Q1 2020 Earnings Call
[music].
Good afternoon, ladies and gentlemen, and welcome to the one tricks Corporation.
Core 120 20 earnings call.
At this time all fine.
I'm sorry, all participants are in listen only mode. After the speakers presentation there'd be a question answer session.
Actually question. During this session you would need to press star one of your telephone keypad and to withdraw your question you can press the pound the heskey.
I will now turn the conference over to your speaker today Mr. Omo.
Well you may begin.
Dr. Christy good afternoon, everyone I'm tanks for joining us today.
On today's call is Kevin Bruce all ski our CEO, but you didn't than chairman.
Before we begin I would like to remind you about few pinks today's call may be recorded and we'd be available on the in rest of the source of section all part of website.
Today's call May contain forward looking statements about a based on management's beliefs and assumptions and information available I was up to date of this call.
Remember all that to be achieved the plans intentions or expectations. This close do not forward looking statements why wouldn't looking statements involve known and unknown risks uncertainties assumptions and other factors that may cause our actual results performance or achievements to be materially different from any.
Each of its own performance or achievements expressed or implied by the forward looking statements, but if somebody said it wouldn't be but we face are described in our most recent filings with the Securities and Exchange Commission.
During today's conference call to discuss some financial measures that a month doesn't that in accordance with U.S. generally accepted accounting principles on non-GAAP financial measures in the Q1 earnings release and in the appendix <unk> presentation, which are well above on our website you will find additional disclosures regarding these non-GAAP measures.
Including reconciliations of these measures to competitive GAAP measures.
We believe that these non-GAAP financial measures for white and left us with but I wouldn't be there could be that comes out as an awful lot operations. These financial measures <unk> recognized under GAAP and should not be considered in isolation or as a substitute for a measure of financial performance prepared in accordance with gap, we thought I would like to fill in the Carlo will.
Kevin.
Thank you very much a mall like to discuss today, our Q1 highlights our vision and strategy both execution.
Aspirational value creation navigating the coupled with 19 is a big focus of our discussion today.
We defined in previous webcast call that we're going to continue focusing on neuro plus the near term what we call the CAC pivot, which stands for cobot accelerator in China pivot.
And then we're going to further discuss just be gone cobot 19, Bob will provide a financial update and then I'll open it up for Q and am and close the call.
So I'm quite poor.
Slide 16 in the past it shows our public publications are continuing to walberg rapidly and she is very important part of our business and we're starting to see some acceleration in areas beyond just no Roe.
As long as you know infectious disease.
Biomarkers we've added another eight.
To it so total treat 30, you can see we've had a very strong Q1 and as a category.
Oh, no Roe as well as infectious disease, and our accelerator and we continue to do a lot of.
We'll call them drug trials and buttons hundred 16 total now we continue to place instruments for up to 429 installed based instruments and you can see or overall growth for Q1.
Despite cobot in some of the other issues confronting the world right now was plus 27%.
We'll see that that is actually 34% on an organic basis. If you explore deal bought acquisition and 38%. If you exclude the one time large order we had last year for Novartis and the drug trial for en masse.
On slide five you'll see that.
Oh.
A 7%, 30% excluding that one time.
And we also feel that this is pretty important because we've been overhauling our installed base moving from H.D., one page Dx, it's pretty exciting advantage Dx has more throughput much higher reliable much more prepared plenty because wall and a lot of clinical trials that are being wrong.
And this was despite the Coca 19 impact which was minimal in Q1 in our eyes I'm really just part of block two of the third month of the quarter was impaired.
Oh, primarily North America, we also seen.
So you know we took early steps to protect our employees and we have a resilience plan in place. We moved 100 people from in the facility to outside the facility. So now we have 180 outside the facility hundred remain in that facility and we've had just really great performance over the last two quarters from two months.
Okay, but despite some of the concerns around cobot cannot say enough about our team worldwide just stellar working around the clock 24, seven once we had safety wallet and which we started early on but reposition distort, allowing our exquisite sensitivity technologies.
Help with the coal.
Acquired from so lot of our work over the last month and half has been actually waking up the worldwide parting precision health networks to the.
Really remarkable data that's coming out around measuring the immune system response to the co. Good viruses wallet drugs to try to impair that.
A response.
Because in some cases these responses so great that leads to cytokine storm, which leads to pneumonia death.
So it's pretty important to continue to monitor carefully be a need immune system as well as now you're going to learn where.
2000 system of course, Rawlins, you testing that we're planning to lunch for research use only on this quarter.
Our accelerator, we continue to expand it and to allow customers to use that while they were down with or labs and this is an important part of our growth in Q1, which we predicted would have already occurred just based on the HD one teach dx crossover where many of our customers were already.
One h. Dx validation runs, which prevents them from using DHX technology on the initial install so we're already plan for that expansion. So it was great to though we were there for our customers as some of those labs did close okay throughout the industry, we've heard numbers anywhere from 30% to 60% have close.
There are laboratories, many times, what we've seen as laboratories have shifted.
From running the trials, if there had been running into a cobrand lapse. So many oncology and neurology lots have been converted over to cope with labs.
We have continued to engage our PPH collaborators worldwide and the publication.
Well as continuing which is really good to see during these times and we're really continue to reinforce our utility in the Samoa technology in neurology and you can see that you know we had growth even in a products instruments and consumables particular, if you remove the onetime our growth was about 17% in consumer.
