Q3 2020 T2 Biosystems Inc Earnings Call
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Welcome to the Vivek Conference Center. The next available comfort specialist will be with you momentarily.
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Welcome to the Vivek Comfort Center next available conference specialist will be with you momentarily.
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Congrats on a good I'd be first lets name please.
David Brown.
Alright, I woke up and are you with.
Hi era.
Right and your joining at Gtwoe.
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Yes right.
Yeah, one second.
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[laughter].
And as a catalyst for to do bio systems to increase our installed base of instruments in the U.S. hospitals.
Diagnostic testing has taken center stage during the past year and it is clear that rapid and accurate diagnostic tests are needed to optimize patient care.
During the third quarter, we sold a record 30 to teach you do you actually instruments and.
An increase of 167% compared to the prior year period income.
Including 28 instruments sold in the United States.
We believe this larger installed base of T., Judy actually instruments initially running teachers Southgobi two panels provides an opportunity to accelerate the adoption of our sepsis panels teacher bacteria.
Endemic has served as a catalyst for two to bio systems.
Oh outlook for the remainder of the year.
Drummond.
They are increasing the low end of our full year 2020 revenue guidance.
And center stage.
Oh expect full year.
And it is clear that rapid.
Well revenues of $19 million.
Or needed to optimize patient care.
Putting product revenues.
During the third quarter.
All right.
Served a record.
Others.
Two TTX instruments.
Jim revenues of $6 million.
67%.
Expect to sell at least 62, Judy X instruments.
Instruments.
Mid stage during the second half of 2020.
We believe this larger installed base of TDX instruments.
The potential to accelerate the adoption of our technology.
Sales.
While staying true to our mission.
Celebrate the adoption of our sepsis panels.
So in his practice.
Syria.
Transformative diagnostics that improved the lives of patients around the world.
We are increasing the low end of our full year 2020 revenue guidance.
Hi, Chris.
We now expect full year.
And that caused the death of nearly 270000 people in the United States each year.
<unk> dollars.
And 11 million people globally.
<unk> of $13 million.
Ladies and study.
Others.
By researchers from the US Department of health and human services.
Dollars.
<unk> estimates that the cost of care.
At least 60 TTX instruments.
Nursing facilities in 2019.
A 2020.
$62 billion.
The current pandemic has created the potential to accelerate the adoption of our technology.
We've mentioned before.
True to our mission.
Our Asian and treatment of sepsis is a race against time.
Activist.
As each hour of delayed targeted therapy.
That improve the lives of patients around the world.
Percent.
To be very clear.
Oh systems is the only company.
Our sepsis.
It cleared products.
Even before the pandemic.
Just causing pathogens.
Nearly 270000 people in the United States each year.
Without the need to wait days.
Globally.
The blood culture.
In a recent study.
Just products.
Researchers from the US Department of health and human services.
During the Gtx instrument.
<unk> cost of care.
As the team to bacteria.
Our hospitals.
The.
Skilled nursing facilities in 2019.
Clinicians and identifying sepsis, causing pathogens.
A marked increase from previous estimates.
The.
Reducing the use of unnecessary broad spectrum antibiotics.
Of sepsis is a race against time.
Combat growth anti microbial resistance.
Therapy can increase mortality rates by up to 8%.
And position the business for long term success.
Only company.
Focused on three corporate priorities.
Well identified sepsis, causing pathogens directly from whole blood.
Improving our operations.
Without the need to wait days for a positive blood culture.
Pleased to provide details on our progress within each area.
Principally life saving technology.
Good morning.
Leading the TDX instrument.
Let's start by addressing our first priority.
Thanks.
Accelerating our sales.
And to do resistance panel.
The option.
You bet clinicians and identifying sepsis, causing pathogens.
At the beginning of 2020.
Through targeted therapy.
Just strategy to focus our resources.
Unnecessary broad spectrum antibiotics.
At the same time.
And to prevent.
Vicious target.
Growth in anti microbial resistance.
This test utilization.
To build on our traction in the third quarter.
Its instruments.
In addition, the business for long term success.
$200000.
We are focused on three corporate priorities.
Yes.
We set at the beginning of the year.
Our third quarter product sales.
Yeah.
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Tens.
And we continue to pursue our target of increasing sepsis test utilization.
It was on our progress within each area.
The adoption of our T. duty X instruments by us hospitals during the third quarter.
Let's start by addressing our first priority.
Oh 28, TDX instruments during the third quarter.
[noise] option.
Increasing our us installed base.
To 69 to Judy X instruments.
Thousand 20, we shifted our commercial strategy to focus our resources on the Us hospital market.
Funding, 383% increase.
It's just target.
Product sales revenue during the third quarter.
