Q4 2020 Quanterix Corp Earnings Call

Ladies and gentlemen kicked me standby and welcome to the Quanta Rex Corp, Q4, 'twenty 'twenty earnings call. At this time all participants are in listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time, if anyone should require assistance during the conference. Please.

Press Star then zero on your Touchtone telephone as a reminder, this conference call is being recorded I would now like to turn the call Ritchie AMOLED shovel seats out of country mix. Please go ahead Sir.

Thank you Charlie.

Good afternoon, everyone and thanks for joining us today.

Moving on today's call is Kevin Who's Osceola, Chairman and CEO before we begin I would like to remind you about few things today's call will be recorded and will be available on the investor resources section of our website. Today's call will contain forward looking statements that are based on management's beliefs and assumptions and information available.

As of the date of this call.

You may not actually achieve the plans intentions or expectations disclosed in our forward looking statements forward 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 future results performance or achievements.

Expressed or implied by the forward looking statements the risks and uncertainties that we face are described in our most recent filings with the Securities and Exchange Commission.

During today's conference call, we will discuss some financial measures for all of them.

Presented in accordance with U S generally accepted accounting principles.

Non-GAAP financial measures in the Q4 earnings release and in the appendix of our presentation. We channel Willable on our website you will find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures to comparative GAAP measures. We believe that these non-GAAP financial measures provide investors with.

Relevant media compete in comparisons of our operations. These financial measures are modeling.

GAAP and should not be considered in isolation or as a substitute for a measure of financial performance prepared in accordance with GAAP.

With that I will turn the call over to Kevin.

Thank you very much a mall and we did do a pre announcement so.

Basically you're going to go through the strategy charts. The numbers, we will once again go through them through a mall after I go through the for.

The higher level presentation, but I will discuss the advances we made in Q4 and 2020 with our focus being part primarily on Covid, Alzheimers and I'll call. It <unk>, but the most important is the payer disruption and the way. We think this is going to transform our overall value creation.

Alrighty and will ensure to continue our dialogue around powering precision health, which is a phrase we coined about six seven years ago, and it's actually guiding the proteomics evolution that we think can really become a revolution in the whey proteins are being deployed let me start on <unk>.

Slide four where we basically made some pretty.

Significant advances.

The whole company has probably put out at a pace of about a 200% of previous years and I think the.

Pandemic has reached each and every one of us from an employee level at a quant terex and enabled us to really go after and help the nation as well as the world.

Battle Covid and it starts with us getting to a uavs in the last several months one for serology, that's a semi quantitative ability to measure.

The actual level of antibody, which we think is key with vaccinations, particularly and the durability questions that remain.

And also in antigen tests that we have also submitted for nasal swab interior and.

We've also.

Submitted for saliva, and we expect shortly to submit for dried blood spots, which we think.

During the antigen in blood is a very significant differentiator given the long haul or effect, which many individuals'. Unfortunately are continuing to be plagued with even a months after having had COVID-19, which.

We think enables us to be able to measure small trace amounts of the antigen still them. Many of these long haulers blood and so this will be key for future therapy trials as well as trying to get health back for many of those that have suffered from COVID-19, even with just lack of taste and.

Smell.

We also were given 20 million granted 20 million by the Rab ex a subset of NIH and that's linked and created very strict strategic ties with the F. D. A that will utilize not only for COVID-19, but for neurology as we evolve.

Our advances in the neurological diagnostic framework the payer adoption, we think theres been critical Unitedhealth group, particularly has been doing a lot of work with US population trials are being run as well as future opportunities, we think to disrupt health care by utilizing per group adoption and we also believe this I'm leading that.

Long haul or menu that we've created and capability is going to be important to allow researchers to figure out how to prevent many of the longer term issues that we expect in many suspect will be linked to COVID-19.

On the right hand side here neuro accelerators for Pizza, what 81, which is a differentiator allows us to stratify out lewy bodies dementia as well as frontal temporal dementia.

From <unk>.

Cohorts for Alzheimers disease drug trials. This is very important also we've shown evidence for being able to see Alzheimers disease 16 years through researchers using our biomarkers before the presentation of dementia and this is key as well we think for getting an alzheimer drug across the the line with the F. D. A we also want to.

Barrow Plex and plan to continue to evolve our neuro flexes that include NFL amyloid betas as well as the Pea towels.

Alzheimers drug trials I'm never been more important than they are right now there's even beginning of links to early alzheimers from those that had COVID-19. So we think this is gonna be a really important area for our growth not only on the research side, but ultimately longer term on the diagnostic side. Once a drug is approved we also had two.

M S. Georgia proved this past year.

And also a major study just came out on AG profile measuring our NFL with a lot of quantitative <unk> the higher the NFL level. The older you are in creating that correlation 48 per cent of our fleet mouse the HD X and new sales are also tracking about that same pace and our growth really in neuro has been unprecedented in 2020.

Record publications, and new Biomarkers as well as this hundred ex sensitivity advance debt, we have at a pilot level now one playing for advanced that into product lines by no later than the end of 2020 to Cabot license put $10 million upfront payments from 25 million of earn earn outs associated milestone.