Despite this cold with activity and rich do you want it sticks crossover, but you can see that we nearly doubled our lab and other services revenue in the quarter I'm now in this past quarter, representing almost 37% in gross margins continued to improve it for went for the H. do you want its dx convey.
Version, we would have another over 100 basis point expansion.
Slide six just illustrates the demographics won't spend a lot of time on the slide slot as meaningful to look at the growth percentages on this slide as past give him. The we're now dealing with the onetime affected cold it but you can see that reduced maintain about a 50 50 split between pharma.
Sure erosion in academia, and we are continuing to build out for Asia position. Despite some of the issues that we're seeing in neurology continues to dominate our overall position, but we're continuing to expand that's on slide seven as we've shown in the past I'm getting to answer is.
That used to be late in the disease pathology and required invasive procedures like operations for biopsies or cerebral spinal fluid spinal taps to go to answer was we were really evolving that late and invasive testing and so early and noninvasive testing.
On slide eight you can see on the left side as you know probably 1300 protein biomarkers in the RSU markets today, and there is 205 to the crossed over into IDBD, what's the hi.
Okay, Hi concentration protein when you go below what today's technologies can measure you considers a almost a magnitude more proteins, we think or opportunities for further providing insights to clinical relevance as we start to roll out or similar technology, primarily today, we're only.
And our euro, but as we pointed out we have aspirations to move it into the clinic on the right hand side you can see many of those very important biomarkers. Many of these actually are being measured for coated and these are many of the slight declines to turn into cytokine storm and create the pneumonia and the lethal diminish.
And Workovers and so that's why it's critical to monitor these and we're really excited that our technologies are getting deployed the support many of the co. Good I few patients around the world into Hotdogs.
Slide eight nine as a side you're seeing.
Traction no regulatory reimbursement risk on the left hand side, we see this is being a much higher probability.
Opportunity for drug companies, who did drugs approved because if you can attract earlier cohorts before symptoms of the diseases using biomarkers and then gauge the efficacy of the drug.
Using biomarkers you can actually achieve great efficacy with lower doses and that's what's enabled us to showcase much higher probability of of an approval. After phase one approval biomarkers or news and that has led to a many multiple growth catalyst and allowed us to go from basically no revenue.
With 57 million in 2019 as you can see in Q1, we're continuing that growth.
We are doing some level expansion of our overall market opportunity into infectious disease. We were there once with HIV very successfully with P 20, poor, but now we're reentering that because this is now.
Actual change globally that we think infectious disease will be a core research category for the next five years globally. So our PPH ecosystems wall engaged and we're now migrating until water.
Buddies and a lot of work that will lead to publications and this landscape I think one I just came out already this quarter or this month for coated which is pretty exciting and we're starting to see accelerator projects are looking to covert cohorts as well, which is also very excited again, it's still stays low regulatory thing, we do with our yellow and.
We do think we have a very strong economic profile and were very early in the penetration we do have a very proven management.
<unk> founder and David Wahoo himself has done a lot of great work over the last two months narratives for all the G showcasing our technology across all three of the immunoglobulins IBG.
Hi, Jim and <unk> as well as across four different antigens, some pretty compelling data has been shown on what our high fidelity and even quantitative technology for IBG. Among the right hand side. You know this is what we said at the beginning year, we would start working towards aspiration of moving across you said it in neurology first.
But we're now starting to see some very interesting opportunities even in astrology landscape that were at least exploring as we move from Cdx companion diagnostic into LDP. Then ultimately we felt it would take several years get into I'd be probably through partnerships, but what's the current through all the G landscape beyond that it is.
We're going to continue to explore that there might be posco is for us to enter into that landscape as well. So we do think our blood test so precise high fidelity with great sensitivity opens up a lot of high value creation Optionality and again, we've added coated 19 out for that Optionality and we are looking.
Rolling out high Fidelity strategy tests that are you on the left hand side. So we will consider if that would make sense someday that evolved into extra clinical markets for Serrano Angie on from an Ivy basis.
We do continue to see high potential IDBD partnerships, and we're going to continue exploring those and somewhat companies that already through on our technology and don't want to work with us are shown below.
On Slide 10, you know our focus on the left Sam left side as we talked in execution mode. It's primarily in neurology, because light blue area, but we started to evolve into oncology and our plan was to use the h. dexcom SPX, where were less than 1% penetrated but many of the larger competitors luminex.
I missed the.
Biotech near end that landscape of one college, you were still less than 10%, 10% penetrated in neurology. So we were going to expand its on college, but were found a lot of those assets and those products or are quite.
Adaptable to the covert 19.
Pandemic and so now we've redeployed many of our oncology assets and many of those labs have become covert 19 labs anyway. So it's almost an earlier entry way for us to teach the world about the attributes of exclude sensitivity and how that can be redeployed to create reductions of false positives and false negatives.
In an area of strategy, we know that's very important in across almost every teflon coated my team, it's important to minimize the false positives and negatives. So the right hand side, we still have those aspirations, but we are exploring aged VX as well as you SPX and the.
Landscape of infectious disease now as well as you know the continued evolution of Hds and SRX score neuro filament light for M.S., particularly on the right hand side.
So slide 11, just shows the three pronged attack that we mentioned in our pivot.
So.
We were looking now to be able to measured book in Asia, India adaptive immune systems with or are you all product line lung, hoping to launch the adaptive immune serology tests sometime in Q2, and this is helping companies with drug targets and try to the drugs effective for cobot 19, as well as trying to predict cytokine storm before.
Lethal and try to.
