Q1 2021 Quanterix Corp Earnings Call
Hello, and welcome to the current Terex Corporation first quarter 2021 earnings conference. My name is Michelle and I will be the operator for today's call.
At this time all participants are in a listen only mode. Later, we will conduct a question and answer session.
During the question and answer session. If you have a question. Please press Star then one on your Touchtone phone.
I will now turn the call over to Amal trouble Quinn Terex CFO, Sir you may begin.
Thank you Michelle good afternoon, everyone and thanks for joining US today with me on today's call is Kevin Dombrowski, Chairman and CEO and shrunk debt sitting out of corporate controller.
Before we begin I would like to remind you about few things today's call will be recorded.
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During today's conference call, we will discuss some financial measures that are not presented in accordance with U S somebody accepted accounting principles.
Non-GAAP financial measures in the Q1 earnings release and in the appendix of our presentation, which are available on our website you will find additional disclosures regarding the non-GAAP measures, including a reconciliation of these measures comparative GAAP measures. We believe that these non-GAAP financial measures provide interest us with relevant beta competed competitor.
Well for all patients.
Financial you mentioned something like a nice under 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 mall and we're very excited about our Q1 performance and let's start off with the gender slide on slide three basically gonna talked about our accelerated growth.
Numerous what we would call growth catalysts for the remainder of this year and for next year.
As well as the scaling potential that we feel we have as well as the strategy that we're evolving well.
We will then talk through financial results the growth, particularly the gross margin and the growth capital and finally, we will spend some time talking through our 2021 objectives on slide for you can see we had 58% non-GAAP growth.
Year on year, which we felt was an incredibly productive quarter certainly some catch up here from the COVID-19 crisis, I would say that most of this growth.
80% of it was due to just primary.
Coverage of the markets that we're serving maybe 20% of it could be viewed as catch up but still very robust.
Order for us and on a GAAP basis that was 73% growth.
That GAAP.
GAAP.
Fluids some of the Red X NIH funding debt was declared as revenue in Q1.
You can also see that we had a very strong instrument quarter, 86% instrument on a non-GAAP basis.
On a revenue basis, and 86 per cent for consumables.
And those two are our primary product dimension of our business. The lab services had modest growth and we expected that this year would be somewhat flat versus last year, where we had nearly 100% growth because we were credit there was a surge for COVID-19 demand for our services is.
Well as many of the HD X is being validated so we do it we did expect this year to be rather flat on services a.
Compared to previous year for that reason, you'll also see that we had 1000 bps point improvement primarily due to volume.
And there's just good momentum and dilution of fixed costs when the volume kicks in particularly for.
Consumables on slide five you can see in addition here the two focus areas in Q1, where COVID-19 and neuro and we did get two antigen, we got an antigen EUA and we have some appendixes and addendums that we've also submitted for other matrices sample matrices. We also got a serology.
We do see that there was great progress in bridging to diagnostics based on the NIH and FDA relationships as well as relationships with some payer groups that further build out the opportunity for diagnostics in the long term through the COVID-19 pivot that we did in the.
The second half of last year.
We also have found and launched a a really good antigen test called it advantaged assay for COVID-19 debt is now actually being deployed across two or three different drug trials NIH themselves are running a major 10 arm trial, where it's utilizing and blood or antigen viral test to see what.
Drugs do perform against COVID-19 both for.
Acute COVID-19 as well as long haul or COVID-19. We also had numerous consumable catalysts primarily in the neuro.
Linkage to COVID-19, where we had no NFL with wash the taste and smell coupled then with some of the advances on L. D Ts for.
For COVID-19 being a key area of research our growth as well as the long haul or drug trials that I mentioned in the neuro field.
Did launch at the end of last year of <unk> 81, which is a really significant P. Tau that allows you to see the dementia I'm sorry, the alzheimers prior to dementia, but also allows you to stratify out lewy bodies and frontal temporal dementia to.
Really important.
Cohort removals that enhances the cohort for Alzheimers trials, and we launched the neuro Plex, which has gained a lot of traction and adoption the Alzheimer's trials, particularly at Lilly and Biogen continue to be a very robust area and we see several other companies now evolving drug trials.
And this is an important strategy for us and we had as we mentioned record revenue for the instruments $7 million and consumer utilization was above pre COVID-19 levels.
<unk>, surpassing the 50% level, which was key for our advance we also announced the Wuxi joint venture over in.
And the.
China District, which we feel there's a lot of opportunity. We've continued our progress with scaling operations scaling quite terex under the leadership of our new CLO.
We'll guidance who's been doing a fabulous job with for the rest of the team over the past.
Six months, we also added Lorrie Olson, who was formerly at Pfizer to our board and she was up a very strong player in the strategy group in Corp. Dev for Pfizer for many years under Ian read and we also raised over a quarter billion of cash in the quarter further enhancing our balance sheet you can see on slot.
Six the number of publications continues to expand and that's a lot of the validation for our technology and there is now over 400 biomarkers that are being measured inside of our technology, mostly as you can see here.
Mostly immune immune and oncology, but the 108 that we have a neurology is represents a major portion of our business today and over the next five years and we'll talk more about debt instrument placements continue very robustly over 40 instruments placed in Q1 and accelerated projects you can see we're now up to one.