Plus utilization.
Our year period.
So installed base of TDX instruments.
31st 2020.
Thanks.
We announced the us food and drug administration emergency use authorization.
Overwhelming majority of our third quarter product sales.
The teachers Sars koby to panel.
And we continue to pursue our target.
Any significantly positive impact on our business, providing a catalyst.
The option of our TDX instruments by us hospitals during the third quarter was remarkable.
We positioned.
We sold 28 TTX instruments during the third quarter.
Asus products.
Increasing our us installed base.
This increased demand has allowed us to shift our us commercial model.
Fueled by the launch of our two two Sars koby to panel.
We placed.
Eight an astounding 383% increase.
Purchase model.
Product sales revenue during the third quarter.
Okay.
Compared to the prior year period.
And obtain large freight upfront purchase orders.
20.
Contracted minimum volume commitments.
Ministration emergency use authorization.
We do panels.
19, molecular diagnostic test.
Eight instruments, we shipped to us hospitals during the third quarter.
Fast is having a significantly positive impact on our business, providing a catalyst.
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Increased sales of two two directions fronts in the United States.
Multi hospital IDN agreements during the third quarter.
For the potential future adoption.
Totals within those networks.
<unk> products.
Access to our potentially life saving technology.
Slide us to shift our us commercial model.
In duty ex instrument sales.
Now onto model.
To increase the size of our us sales team during the fourth quarter.
Yeah.
And continue to remain mission focused.
We sell instruments to customers along with service contracts.
An increase in our gtx instrument installed base.
With contracted minimum volume commitments.
Service resources.
Yeah.
To support customer installation and implementation.
At each of the 28 instruments, we shipped to us hospitals during the third quarter.
Station.
Both in the form of a capital sale.
Ration to routine testing.
Thrilled to inform you.
Less than one month.
Disputed too.
Darko average of nine months.
IDN agreements during the third quarter.
Experiencing unprecedented demand from us hospitals for our Gtx instrument.
Yeah.
And you do Sars koby to panel.
Knowledge.
During its recent commercial launch.
Our additional TDX instrument sales.
COVID-19 testing opportunity for T., two biosystems into perspective.
And continue to remain mission focused.
Gtx instrument.
Yeah.
Running to do Sars koby two panels.
The increase in our Gtx instrument installed base.
Our bowlers annually.
So increasing the number of direct service resources to support customer installation.
And implement our technology, a key consideration on our part.
We set up.
Our decision to acquire a TTX instrument.
Migration to routine testing.
19.
They did to less than one month.
See value in our platforms ability.
Nine months.
Other hospital challenge the ability to manage.
Precedent of demand from us hospitals for our TDX instrument and two to Sars koby to panel.
Constrained that one in five hospitalized patients.
Yeah.
That are positive.
The COVID-19 testing opportunity for T. to bio systems into perspective.
Many of which are super infections.
Single TDX instrument.
Is it to sepsis.
You do Sars Kirby two panels.
And the value that we can bring to these us hospital customers.
Theres annually.
Yes hospitals are also experiencing unprecedented demand for COVID-19 molecular diagnostic test.
Yeah.
And because many diagnostic test manufacturers.
Is that their decision to acquire a TDX instrument is not solely focused on COVID-19.
Forms.
But they also see value in our platforms ability to address another hospital challenge.
Hey.
The ability to manage.
And improve patient care.
Free.
Thanks to sepsis.
X instruments and their specific required quantities.
Yeah, I've hospitalized patients.
And.
That are positive.
If again competitive advantage.
We are also positive for additional co infections.
Yeah.
Yes.
Of the COVID-19 testing landscape.
And all of which.
And.
Got it to success.
Actually to be approved in the near future.
The value that we can bring to these us hospital customers.
Since may faced obstacles and headwinds.
So we're also experiencing unprecedented demand for COVID-19 molecular diagnostic test.
Since.
And because many diagnostic test manufacturers.
Tossed little demand for COVID-19.
These of tests.
I'll stick test.
State hospitals are acquiring multiple testing platforms.
Thanks 21.
It growing testing demand.
It's important to remember that our objective during this COVID-19 pandemic.
Summers.
Significantly increase the us installed base.
Its instruments.
X instruments.
Specific required quantities.
Hi, quality COVID-19, molecular diagnostic test.
Significant competitive advantage.
Our installed base of instruments.
In thinking about the durability.
Some of our potentially lifesaving sepsis products.
We understand.
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But a vaccine is likely to be approved in the near future.
2020.
We also understand that vaccines may face obstacles and headwinds.
Extended the new technology add on payment.
Speed availability.
For our team to bacteria panel for an additional year.
Such we believe the US hospital demand for COVID-19.