Intervene with immune modulation drugs and so we also see backs and vaccine development in important area for our technologies and we'll continue to evolve them for drugs vaccines and that coalescence plasma treatments. The accelerator services is also a very strong opportunity for us.
During these times of interruptions, we think this full year, we'll have a very strong opportunity. We're even seeing interest I'll answer all the GE and population studies for coated.
Population around you know who has actually caught the coke and and has immunity built either in age or adaptive and how can they start to figure out ways that the population of the world back to work. We think this will be pretty important area of are you all research use only for our accelerator.
And we also believe China is coming back on the market sooner and we wanted to touch that way. So we've accelerated our build out of China.
We can fill in the slide 12, all the different collaborators around the world and our PPH network that are really helping enable I'm a very rapid commercialization of the technologies, we rollout from Oh, PPI from a well call it and argue old basis, there's a large installed base lot of sample sets and banks around the world and all the hot zones, we've been having.
And Webinars with goes live that investors could actually tap into if you want to listen to the one we had three weeks ago, that's accessible and it was pretty compelling and we'll probably another one in the next several weeks as we rollout you know the bill.
Our strong euro test kits.
So on slide 13, you can see we've already been an innate number one based on what we were going for on quality.
Storm on if you're on and pro inflammatory markers.
On the right hand side is where we're moving next with our argue old franchise moving into this area.
Of immune.
Response Adaptively there are some easy ways in this landscape growing explored at this point.
But we do think passport immunity is going to be important as well as disease severity vaccines and drug development as well as we mentioned coalescence serum and that antibody production area.
This slide 14, just further showcases all of the panels that we have established in the different product lines for measuring being innate immune system and the cytokine storm both for predictive and drug interactions Slide 15, just described some of the key component tree of what we're working on right now for our.
Oh, good 19 through college, you panel, starting with Fiveg quantitative test, we'd like to watch that in Q2 and to the are you all markets and have some Q3 volumes from it we see it the in very high sensitivity and specificity, reducing false positives and negatives in Cds immune much earlier a.
Actually providing on vogtle opportunities and blood for infection determination almost potentially as early as infection itself and we know today, but there's a lot of false positives.
And India through College Atlantic, We also as lot of false negatives in the viral detection landscape, it's hard to get many of these viruses onto nasal swabs and as a result as much as 30% could be missed so having early on understanding of the immunity Bill is it.
Great orthogonal weight, but go after somebody's test our technology does leach Dx can write measure as many as a thousand tests per day per instrument.
If in fact utilized around the clock in as you know we've got over 250 HD ones in each GXS around the world. Our initial rollout would be probably on something that were deployed the h. Dx further enhancing each dick's value to our customers and hopefully I'm still helping accelerate HD Wantage Dx opportunities.
Sample banks as we mentioned around the world and we hope to launch in Q2 and I Gigi quantitative are you will test. The next several slides just talk about number two the adapted you could sell the right hand side, there's a lot of EISG him.
There's a lot of historic viruses that are tricky in a lot of today's realogy test. They measure a lot of this historic viruses, creating a lot of false positives, which could lead to someone thinking they have immunity when they don't that's an important trade. So by having this exclusive tivity. We've been built dilute the samples a thousand fold and we can look at.
As you can see me next several slides different curves of the high Gigi, particularly is what we're interested in and see it earlier with quantitation. So we think that so ultrasensitive.
It is key for Tommy negatives, even from the viral detection and so in summary on slide 20, you know we see the ultra specific sensor in the quantitative or your test being highly productive and we want to utilize and roll that out to try to help the world and top right corner is our sensitivity. We also are going to explore that enhancer from fingerprint.
And drive blood products, and then potentially slide but at some point because of his exquisite sensitivity in the need to dilute any way to eliminate matrix effects.
So on slide.
21 that you know this is a similar commercial group we've already had 42 meetings in the month of April for PPH network did that Webinars and we're trying to build some momentum for Q3 and four to drive. It. This we know Q2 is probably get some headwinds obviously from covidien, but our temp would be bye.
End of Q2, the rollout some some really nice product offerings for coated and infectious disease Corps second half year.
Accelerator you can see we already are starting to see trials I think one is already been signed up for coated which is important for not when it's you need immunity, where we can look at all these different cytokine to see how a drug as interacting with that modulating appropriately and we're also linking our commercial organization together accelerator.
And product sales together to further enhance the ability to move.
Companies that have our technology that might be shut down into the accelerators and can you run in retrospect to Charles particularly in neuro and in China were continuing to try to build out that footprint and we hope right into the year to actually have an accelerator position in China to help further help demonstrate.
Slide 22, just shows the various products that we sell once you've been there is to be based HX and SRX and then the planar based which is a high cytokine panel complex, that's been used and oncology, but now we're evolving into coated.
Yes, PX and then you can see the kits that we sell into services that we provide.
Slide 20, threes repeat slide from the past the just shows that if you can use our technology and increased the probably the drug being approved by 300%. After a phase one approval. It really creates a lot of momentum for drug companies to want to utilize that that's where all of our lot of our growth has come from from the last three years.
By further modulating down toxicity modulating of efficacy by seeing these earlier cohorts and you could see the number of sure arose at Mt deployed it which is also important it's they're going to be looking at serology test, we'd like to engage our.
Labcorp and quest and others that are very strong partners rules based medicine frontage. Other places have zero capability. If we roll outs are always yard drug tests, we'd like to be able to run those and those facilities for many of our pharma customers that are trying to interact with drugs and vaccines with those technologies and we ourselves now.