<unk> as well as royalty payments as Abbott evolves Samoa inside of their technology and we did do a raise in 2020 did another one in January.

<unk> services expansion continues and you can see our growth on slide five continues at really a double the pace level versus when we were private or investors are actually doing a lot of introductions for the C. Suites of our biopharma customers that are trying to get drugs approved using our biomarker. So it's a real win win for <unk>.

Busters.

We have both our growth as well as helping get drugs approved debt there.

Portfolio companies that are that are focused on bad debt being their value creator our growth has really gone almost <unk> 55 per cent to last for three years and we did state that we feel very comfortable 30% to 40% research growth over the period of 2019, the 2023 and so this is.

<unk> I think as you look at our growth projections for this year, 80% increase in our accelerated revenue. We thought was really key last year given many of our customer labs were down and we also now have 180 instruments installed with 93 HD Xs. We think this is also very important and the H D landscape and.

Our consumable growth recovered in Q4 to a very strong clip and we see utilization rates being almost twice what we originally set out for those to be so this is showing a lot of usage of our technologies. This slide just up you know it gives you the breakdown of the instruments consumables lab services and you can see.

But the growth rate continues to be a really strong in Q4 recovery for the consumables, which we think is important but we had a really strong instrument year that I think most were very excited to see them.

We do expect that we'll continue with.

The strongest growth in consumables slowest growth in instruments, but we think services will be right in the middle and this is great because the debt.

The appreciation of gross margin is going to be greatest with our consumable growth.

Slide seven just shows the biomarker growth as well as these publications, which validate our technology and really that's what differentiates us from many of the others that have tried to revolutionize proteomics is our publications validating third party peer reviewed achievement with our technology and we've democratized it with now.

535 instruments around the world and you can see our number of drug trials in red on the right even inside of our own company and obviously, we've got large zero relationships with quest and Labcorp as well as frontage and others rules based medicine, but you know even in house now we're running some really important drug trials in helping rescue.

<unk> are many drugs that couldn't get approved without the biomarkers.

And then on slide eight you can see that the overall demographics continue to strengthen our you know what we'll call. It our Asia position. We do think that 2021 will be a real strong Asia growth year now that we've hired a general manager and we just did the wuxi contract customers continue to be.

Mostly pharma biotech, but the academics.

<unk> to be an important focus because of publications and while neurology you know represents for the past 12 months not the strongest growth. It's a significant portion of our overall installed base and we know that's recovering in Q4, given big labs reopening and then ultimately our instruments.

Have been continuing to grow at a very strong pace and you could see our accelerated growth this past year.

This represents a pretty good opportunity for strong growth in 2021, given our 30% to 40% CAGR for the five year period, starting to 19 through 23.

Slide nine just goes back through and says we've got very strong validation on the left hand side, where our Tam has been 1 billion that we see evolution over the next five years to 20 billion, particularly with a lot of the new entrants that are coming in and doing drug.

We'll call protein discovery, bringing molecules into the pipeline that we then really expand Tam with our ability to see them with a lot of sensitivity and see them from homecare samples, particularly the less invasive samples and that's a key to our evolution. We did put a lot of cash on the balance sheet, we've gone from basically no.

Revenue was 85 million net over the six year period and put furniture for a million is currently on the balance sheet and you know our valuation continues to evolve, but we're really in the first or second inning of what we think is a very strong valid of valuation creation strategy on the left hand side, where there's very low.

Regulatory and reimbursement risk and you can see our growth catalysts in this menu expansion and these drug trials clearly are the area that really creates significant opportunity for growth a low risk growth, which creates and drives a lot of our future valuation and these new entrants I think is just a real good sign further validating.

The pipeline and creating what we think is a great complementary relationships upstream I'm also the chairman of 98 devices, which is one of those upstream companies gives us great Intel across the proteomics pipeline I'm on the right hand side, where we think the teams are 10 ex and really got a significant opportunity we've got validation.

Now from the Abbott deal the Siemens deal and all the pharma data and NIH and rat ex FDA relationships have never been greater and we still look for single site L. D. T. Ultimately IBD in our neuro franchise, starting with M. S. But we think Alzheimers who's got a shot on goal over the next couple of years, depending on what happens with drug trials, but COVID-19.

They're all zimmers continue to be our focus liquid biopsy, we're partnering with companies in that landscape from field to better low risk way for us to manage liquid biopsies. It's a very crowded market of drug companies typically are worried about you know reducing the size of their markets. Because response levels in oncology are at very low levels compared to.

Other areas and other disease categories. So we think from a payer standpoint. This leapfrog, where we've struck these relationships is really catalyzing the opportunity for value creation on both the left and the right, but particularly the rate as they I think look for trying to reinvent the diagnostics industry basically looking for does.

These before symptoms when it's much more therapeutically beneficial to intervene with a patient and then ultimately prevent these diseases by having very early detection is there's a chance to really create a very different kind of outcome with biomarkers and the you know I think our right hand side is more of an <unk>.

Evolutionary story now instead of aspirational given the NIH is investments in helping us build the spreads going from the left to the right.