This addition, us hospitals treating Medicare inpatient.
Through at least 2020 to 21.
An additional reimbursement of up to $97.50.
In this COVID-19 pandemic.
For eligible patients.
<unk> increased the us installed base.
Station.
Judy X instruments.
Catalyst.
Meet the demand for high quality Cobot, 19, molecular diagnostic tests and to leverage this larger installed base of instruments.
Improving our operations.
Bruce about potentially lifesaving sepsis products.
<unk> expense reductions.
Yes.
During the first half of 2020.
20.
Significant progress in reducing our cost structure.
Eight services.
We reduced headcount by 20%.
On payment.
Consolidated our facilities.
Key to bacteria panel.
Yes.
Additional year.
22%.
Full year 2021.
Investments with our corporate priorities.
Hospitals treating Medicare inpatient.
Sort of initiatives.
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Due to the manufacturing cost of our products.
Reimbursement.
Let me focus.
$7.50.
Yeah.
For the two bacteria panel.
See the benefit of these improvements in our financials.
This reimbursement decision.
SGN a expenses.
Yeah.
And reduce cost of product revenue.
The panel.
Compared to the prior year periods.
In addition, the increased sales volume.
Furthering our operations.
Q2, Sars koby to panel.
Cost of goods.
Overhead absorption.
Productions.
Following us to leverage our supply chain.
2020.
Additional improvements.
Progress in reducing our cost structure.
Third quarter.
We reduced headcount by 20%.
Of our Gtx instruments.
Ladies.
Our test panels.
State.
Demand from us hospitals.
Ben.
Our goal is to deliver at least 60 TDX instruments in the United States.
The number of initiatives.
And 20.
And in factoring cost of our products.
Within seven fold increase.
On our sepsis test panels.
We're now beginning to see the benefit of these improvements in our financials.
Manufactured approximately 70000 test.
And reduce cost of product revenue.
And then fold increase over the prior year period.
In addition, we increased sales volume.
And your factoring capacity.
Sars koby to panel.
100000 tests per quarter.
Yeah.
By early 2021.
Supply chain.
To support these expansion plans.
Let's.
We are hiring manufacturing.
During the third quarter.
We rapidly increase production output.
And taking all necessary measures.
Our test panels.
Machine.
Meet the demand from us hospitals.
As a reminder, each TTX instrument.
60 TDX instruments.
To 60.
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The twoq seat.
After 2020.
B two panels per day.
Yeah, that's a greater than seven fold increase.
That coupled with our customers standing order process.
Mission during the third quarter of 2020.
Forecast test demand.
Proximately 70000 test.
And planned manufacturing schedules accordingly.
Well to increase over the prior year period.
Moving to our third priority.
We plan to further increase our tests manufacturing capacity.
[music].
To approximately 300000 test per quarter.
Awarded by the Us government.
In one.
Or BARDA in 2019.
Pension plans.
The BARDA contract.
Capturing.
The base stays and six options.
Insurance personnel.
Up to $69 million.
Measures.
Develop a buyer dry panel.
Yes.
Next generation instrument.
Under each TTX instrument has the capacity to consume up to 60.
It's in the base phase of the contract.
So as koby two panels per day.
We budget.
Depending on workflow.
The progress by our development team.
For standing order process.
Exercise option one of the contract.
The forecast test demand.
And $5 million.
While base.
Bounced on September Thirtyth 2020.
Currently.
As a reminder, the contract terms require.
Dancing our pipeline.
Our systems incur expenses.
Okay and programs.
Submit them to BARDA each month.
Product development contract awarded by the Us government.
The decision to exercise option, one as a positive development.
The BARDA contract.
Shared objective.
Phase and six options.
Management.
Funding of up to $69 million.
We believe the new products will be highly differentiated.
Your next generation instrument.
[music].
And expanded sepsis panels.
Develop a biothrax panel.
Fully completed all milestones in the base phase of the contract.
Hi, good sepsis Pan.
And on budget.
We believe the next generation instrument.
Yes.
Expanded sepsis panels will be a major leap forward.
The contract.
Correct from blood diagnostic testing.
Yeah I've million dollars.
Is being designed to potentially cover.
2012.
Percent of all blood borne infections.
It turns require.
250 species.
Our current expenses.
And Gram positive.
From the BARDA each month.
Hello.
<unk> percent.
In addition to all blood borne antibiotic resistance threats.
June one as a positive development.
Theres for disease control and prevention.
Adaptive.
DC.
Prove the diagnosis and management.
As highlighted the need to address societies vulnerability.
It will be highly differentiated.
And raised awareness.
The impact.
We remain on schedule to develop a bioflo panel.
It may have on our ability to fight future Pandemics.