Has 116 projects phase 123, and our own accelerator lab.
And you know that FDA continues to explore I'm, even neuro and cobot Bluebird Theres a lot of examples where there's lots of smell lock the taste or CNS functionality of a lot of customers now starting to run NFL, even looking at Kogut implications of neuronal death in the and the Ronald damage, which we think it's just another way to showcase.
Yes, our technologies slide 25 to shows all the companies either in research institutions Pharmaceuticals, Biotechnologies heroes and others that now are deploying our technology further building a strong installed base and validation for what this technology can do.
On Slide 26 is now to Spaniel post covert we are still very focused on M.S. trousers. Several drugs that we know have already utilize their technology in phase three trials of secondary surrogate endpoints. There's just a very strong avalanche of publications, we would like to think that there's an opportunity.
Good.
Methods, they disease progression opportunity for NFL and in the FDA.
We'd like to have a meeting with them. This year were originally we want to being the first half, but at least this year now with some of the delays due to co. Good to talk about getting NFL proved that disease progression moderate monitoring technology for NFL on four M.S., which there is all that evidence and this slide that shows the way our commercial organization.
Start to look at total clinical trials, using NFL, which ones are actively using it and how we can start to then go and find companies, where there are NFL opportunities, where we're drugs or try to be approved but aren't currently using our NFL and so were you could see we still feel we have a very low.
Penetration so our salesforce is becoming more educated each quarter as we use these kind of tools to point out where there's opportunities for neuronal pipeline to can benefit from using NFL to get approvals.
The slide 28, Ben shows at Novartis and they have a drug that are hoping to show approval for in June that used our technology as a secondary surrogate endpoint in the phase three trial, Roche and others and use that as well and key trials Biogen. So we're continuing to just evolve. This we think some day, everyone should know there and I felt level.
And the difference between dying standing up versus being a wheelchair could be by measuring NFL because it will allow patient could get on the right drug sooner versus waiting as long as two two and half years with today's them or try to figure out whether a drug is working.
Testing NFL noninvasive in blood, we think within three months, there's evidence and some publications can tell you whether the drug this stocking and slowing down and producing on their own will death VR NFL test. This is pretty compelling data and this is the truth big trials that we talked about previously on the left as analytical validity 17 differ.
Sites around the World is getting the same results with our NFL, which we think proves analytical validity and then or is a major trial normative study on the currently going on in Switzerland, which attempts to show with.
You know healthy patients what the average NFL level should be.
Different age groups from age 70 to 70, if your healthy so anything above that would suggest that there's some the rental damage occurring from some neuro degeneration, some disease, whether be all simers, Rms Parkinson's or concussions or other physical damage to the brain and we think that's going to further support clinical validity claim.
So we wanted to update the slide given.
Moving on and co bid, we still see strong utilization potential for our technology, but we think it's me more like 40% for the full year as well as each Dx is by year end. We think we can get 40% installed still which is still pretty remarkable move on we're continuing to develop due to high resolution.
Over 19 immune response and we see.
The potential for $3 million to $5 million revenue. This year from the joke that we're putting into that pivot into infectious disease rent no. We can't say for sure but that second half. We think does have real potential for that infectious disease on opportunity from a strategic standpoint. The IBT partnership is still something we're focused on.
Plan to continue to look for it also opportunistic M&A, we have a strong balance sheet. We know that this industry is going through a lot of trauma right now and so we want to do there to support any what we'll call opportunistic ways to accelerate our strategy perpetration, you can see or our goals for gross margin.
For the moment, taking that off the line just based on the total revenue that we're trying to sort out for the full year, but we still think we can't have 75 Bridgetex is in place by year end 75, Aerostructures and SPX is and we still continue to look for hundred X sensitivity increase seeing great work in our pilots right now continue to advance our.
The investments and not on slashing a lot of head count for the moment, we feel like this is we've got a very strong offensive opportunity to grow our company and for the second half and we don't want to in any way damage. Our long term growth opportunity that we think is remains probably more bullish now than ever before and now we're having to check.
Even showcased faster, we think the technology and cobot, So I'm all I'd like to stop there and in turn this slide over to you.
Thanks, Kevin I'm going up the white some additional financial details about our Q1 Twentytwenty performance and we'll be referring to slide 31.
As Kevin noted revenue in Q1 off Twentytwenty was 15.7 million. This represents 27% revenue growth compared to 12.3 million revenue in Q1 2019 solution revenue grew by 107% driven by accident. So research where do we have expanded capacity.
Support customers transition from 61, which Dx and overcome interruptions in that operations instrument revenue grew by 10% and was limited by inability to access system customer sites to complete installations due to cope with 19.
Consumer posted revenue of 6.1 million was flat versus prior year.
We will try to get a consumable revenue included 0.9 million in connection with the large onetime cost too much study.
Consumable utilization was a glut should be impacted by customers transitioning from HP, one to which Dx and leto from interruptions in that operations due to go with 19.
As stated previously been locked providing revenue guidance.
In Q2, we expect goal Weve 19 related challenges such as limitations in accessing some customer sites to complete installations and drop in consumable utilization due to infections in certain customer elaborate.
To continue until these customers to what the nominal patients.
On a non-GAAP basis Q1 gross margin was 48.5 crushing what's this but I'd of Q1 gross margin of 48.7%.
Q1, Twentytwenty gross margin also includes a 200 basis point negative impact Biomark HD, one Cleveland program as discussed previously while this may create an unfavorable impact on gross margins. It is already compelling investment to drive future consumer both growth and excitement around out technology.