Hundred and third night phase one through three drug trials being run inside of our accelerator and on slide seven over the last 12 months 12 months weighted average you can see that our North America growth has been strongest at 40% and now represent 62%. So we have a lot of opportunity in Asia.
No we've had some pull back due to COVID-19, but it's it's a major area of expansion for us over the next several years customer.
Customers still primarily pharmaceutical and see our OS growing at 23% and then you can see neurology still dominates and should dominate for the next several years because of the strength of opportunity there.
And you can see also that.
We've now almost approached a 45% of our revenue coming from consumables with a 27% growth on.
On slide eight on the left side research and discovery is where we're trying to really force execution fillers are good two to three X value creation opportunity with a Tam going from 1 billion to 20 billion as more proteins get discovered upstream of us and our publications of trials over thousand phase 123 trials.
All the pharma data and the two M. S drugs that were approved in 2021 from Roche one from Novartis, using our NFL and the P. P. H ecosystem powering precision health ecosystem. Those are all great validation points for our strategy to just continue fortifying our moat by further enhancing our sensitivity by another hundred X.
And also increasing our flex the 10 or ease of.
Use limps connectivity and menu expansion over the next couple of years will be our focus both for neuro.
And immunology and infectious disease the growth catalysts as we mentioned earlier certainly vs. Alzheimers trials in neuro and general plus the COVID-19 drug trials, coupled then with the launches of these new products. The P thousand or some new ones that we're also working on P tell to 17, and we do expect more neuro Plex opportune.
<unk> over the next year or two as well and as we scale, our manufacturing and improve our HD X performance.
And further invest in our global channel, we see that as another key growth callison really the breakthrough over the last year, it's been connecting with a payer groups and starting to run trials third party IRB trials, mostly being run in our accelerator, but some of the equipment now is at the payer groups themselves looking for improved outcomes using biome.
And on the right hand side on the next slide you can see the aspirational diagnostics, where theres, a significant value opportunity and a larger Tam and Abbott has done a deal with US as you know last year 10 million upfront Siemens is done at a F.
NFL license NIH has given us $20 million based on what they could see us or advances in COVID-19 and the F. D. A advances with Tuohy U A's and the M. S day to that we're actually getting from pharma all represent good validation for our strategy, which is to leverage what we've been able to do on COVID-19 and so the neuro and H Dx.
Diagnostic advances and to achieve what we would see as an L. D. T license. This year with one of the major L. D. P companies, but also in house to keep working on our own single site L. D. T. Ultimately single site IBD for NFL and the Pizza House. So we see numerous growth catalyst in the future for.
Six easy ways will give us some short term tailwind as we believe this year, but we also believe that the key is the alzheimers screens as well as continued M S in Parkinson's and managing and measuring our minimum residual disease. Once a drug is approved for Alzheimers, we think represents a very solid longer term value creation.
And so we are increasingly accelerator L D T footprint and its capability and we're working closely with these payer groups because if we can see alzheimers pre cognitive impairment and move them ultimately into drugs get approved for can change the outcomes of those that have early stage alzheimers in those sectors.
So strategically on slide 10, as we've shown in the past there's about 1300 proteins in research in 200 debt I've actually found their way into IBD being measured primarily by Abbott Roche and Siemens.
But when you expand the detection ability into sensitivity levels of 1000 to 100000 times lower we think that ultimately there could be as many as a thousand drug proteins makes it into IBD category and 100000, possibly being reachable with research and that is.
Is gonna be achieved with early and noninvasive detection, using our technologies, which is digitizing and creating a lot of sensitivity for protein measurements slide 12, we've shown in the past, but it shows that pipeline from discovery all the way over to help screens and you can see that the plex starts out very high with many of the new entry.
Since the Soma logics the.
Oh lengths are the modulus L I F.
June is a lot of companies are Sir that's moved and for creating thousand plus plexus to create more protein understanding where today, it's only 5% discovered and then as you move down the pipeline you can see that the Tam increase, particularly when you get into diagnostics, which today is almost 100% single plex from Roche Abbott.
Siemens collecting about 25 billion of that $30 billion and you can see that quanta is primarily playing in the basic research drug development and someday, hoping the crossover into health screens.
And the and the impact of sensitivity allows you to use home collection less invasive samples dried blood spots potentially saliva for see disease earlier, and that's the key to creating more utility for these different proteins, given homecare collection and when I click onto slide 13 shifting from symptomatic where Moe.
Cost of todays current protein detection is on symptomatic patients. If we can move it earlier with the sensitivity we believe that Theres a major expansion of the Tam by close to 60 70 billion by moving upstream and being able to see disease before symptoms.
This next slide just says in the area of neuro Slide 14 today, there's primarily using Tau pet imaging and amyloid beta imaging pet imaging to look for those.
Those that have alzheimers and they can begin to see pre cognitive impairment you can see in the middle.
Image and also the cerebral spinal fluid spinal tap are highly invasive technologies and on slide 16, we're working to move narrow with our sensitivity down to the bottom left so we'll be able to see before symptoms disease Noninvasively and then on slide 17, the classic cycle.
