy proteomic solutions, such as mass spectrometry, which often entail high instrument and ownership costs, require specialized infrastructure and staff, and present complexity in data analysis, factors that have historically limited broad adoption. Quantum-Si positions its Platinum line of instruments, including the recently launched Platinum Pro, along with its consumable kits and software, as a streamlined, lower-cost, and more automated alternative.

The company's journey began with the founding of Q-SI Operations Inc. in 2013, culminating in the business combination with HighCape Capital Acquisition Corp. in 2021 to form the publicly traded Quantum-Si Incorporated. Since then, the focus has shifted from foundational R&D towards product development and commercialization. An early access program in 2021 led to a controlled launch of the Platinum instrument starting in late 2022, followed by a full commercial launch in the second quarter of 2024. This period has been characterized by significant investment in technology and building the necessary commercial infrastructure to bring NGPS to market.

Technological Differentiation and Innovation Pipeline

Quantum-Si's core competitive advantage lies in its differentiated technology platform. The system utilizes a proprietary semiconductor chip with millions of wells, enabling single-molecule detection through kinetic measurements of fluorescently labeled amino acid "recognizers" as they bind to a protein sequence. This approach allows for direct interrogation of protein primary structure and post-translational modifications. The company highlights that its multi-amino acid recognizers are an advantage, potentially simplifying the biochemistry compared to needing a distinct recognizer for each of the twenty amino acids.

The innovation roadmap is central to maintaining this technological lead and driving future growth. Quantum-Si has demonstrated rapid iteration on its consumable kits. The Version 3 Sequencing Kit, launched in Q3 2024, delivered a significant performance leap over its predecessors. Compared to the Version 2 kit, it provided a more than 1.5-fold increase in output per sample and lowered the customer cost per amino acid by over 1.5-fold. Looking back to the Version 1 kit, the Version 3 represents a more than 5.5-fold increase in output and a more than 4.5-fold reduction in cost per amino acid, achieved in just one year. The Version 4 Sequencing Kit is on track for a Q3 2025 launch, aiming to further increase proteome coverage through new recognizers and an enzyme engineered for high-efficiency cutting before proline, which is expected to improve analysis of peptides behind proline residues.

Beyond sequencing chemistry, the company is developing a Version 3 Library Preparation Kit, expected by the end of 2025. Initial data suggests this kit will significantly reduce sample input requirements, broadening the range of biological samples and proteins accessible to customers. A Barcoding Kit, expected in Q4 2024, is designed to optimize workflow and performance for protein barcoding applications, an area seeing increasing interest, particularly in pharma and biotech for applications like multiplex screening in drug development.

The most ambitious project on the horizon is the Proteus platform, a new instrument and consumable architecture slated for launch in the second half of 2026. Proteus is designed to scale output dramatically, targeting billions of reads per run by processing two consumables simultaneously, each with up to 80 million wells, compared to Platinum's single consumable with 2 million wells. This increased capacity is intended to enable de novo sequencing and support extremely deep analysis or higher sample throughput. The development leverages existing Quantum-Si technology aspects (surface chemistry, fabrication, chemistry) and advancements in optics from the DNA sequencing field, supported by partnerships with companies like SkyWater (SKYT), Planet Innovation, Nvidia (NVDA), and IDEXX Health and Sciences (IDXX). A key milestone is achieving successful protein sequencing on a prototype Proteus system by the end of 2025. For investors, this innovation pipeline is critical as it underpins the company's ability to expand applications, improve performance, lower costs for customers over time, and potentially capture larger market segments, thereby strengthening its competitive moat against established and emerging players.

Commercial Strategy and Financial Performance

Quantum-Si's commercial strategy focuses on accelerating adoption across multiple market segments and geographies. The company is expanding its direct sales force in the U.S. and Western Europe and building out its distribution network. By the end of Q1 2025, the international distribution network had grown to 23 partners, covering regions in Europe, Asia, the Middle East, Africa, and South America. This international expansion is seen as a significant opportunity, particularly in regions where the high cost and complexity of legacy systems like mass spectrometry are prohibitive, making Quantum-Si's lower-cost, streamlined platform a compelling alternative. In North America, a distribution agreement with Avantor, announced in November 2024, is expected to significantly augment the direct sales team's reach. Training for the Avantor sales team was completed in Q1 2025, with initial sales contribution expected in Q2 2025 and acceleration in the back half of the year.

Financial results reflect the early stages of this commercial ramp-up alongside ongoing heavy investment in R&D. For the first quarter of 2025, total revenue was $842,000, an 84.2% increase compared to $457,000 in Q1 2024. Product revenue specifically grew 88.8% year-over-year to $808,000. This growth was attributed to higher sales volumes of instruments and consumables, reflecting improved commercial execution. Full-year 2024 revenue reached $3.1 million, a 183% increase over 2023, with Q4 2024 marking the first quarter exceeding $1 million in revenue ($1.2 million).

Gross profit in Q1 2025 was $486,000, resulting in a gross margin of 57.7%. This compares to a 58.9% margin in Q1 2024. Gross margin remains variable, influenced by the mix of instrument versus consumable sales and the utilization of inventory carried at low or no value from prior periods (contributing about a 7% benefit in Q1 2025).