Non-GAAP gross margin excludes the impact of non cash acquisition related purchase accounting adjustments related principally to acquisition of human Mtwenty 19, and provides investors with their lewinsky to feed it competitors in a flight operations on a GAAP basis on Q1 gross margin was 43.3%.
What does this but idea of Q1 gross margin of 48.7%.
We believe me how was significant unfortunately for gross margin expansion in the future beyond our current performance as we've all done mix towards higher margin consumer boasts ANNEXA video services business scale auto what all the business and produce product cost.
Operating expenses totaled 18.5 million in Q1 Twentytwenty the balance sheet is in good shape as of March 31, with approximately 96 million unrestricted cash we continue to aggressively through it and work towards enabling piece of chosen cool, we'd 19 pursuits concurrently we also continue to evaluate different.
It's an audio is on the call, we'd 19 impact including degree of demand deductions and lentil shutdowns beyond the core we do it out emphasis is on preserving cash through managing operating expenses in capex to best position us to utilize our strong balance sheet for opportunistic strategic pursuits.
Use of cash in Q1 is typically high due to pay out of employee bonuses and annual premiums during Q1, Twentytwenty got cash balance decreased by 12.8 million due in BYOD 7.9 billion BNL loss, excluding noncash items, such as stock options depreciation amortization and 4.9 million.
In the use of cash for working capital largely driven by payout of employee bonuses and annual premiums weighted average shares outstanding for Ed Stokx <unk> 28.2 million for Q1 Twentytwenty Peter.
Well, what all we are pleased with our Q1 Twentytwenty performance and remain focused on proactively managing in navigating the crisis to protect our employees and their families. While we continue to optimize our business operations for customers collaborators and investors with that I'll turn it back to Kevin.
Thank you very much a mall and what I'd like to do Dallas open up for questions.
Ladies and gentlemen at this time to as a reminder to ask the question do we need to press star one of your telephone keypad again to withdraw your question you press the pound a hedge king please standby belviq about accumulate roster.
Again that is star one.
Our first question comes from the line.
Tim from BTG.
Hi, Thanks for taking my question hope everyone that stay healthy.
Hey.
Thanks Angie.
Kevin weight wondering about your service revenue, obviously very strong growth there could you tell us a bit more about what's driving that you know in terms of yard is it coming mostly from your existing customer. So are you able to add new customers, there and I'll see you could talk about what.
You know what with the contribution from Covidien related activity in terms have I tried the background that acquire.
Board.
Hello.
Kevin I either.
Oh, yes isn't it is line.
Oh.
I want to Chief Constable Wayne just a minute.
300 give us just couple of minutes, Kevin should be dialing it.
Hello.
Okay, Kevin Hi, Kevin we can hear you know.
Okay, great Yeah, sorry about that somehow got kicked out.
You know basically I would say that the the demand profile for our services.
We didnt know going into the quarter that we were going to see a fairly significant uptick because of the H.D. one to each dx.
Revalidation of the H. GXS was critical component and customers couldn't usage, Texas during that time.
So I would say.
Okay. He has had again one moment.
Okay.
Folks that request for a couple of minutes, we can kind of connectivity.
I slogan is now live.
Okay, so sorry about that little bit of technical problems working from home your my apologies, but.
Most of that demand came via the HD, Wantage, TX and we wouldn't expect seeing demand.
For the covert related activities the earliest would be late.
She true so.
Most of what we have seen around coded would not be related to co bid.
Actual trials running no infectious disease biomarkers it would be.
More than some of the labs with customers were shut down in that they would rely on us as a result, so I would say that probably one third to maybe 10%.
I'll bet demand was from customers shutdown, because most of the shutdowns with customers didn't occur until later in the quarter. So most of this was just due to that HD, Wantage Dx, which we did predict.
Is there any other questions.
Christy can you hear us.
Yes, I'm here. Our next question comes from the line of Puneet Nada.
Yeah, Hi, Kevin Thanks for the questions and hopefully you can hear me well yeah. So.
Just want to understand a little bit I mean, obviously it services were strong accelerator.
Opportunities here those customers are coming to you, but just wanted to do you know sort of I get a sense is that how much of that could continue going forward.
As you know how much of a sort of how much are you seeing that on an honest sort of ongoing base as an end project I missed the comments earlier, but could you give us a view sort of how that plays out in the next couple of months here.
Before we all emerged from this crisis.
Yes, absolutely Penny now I would say that.
So again, we're very fortunate to build that capacity up of accelerator planning for a lot of this to have occurred in the first half of the year. So we did further expand backing and again getting are poised safe and effective in that facility was was Paramount we've got great.
Please that.
Really.
Adopted all of the right principles of you know social distancing protective gear.
The cleaning et cetera, so our operations have been pretty much flawless because of this incredible performance and then I think that has allowed us as you know their companies even like Biogen that that's pretty wrapped up into a lot of the total good activities early on they would be one of our top 20 customers. So.
So I would say that in general when your house companies shut down their facilities.
Our facility gives him a chance to continue running particularly retrospective trials, where the samples have already been collected so I would expect that we're going to see a good surge of demand and fulfillment of that can mean, assuming that we continue with our you know flawless operations to.
Some of that demand in our accelerator for the next I would say not only next couple of months, but probably into Q3 as well so on that on a full year basis.
Clearly I see the accelerator this year given the circumstance of what's occurred combination of each do you want HTS.