Is that you start with biomarker adoption and you can see in this case, there's a lot of companies that are using our technology in the neuro field, where we believe there is a 300% improvement and the probability you're going to get the phase three approval after having a phase one advance if you use these biomarkers and many of these drugs required of biomarkers to get approval.
Which gives us and the pharma groups are much more cooperative environment for us to work together.
You can see here 16 years before dementia. There was a lot of headlines that we received over the last year being able to use blood plasma biomarkers to see.
All zimmers that early and elevation of NFL and now some of the P trials like to 17 that then leads into demonstrating clinically.
Both validating and bring in utility to these biomarkers and you can see six or seven for key ones that we're honed in on and then down below you can see that there's a lot of evidence that biogen and Lilly are both trying to move in Alzheimers drug across the goal line and both are claiming that blood plasma technologies.
From symbolic have great utility for helping them advance and then ultimately.
Step three is to actually get a drug approved and then creates in diagnostics and health screens and so when you look at that that cycle and we mentioned earlier that already for Novartis and Roche, we have a proof case with our NFL, helping these two drugs get approved in 2020. Many of those trials were run in 2018 and 19.
You may recall some of the searches for those and so now moving the same modeling all timers is where we're going in slide 23 shows all the farmers better now adopted our technology one of the fastest adoption cycles to enable this incredible ability to transform the way drug development is working so on slide two.
Plenty for you can see that when you look at Nora to generation landscape, whether it be alzheimers, where there's 5 million cases after cognitive impairment. So a precognitive it could be two or three times debt level than a O S. Huntington's multiple sclerosis, Parkinsons 1 million total about $6 5 million and already we've got.
Major Biomarkers looking at all of these disease Cascades on slide 25, just showcases debt interestingly now at 15% of the drug trials are for neuro sciences versus other areas. So its continuing to increase and inside of neuroscience is the neuro degenerative diseases represent.
37 per cent of the N S, which is 15% of all drug trials and this is where we play and on the right hand side you can see the number of molecules in phase one two or three trials that we are only less than 10% penetrated today, but this is where we see a major advance because 83 per cent of the N D day drugs on slide.
Twenty-five are in fact.
Areas that are Biomarkers currently cover and support drug trials Slide 26. This shows how over the last for years, Youre seeing more and more drug trials and more and more sponsorships from industry and each of the areas of Alzheimers Parkinsons multiple sclerosis, and other N D D and we think that the.
The blood plasma Biomarkers is really and objective way to significantly enhance these drug trials and the costs the efficiency and the ability to get.
We would consider enhanced cohorts that have disease before dementia and also have better stratification towards the actual.
<unk> disease that the drug is intended and that enhances the ability to get approvals slide 27, just shows all of the different biomarkers, we have in Alzheimers Parkinsons L. S. M S and even concussion and slide 28, I think is the last slide but I'd like to leave you with the net is that you know one of the challenges as a pet imaging.
And CSF spinal taps class 5000 to 10000, they're highly invasive they can't really be scaled and in our technology for $100 and a blood plasma test. We think is a game changing way to see.
What you could have seen in imaging. There is now a lot of correlates of studies that have shown this in our third party peer reviewed publications and so teaming up with pharma around what we already have with these different biomarkers, but then further enhancing this with the hundred acts to even see earlier stage alzheimers and to see better.
Discrimination of these stratification of disease cohorts, we believe that this represents an amazing partnership opportunity between Quad Terex from pharma companies for early detection stratification, and then minimum residual disease monitoring once drugs are approved so Richard clinical outcome speed and cost leads to rethinking and <unk>.
Credible opportunity for Quad tariffs and those companies that are utilizing quanta ericsson's technologies, so with that I'd like to turn it back over to Malte, who are mall has.
<unk> himself, a really nice position at waters Corporation as CFO beginning on May 11th we've just been so blessed to have had a ball working with us. The last two years. He's done a lot for our company and I can tell you that he will always be in our ecosystem and he is someone that we know for the rest of our careers will be worth.
And very closely together, but the mall has agreed to continue supporting us in working with us and while that's going on he is also recruited.
A really productive Sean Stetson who's our corporate controller that on May 11th will become our interim CFO as we do our search and I would also say that Peter MACRA, who was my CFO at caliber for about seven eight years been a publicly traded CFO for many years, even after caliber has offered to work with us for a couple of months.
During the search the support Sean just to make sure all of the Sox and the key things that we're working on internally continue to progress on.
On point and line schedule, so with that I'd like to turn it over to you.
Thanks, Kevin.
It's been in credit.
For me.
Sure.
Im very proud of what we've achieved here at quanta headaches and it will always be part of a broader ecosystem, where more and more companies investors Kols continue to participate in other mission of early disease detection. When these diseases can be cured and its game changing for patients.
I'll be providing some additional financial details about our Q1 2021 for farmers and I'll be referring to slide 29.
Kevin noted GAAP revenue in Q1, 2021 was $27 2 million and included $2 3 million of revenue from Atlantic Awards. Excluding this non recurring item non-GAAP Q1, 2021 revenue was $24 9 million or 58 per cent increase versus prior year Q1.