You know our overall strategy Hasnt changed current detection level shown in red.

On slide 10.

On slide <unk>.

The second part of Slide 10 shows how we are moving them into the asymptomatic region with less invasive testing and the areas of cancer neuro in Covid.

M protein, we think is vitally important its more phenotypic given great utility. It's been attempted for really 50 years and we know that there are some pretty big players already measuring proteins, but the proteomics landscape is still very under discovered and we do think that identical twin study.

That's really the proteins, what's different when one twin grows up to get cancer. When the other one grows up to get diabetes, even though they have the same DNA and RNA. We think this is really indicative of the utility of the protein being it's telling you. When you have the disease versus you having a probability for them Slide 12 does show Hey, there's 200 proteins that Abbott.

Siemens and Roche for measuring today credit 20 billion of revenue and on the left side and research you can see luminaire and protein simple and some others are playing very successfully and that 1300 1300 protein regime, but when you bring a sensitivity on you can see we significantly expanded.

<unk> the the landscape and also provide the less invasive opportunity for measuring these these biomarkers and this is ultimately we think there could be a thousand proteins measured versus today's 20 proteins and this is five times the current level and five times 20 billion brings 100 billion Tam system the dogma.

Mostek side alone. So as you know the computer industry and this whole revolution of technology has evolved the genomic landscape with sequencing. We believe the proteomics is now ready to be revolutionized and on slide 14, We just show that.

Ultimate ultimate opportunity that alumina was able to create and they spun Grail out and then brought grill back in and so a lot of the current value in this overall genomic landscape is downstream with those companies on the right I think three times the market cap sits on the right and so we know that.

The grille move was a smart move by Illumina and we think that there's a lot of lessons here you have the same founder of Illumina founded Quanta Ericsson. So we're trying to learn from those lessons and try to get some value downstream and tried to make sure that we don't lose a lot of that downstream value. So we're building as you can see on slide 15.

We're using greater sensitivity to enable the less invasive biomarker subtypes and multiplexing for for.

For disease specificity and single molecule is what we're able to achieve and that does create this new paradigm of measuring proteins and homecare samples to see disease before symptoms and this is going to be an awesome technology for disease progression monitoring across all areas, but we're prioritizing ourselves for neurology first where we don't think.

The landscape is crowded and there's just tremendous focus right now, particularly on all timers. So when you look at our pipeline on slide 16 quite Terex starts on the right hand side, where the drug trials are we're focused today, primarily on the brain and COVID-19, but we're evolving into oncology and heart and on the right you can see that the Tam grows to 30 billion.

And by just moving into Covid Alzheimers M S and Tbi and here's where we are trying to create a direct presence, but we do also have relationships that we've signed with Siemens and Abbott as partners that we think can further validate our opportunity Roche is one of our largest customers as well, but then you can see what this next slide.

This final slide liquid biopsies were partnering but we do think health screens from United.

Health group as well as Aetna Cigna, we think these are great opportunities to further advance the.

Field of medicine by seeing disease before symptoms and on the final slide here. When you look to the left you can see many of these companies, where we're hoping to add new companies like mollison.

OSI and others that suicide that have further evolve through spacs and continue to put a lot of investment into the left hand side. We think it's getting very crowded, but that only brings more proteins into the pipeline that we can expand terms with the the sensitivity that we talked about earlier. So what we did do is.

Build a tam narrative that starts with today pre COVID-19.

About <unk> 4 billion in neurology and oncology in research and then once we go post COVID-19 and cut across with easy ways. You know it does create a $12 billion Tam, but mostly what we're doing as a strategic Trojan horse strategy of moving into diagnostics with neuro and then gone back upstream and for research for Covid now we have.

The validation of <unk> in the long haul or ability to see the virus from blood. We think we really can start to evolve the research side of Covid.

Which we think will be around for the next 10 years and then this next phase of disruption that we have with the payer groups. We think really allows us to evolve downstream then it's in immunology.

And oncology further building out this Tam and then ultimately we do think further bringing sensitivity upstream into the discovery side of this where most of those new players are entering we think two or three years from now you'll be able to get many of these answers on protein pathology with less invasive Sam.

So we think discovery will actually benefit from the less invasive sample, but we don't feel like that's the priority. We think it's a longer term piece of our Tam story, So hey, Ron when you lock and load right into slide 18, where we are today biomarker discovery leads to biomarker adoption by those companies that we show with a 300 percentage.

Kris and probability of a drug being approved when they use our technology. That's why we focus on neurology, where these drugs like Alzheimers disease have never been approved so it's key to getting them across the goal line and on the number two area demonstrated clinical validity you can see those six markers right now are very important as our story.

To evolve with with Lilly and with Biogen and Black, so and Pfizer as well as Takeda and Novartis and Roche and then you can see getting to the actual health screens, bringing many of these patients.

Patients into the cohort <unk> once the drugs approved getting those therapies into patients before presentation of symptoms is what really transforms this landscape and leads to new biomarkers being discovered this slide 19, just shows all the biomarkers it used to be done with 5000 dollar CSF spinal taps that's <unk>.