Plus the ability to help customers through disrupted labs, plus our evolution of being able to actually run biomarkers towards told the population studies those three things I think bode very well for our ability to respond in the current year.
So provides a nice growth both methodic seller last I think you're going to see it through at least the first three quarters and I wouldn't be surprised we see in Q4 as well.
Okay. That's that's very helpful on the Stx platform.
Could you give us a sense of.
The customer orders sort of if you could provide any color around the ones that you expect to ship out or and as you emerged from this crisis. So well what what is an expectation what are some of those expectations for capital equipment purchases in your mind because obviously.
Acting.
Capitalized fitments purchases to be down and as a result of the crisis, but stx is some as an instrument that you are providing at a discount so help us understand that dynamic and what what's your expectation for that pickup and potentially in you know into the second half.
Yes, I'm I'm actually fairly bullish I need and you know fairly conservative, but I'm actually bullish around the prospects for the second half for HTS, mainly because I think whatever we do in there in the accelerator lab is going to further demonstrate the ability.
To provide a lot of high throughput.
Hi pursues young.
Exquisite sensitivity.
Results and historically the more we did in the accelerator to more it helped us with our pipelines and given the DHX is somewhat of a disruptive advance and its reliability couple of them with all these other features of sensitivity ITSM closed as well, which I think for infectious.
As is another nice.
And look forward I think the second half should have a pretty strong h. Dx component tree.
I also hope that you know that we have real success around the world in our TPH ecosystem, what Surajit testing were.
Around the world everyone's trying to get back on their speed and there's a lot a false positives and a lot of frustration today through LNG testing, where folks are different countries are trying to create a new licenses immunity licenses or passports, but if you have positives based on previous viruses that you can.
Yeah.
It out of the result could mostly.
A lot of the policy, making and couldn't make it harder to know who it is it isn't immune there's lot of questions to like if you have them into the how long without a glass and what level of unity represents protection for so many questions that we take a quantitative research use only.
Gigi test are going to be able to help answer that we would like to think that around the world. The HTS.
We'll be utilized to run a lot of those studies through our various cohort.
Samples everywhere around the world, but we think.
Operations, and we don't look at like Sweden haven't heard immunity, where they think they might hit 30% immunity at this point we've had some researchers say we should do testing entire country, Sweden right next door Yelp, Denmark. That's gone are very different directions that are going for herd immunity and really driving.
Continuing to work, they're they had more isolation techniques similar to United States and so what are the differences and those strategies I think having the quantitative strategy are you all test will I think lead to a pretty important opportunity for DHX.
I'm on the serology asset and thanks for those comments that are under serology approach.
If you could elaborate what are you know in terms of the cytokine Sir.
Research market, what is the opportunity that youre expecting there and secondly, wind, but then Suralco GE do you expect to have tighter antibody titer information and then potentially pursue vote lot vaccine and.
Convalescent plasma trials, meaning with partners pursuing any of those trials if he could cover those three topics and cytokine and tighter and vaccine convalescent plasma thanks, Kevin.
Absolutely Canadian and I do think that historically wants to analysts starting to record on the disruptive capability that we have it's amazing how many investors learn about it when they go through their companies and teach the companies that they own are you using the context technology, we're hopeful that exact same.
Cascade going occur here for me I know you've got a Phd in really some deepen the whole protein landscape and that if it helps when you report on this I'm sorry, as I said and so in our case first of all India Native system, That's where you had decided upon storms already around the world, We've got that being deployed new publications.
Coming out, particularly around interferon alpha that's the first spicy Union ate system and it's interesting that it it can actually spike up as quickly as anything in Surajit I'm. So that's the adaptive immune system. So first and foremost I think we've shown around the world great public.
Great data on our interferon Alpha and we now are working on the fraud products that we think we can launch within the next two quarters to take interferon alpha break it into maybe as many as six to eight sub types are excluded some city like will allow people further stratified and so this is a real port.
Area, there's some some pretty profound publications that just came out on this but then all of the pro inflammation markers are escharex can measure using the Corplex complex, we think that that's going to be very very strong growth opportunity moving our cancer research products right into this this landscape of predicting cytokine storm before it hits like a radar.
Gary of Serology, I think it's it's exquisitely important.
To be able to quantities and you mentioned tighter I think we're actually looking at building our own calibration curves, even comerica antibodies, which really would enable the first in the world ability to know what level of immunity someone has with fiveg, we would like to be able to roll that out sometime in Q2.
The research markets in the major population studies, so that we can start to understand represents community.
And why do some people might have symptoms others have symptoms can we see differences in the community that's.
I have one person versus another and when you're looking at vaccines. The first step is making sure that the cohorts that you're putting the vaccines into that to make sure. They already have some level of cold and 19 community based on having exposure for transmission some point a long because sensors so much non symptomatic race symptoms.
Got it coated that's going to be very delicate for vaccine producers the middle that they've got a really good cohort for the vaccines and so we think that it's important not only for astrology cut that quantitative capability, but even in the innate immune system. We have a lot of of vaccine customers wanting to look at that hey, when does.
Total lesson plasma really works.
Both the donor and also the recipient we think knowing their cytokine profile as well as knowing their surajit NRG Gee, we think that there's opportunities to even look for neutralization.
Antibodies and no which antibodies truly are neutralizing the disease. So we think that there's going to be studies, particularly by drug companies using our exclusive technology to to look at Neutralisation. So we already had several used cases from TPH researchers looking at different compounds to contend with a different antigens that we can look at in them.