We had record instrument revenue in Q1, 2021 7 million in revenue an increase of 86% versus prior year Q1.
<unk> revenue grew 86% in Q1 versus prior year to $11 3 million driven by significant demand for pita 181, neuro multiplex assays and COVID-19 out of U O assays, our strong revenue performance in Q1 main groups. Some recovery of previously deferred demand due to pandemic.
As customers return to more normal operations.
Services revenue increased 11% in Q1 to $6 4 million and was somewhat limited due to resources and supplied by would it take to support our strong consumables demand.
As stated previously we are not providing revenue guidance.
Somewhat activity as it had done pre COVID-19 levels, how would a potential renewal spread of new code on a line of Spain could force renewed lockdowns potentially impacting installations and utilization.
On a GAAP basis, our Q1 gross margin was 61% and was favorably impacted by Orthotics grant revenue versus prior year Q1 gross margin for.
Three 3%.
Non-GAAP gross margin was 58, 5% in Q1, which was an approximate 1000 basis points improvement compared to 48, 5%.
In the same quarter of 2020, our non-GAAP gross margin excludes the impact of antibiotics awards as well as noncash acquisition related purchase accounting adjustments relating to our 2019 acquisition of Oman, thus, providing investors with relevant beta competed comparison of our operations gross margin expansion was driven by volume.
Hmm productivity gains and price demonstrating a significant opportunity for gross margin expansion in future as we evolve the mix towards high margin consumables and excellent services.
<unk>, our business and reduce product cost.
Our GAAP operating expenses totaled $26 1 million in Q1, 2021, and non-GAAP operating expenses, which primarily exclude non recurring expenses associated with athletics Grant revenue total.
$24 4 million during.
During Q1 2021 at a cash balance increased by 61 5 million.
Driven by $269 7 million in net proceeds from other public offering in February.
As of cash in Q1, 2021 was $8 2 million.
Ending unrestricted cash balance was 442 7 million basic.
Basic weighted average shares outstanding for EPS totaled $34 4 million for the Q1 2021 per unit. Overall, we are pleased with our Q1 2021 performance and progress made on our strategic priorities and remain committed to delivering solid growth 21 results in line with.
With that I will turn it back for Kevin.
Thank you very much involved and I'm just got close with our objective slide where we do show our <unk> growth from 2019 to 2020 for 2019 being a better base year of 30% to 40% compounded annual growth rate in neurology, increasing our trial penetration through greater.
10% 65 per cent of our H Dx installed base at year end 2021, which means all the HD ones will be a much lesser component of our future, which HD xs have greater pull through and greater consumable growth opportunity also we mentioned the NFL diagnostic L. D T plus.
A D pharma drug trials, we want to continue to evolve those COVID-19, we want to drive the Leverages Bowl answers and strategy EUA penetration deliver our radick scale up that they gave US 20 million of scale up our technologies are key the achieved the COVID-19 drug trial adoption that are already has started and expand the surveillance for.
Payers of the COVID-19 landscape immunology want to continue to expand our many of the interfering in inter interleukin a cytokine.
Assays, which we think also relates to COVID-19 and expand our SPX placements and also continue with our payer pharma long haul or trials and then financials. In addition to the the growth that we've already mentioned, we want to have 240, H Dx invest direction and SPX has placed this year, that's a large number.
And then we went to 60% of those instead.
Installs to be HD, Xs, which is our most profitable and the highest pull through instrument that we sell in on a platform level scaled the quantity supply and global channel defined the pathway to deploy this hundred X sensitivity hopefully through partnerships with some of the leading farmers in Alzheimer field, where we can go for pre cognitive impairment expansion.
And then keep building those strategic partnerships with that we'd like to turn it over for questions and I'd like to open the lines up.
Thank you Sir we will now begin the question and answer session. If you have a question. Please press Star then one on your Touchtone phone.
If you wish to be removed from the queue you may press the pound sign our husky.
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The first question I have in the queue comes from Tycho Peterson. Your line is open. Please proceed.
Hi, guys. This is Casey on for Tycho, Thanks for taking our questions today.
I guess the first one is around COVID-19 contribution for <unk> can.
Can you just maybe quantify.
What the antigen and antibody tests.
<unk> contributed to the quarter and then also on the research side for COVID-19.
Between research being done on long COVID-19 and then the drug trials as well just any sort of way you could quantify the COVID-19 contribution here.
Sure So day moving forward yes.
Sure I'll start and end them all you can provide.
Provide additional clarity or Sean you know basically we don't provide a lot of granularity, but I would say that the COVID-19 revenue for Q1 from from our vantage point is clearly less than 10% of our revenue.
We are.
Primarily CNS and research early.
Early on supporting L. D T.
Research as well as some of the drug trials that we mentioned and so it's not a significant component to our Q1 and we didn't have much in 2000, and you know 'twenty either so there weren't a lot of tailwind that was mostly headwinds in 2020 now the only other exception to this is if.
You go from non-GAAP to GAAP, you will find that we had low over 2 million of NIH funding that would been COVID-19 related so on the non-GAAP, it's less than 10 per cent, but under GAAP. You know there are some some funds.
