Q1 2022 Quanterix Corp Earnings Call
Okay.
Good day and thank you for standing by welcome to the Terex Corporation Q1, 2022 earnings Conference call.
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I would now like to hand, the conference over to your speaker today.
Mike Doyle.
On Terex CFO .
[music].
Morning, everyone and thanks for joining us today.
With me on today's call is Ms <unk>, Lu President and CEO Kwon tariffs.
Before we begin I'd like to remind you about a few things the 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 on information available as of the date of this call.
We 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.
With that I will turn the call over to Ms. Sue.
Thanks, Mike and good morning.
Before we start I'd like to thank Kevin and the board for their support in this new chapter at Quanta Eric's.
Kevin dedication and passion for this company and its impact on health care Ghouls.
Our shared I look forward to working with him the board our employees and customers.
Since I joined <unk> last year and transition to this new role two weeks ago. What has been very clear to me is that our ultra sensitive single molecule array Samoa.
Technology is being used every day to.
Detect and measure of proteins in a way that's unparalleled.
But it's how we effectively deploy this technology that counts.
This includes unlocking new biomarkers.
Playing a key role in breakthrough research.
Ultimately developing tests that will have a significant impact on the human condition.
Last quarter, we reported total revenues of $29 6 million, which represents a 9% growth year over year.
And as previously stated we are on track to achieve revenues between 122 and $134 million with higher growth rates on the back half of the year.
Our growth was driven by strong performance in our consumables segment, which grew 28% year over year.
Excluding R 22, Lilly collaboration that growth was partially offset by instrument and accelerated decline.
Driven by strong demand in 2021 for pandemic testing in our laboratories.
We realize the benefits of our collaboration with Eli Lilly, which is a partnership that <unk> had been working towards for several years and provided $2 7 million in revenue during the quarter.
As a reminder, this multifaceted agreement provides <unk> access to Lilly's P. Tau <unk> antibody technology for near term similar based research products and services and future in vitro diagnostic applications.
It also establishes a framework for collaboration that we expect will drive continued growth as well as revolutionized the diagnosis and treatment of Alzheimer's disease.
Yes.
Our adjusted gross margin of $49 three declining by approximately 1000 basis points compared to last year.
As part of our transformation and scale with quality focus we are implementing several new processes, one of which is around inventory management, which did have an impact on margins this quarter.
These new process changes will be an important foundation for future performance.
Operating expenses were approximately $32 7 million compared to $26 1 million in Q1, 'twenty, one due to personnel increases and lab expansion to take on several new projects.
In terms of cash we spend approximately $22 1 million to support our operations and additional factors that Mike will discuss.
Looking at our revenue growth by geography, we continue to have very strong presence in North America, where we grew 18%.
Our year over year growth in Asia was driven primarily by lack of activity in 'twenty, one due to COVID-19 and our.
Reduction in the EU was due to a strong prior year COVID-19 related demands for pandemic testing in our labs.
Yes.
We maintain a roughly even split between revenue earned from pharma CRO clients and academic clients during the first quarter.
Publication pull through continues to grow.
Our similar technology with highlighted in a record 151, new publications in the first quarter of 'twenty two.
<unk> total similar specific inclusions to over 1700 since its inception in 2006.
82% of our first quarter revenue stem from neuro related offerings up 77% compared to prior year period, driven by strong adoption of foreign taxes narrow capabilities strong demand for our <unk>, one and neuro multiplex assays.
Now I'd like to spend some time, highlighting a few of our exciting operational and business development that we announced this quarter starting with receipt of our breakthrough designation from the FDA for our Somoa narrowed some light chain, our NFL plasma test, which follows our announcement last year for the same designation on our <unk>.
First.
Using our technology researchers from Basel, we are able to quantitatively measure NFL in human serum and plasma which when used in conjunction with clinical imaging helped to identify relapsing remitting multiple sclerosis patients who are at risk.
At lower higher risk relapsed within four years.
This could therefore be useful and tailoring the therapeutic approach to more effectively treat the disease.
If approved <unk>.
NFL could help the community by offering a more effective detection method.
It was really important to achieve this but I want to caution that developing these IBD test takes time.
And we don't expect any near term revenue impacts from regulated products.
One of the limitations of the NFL biomarker test was establishing a baseline that corrected for age.
And body mass.
People age their NFL levels increase this study looked at over 10000 samples from over 5000 subjects to establish a baseline.
And give us a better understanding of NFL and identifying individuals with brain health concerns.