Spinal fluid very painful for expensive, it's very hard to get patients from drug trials, even to have a spinal tap or a 5000 dollar pet image. That's a lot of what today's world is on the left and what we're doing is.

Crossed informing and standing up tests across all these different diseases and research using blood and net initially being a strong but then ultimately we think the ability to get dried blood spots like we're getting with the new.

E U a submission for Covid, we think it's important to demonstrate home testing for many of these different technologies and that's where the sensitivity further enhances that ability slide 20, just shows those two drugs that were approved in 2020 key here M. S drugs approved secondary and primary.

Points, using the NFL or neuro filament light, where we've locked down required who might as you know a year and a half ago. This has been key because they've got a 100 per cent of the publications over 200 of a mall or using those antibody pairs 100, it's exclusively using those pairs with some ola so that's where we've got.

Both ends of this we feel very importantly walked up to support our customers' research in these areas and we really are excited about slide 21, where we could see alzheimers on the Tam for doing that scene. At early we thought was was more of a research quite allow cohorts to be recruited but on the right you can see.

Primarily Lilly Biogen right now very close to driving through with the FDA towards approvals, but this.

And the centre here. This advance we made with Pizza. When you went through 2017. This neuner neurological publications coming out of Europe from neurologists allow us to create correlations with amyloid disease and pathology using our P towers, where you wanted to 17 and this is key to allowing.

A simple blood test now to be able to reveal not only alzheimers early and strive for stratified out, but we think that someday could become a key for the diagnostics. So on slide 22, you can see all the drug companies that are deploying our technology. We think this is a big piece of our story and their reference selling at.

Conferences and summits like the powering precision health summit allows other customers to see the usage of the technology across all disease categories and slide 23, we do think that while we're gonna have a lot of growth no matter for Alzheimers drug is approved this year or not because the need for our technology get drugs.

Approved once once approved we think that creates the diagnostic opportunity and that's where we're looking at first you know I will call. It a single site.

L D. T. Initially and then evolving into single site IBD.

In the area of Covid. This is really allowed the world to see just whats possible with the sensitivity you can see that you know the Corona virus is really most contagious before symptoms. Unlike any other virus and that makes it very difficult to really control because the other.

Other types of immune system responses to the antigen. The first one is the adaptive immune system, where you have the cytokines and many times, it's created cytokine storm that led to pneumonia and many of the deaths because your immune system is not really able to manage it particularly with compromised immune systems and then on the right.

I'm sorry, the left is the innate immune system on the right is the adaptive this is where we're measuring the I G. G, which we think is an important measurement for particularly for vaccines. This detection window of today's technologies when they only look at the tops of these curves has really led to Elisa false positives negatives that you've seen with Elon musk and and the.

Indianapolis Colts and even though governor from Ohio, but this next slide you can see that when you can see the entire range. It allows you to see a broader detection window and that's where we believe our technology ultimately will be very valuable for asymptomatic Covid testing, which is what's key for screening students and workers.

As to get them back to work and across all these categories now we've got technology, even in the NFL for loss of taste and smell, we can measure it through and there's three publications now supporting us from neurologists and this is that she linkage to early alzheimers as well that we think for long haul or studies. This is a key.

Measurement that we think will help us not only with the alzheimers approvals, but all holzheimer drug approvals, but also with the long haul or of the COVID-19 itself and looking at the entire.

Kinetic spectrum of Covid, we think is key for this long haul or assessments and right now the NIH is running a 10 arm trial using our technology with some of the therapies like the the antibodies from Lilly and glaxo as well as from them severe from.

Gilead these are important to be able to see the blood and see the virus from blood for those trials and slide 26. It shows a full menu of different types of biomarkers that allow us to assess the symptoms of COVID-19 and the see if in fact, the technologies and the therapies being deployed or going to Iraq.

<unk> keep the virus and those symptoms associated with the virus, which sometimes kill and we know that a lot of follow on cardiac tissues respiratory issues stroke as well as.

No brain fog, and we think some day neuro degeneration. So art company really unlike money that is technology, driven and they try to find the killer App were market driven and we actually use a process and many of us have been associated with powering precision health for some time and allows us to see a lot of.

For the industry is going to be with respect to many of the critical diseases that are mostly for like cancer and like brain neuro degeneration and Covid Quanta is key to this with their sensitivity.

Slide 28, basically shows how this PTH ecosystem tries to bring innovation very quickly to patients and those all those constituencies down below are the most senior levels from all of those areas, whether it be investors, whether it be scientists whether it be hospital groups, even the advocacy groups and the.

For the various research groups and you know see our OS we have them all attend even the agencies and that allows US then on slide 30 to get information from these various constituencies into quite terje to allow us to stay ahead of the game and guide where the proteomics opportunities going to be and you can see how we also interconnect with Leroy Hood.

Group as well as Michael Milken in many of the top thought leader groups to try to advance our own thinking in slide 32. This shows some of the key C suite relationships that we think is what's allowed us to uniquely bring precision health collaborations interconnectivity with each other and that allows.

Is to catalyze the proteomics revolution by connecting these thoughts and so I'll end with just the the payer groups disruption, we think that the results of my three ways that they create better outcomes. Initially it was already today biomarkers and therapies for M. S diabetes, and Covid, where they can deploy now create better outcomes by senior.