Any additional color here either a malls are shown.
Yeah, Thanks, Kevin and thanks Casey for this question.
I would note that right I mean.
On sort of the EUA COVID-19 approval.
The revenue has been minimal Ah I think most of the revenue Israeli on the audio OSA.
We see this new dimensionality get added to our technology and what we remain absolutely excited about is the level of adoption. We've seen in some of the leading edge research happening and some really key research houses like NIH.
They continue to work with our technology on long haul low and that could go right. Some long terms.
Obligations for these technology, but again for the quarter. Most of it was sort of research assays getting used in sort of LDP your feedstock savings.
Got it thank you.
Then can you sort of talk to any progress that's been made by Siemens and added from each of the respective partnerships and then what is sort of the next steps there and timelines for a sort of milestone payments there or any color on each of those.
Yep No first I would say Casey good good question and I think we remain very bullish on both of these relationships we've seen a lot of activity.
From Siemens are continuing to evolve the NFL and we do believe that over the course of the next 12 months will continue seeing them of all venous for their installed base and that's the primary purpose here is to give our NFL legs and to try to keep the standard we've got the best highest spec.
Sufficient antibody pairs when we acquired them on and we would like to continue to evolve debt with many of the diagnostic houses and in the case of Abbott.
That was actually a similar license and so they are working to incorporate it into their technologies and that is not a short term advance that's going to take time, because that's engineering advances you can't simply take existing installed based Abbott technology and convert it to Samoa it requires actual.
And it's true that that's associated with the IP that they licensed from us so that would not be anything you should expect to see any significant advances from Abbott in 2021 as you will from Siemens.
Gotcha, Okay, and if I can just sneak in two more quick ones I'm sure in terms of a pipeline for liquid biopsy partnerships you've talked about this from the past can you elaborate on any progress on signing deals with companies like thrive and the like and then we've gotten this question more and more on how should we think about for Lilly.
I'm a drug data that was disclosed in March what does that mean for contacts maybe from a high level perspective, and also as it relates to your collaboration with Lilly.
On the outside or Biomarkers.
You guys for taking my questions.
Absolutely Casey great Great questions I think first on the liquid biopsy. There's two companies that already have our technology that are productively advancing one's free known and the other is volition.
And these two companies are utilizing the ability to see proteins.
Much more sensitively and having much lower L. L lower limit of quantitation and so this is key for many of the algorithms that the liquid biopsy companies have been evolving is not just looking at genomics, but also proteomics and we have showed in previous presentations are some of the critical pro.
Teens in the thrive algorithms.
We do believe we can bring some value to those algorithms for C. N certain proteins that today's technologies when most of the standard that they had been using was based on lumen ex they would not that the low the lower limit of quantitation or detection was was.
Low enough to be able to detect these are proteins and we do think that those algorithms could be enriched and so theres no advances that we would speak up publicly at this point accepted we are showcasing that data and we still have a good strong belief that there's a lot of utility for using our technologies in the liquid biopsy.
Inscape, but we ourselves feel white the drug companies arent as excited and as interested to use companion diagnostics and oncology as they are in neurology and neurology. They they really can't get a drug approved in many cases like alzheimers without the support and that makes it a much more attractive.
Win win environment.
For us to work with for the drug companies in neurology and theory of liquid biopsy.
Unfortunately, many times it restricts markets and reduces the size of the markets. When you utilize companion diagnostics in areas, where we just want a partner and the low those companies to utilize the technology. Your second question regarding Lily.
We continue to be one of our most strategic and important customers as does biogen and several others that are in the Alzheimers landscape and I do think that theres been a lot of enthusiasm around some of the anti Tau technologies and the ability to correlate.
With blood plasma.
Utility and Biomarkers correlate with images and with CSF in those breakthroughs to change the economics of drug trials and even enable.
The ability to recruit patients earlier pre symptomatic for pre cognitive impairment and also stratify out certain types of dementia that is not related to alzheimers that could actually hurt drug trial performance for efficacy and so lewy bodies dementia frontal temporal dementia as an exam.
Pizza whenever you want it showed a lot of utility and helping stratify those patients out of the drug trial cohorts. So I would only say at this point that Lilly remains very strategic they've got a lot of our technology and we have a very close relationship working daily standup meetings around.
A lot of the plans that they have moving forward as well as several of the other companies that I mentioned in the landscape and you might remember Tatiana worked with US for one year and then left to go to Takeda and she's now deeply integrated into the Takeda neuro landscape, where we're seeing.
Several different companies utilizing our technology, well beyond Biogen and Lilly and that I think is going to be key to getting some of these drugs approved so we remain very bullish on the drug trial landscape for the next 18 months and Alzheimers and if for some real good.
Good practice the FDA does approve one of these alzheimers drugs, we think that we're well positioned for then try to.
Evolve some blood plasma diagnostics for health screens as well as managing the minimum residual disease similar to what we're doing and M. S. So we looked at this as being a very encouraging piece of our of our overall franchise for the next several years.
Other other questions.
Do you have another question in the queue. The next one is from Chris Land. Your line is open. Please proceed.
Hey, Kevin and thanks for taking my questions and congrats again.