The expanded sepsis panels.
Okay and future products can play an important role.
Affiliation instrument.
Right.
Branded sepsis panels will be a major leap forward.
Spec to detail the third quarter financials.
Test.
Okay.
Is being designed to potentially cover up to 99%.
2000.
Blood borne infections.
Million dollars.
For the 250 species.
Compared to the prior year period.
And Pam Gram negative results.
2020.
All blood borne antibiotic resistance to that.
19%.
The us centers for disease control and prevention.
By increased.
Panel and instrument sales.
Yeah.
This pandemic has highlighted the need to address societies vulnerability.
It's funny.
Merging pathogens.
In dollars.
Theres awareness.
198%.
Is that growing anti microbial resistance.
<unk> increased.
But our ability to fight future pandemics.
Cost and operating.
Current and future products.
2020.
Supporting role.
$15.8 million, an increase of $1.9 million compared to the prior year period.
For the financials.
By increased cost of product revenue.
Thank you John.
Sales.
Total revenue for the third.
Research and development.
Okay.
Selling general and administrative.
He was an increase of 213% compared to the prior year period.
Expenses was 11 point.
For the third.
Dollar.
Thousand.
Okay.
Yeah.
That's fair.
$3.8 million, an increase of 219%.
Our 30 cents.
Prior year period.
The prior year.
<unk> increased test panel and instrument sales.
Cash equivalents.
Search and contribution revenue for the third quarter.
Restricted cash.
Was $1.5 million.
Dollars.
This decrease of 198%.
2020.
Period.
We expect working capital will increase compared to prior periods as receivables and inventories.
Expenses for the third quarter of 2020.
To reiterate the guidance drawn provide earlier.
An increase of $1.9 million compared to the prior year period.
To be between.
By increased cost of product revenue.
$7 million.
[music].
Including product revenue.
Research and development.
Okay.
And selling general administrative.
[music].
Expenses.
Research and contribution revenue of approximately one point.
Funny.
<unk> million dollars.
$3 million.
In the U.S.
Yes.
30.
Loss.
Two dx instruments will be sold in the fourth quarter.
Per share.
2020.
Our year period.
And back to John Sperzel.
Yes.
Remarks.
Current long term marketable.
Hey, John.
Yeah.
Unrestricted cash.
Transformational for TG biosystems.
As of September Thirtyth.
<unk> growth as a commercially driven customer focused company.
We'll increase compared to prior periods as receivables and inventories increased with higher sales.
[noise] base of TDX instruments by nearly 70%.
Sphere, we now expect.
Demand from us hospitals for our COVID-19, molecular diagnostic test.
0.7.
And have commitments from customers.
Colors.
Stopped our products.
Product revenue.
And us for long term success.
$8.2 million.
The fourth quarter with strong demand for our products.
Absolutely one point.
Good idea about the future of two two biosystems.
The us.
In our ability to lead the molecular diagnostics sepsis testing market.
In the fourth quarter of 2020.
Fighting updates on our progress in the future.
Bill for closing remarks.
Up to questions operator.
Thank you John.
Third quarter was transformational for T. to bio systems.
Thanks, Chris.
As we continue our growth as a commercially driven.
For me.
Focused company.
I understand the question.
Hi, good record sales during the quarter.
[music].
Hi, Bart us installed base of TDX instruments by nearly 70%.
To maybe.
Our strong demand for us hospitals for our COVID-19 molecular diagnostic test.
First question.
Tim it's from customers.
Yes.
We adopt our products.
Okay.
And position us for long term success.
With.
As we entered the fourth quarter with strong demand for our products and we're excited about the future of Q2 biosystems.
Resurgence.
In our ability to lead the molecular diagnostics sepsis testing market.
And trends you're seeing in the halls.
Providing updates on our progress in the future.
Steve just highlight.
Open it up to questions operator.
Embedded into the implied Q4 guidance.
To ask a question.
[music].
Chris.
Our Max we are seeing strong demand as I mentioned.
Selma indicate your line.
The instrument and for the two two Sars koby to panel.
Yeah.
The ways, we differentiate ourselves from our competitors is by making a commitment to deliver.
Thank you Ms.
Specific volume of COVID-19 tests and were able to deliver on this promise because we can accurately calculate the test utilization of our installed base.
Yes.
And scale our test production accordingly.
And then congrats in the quarter.
We remain laser focused on our long term customer target, which is us hospital systems I'd witnessed.
Okay and then.
Of diagnostic suppliers try to chase every single testing opportunity out there.
Only to disappoint their core customers.
He assumption.
Almost immediate backwater.
Q4 guidance.
And deliver on our promise established strong relationships with these hospitals.
And as I mentioned.
Printer, which will lead to.