Disease before symptoms be is where they're trying to get a therapy approved and we think that the payer groups can be incredibly effective in recruiting patients with our biomarkers for those drug trials, which then would give them an advantage to move very rapidly integrating approve drugs into their membership group and then finally.

And the category C. We think that there's an awesome opportunity with a large payer groups to do large scale trials to identify biomarkers for some of the more serious illnesses like pancreatic cancer and in many of the long term surveillance of of of their membership could lead to.

For the next breakthrough biomarker, so what I'm Gonna do now ill turn it over to a mall for some financial updates and then we'll close out with the Q&A. Thanks a lot.

Thanks, Kevin I'm going to provide some additional financial details about our Q4 and full year 2020 performance, we'll be referring to slide 30 for a webcast page 55.

As Kevin noted GAAP revenue in Q4 of 2020 was $26 1 million and included for 5 million of revenue from Orthotics Awards. Excluding these non recurring items. Our non-GAAP Q4, 2020 revenue was 21 6 million a 36% increase versus prior year Q4.

Consumables revenue increased by 49% in Q4 and instrument revenue increased by 21% service revenues increased 28% in Q4, driven by a 46% increase in accelerators surgery system revenue.

GAAP revenue for full year 2020 was 86 4 million and included $11 2 million revenue in connection with a non exclusive license agreement with Abbott in Q3, and $6 4 million in revenue from Atlantic Awards across Q3 and Q4 exclude.

Excluding these non recurring items, our non-GAAP full year 2020 revenue was $68 8 million, a 21% increase versus prior year. Despite challenges in accessing customer sites for installations and customer facing interruptions in their operations due to COVID-19.

As previously discussed we have proactively expanded an accident of services capacity to support our customers and sustain their research and clinical trials. This resulted in a 50% increase in our service revenue driven by a 80 per cent increase in full year accident at a set of research revenue.

Coming to that ex weird accounting for Atlantic somewhat under Ias 20, accounting for government grants and disclosure of government assistance.

<unk> 'twenty, we expect that approximately half of that growth robotics work package to milestone payments of approximately 9 million will be recognized as grant revenue of which approximately half was recognized as grant revenue in 2020, we expect the remainder approximately for two 5 million will be recognized as grant revenue.

2021, the remaining approximately $9 million of contract milestone payments that relate to reimbursement for the product yourself property and equipment will be recorded as a reduction in the carrying value of these assets and will have no grant revenue associated with them in our profit and loss statement.

As previously stated we are not providing revenue guidance. We have recently seen customer activity returns to pre COVID-19 levels. However, the potential spread of new Coronavirus day in May force for the new Lockdowns developing and challenges such as limitations in accessing customer sites are dropping consumables utilization due to interruptions in certain costs.

Elaborate please in U S and Europe.

On a non-GAAP basis Q4, gross margin was 58% versus prior year Q4 gross margin of 47, 3% an increase of approximately 350 basis points. Our non-GAAP gross margin excludes the impact of Orthotics awards as well as noncash acquisition related purchase accounting adjustments relating.

Two our 2019 acquisition of Oman, thus, providing investors with relevant period competed comparison of our operations. We believe we have a significant opportunity for gross margin expansion in the future as we evolve our mix towards higher margin consumables and excellent services scale out over all business and reduced product costs.

On a GAAP basis, our Q4 gross margin was 57, 6% and also favorably impacted by a biotics grant revenue once its prior year Q4 gross margin of $43 one per cent.

Our GAAP operating expenses totaled $25 million in Q4, 'twenty, 'twenty and non-GAAP operating expenses, which primarily exclude non recurring expenses associated with that.

Ex grant revenue.

$2 6 million.

During Q4 2020, our cash balance increased by $8 4 million driven by $10 million milestone payment received in Q4 from Abbott timing of that ex womens and proactive working capital measures, we close the year with $181 6 million unrestricted cash balance and during Q1 2021 really.

Approximately $270 million in net proceeds through a public offering.

Basic weighted average shares outstanding for EPS growth of $31 7 million for Q4 2020 beat it.

Overall, we are pleased with our Q4 and full year 2020 performance and progress made on our strategic priorities and remain committed to delivering a solid going into 'twenty. One that is all in line with expectations with that I will pass back to Kevin.

Thank you Walt were open up for Q&A.

What do you think that's I mean, if he had the question at this time. Please press. The Star then the number one key on your cash town telephone or for your question has been answered or you wish to remove yourself from the key craft with Turkey again, Thats Star one to ask a question. Your first question comes from the line yet to meet you there.

SBB Leerink your line.

Yeah.

Yeah, Hi, Kevin Thanks for taking the questions.

The first one is on proteomics I mean, obviously there is significant interest here in proteomics and more investment that's flowing into early stage technologies.

Obviously, you know proteins and more importantly, the detection of proteins in a most sensitive way is it something you would do very well with <unk>. So I'm just trying to understand how is contrary positioned in the continuum of debt. The overall research from the early stage sort of screening research.