Thanks.
Kevin maybe just to start could you update us on your oncology market efforts at growth. There has this lag then their <unk> business.
<unk> uniquely positioned in that market just given the sensitivity also I think one of your slides talked about the launch of a 10 Plex assay I'm curious if you think that should be able to kind of lies oncology growth given the utility of multiplexing within that market.
Yeah, Great Great question, Kristen and I think that you know one other things that the the COVID-19 pivot did.
Did in fact achieve.
Achieved for US is that many of the oncology labs did shut down in 2020 and became COVID-19 labs, because if you think about.
You know a lot of the early impairment acute impairment of COVID-19 patients was cytokine storm or pneumonia from cytokine storm, where the immune system basically unraveled very rapidly and they needed the vent try to control the immune system or they they found themselves in cytokine storm in and what we basically.
Do for oncology immunology, we're looking at the immune system and in the places where there are immuno therapies getting.
More research into how the drugs interrelate with various cytokines, whether they'd be inner loop considering interferons as is the key to our 10 Plex and so yes, we did launch the 10 plex.
Which basically has been utilized more for COVID-19 because many of those labs had like I said converted to COVID-19 labs, so as they convert back.
We believe in the second half of 2021 'twenty 'twenty, two should bode well for our oncology franchise, which does take a second seat for what we've done in COVID-19 and certainly neurology and so as the neurology has further heat it up with the Alzheimers excitement over the last six months couple of Denver.
With COVID-19.
Basically raining on many of the labs that were oncology labs, we don't expect a lot of short term focus on oncology, we think it would defocus, what we think is an incredible opportunity in neurology in COVID-19.
But as those labs transition back into oncology labs, we think we'll be well positioned and so that's the way. We're staging this so that we're getting the optimal use of our opex and keep the growth targeted where we have the greatest opportunity and so because neuro and COVID-19, both sit right now and very.
A very strong positions, where we are trying to make sure we capitalize on those opportunities before diluting our efforts into oncology.
Got it and then Kevin the pipeline early life science tools companies.
It has been rapidly increasing over the past few years, you have a very strong balance sheet, especially with the financing earlier. This year. You also made a number of.
Strategic acquisitions for a few strategic acquisitions over the past several years. So now with that line I was hoping if you could give us an update on your cabinet departments.
Deployment efforts and now if you see any opportunities for M&A in the near future.
Yeah, you know first of all I think we we we had a lot of investors that were interested to get into our stock and we've found a nice win win to put more cash on our balance sheet to just give us better protection in the event of a downturn as well as to allow us to look at strategic M&A assets.
As they might advance our strategy key to the way we look at M&A is is that we're looking primarily for ways to advance our strategy as opposed to any opportunistic a pure play M&A.
When we look at it that way, we certainly see a lot of opportunity for evolving our laboratory accelerator services footprint as well as globalization around the world are two key areas that we think M&A could in fact enhance and advance.
Our strategy another related area would be for assay development and for antibodies that we think are key for Oman antibody pair was highly specific and we were able to see it because of our sensitivity in our simple with technology and that gave us an advantage in knowing and seeing the potential that the Oman.
Company in those antibody assets represented and so similarly, when you look at the P. Tau franchise. There are some newer phosphorylated towers that are creating great stratification as well as early detection.
Detection of pre cognitive impairment alzheimers patients and so anything we can be doing in the assay development <unk> antibody landscape, whether it be licensing key antibodies were actually acquiring them. We think that that is another area that there's no capital.
Appointment could be.
Very productive advance for our investors because of the accelerating our strategy. So we do have a strong balance sheet.
And we also won because it also allowed us to invite and some some newer investors that we think have been very productive because if you also recall many of our investors create demand for us by.
Introducing us to the pharma companies that they own and those pharma companies trying to get drugs approved.
Benefit by using our technologies and so investors end up becoming a real good commercial opportunity for us to increase our pipeline for selling our technology. So we actually think that the the races were very productive and subsea.
Subsequently, it's given us a balance sheet to allow us to look for ways to accelerate our strategy. So we're pretty we're feel very per.
<unk> opposite our current balance sheet dynamics and ability to deploy capital for strategic assets that come on the market.
Okay, Great and last question for me and probably for a mall.
I think I heard that the catch up dynamic contributed 20% to revenue growth this quarter and did that primarily impacted instrument business or do you see a benefit on our consumables and services side as well. Thanks again.
Sure Yeah.
I think I'll I'll start them on and you can maybe follow up I think that in general.
There is there is some level of catch up because you have some customers that basically.
Depleted their stocks and when they went into shutdown mode. They started many times to utilize our accelerator and so you know we estimate that there is some level, but not a significant you know probably 15% to 20% of the very strong growth. We had in Q1 that could be Alex.
But for some level of catch up but the instrument was certainly a stronger instrument than we've probably had and you know really for years and this has been an area that we've been continuing to ramp up because we've got new form factors, which have been very productive in the HD X itself has really.
So its capability and that's allowed a lot of customers to want to get into the HD X and so I do think that much of what you see in instrument demand is in fact strength in and that will we believe continue to be an area of strength, but we ultimately believe their consumables will grow the SaaS.