And for the two two Sars koby to panel.
Next moving forward.
We differentiate ourselves from our competitors is by making a commitment to deliver a specific volume of COVID-19.
And from.
The two multi.
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We're able to deliver on this promise because we can accurately calculate.
Strap to your strategy.
Our installed base.
Okay.
Scale, our test production accordingly.
Mr versus in.
We also remain laser focused on our long term customer target, which is us hospital systems.
Yes.
I've witnessed.
Get in the door.
I'll stick suppliers try to chase every single testing opportunity out there.
Our of our.
The point their core customers.
Sales.
On almost immediate backwater.
Capital integrated delivery networks.
Has established strong relationships with these hospitals.
Two the launch with our coated test.
Which will lead to.
Hospitals as well as.
Two of our sepsis products moving forward.
Networks. So we're really pleased with the execution that we had during the third quarter.
Yes.
And we will continue to follow that same approach during the fourth quarter.
Steve.
In terms of our ability to get access to these accounts.
How is your strategy your strategy.
Spring, we're using technology, we're having zoo meetings go to meetings.
Conversions in.
We are having telephone calls.
Just launch your co the 19th.
In the current environment.
Here in November you.
During during Q4.
Door.
And we're going to add to our sales team. So we can accelerate things.
Half of our.
Do so.
US instrument sales.
To work with Us this way.
Those two hospital integrated delivery networks.
One more quick one can you just give us a sense for.
Going into the launch with our coated test.
Q3 signed on for.
For hospitals as well as.
Refracs in.
Systems are integrated delivery networks.
Change of these.
Really pleased with the execution that we had during the third quarter.
As well.
And we will continue to follow that same approach during the fourth quarter.
Yes, I would say that.
We have to get access to these accounts.
Them are signing a contract I wouldn't get into specifics about whether they are one year or longer than than one year contracts.
Email, we're having telephone calls.
That's what our customers prefer.
Thanks.
Environment.
Standing order process, and we feel really good about that.
We're going to add to our sales team. So we can accelerate things.
Three.
And we will continue to do so.
Soon we had cobot testing.
The to work with Us this way.
The plan and our strategy is to subsequently when when space is allowed on those instruments.
Your new placement.
Testings, who sepsis testing.
And fund for.
Right now our fully.
Are those contracts and.
Yes.
There's.
Certain percentage of these contracts that.
Thank you Max.
TT bacteria and TC, Canada as well.
Our next question.
Yes, I would say that most of the customers in fact, all of them are signing a contract I wouldn't get into specifics about whether they are one year or longer than than one year contracts.
But of a clarification.
Purchases.
They have the Sars.
Capital for the instruments.
And then there is.
And in order process, and we feel really good about that.
So this rule out.
Once that were sold in Q3.
Provide contributions.
Soon we had cold and testing.
So just wanted to clarify.
The plan and our strategy is to subsequently when.
Im sorry go into test is driving that.
Some of that testing suit sepsis testing.
Of.
I'd now are fully.
Does this rollout.
With test.
Sure our sepsis tests were up as I mentioned in the in the prepared remarks, something like 70, and close to 40% year over year.
Q3, 2020 versus Q3 2019, so we feel good about the continued progress.
Yes, hi, Thanks, John So first.
Figures.
Yeah.
Firms of coated a majority of our sales in the us.
To test.
Three was KOVA driven exactly what we expected because our strategy again.
Okay.
It is too.
To clarify if you can.
Drive significant increases of our installed base.
Order I just wanted to clarify that.
The X instruments that will later serve as a natural customer to go evolve into sepsis testing.
Best is driving that but.
And could you also give us a sense of.
In terms of that evolution of conversion from that Cobot continued increase.
In the in the prepared remarks, something like 70 and close to 40%.
And some of the things.
[noise] tiers.
320, 20 versus Q3 2019 so.
I had one.
Two new progress.
[music].
So those are global figures.
I know, obviously you're seeing.
Okay. Good.
<unk> expenses in the near term.
As in the us.
The 2021 letter.
It was colder driven exactly what we expected because.
But I just want to clarify if you could if you could if you could give us a sense.
Drive significant increases of our installed base.
And what are some of the things you are seeing in these early account.
That are served as a natural customer to go evolve into sepsis testing.
Sepsis.
And Canada products.
Great and then in terms of that evolution of conversion from the cobot to continued increase.
Next is on us hospitals, because they are our sepsis targets.
Your.
Before we sell a two TDX instrument for COVID-19 testing.
To where.
For pre selling.
Our point Cove bid.
This is an important part of the sales process.
We're seeing strong growth here in the near term.
His coded driven.
21 latter half.
Second.