Operating expenses remain substantial due to continued investment in R&D and commercialization. Total operating expenses were $25.6 million in Q1 2025. For the full year 2024, GAAP total operating expenses were $110.2 million, a slight decrease from $111.7 million in 2023. This was largely due to an 11% decrease in R&D expenses ($59.6 million in 2024 vs. $67 million in 2023), resulting from R&D realignments and a corporate restructuring initiated in Q4 2024. This restructuring, which involved terminating approximately 23% of the workforce and resulted in $2.3 million in cash severance charges in Q4 2024, was completed by year-end and aimed to streamline resources and focus on key initiatives like Proteus. Selling, general, and administrative expenses increased 13% in 2024 ($50.5 million vs. $44.6 million) as the company ramped up its commercial operations. Adjusted operating expenses for 2024 remained essentially flat year-over-year.

Liquidity and Outlook

Quantum-Si has historically incurred significant losses and negative cash flows from operations, with an accumulated deficit of $615.8 million as of March 31, 2025. Net cash used in operating activities was $26.2 million in Q1 2025.

However, the company has proactively strengthened its balance sheet through equity financing. As of March 31, 2025, cash, cash equivalents, and marketable securities totaled $232.6 million. This includes net proceeds of approximately $46.8 million from a registered direct offering that closed in January 2025, issuing 15.62 million shares at $3.20 per share. This follows the use of an at-the-market (ATM) offering program in 2024, which raised $36.2 million gross ($34.8 million net). Management believes its current cash position, combined with anticipated revenue, provides sufficient liquidity to fund planned operations for at least the next twelve months from the May 15, 2025 filing date and extends the cash runway into the second half of 2027.

For 2025, the company has provided preliminary guidance for adjusted operating expenses of $103 million or less and total cash used of $95 million or less. However, providing specific top-line revenue guidance for 2025 is challenging due to external factors. A significant slowdown in new instrument purchases in the U.S. academic market was observed in Q1 2025, attributed to uncertainty surrounding NIH funding and indirect cost caps, which is expected to persist until at least the fall of 2025. While existing U.S. academic customers continue consumable purchases, the company is strategically mitigating the impact on new sales by increasing focus on the pharma, biotech, government, and international markets. Clarity on 2025 revenue is expected to improve as the Avantor partnership ramps up and the NIH funding situation resolves.

Competitive Landscape and Risks

Quantum-Si operates in a competitive landscape dominated by larger, more established players offering a range of life science tools, including mass spectrometry and next-generation DNA sequencing platforms. Companies like Illumina (ILMN), Agilent Technologies (A), and Thermo Fisher Scientific (TMO) possess significantly greater financial and marketing resources, established customer bases, and broader product portfolios. While precise, directly comparable market share figures for all niche competitors are not publicly detailed, Quantum-Si's current market share in proteomics is estimated to be relatively small compared to the dominance of mass spec or NGS in their respective domains.

QSI's competitive strategy hinges on its differentiated NGPS technology, which it believes offers advantages in speed, sensitivity, and workflow simplicity compared to legacy methods like mass spec. The company positions itself as a disruptive innovator, particularly for applications requiring single-molecule resolution and simplified workflows accessible to labs without extensive proteomics expertise. However, QSI faces challenges related to its smaller scale, which can result in higher operating costs per unit compared to larger competitors with established manufacturing efficiencies. Its financial performance, characterized by negative margins and cash burn, contrasts sharply with the profitability and strong cash flow generation of larger rivals. Indirect competitors, including companies developing AI-driven analysis tools or alternative protein analysis methods, could also impact the market by offering potentially cheaper, albeit perhaps less comprehensive, insights.

Key risks to the investment thesis include the pace of commercial adoption, particularly the ability to overcome the current headwinds in the U.S. academic market and successfully ramp up sales through new channels like Avantor and international partners. Execution risk on the innovation roadmap, especially the timely and successful development and launch of the Proteus platform, is critical for future growth and competitive positioning. Litigation risks, including the Delaware Stockholder Litigation, the dispute with a former contract manufacturer, and the lease dispute, could result in significant costs or liabilities. Furthermore, the evolving regulatory landscape around the use of artificial intelligence in life sciences could impact the company's software and data analysis tools. Inflation, supply chain disruptions, and geopolitical conflicts also pose potential risks to material costs and operations.

Conclusion

Quantum-Si presents a compelling, albeit early-stage, investment thesis centered on its pioneering Next-Gen Protein Sequencing technology and its potential to democratize access to the proteome. The company's proprietary single-molecule detection platform offers a differentiated approach compared to legacy proteomics tools, with a clear roadmap for performance improvements and the development of a transformative, high-throughput platform in Proteus. While the commercial ramp-up faces near-term challenges from market-wide cautious spending and specific headwinds in the U.S. academic sector, the company is strategically expanding its reach through direct sales and a growing network of international and North American distribution partners.

Supported by recent capital raises that provide a cash runway into the second half of 2027, Quantum-Si has the financial capacity to continue investing in its critical innovation pipeline and commercial expansion efforts. The success of the investment thesis hinges on the company's ability to execute on its technology roadmap, particularly hitting key milestones for the Proteus platform, and to accelerate commercial adoption outside the currently impacted market segments. While competition from larger, well-resourced players and the inherent risks of a developing market remain significant, Quantum-Si's technological leadership and strategic focus position it as a company to watch in the evolving landscape of proteomics.