That's because it's an installed dynamic where you have installed base and then you have utilization that we keep increasing by expanding our menu so utilization levels give us a double pronged opportunity for growth in the area of consumables and so that's where we would expect our growth on when we say 30% to 40%.
CAGR, it's gonna be highest for consumables and it's likely going to be lowest for instruments, but it's going to be in the averages for services. This year is an exception for services because we did grow a 100% last year, so about anything any color to add there.
I think you've covered it well I mean consumables because of a shelf life the impact is going to be small.
Instruments, it's hard to parse out right because there are several positive factors, providing the tailwind for instruments.
Gotcha being one of them, but also.
The X performance is well received.
Also demand for needle multiplexes in greenhouse, that's creating new demand for instruments and the whole COVID-19 dimensionality in order you always creating demand for instruments. So it's for hard for us to parse out very some gaucho convey instruments.
Which will come out in the future quarters, but other than that.
As Kevin said, it's small.
Great. Thank you.
Absolutely.
Other question next question comes from Max Masucci. Your line is open Sir Please proceed.
Hi, Thanks for taking the questions. So what the vaccine rollout the utility the role of antibody testing for COVID-19 purposes, I think it's becoming more defined so can you just give us a sense for which types of antibody testing projects you are seeing the nice traction.
Is it [noise] serial testing programs sort of understand how vaccine immunity degrades or understanding the right dosing or effectiveness of therapeutics and vaccines, but just be great to get some color around what you've experienced firsthand in a serology market, that's sort of evolving in real time.
Yeah, you know I would say Max your question is it is very very strong because everything you described many pieces of what you described where C. N N and one other things that are serology.
Test is going to enable is the ability to quantitate, how much antibody is there and we're only one of two or three ways that have quantitative <unk>. We also made a move about I've just two months ago with a dawn mattoon, who you might recall checks have joined us from.
Cell signaling had a significant backdrop I was on their board and get to know her well.
You know being on the board there, but that's one of the top antibody companies in the world and she joined US about three years ago, and we've now signed her to help us build out the diagnostic franchise she's done an incredible job, helping us get the EUA is working with the FDA for both serology and for the antigen test and we now see.
Many different shots on goal for utility in serology, and we're gonna be planning additional moves over the next couple of months to because we do believe that COVID-19.
Is far from over when you start thinking about the immune system protection against COVID-19.
The things that you mentioned the durability of the vaccine key question will there be a need for boosters, we've listened to the Pfizer calls yesterday, there was a lot of belief that boosters will likely be needed also how do you quantitate when a booster is needed and how 'bout. The variants that are starting to emerge, particularly.
When you see the surging occurring in India, where you've seen as many as 400000.
Proven and tested a demonstrated cases in one day, which means that it could be twice that when you consider what's maybe undetected. When you start to see levels of debt level of spread what you start to look at other variance and how does these various vaccines quantitate and neutralize so I think neutralization.
<unk> will be another area of interest where it's not just what's the quantity of the antibody is that quantity neutralizing and for how long is it neutralizing and so I do believe Max that serology will begin to emerge, but its going to need to be a specialty serology that you have the quantitative and and and and longer term the neutralization.
<unk> understanding of of those no antibody sets now we also are seeing a lot of interest in using our viral test in blood to actually measure how well antibodies from say like Lilly <unk> Glaxo, where other companies how well are they received <unk> treatments.
Same with ridge redemptive year, and new analogues of or in terms of your from Gilead. These are trials at the NIH are running with our technology looking at the antigen and C N which of these drug.
Cocktails have the best impact for acute management, but then long haul or management, where 30% to 40% of those that have had COVID-19 still were having trouble with recovering taste and smell and having their own all depths plus other issues around the body. So we do think that it's important.
Research opportunity and we are more interested in pivoting into the research sustainable opportunity because there will be other corona viruses in the future as well that we see a lot of investment and activity by the NIH W. H O and others around the world to try to protect against the next pandemic.
That's great Super helpful. Thanks.
Our final question for me.
The catch up period for demand will be drawn out over the course of 'twenty 'twenty. One just started giving them the global nature of your customer base, you know that should pad you know what you can consider I guess organic demand I.
I guess first is that a reasonable assumption and then second can you just give us a sense for the split between Q1 demand that was driven by new customer wins versions utilization increases for existing users just trying to get a sense for credit recovery on both fronts and thats. It for me. Thanks.
Absolutely Max another another set of great questions I would say that we are entering into a phase now where we do unless theres a relapse of some significant.
Proportion, we think that the reopening of many states in the United States and as that starts to cascade into other sectors and in the Western Europe, probably hopefully be indexed and then ultimately some of the more serious current situations getting corrected in south.
Erica and India longer term, we do believe that we will continue to see.
A rebound and a lot of the research that many cases wasn't put on hold because they utilize our accelerators. So we had this great opportunity to further invest early in 2020 to build out our accelerator assets to cover and allow customers to continue a lot of the research and our services.
And that's where we do think many of those.
Service opportunities will emerge back into the actual customer labs, where consumable sales will go back across their instruments in their labs. So we do think that that's going to be a very productive area for for future expansion and and we do think that throughout the year.