Hopefully the sepsis volumes should increase but I just want to clarify if you could if you could.
If you could give us a sense.
Remains a top priority.
This.
Midst of the pandemic.
And some of the things you are seeing in these early account.
US government indicates that the.
And just to see a long term uptake of.
That's as to our healthcare system is $62 billion in the 10 months.
Pete.
I joined.
That we target the right customers.
[music].
Which is why our focus is on us hospitals.
To $41 billion.
As targets.
$2 billion over 10 months.
So a two TDX instrument for COVID-19 testing.
Fear strategy to transition customers from Covance testing.
Hi, This is an important part of the sales process.
So.
We refer internally.
This testing.
Corbett driven.
The launch of our teacher starts koby to panel.
Talk to hospitals prior to covert most said sepsis was a top priority.
Total and that is the hospital laboratory.
A top priority.
With the lab as a team to biosystems advocate or a champion if you will.
Men indicates that the.
For key hospital stakeholders.
Their system is.
Management process.
In dollars.
Clinicians.
Months.
And recent data has shown that.
Two and became CEO.
Hospitalized COVID-19 patients.
$27 billion.
Yeah.
The $1 billion.
Our debt.
<unk> billion dollars over 10 months.
Also positive for additional co infections.
You have a clear strategy to transition customers from carbon testing.
Okay.
[music].
Strengthens the value of what we have.
We hope that it does.
[music].
To sepsis testing.
Okay, Thats, great and on the investments that you're doing here in the fourth.
Vehicle to convert one of the most challenging stakeholders.
[music].
Spittel and that is the hospital laboratory.
As to what it should.
The lab as a teacher Viasystems advocate or a champion if you will.
Yeah.
Just other key hospital stakeholders.
Additional investment.
And process.
Okay.
For example.
The growth than to maybe into 2021.
As shown that.
Yeah.
One in five hospitalized COVID-19 patients.
We had a really good book of business ending Q3.
And rolling into Q4, and Thats the nature of a razor razorblade business.
Yes.
We are in the business of selling test and providing information to customers.
Lets us.
And make decisions.
We have what we have.
And we'll take care of the patients the instrument is simply a vehicle.
Okay, Thats, great and on the investments that you're doing here in the fourth.
We utilized instrument.
Sure if you already provided.
$600000 annually.
Number as to what the shouldn't.
Just about where we are trying to take our installed base of instruments that are used solely for sepsis. So.
And what are your thoughts in terms of.
This is the more instruments we have.
[music].
Fully functioning going into the next quarter.
Be into 2021.
Orders committed purchases.
For as a reverse order puneet so first of all.
Tumors, we have to go out and win.
Business.
Our commercial strategy.
The.
In terms of the team we didn't disclose the number of people.
We are in the business of selling test and providing information to customers.
Yes.
They can make decisions.
On how to handle.
To add medical science liaisons.
We have vehicle.
21.
I tried to give some context about.
It is.
The value of a fully utilized instrument.
It is it's not just a single type of person that we didnt, we didnt describe the breakout of those.
And a little bit of context about where we are trying to take our installed base of instruments that are used solely for sepsis.
Hi, there.
The nature of a razor razorblade businesses.
Once we have.
Pension offering.
Next quarter.
Line here for potential regulatory approval and potential reimbursement as well.
Aspects are the less new customers, we have to go out and win.
As we sit here today.
<unk> strategy.
The 24.
The team.
It's five 10-K.
Number of people.
Not include the.
Single type of person.
Five 10-K, assuming we do.
That is.
As I said on the last call I think there's an opportunity to improve that schedule.
In 2021.
With funding from the U.S. government those are those discussions have not occurred yet because the government's been pretty consumed.
The person that we didnt, we didnt describe the breakout of those.
Those well and and look forward to giving updates on our progress there.
So then in terms of BARDA contract good to see the progress there.
Good to see the progress.
So as you look at this.
Yes.
Yes.
Offering menu expansion offering what's what's your timeline here for potential regulatory approval and potential reimbursement as well.
With.
So the BARDA contract as we sit here today.
Hey, guys. Thanks for the questions and congrats on the record quarter.
Our 10-K submission.
Thanks Mark.
It does not include the timing for which we get a five 10-K, assuming we do.
Record.
As I said on the last call I think there's an opportunity to improve that schedule.
Hospitals that are new to T two versus.
From the U.S. government.
Those are those discussions have not occurred yet because the government's been pretty consumed.
With the current pandemic, but I anticipate that those will end and look forward to giving updates on our progress there.
Do I'd ends the hospital systems.
Okay great.
And he had been trying to get into four years literally.
Yeah.
So we feel really great about that.
Okay and.
Do you think the two large IDN.
Likely have.
Oh.