The database established by this study was published in the Lancet and is an important milestone for our similar NFL test.
Contact with similar technology also enabled.
The completion of multiple other high profile studies the results of which were published during the quarter.
Through a recent study from the Harvard School of public Health similar technology was instrumental in detecting NFL protein at ultra level.
Levels to reveal a high prevalence of Epstein Barr virus associated with MFS.
This evidence suggest that EBV is a leading cause of biomass a truly revolutionary finding for the entire community.
We're thrilled someone was a key part of this discovery.
Now I'm going to turn it over to Mike to discuss some more financial details Mike.
Thanks, Masoud I'm going to provide some additional financial details about our first quarter 2022 performance.
And for your reference for those following on the call it will be slide number eight.
As <unk> noted our total revenue in the first quarter of 2022 was $29 6 million, a 9% increase versus the first quarter of 2021 revenue which included.
Approximately $2 3 million of revenue from our nonrecurring now completed <unk> Awards.
We had product revenue in the first quarter of $20 7 million, an increase of 13% versus the first quarter of 2021.
Within product revenue consumables revenue once again had solid growth increasing 28% in the first quarter versus the prior year driven by our strong demand for <unk> 181, and our neuro multiplex assays.
First quarter 2022 service revenue increased 37% versus the prior year first quarter to $8 8 million.
Included within services revenue is $2 7 million recognized during the first quarter of 2022.
Our collaboration with Eli Lilly announced during our Q4 2021 release.
We feel comfortable to customers' activity has returned to pre COVID-19 levels.
However, potential spread of new variants could force renewed Lockdowns. In addition, global uncertainty with rising inflation and the warrant Ukraine continues to have the potential to impact our performance.
Our Q1 2022 gross margin was 49, 3% compared to 61% in the first quarter of 2021.
There are a few factors that drove this change are.
Our recent growth as highlighted inefficiencies in our inventory management processes and response, we made a change in the way, we estimate and reserve for excess and obsolete product.
The change looks at 12 months activity versus three months and should result in a more accurate assessment of the <unk> reserves.
The initial impact of this change materially affected our results for this quarter.
Due to higher inventory balances, we also instituted a longer early quarter shutdown in Q1 of 2022 as compared to Q1 of 2021 to perform our annual physical inventory count which impacted productivity.
We've made a number of process changes to how we manage inventory that will allow us to scale with quality and improve margins going forward.
Our operating expenses totaled $32 7 million in the first quarter of 2022, an increase of $6 6 million versus operating expenses in the first quarter of 2021.
Major expense drivers were volume related activity personnel increases outside services and laboratory expansion as we scaled the organization and invest in process improvements.
During the first quarter of 2022, our cash balance decreased by $22 1 million.
Ending unrestricted cash balance of $374 3 million at March 31, 2022, and basic weighted average shares outstanding for EPS totaled $36 9 million for the first quarter 2022 period.
Cash outflow from operations was $22 $1 million driven by higher operating expenses, primarily driven by headcount increases timing of vendor payments and capex.
The $10 per share in cash and no debt our balance sheet is in excellent shape, and we're well positioned with adequate resources to pursue our strategic objectives.
Overall, we're pleased with the first quarter performance.
And the progress made on our strategic priorities and remain committed to delivering solid remainder of the year 2022 results in line with expectations with that I'll turn it back to Mitsui.
Thanks, Mike.
Where we open up the line for questions I want to recap, where <unk> is today and talk about where I see the company headed in the future looking ahead to the rest of fiscal 'twenty two.
We wanted to be clear that we're focused on three primary areas starting with scale with quality.
As we enter a new chapter and realize the full potential of our platform. We're keenly focused on scaling our products and services to meet increasing demand.
I wanted to send a message out there that we want the best operations people on scientists to join an existing group of extraordinarily talented individuals.
And organizing around these incredible people and executing our new model are going to be critical for us.
Second in the biomarker space.
It's clear that we're on the front lines of innovation.
Key drivers behind this innovation are our people.
The feedback we received through our deep relationships with customers and researchers.
<unk> is rooted deep heritage of scientific breakthrough.
And we believe it early innings for us.
We announced the release of our 100 X sensitivity in our accelerator by the end of this year and we expect to provide for the first time <unk> 17 on the <unk> platform in the same timeframe.
We will pursue both organic and inorganic investments as we enter this new chapter.