Where are you looking at the large panels and large number of proteins to more targeted side of things and then enter the diagnostics, where do you said into that continuum and and what should we be looking out for as a signpost for contracts to be positioned even more in proteomics.

Very good question Puneet and its interesting I get more questions in all of our one on ones with investors about where they should be making their investments upstream given all of these new entrants than I do sometimes even about us because I think theres a lot of confidence and belief they understand that we are executing that.

<unk> been doing this for really 20 years with a lot of execution prowess and we've spent a lot of time studying this landscape before even entering it as you know I came out of retirement seven years ago brought most of the 100 people we have in the company now from some of the former companies and they're very experienced that are driving execution.

The landscape like this and so we've been very measured in the way we've approached it and what we've been finding is that there is a lot of misinformation around those.

Those you know there's a lot of people that can say things like you know we can see these markers and what we find out is that when they can see these markers used would be some of the upstream companies, they're seeing them and lessen theyre seeing them in very invasive samples indoor they're basically saying that they can see.

See him, but the challenge is being able to see them through the continuum of health to disease, and when you're healthy you're at the lowest level the lowest level of concentration of these proteins and what really is the magic around where we sit which is downstream of much of the discovery, where the mass spec in many of these.

New entrants are trying to play a role in discovery and some of them call themselves unbiased and I think to a great extent many of them are unbiased, but they're not really totally unbiased because if a marker of biomarker of protein is that a really low concentration in let's say less than <unk>.

A sample in the patient as healthy as an example, what youll find is that their technology won't be able to see it in that condition, which makes it actually biased against sensitivity. So you know one of the big areas that I think that's important for everyone to understand is we are not trying.

Right now to be a discovery house there are a lot of really good companies entering but we think an invasive samples are going to be really good at discovery, where we really bring our value to it is when you start to then say what you can see in CSF, let's now see it in blood or see it in saliva or even see them breath.

Condensate, that's when we think the utility of that protein goes way up when you can see it in a non invasive sample and then you can see if you can also see it from health to disease, even in the youngest population where once again the younger you aren't many types of protein levels for like an NFL or even lower.

So it's that complete continuum that brings greatness into the discovery opportunities in most of our customers understand that ultimately they're going to want to have that sensitivity to allow you to see that very low abundance and that less invasive sample many times through cleaning up the sample with dilution and getting around false negatives.

False positives is another use of the sensitivity in the being able to quantitate in being able to say how much there is particularly in COVID-19. When there's a real question around people getting antibodies as well, what's the quantitative level of those antibodies and ultimately is it neutralizing the actual virus, which it seems to be.

Very personalized the viruses vary a lot of diversity, we're learning from the NIH between different people, but even within the same person for different weeks that they have the virus. There's so much diversity that you just need to be able to quantitate, what you're seeing in order to unravel. This mystery of Covid. So this is where I.

We play fairly uniquely with a lot of the drug trials and getting those drugs approved ultimately then op opens up the opportunity to screen people into the drug to get approved and that's really where we sit in and right now we sit fairly uniquely there and this is where the the bar.

Body of evidence is really in these third party peer reviewed validated studies that validate our ability. The NFL has been a key franchise and now we're evolving it into the T cells and looking at subtypes.

To be that many of the competitors will look at total Tau and invasive samples both seeing the subtypes and non invasive samples dry blood spot is really when you create the utility for that pizza hut franchise that allow you to differentiate amongst those that have dementia to only those who have alzheimers so anyway.

Those are some of the pieces of this puzzle and I think that's a real important question because there's a lot of money flowing now in the proteomics you just wanted to make sure that it's flowing with long term value creation, where we could end up in a scenario where people will not be happy with the long term investment.

That's great that's very helpful. Kevin.

Basically on the neurology trials.

You have.

<unk> done well here throughout 2020.

We saw a major uptick in trials as Alzheimer's and multiple sclerosis, and in Parkinson's and other neurology indication trials have ramped up any measure you can provide us in terms of you know the number of trials that you can potentially get involved in as a result of you know.

More data and more confidence on the Alzheimer's and and just broadly in terms of neurology trials.

Your level of confidence for further growth in 2021, given the sort of base. You saw we saw in 2022, which was still a bit of a pandemic impacted here.

We feel very confident about 2021, and 2022 relative to the neurological drug trials and the current level of our very embryonic penetration that penetration is actually embryonic in a field that you needed to start and because in order to conform to the FDA.

<unk> for Biomarkers to be using a drug trial, you have to have approved drugs to validate.

And quantitate the clinical validity.

Of that biomarker for showing drug efficacy and so.

Their mass has 16 approved drugs that allowed companies like Novartis and Roche to looked at previously approved drugs to validate and retrospective trials biomarkers like the NFL and then deploy them and.

Stream prospective trials for new drugs, and that's why M. S really is where it started and even there we feel like we're only 10% penetrated but that's where we see a lot more phase III trials in phase II trials, because we've been at that for several years Alzheimers is an area, where there is no approved drugs and so it's been hard.

<unk> for the Alzheimers companies to prove out these biomarkers and many times they are proven them out with existing technologies like imaging and like three both spinal fluid spinal taps samples and those are so invasive and so expensive, but they don't translate into law.