[music].
The number of systems they need.
To handle the covert crisis.
Thanks for the questions.
2021, or do you see additional potential there.
Thanks.
One of them does have enough instruments to handle.
Question is on what percentage of the record.
When I think theres potential to expand.
Who.
Okay.
Hospitals that are new to T two versus.
[music].
It's between new and existing customers.
Per system as an important goal for the firm.
How did that track.
The overwhelming majority to new.
And can you.
Comment on your goal to continue to hit 100000 at the end of the year.
Yeah.
Systems.
Yes, so we're working through that Mark the we saw an uptick in our sepsis panels. So we are continuing to see increases.
And our.
Two large IDN.
Sepsis instruments.
And the annualized utilization, what we didn't want to do is dump all the cobot into that number I mean, it would look fantastic it would be way north of a $100000 and we might feel great about that.
Instruments to handle.
It it out at the beginning of the year, we laid that number out.
When I think theres potential to expand.
I have a sports side of a coated pandemic.
Yeah.
We're trying to keep those completely separate.
And nobody per system as an important goal for the firm.
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How did that track.
It's not as fast as we had hoped because we've seen some headwinds.
And on your.
Getting into customer accounts and driving our substance business.
But we're pleased with the progress.
We're working through that Mark the we saw an uptick in our sepsis panels. So we're continuing to see increases.
Yes.
And our.
Four.
Store base of sepsis instruments.
Obviously, thats a really strong demand.
Didnt want to do is dump all the cobot into that number.
[music].
If you would look fantastic it would be way north of.
Place as a launch off number or.
Okay.
Can you give us a sense for your funnel and how you see demand.
Without the benefit or without the poor side.
And next year.
Sports side of a covert pandemic.
So we're trying to keep those completely separate.
For of instruments that we have.
Subsys panel.
In customer sites.
It's not as fast as we had hoped because we've seen some headwinds.
For 30, Onest will be really important.
And driving our substance business.
Jump off point, if you will to start the year, because that will drive demand for that instant dread demand for tests.
32 placements this quarter.
Bidding plan too.
Or more.
Guidance for 2021, I mean, we would typically do that.
Obviously, thats a really strong demand.
2020 earnings early in 2021.
For next year.
Priorities and set guidance.
As a launch off number or.
Can you give us a sense for your funnel and how you see demand.
If I can.
And you know your business next year.
How the Medicare and tap.
That might be.
Okay.
Let's see before the number of instruments that we have.
Driving bacteria panel revenue.
Tumor sites.
If it's not having an impact.
Ambles.
Don what your expectations might be.
Really important.
It's not having an impact yet mark and I think thats one of these headwinds of coated.
Demand for that instant dread demand for tests.
Fully consumed.
We didnt plan to.
Patients.
Wins for 2021, I mean, we would typically do that.
Yes.
The announce our full year 2020 earnings early in 2021.
How big of an issue it is.
And set guidance.
But thats going to be important as as customers get control.
Last question.
I'd like whether it's through vaccine better therapies.
On how the Medicare and tap.
Greece bandwidth.
Paying into the sale process.
Be there to to address sepsis with them.
Bacteria panel revenue.
That.
And maybe if it's not having an impact.
Scott.
I meant on what your expectations might be over the coming quarters, it's not having an impact yet mark and I think thats one of these headwinds of coated.
Yes.
Where customers right now are fully consumed.
Good times.
Their own environment dealing with coated patients.
Okay.
Well, they don't have a lot of bandwidth to address.
On.
Technologies, including sepsis, even considering how big of an issue it is.
Yes.
So we anticipate going forward that thats going to be important.
Okay.
Was patients.
Our customers get control.
[music].
Of this pandemic, whether it's through vaccine better therapies.
Hi.
Stick to us, we think they're going to have increased bandwidth.
Some of them.
Our.
Going to be there to to address sepsis with them.
Yeah.
Should be an important part of that.
Timeframe with.
Okay. That's it for me thanks, guys.
With was how this.
Our.
Right.
Back to your modeling.
[music].
Specifically, how you would look at it.
Yes.
In being able to.
Yeah.
Address the future need for quick.
These grim time.
Thank you.
For providing.
Liquidity positive note.
In those statistics, but I can say.
Just one quick question and I'll hop back in.
This those are disheartening statistics.
Tim This is been tracking.
[music].
HM.
Business side.
Those patients.
Those figures reinforced the link between COVID-19 in sepsis.
Okay and then.
A also underscore.
That.
That accurate.
Our.
Causing pathogens.
Our succumbing within.
Hi, good highlight why.
Frame.
Bolstered implement a technology like ours.
Okay.
And frankly, why the U.S. government should support technologies like ours as well.