As we look at customers that are utilizing the technology historically buying in.
And re upping their consumables across their instruments, obviously is a key area of our current growth, but interestingly those instrument sales you saw a peak in Q1. Many of those are brand new customers and so this is really good news as the neuro opportunity, particularly in Alzheimers and M. S. In Parkinson's.
It's hitting at the same time, because those trials continued while the COVID-19 crisis was shutting down many labs in our accelerator. So that's enabling new customers now that used our accelerator to buy instrumentation. So we get kind of a double prong of both existing customers.
Utilizing and continuing to kind of get back into action, but the new customers that debt.
Experienced us for the first time through the accelerated during this period, giving us a good opportunity as well for for growth with new customers. So I hope I hope that helps Max.
Yeah, that's great. Thanks, Kevin and also congrats to them on your new opportunity.
Thanks Max.
And I do have one more question in the queue that comes from credit Suisse.
Your line is open. Please proceed.
Yeah, Hi, Kevin first of all congrats on the quarter animal I will Miss working with you on <unk>, but congrats on the new role.
So just two questions from me Kevin first one on on Neurology I mean, as you are seeing an increasing involvement in their neurology trial, how should we view the long term diagnostic opportunity.
If and when those drugs are approved how do you. How do you think you'll be participating that is that through licensing or could we see potential direct installs direct revenue there.
And then it just broadly in terms of your C. R. O relationships can you give us an update there where you stand currently what's the penetration where you're at and where you'd like it to be and and how does that impact your accelerator revenue longer term. So that's it for me. Thank you.
Yeah, Hey, Puneet, great two great questions here the first.
This diagnostic opportunity for all Zimmers really is something that we are gearing up for given our relationships with pharma, who have a lot of interest and evolving our technology of blood plasma markers into health screens as well as management of.
Residual disease post an approval. So we we had most of our focus puneet on M. S. As you know with NFL up until COVID-19 hit and NFL found its way into helping us measure loss of taste and smell in the COVID-19 landscape, but you know it also played a role in Alzheimers and so.
We've got multiple shots on goal of showing the Ronald deaths and then more specific marker.
Markers like the phosphorylated Tau even G fast for some levels of inflammation.
For the Alzheimer Cascade and so I think what you might see a ball would be a multiplex that would be have a lot of diagnostic relevance post approval and the and the multiplex would looked at neuronal death from the NFL, but we'd looked at some of these peak sales for more specific stratification.
<unk> and understanding the disease and trying to see it early.
To be able to move patients. So this is where our payor.
Our payer relationships are playing.
A lot of dividends because they have a lot of interest some of these payer groups feel like it could have significant quantities of pre cognitive impairment Alzheimers. When you think that you can detect at 10 or 15 years before dementia and if you can get a drug approved that we can stop the progression what you basically could do it.
<unk> used early detection methods with our biomarkers to reveal which members have the specific alzheimers cascade before any impairment cognitively and then you can get them on a drug that stops the progression in effect you can prevent a lot of the deleterious effects of Alzheimers and so that's the the dream.
Jim that's starting to emerge and I think having the payer relationships is also going to be a way to help us advance our health screen strategy for using our Biomarkers post a drug approval.
I do think we continue to feel very good about that aspect of our business and feel well positioned to leverage opposite multiple growth catalysts that opportunity. The ciros have never been stronger or many of them were utilized even heavier during the period of COVID-19 because their lab stayed open.
So we have very strong relationships with most of the large zeros and we feel like 90% of the drug trials that have actually been run using our technology has been through the ciros, whether it be rules based medicine or you know quintiles.
From quest or Covance from Lab Corp, a frontage.
You know euro fence across the board, we've got very strong adoption cycles, and the crows and they utilize the technology and bring a higher levels of pull through so we actually see it as a very strategic area.
The accelerator, we think complements it we have many customers that say you know I really want to work with the people that invented the technology to run the trial and so probably 10% of the drug trials I think something like 139 have now been running our accelerator, but we do think that there could be as you asked both relation.
And ships, where we license to some of the diagnostic companies the ability to run post and Alzheimers trial approval diagnostics, but we also believe there's the opportunity for us to merge our own direct channel and expansion of our direct capabilities. So we're exploring both and over the next.
Several months Youll be seeing more evidence of us trying to gear up as these trials gear up so that we can be ready to pivot and for diagnostics for Alzheimer's in the event that the drug does get approval.
Great I think that that probably concludes our calls that the.
Correct.
Okay I have no. Other question, Sir do you have any closing remarks.
Yeah, I, just would say hey, we really thank you for continuing to invest.
Invest in Quant Terex and understand our story, we feel like we have a duty to try to help the world through a lot of the opportunity that these these book.
Plus plasma biomarkers are creating for neuro degeneration, COVID-19 and longer term oncology and we really appreciate the opportunity to continue our collaboration with the Investor community. So thank you very much for today and we'll continue giving you updates in our wish once again, the mall and Sean Stetson great up.
Good luck in their in their next.
The next chapters in each of their careers. Thank you very much.
Thank you ladies and gentlemen, this will now conclude today's teleconference. Thank you for participating you may now disconnect.