Longer term utility and so there's where we enter is by being able to ultimately see this in a blood sample and then some day and saliva samples.

We're under a theme of utility of those biomarkers for longer term diagnostic and health screening purposes as opposed to adjusted debt the drug approved.

And so many of the Alzheimers trials to date have not utilized our technology for those trials like if you look at the Biogen data, it's really based on CSS.

Highly concentrated samples, but we know that they're one of our largest customers as is Lilly we no longer term, there's a lot more opportunity for the less invasive samples to get recruitment for patients to actually run these trials and that's where we're bridging up teaming up now with some of the payer groups to actually enable leading edge.

Drug trials utilizing what we would consider to be the payer groups membership as a great place for the Biomarkers to be deployed it allows the payor group to really showcase their leading edge capability that almost anybody when they start to see that theyre going to want to be part of our pay per group.

Because of what Theyre going to bring is the next generation of medicine for deploying pre symptoms or asymptomatic line. So I do think that we're on the first thing for all zimmers and we see tremendous upsurge for the next several years utilizing our biomarker technology for.

For those trials and maybe see it for two reasons one is early.

Groupement before presentation of dementia, when it's easier for a drug to be efficacious, and secondly to enrich the cohort by removing lewy body dementia, and removing frontal temporal dementia using a stratification capability of the technology then once the drug gets approved then we look downstream a triage.

And health screens to move patients more efficiently than imaging indoor spinal taps into the drug.

Okay. Thanks for.

Those details if I could.

Asking more near term question first of all I mean that that's great to have you know thoughts on the longer term as you are seeing these trials ramp up but I.

I think you pointed out 30% to 40% research CAGR here in the.

In 2019 to 2023 I believe.

But you have a number of growth drivers here you have easy comparables for 2020 as well so I'd just tell us like why shouldn't we.

Expect a meaningfully higher growth and in 2021.

You know versus that CAGR that you pointed out.

Well first of all I've warned you Penny and I tried to say this for all the analysts I think 30% to 40% CAGR is plenty to create a lot of value and trying to model things that go beyond that I think just represents risk. That's that's not really justified for our.

Investors and so I, we're almost criticize anyone that starts to throw CAGR is much higher than that and we feel very comfortable that that's a CAGR, we can manage and execute against because a lot of the value creation of our company is in the narrative of what were really evolving to on diagnostics and you.

You really can see the beginnings of many new investors and we did a raise back a few weeks ago. I think we had $1 billion of demand and the 24 hour period, because theres a lot of interest of new investors into this category because of the longer term opportunity in the short term I do agree that we've got.

Some good comps because 2020 was something we had headwinds more.

More than we had tailwind for Covid and as a result, when you look at the CAGR.

Or you look at the growth rate in 2021 versus 2020, it probably will be greater than the CAGR because our growth in 2020 was less than the CAGR because it was headwinds from COVID-19, but again I wouldn't buy our stock based on that I think that's trying to time it in the short term in and out.

I think that we're going to try to remove any tailwind we get from Covid on the diagnostic side, just because we don't we're going to remove it from and make it a non-GAAP measure. So we don't create hard comps for 2022. So we don't want people to see the tailwind of what we do in diagnostics for Coke.

Good.

Might be short lived we don't want that to be a reason for people to surge into our stock. It's just it's going to give us the pathway to get into these institutions. These research institutions with the easy ways for really screening students in those research institutions. It's gone and then give those installations and opportunity for the.

Long haul or effect of Covid, which is more of a five year play that's where we see the sustainability of COVID-19 value for our Investor base.

Sure that's fair, Kevin Thanks, I'll hop back into queue.

Absolutely.

Your next question comes from the language founding team none for the DTI T K line scan.

Hi, Thanks for taking the questions I, Kevin. Thank you so much for all the color around how contracts fits into the overall proteomics landscape.

Just curious about just your multiplexing capabilities you guys have obviously made a lot of progress in terms of its activity.

Attaining a greater sensitivity, but havent talked about multiplexing capability now in my view I'm kind of curious as you think about as you know its contents, that's kind of in the downstream area compared to total.

The early discovery Prairie, if multiplexing not as critical in your view and kind of what.

What if for.

You know the right.

Multiplexing capability like that that we should think about.

Hum.

Question Sanjiv and I think that this is a slide that I'm working on we're working on for future presentations, because it's really interesting.

In the research phase of things, particularly in discovery, where you're trying to identify a.

Linkage between pathology of the disease and protein signatures, you really want to have a very broad multiplex capability. The mass spec has like been an example of this it's a very broad based shotgun looking at a lot of different proteins and you know I see evidence of these new entrants like sphere.

Soma summarize, it's not a new entrant, but they're also very capable.

I looked at you know Oh link model. It's there's a lot of companies that I think will bring a lot of value to the multiplex shotgun to kind of identify the pathology. That's that's rich for evolving utility of the biomarker into drug trials and then ultimately into diagnostics in there.