Multiplex capability looking at all three immunoglobulins across.
Actually no.
No more than one antigens, despite savage and being the most popular but there are others are tacitly others that we are further evolving. So we think that we have the right.
Yes, a strategy to continue to help unravel some of the mysteries, if we can get our customer base, particularly vaccines and immuno drunk nuno modulation drugs and also coalescing plasma if we can get them all to understand what we have the sooner we can do that they've got a chance we have a good again down.
Demand creation, so we're pretty pretty I'm excited about that possibility in potential.
Okay, great. Thanks again.
This means that any other question on the line.
I'm sorry, our next question comes from line of mass Mississippi.
Hi, as again, thanks for taking the questions.
So all right so services revenue.
Right.
[noise], how can you hear me.
Can you guys Jeremy.
Can you hear me can you.
Hi, good morning, and alright, well, obviously itself just understanding that Nicole that 19 impacted some but not.
All in Q1, you're now are just over a month into Q2 and.
Any directional commentary.
What you're seeing maybe for each of the different insurance families. So far in keeps you in a nice but to what degree. If you think this service is strange could offset some of the declines that we make naturally see disruption.
In Q2, non sheep sort of look at that net impact.
Can you hear me.
Yes, Hello, Okay, great. Yeah. So yes in Q2, I wouldn't expect there to be large.
Implications to.
US supplying technologies for.
Valley encoded.
I would say that that is something that I would be looking more at the second half of the year.
And I think that.
I have been most.
Belief system for co bid.
Related.
Instrument growth and Hds.
Because of what were considered to be this high fidelity quantitative IBG test that we want to rollout.
And then secondarily any innate immune system for both S. HD acts as well as SPX.
We think both of those technologies play a role in the innate immune system, which is the site at times, where we run a lot of different side at times, we can actually run a six flex on the HD X and.
This interferon alpha.
When we ultimately evolve that into.
You know sub types my fifth you'll see that being probably done initially on the Ht expert then ultimately on the SPX. So I do think that yes, Rx is a smaller.
System Dopey some involvement.
For Covidien that landscape, but I don't think it's going to be.
As use because the throughput of it other than SRX is more of a bench top.
So I think that gives you the prospectus you're looking for relative to two co bid activity in the second out I mean, we definitely continue to be very much and be neuro landscape. We're NFL and we've got some new markers coming in neuro that are getting a lot of excitement mainly peach.
Phosphorylated towel and there are several different types of sub types of child that are getting a lot of interest from some of the pharma companies. Indeed, all cymer landscape.
Great. That's helpful. And then I just one more assets I can say, yes. The role that your company is serving gearing cover 19 differentiated cells here [laughter] technological capabilities and with the recent surgeons funding Thats now available for cutting edge projects and I'd like to how.
Yeah, Hi against the pandemic are you actively going after any of these these grants and.
What's your approach Darrin I do you have a better chance of maybe walking winds down because you know the companys sort of unique capabilities.
Yeah, I would I would say that Theres no question some of the assays in the technology, we're developing should have some potential BARDA grant.
It's probably not the place, though that we're putting most of our focus initially because we're trying to awaken the commercial opportunities in pharma biotech, particularly for vaccines and drugs drug therapies as well as a convalescent plasma.
Dimensions, we see no real opportunities for getting installed base.
Around those technologies that will have some continued evolution of pull through from the consumables. So I think that while we do think that government grants could play a role it's not where we're putting most of our emphasis right now I do think once we get ourselves established with the.
You know that the innate immune system in what we can do with it with the SPX DHX and then astrology, hi, quantitative fidelity serology test with the H. Dx.
I do think that we will then make sure we.
Turn to make to get any funding that could further support this but it just isn't our primary focus.
That funding can become lumpy too and we don't want to in anyway build our future just based on that so that's why it's it's probably secondary but still very important to us.
Got it thanks for taking the questions.
Sure Max.
Our last question comes from the line of Doug Sneakers.
Hi, This is Ryan on for David Thanks for taking my questions.
Maybe one more color 19, one in it and that's really some of the past Mark you talked about explained to use in your similar technology.
For early antigen detection can you can you give an update on and on your work in that area.
And could we see a product at some point over the course and this year.
Yeah, we're probably I'm less focused on that one that's the third priority in our co. Good landscape focus first is in eight.
Second is through all the GE as we've been prescribing and then third would be the antigen. We do think that there's natural benefit to what our technology can do and so we are exploring.
The assay development in that landscape, whether we roll that out in Q2. This is probably still a question mark but we do think that anything you can do in blood.
I would be a real benefit because of all the protective.
Personal protective equipment concerns of.
How hospital workers were them and could actually transmitted disease or theres, a lack of ERP and I don't have sufficient protection from the disease. So anything that can be done to get a test in blood.
Would be up a pretty big breakthrough, but.
Does that present in blood, how long does that present in blood. These your questions that we want some of our researchers to further explore before we can give you too much.
Insight to just how big of an opportunity. This area represents so we're definitely looking at samples securing samples by the way has been a real challenge.
Securing positive samples we've had researchers from our PPH network in Europe, even Germany and bond that's been just incredible supporting us in getting us samples that we could test to validate some of our strategy work.
But in an area of antigen you know my view is that you ultimately have as Sean even and saliva. So.
Obviously blood would be awesome, but if we can get it there saliva would could be even more or somebody being sensitivity.
Could be Paramount and that's what we've seen over the years is that the less invasive the sample to lower the concentration in maybe the more than.