But.
Can address both sepsis.
Two.
Okay.
Yeah.
You saw the linked very early between those two.
Yeah.
And.
Thank you.
Seems these statistics are not getting better.
Thank you, Steve I hadn't seen those statistics, but I can say.
For these patients, but fortunately for the fact that.
Those are just hardening statistics.
Going out there and addressing.
On the business side.
Thats, obviously strike.
Figures reinforced the link between COVID-19 in sepsis.
Thanks Thats helpful.
They also underscore.
Since this is also reinforcing why we're laser focused on.
Causing pathogens.
Ill hospitalized patients.
Highlight why.
Thing.
Rules should implement technology like ours.
Many competitors are chasing them.
Yes government should support technologies like ours as well.
Hospitalized patients.
[noise] sepsis.
With that.
There is a link between Covidien sepsis.
And those two.
We think that we can.
And.
As many hospitals as possible to help those patients.
Better.
They have better outcomes.
Yeah. So.
Thank you for taking the questions and again, obviously congratulations on the progress that you've made this quarter and into the future.
And addressing this.
Thank you Steve.
Thats the right away that obviously strengthens the case for adoption of.
Two I guess that's.
Permanent.
Segment.
Hi, guys.
Steve I would say this is this is also reinforcing why we're laser focused on.
First off for me on the.
The install delivery resources in us fair.
Actually.
Quite impressive progress that you've made going from a historical average of nine months onto a month.
The resources, you're adding I mean.
When cold in sepsis.
I'll take it down to a week or two weeks or is it just.
Who as many hospitals as possible to help those patients.
With the installed them in the you have from the incoming.
Question and.
I don't think that we should anticipate reducing that two week.
Sure.
We're obviously going to do our part to make it as efficient as possible I think I think a month's time.
Yeah.
From closing a sale to having.
Thanks, Greg.
In samples run on a routine basis is.
Good afternoon, gentlemen, thanks for taking the questions.
Been a monumental effort by our team its.
The install delivery resources in us for.
Actually quite impressive progress that you've made going from the historical average of nine months under a month.
The resources, you are adding and I mean.
The step to set the stage.
I'll take it down to a week or two weeks or is that just trying to kind.
Kind of keep up with the install them and the you have from the incoming.
His customers and be a good partner.
I don't think that we should anticipate.
Okay.
Using that two week.
Just just with the is the fact that you're hiring this people are trying to create a good experience.
Sale to having.
Yes, the 32 systems, they expect to sell this quarter. It sounds like you have pretty good visibility into into getting there if I'm if I'm hearing you right.
It's been super impressive to.
On November 4th So we still have a ways to go in the quarter.
And we frankly just need more resources.
So that we continue to provide great customer support.
For me, let's say you do hit the guidance.
Where you're at right now you know in terms of the system sales and then.
The consumables that are associated with those.
In front of these customers and be a good partner.
A sense as to what you think gross margin could look like.
Okay and then just just with the is the fact that you're hiring this people trying to create a good experience.
Yes, the 32 systems, they expect to sell this quarter. It sounds like you have pretty good visibility into into getting there if I'm if I'm hearing you right.
He 20 that Weve given total revenue.
Here on November 4th So we still have a ways to go in the quarter.
Increase.
But weve made really good progress.
Vince somewhere between 129% and 141% so.
To hit the guidance.
Where you're at right now you know in terms of the system sales and then.
The the consumables that are associated with those.
You are in the us.
Give us.
A sense as to what you think gross margin could look like.
Product gross margins, we typically don't do that.
Some in those those.
Figures the embedded in guidance or.
Fair enough.
Yeah.
I'll leave it at that thanks, a lot for taking the questions gentlemen.
At it just.
Okay.
For context.
[music].
The revenue guidance.
But.
For the full year 2020 that Weve given total revenue.
Thanks.
Between 19 and $20 million.
Thats an increase.
Thank you for joining our third quarter 2020 earnings conference call.
141% so.
This quarter.
Guide is a substantial increase.
Okay. Thanks.
For 2019.
Thank you.
As I mentioned earlier.
Instrument.
Sales that we expect in the second half of the year, because they're all occurring in the second half of the year in the US is also a substantial increase over 2019 were not guiding on product gross margins. We typically don't do that so hopefully thats enough context for you.
Okay Fair.
Fair enough I'll leave it at that thanks, a lot for taking the questions gentlemen, Thank you bet. Thank you.
End of our question and answer session.
I'd like to turn the conference back over to John.
On for closing comment.
I'd like to say, thank you for joining our third quarter 2020 earnings Conference call. We appreciate your support and look forward to updating you next quarter. Thank you very much.
Thank you. This does conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.
Okay.
Okay.
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