Where you want the less invasive sample and you want to be able to quantitate and you wanted to be able to dilute samples and that's when the sensitivity becomes really important and so some day I'm gonna have a slide that shows the the role of the multiplex for the different stages of the pipeline and what you see is two.

The upstream side, where youre doing discovery, you want to have a lot of flex, but the overall Tam and the value creation is probably not going to be a significant there it's gonna be as it goes down the pipeline that's used for drug trials and then it's ultimately used in diagnostics, that's where we think the terms get much bigger in the value gets.

Credit and I looked at for instance, today, there's three companies Roche Siemens and Abbott.

Nearly $20 billion of Tam on basically 200 proteins, but 100% of that revenue is basically single plex.

So you can see what I mean here that once you hone in on the protein of interest you can create a lot of 10 and a lot of value for single Plex. So you've got this situation that you do need a lot of flexing upfront, but once you get into the utility zone complex to maybe.

20, <unk>, probably going to be more than it's needed for a panel that gives you. The specificity and gives you the disease specificity and gives you the ability to create utility and so I think that.

There will be the number of tests that are run you'll find that the volume of testing run will be greatest for the high plex them, but the value of where a lot of dollars that is going to be in 10, Plex and lower and again I think Roche Abbott and Siemens have demonstrated that with their incredible ability to.

Create a lot of value for a very few number of proteins that are all single Plex does that help celgene, yes. That's super helpful. Thank you so much for that and it's fantastic to hear you guys partnering with the payer groups.

Just kind of curious though are there.

Specific studies that are currently underway, where you might have visibility into the time line.

You know when we might be able to see for data readout.

Yeah, you know I.

I think that what you'll see is probably.

It's up to the payer themselves on what they want to publish and I can't really say at this moment, how public they're gonna Wanna be what's with the surveillance data that they're collecting but we are you know running.

Running three different IRB.

Right now and see a lot of opportunity for additional ones that I think are informing them at more of a population level, but eventually we think that this is giving that it's getting them introduced to what biomarkers can do and that can lead to that slide that I showed it then went to an <unk>.

Three where you could even see biomarker discovery as well as teaming up with pharma companies and I think you might've saw the announcement about two months ago from the United Health Group and Lilly.

Lilly teaming up that was an example of the payer groups teaming up with pharma to try to get drugs that haven't been able to be approved approved by utilizing their their membership for for some of the disease cohorts. So I think that that's where the opportunity really get started and then longer term.

You'll see them I think practicing biomarker surveillance of all their members probably at a quarterly level hopefully using homecare.

But how much they publish between now and when they get to that state. This is kind of their call and we will be continuing to invite them.

There's an independent Contras summit called powering precision health that we will continue to invite the peer groups too and that's incredibly aligned with what they're trying to do with outcomes and it makes it a really easy putt for their involvement there and that's probably where you'll see a lot of the readout for some of them.

The learnings that they're getting from from their IRB.

Great. That's Super helpful. And then lastly from me just kind of curious on the Covid antigen test, obviously very interesting insight and typically booth there.

And it sounds like you guys are using it largely for research applications currently but do you foresee kind of in the future. If you look at the wholesale cause of infectious diseases.

The capabilities of being able to protect ampligen on.

Democrats type assets pivotal.

Yeah.

For the past cycles swapped how you know how did you detect how the clinical diagnostics.

Field might look at the technical buyer for them from packaging going forward.

I do think that there are some potential differentiating opportunities in that field of diagnostics COVID-19.

We are trying to treat it as a as a measure though of revenue we would probably subtract it out because we don't know how long lived it would be given the vaccines and given the timing of the overall COVID-19 and we do think that it's easy to mislead investors in this part of the landscape. So we do.

There'll be some tail winds and one area would be and just looking at any one we call them long haul there's people that are still suffering from symptoms many of them six months later.

Still people that don't have recovery of taste and smell and that's a critical CNS function that could be linked to sometimes longer term neuro degeneration or we've seen evidence of stroke and heart attack and other types of issues from.

Those that have had COVID-19 previously in the innate immune system being fatigue is another area that there is a lot of focus and so I do think that there'll be.

An opportunity for some diagnostics looking at the virus in blood to ensure that these patients have eradicated all of the virus from their body, where they might if they measure using the traditional nasal pharyngeal or nasal swabs.

The virus may have less left the respiratory tract and it's only in the systemic blood track for vascular track and so there I do think there'll be a diagnostic opportunity and I think the whole field of asymptomatic. So if we could get the right Sam.

Samples and the right IRB run we think we could play a role there to see the virus before symptoms hit when its more important to manage because that's when you're most contagious the 'twenty for our period before symptoms. So I think those two areas. There is a potential chance for some tailwind from 'twenty, one, but again, we don't want.

People to buy us based on those tailwind for its more an entry for us to get into those research institutions that will really be looking at that long haul or effect.

Unfortunately, we're going to have to cut off if there's other questions I got to give a keno then another another meeting here at 530, if there's other questions feel free to write those into us, but we really appreciate all the support that the investors have been given us over the last three and a half year.

Since going public and we appreciate this opportunity to keep updating you and let us know for any of you would like us to reach out to you. One on one. Thank you very much for your time today.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

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Yes.

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