Matrix effects, where you need to use dilution not only to make the sample larger to be able to get the answer but to get rid of a lot of the interference. So that you get your noise way down sort of your signal over noise that goes way up so I would like to think that it's not just blood, but potentially sliwa for that antigen test.
Then, we'll probably be in a position to comment at.
Our next major PPH Forum.
And we'll talk to researchers about just how much potential they see and this infection presenting in blood and also some of the large Ivy D.
Diagnostic companies I think have a lot of interest.
In this potential collaboration too so we're going to keep exploring that are given that it's the probably the biggest Tim that we see is the infection itself and viral load Union. We were really deal with key 24, we created a massive for HIV that was a thousand times more sensitive than any other kind of antigen test and we're really.
I'm proud of that development you are using that to further showcase that potential. So I know we'll have some homebrew.
Worked troms lover collaborators are ready going on in this in this part of the of the landscape, but we're going be working on our own assay trying to get the best antibodies that will grab onto it with the detector light and get the least amount of noise for the least amount of and basis samples and hope that helps.
Got it yeah, I know very very helpful. And then we'll more thank you for that any color on year on year full your expectations for instrument placements is there any more color you could provide on on Q2 fair fair placements or or overall revenue anything you can quantify to help us.
Obviously, you're going to be a little bit tougher environment like customer sites close, but but anything you could help us, but just to make sure we're not over asked.
We're not getting an unrealistic bar for you given all the uncertainty in Q2. Thank you.
Sure No no problem I think it's still an unknown for us.
And we don't guide so we don't want it we havent guided it's funny, we now noticed that many companies to do guys. They've taken the same stance now to monetize so I.
I do see estimates in areas of the same landscape ran from other companies in our landscape that range from 30% to 60% of their installed base is down and in our case no. While we've had some.
Some headwind obviously due to that same predicament.
I do think we're seeing some tailwind that comes from two different directions. One tailwind is having the accelerator, which we've talked about and allows customers to use us even when they're labs are shut down.
And secondly, then is the ability for us to launch products and assays that are relevant to actually come back to a good and so those are some tailwind stuck to offset the 30% to 60% headwinds that you do see from many of the other companies in our landscape. So I'm not sure if that gives you any.
Perspective, but it could mean it.
No.
Q2, there's going to be rough we know it's going to be rough compared to what our original Q2 projection was going into the year, but it isn't going to be as bad as most companies that have no.
No way to pivot and have some tailwinds and we've got to tailwinds that could offset some level of that headwind, but the headwinds real and Q3, we're hopeful that we're going to come out of this.
Much more productive in the real question too is how bad will.
The Cobas pandemic affect Q3 revenues, we would like to think of Q3 is hopefully being a rebound quarter coming off of what the world's facing in Q2. So we still believe that that's going to be the case without providing any granularity on our guidance.
Very helpful. Thank you [noise].
Our pleasure.
There are no more questions on the phone line.
Perfect I will close we have a final slide in our deck to just talks about the combination of the market opportunity being somewhat unprecedented when you can do something as disruptive as what we can do with ultra sensitivity. When you start to realize that the sensitivity that we have can be dips.
Floyd not just in season.
Hi, all markers that are very low abundant, but it can also be deployed to create the ability to see it in less than base of samples and home care is going to become a very significant area of opportunity as we come out of this tool good pandemic because of the ability to get testing done at home.
Prevents the risk of being affected by going to a center.
Where in fact, the hospital workers themselves are trying to battle to present themselves from being.
In any way contaminated with the infection. So homecare requires less invasive testing and that's another way that sensitivity can be deployed is to look for any answer in a fingerprint and then to.
The loop that finger prick up I'm shows enough volume more even look at saliva. So we're actually very encouraged that our sensitivity can be deployed in ways. Other than just looking for low abundant markers and immunoglobulins are actually pretty high levels, but being able to see these earlier in their production.
And see it even at the time, maybe closer to when the infection occurs we see a lot of potential to speeding up the knowledge of knowing if you've got the antibodies and also doing it less invasively and then the do a quantitatively can have such a low.
We'll be limit of detection that allows that you're limit of quantification to be in the entire relevant range. So we actually think that you know diluting samples not only eliminate a lot of the specificity issues accrete false positives by eliminating those viruses that previously treated animals.
These are much lower levels, but not only diluting for that specificity, but then also creating this opportunity.
To see it lesson basically in earlier all of these Lee to we think a better demonstration of our ability to to to do something in the world. It's that's highly relevant so.
We just want to leave you that that market opportunity. We don't think has ever been brighter for the long term and get into the clinic sooner could be another big win moving across since our aspiration will side of the business no way to know that but you know we felt that that was going to take a few years, but through partnerships in through the advances in Charlotte.
It's hard to imagine where we might be six months from now so well keep.
Very focused on that market opportunity in continue executing like we've been executing with a lot a precision superb execution remains one of our our true pillars to are advancing our technology in the marketplace and we've got an employee group that just has been stellar I cannot say enough I've never been.
And more proud to be part of the team then to be IP.
Part of this clintegrity, maybe literally work 24 southern around the clock for the past two or three months keeping themselves highly say keeping continuity of operations really driving force solutions that can help the world. So just want to.
Really give a shout out to that group and thank all of the investors for your continued support and just staying very linked into what we're doing in helping us get the story out to help the world know, what we're able to do with our technology. So thank you very much for your time today.
We'll talk to you sound like.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
[music].
[music].
[music].
[music].