Finally, we're focusing on the translation of research Biomarkers to those that are being used in clinical testing and ultimately diagnostics for validating both <unk> one and then it fell in our CLIA lab and look forward to making these tests available in the near future.
<unk> is uniquely positioned to detect biomarkers early and play a differentiated role in this continuum.
Let's open up the lines for questions operator.
Thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key.
By while we compile the Q&A roster.
Our first question comes from Matt <unk> of Cowen <unk> Company. Please proceed.
Hi, Thanks for taking the questions.
First of all on last week, the FDA approved the first IBD test used to aid in the detection of Alzheimers disease.
South based test and that earned approval through the breakthrough device designation pathway.
Macedo would be great to hear your thoughts on the CSF based test approval, whether you've had any recent dialogue with the FDA related to your two breakthrough device designation for <unk>, one and <unk>.
From neuro settlement light.
Whether you would expect a similar timeline in terms of how quickly and <unk> test can advance through the breakthrough device designation pathway.
Hey, Max Thanks for the question so the with the way we look at this is that on.
Our breakthrough designation on the NFL test, we just received that.
This quarter in Q1, and very excited about that.
And being able to measure NFL and what it's going to do for relapsing remitting Ms patients we heard about the test.
The CSF test obviously.
We had the 181 breakthrough designation in last year for Alzheimers and.
When you look at measuring whether it's at 181 or NFL. The best screen is probably going to be ultimately and blood and CSF.
<unk> is great for us.
Because it now serves as a marker that we can.
Measure to as opposed to a pet so we're very happy.
It was approved.
But we think that the plasma blood screen will be the final ultimate.
Perfect screen for the market.
Okay great.
Let's see can you give us any sense for how your conversations and interactions with all simers drug developers.
Tori authorities have changed in the past months since the <unk>.
Anil NCD.
Beta amyloid antibodies.
It's been about a month now and just if you've seen any any changes in.
The behavior in your customer base over the past months.
I think.
Obviously, the NCD came out and there's a lot more interest now to do more testing and more trials with our 181 or 2017 and a lot of the other antibodies in a beta $40 42.
Clearly theres a few other shots on goal for Alzheimer's with a few other pharma companies.
Now what what is consistent is that some more work has to be done in the field and when those people are doing that work, they're using our tools and our technology. So.
It's been positive for us.
A lot more interest in doing more testing.
An examination of different types of Biomarkers from a regulatory standpoint, we don't see any major differentiator, we talk about our.
<unk>.
Our single site IBD breakthrough designations with the FDA at the same time, we also announced at the beginning of this year that we're also looking at some <unk> through our CLIA laboratory.
So that is a first step.
And then the single site IBD is a second step in the future.
Great final quick one for Mike.
<unk> seen a number of companies in our coverage chart out their path to profitability, we'd just be great to get a sense for how you're thinking about the revenue level that would be required for <unk> to crossover and to cash flow breakeven or any other details around how youre thinking about the path to profitability.
Yes, great question, Max Thanks, and while we haven't we've.
We've talked about seeing on our <unk> business cash flow breakeven in Q4 up 23 early 'twenty four.
We haven't changed our posture there we didn't we didn't assign a revenue number but I think from our perspective, our goal continues to be to maintain our revenues and get our revenues.
To hit that historical levels of 30% to 40% growth Thats, obviously, not the guidance that we gave this year, but I think we're looking to come out of this year and accelerate into 'twenty three getting ourselves back into that range. So that's how we're thinking about it.
And.
We'll probably at some point provide more color and detail on that in a future call.
Great. Thanks for taking the questions.
Thanks, Max Thanks Max.
Thank you our next question comes from.
Mix of Canaccord. Please proceed.
Thanks, Hemant student Mike Thanks for the questions.
I wanted to start with the financials. So on the soft gross margin recognizing that 49% is not.
Is that well below like what I would think <unk> kind of.
Could be in the near term, maybe like mid 50 high <unk> kind of business, but I just wanted to understand if there is any kind of number one supply chain issues I heard Mike Youre kind of explanation there in the remarks, but just obviously supply chain is pretty topical so I understand that and then the accelerated gross margin dynamics I mean, what could margins be at scale for that business versus maybe typical consumables I know I think its.
Longer I believe but it really was in there of course I was just curious about that and then maybe Mike <unk> can you just comment on like next quarter, how should we kind of think about this going forward in the near term for gross margins.
Thanks.
Yes.
Thanks for the question I'll.
To start and then I'll have Mike chime in on parts of your second part of the question. So I think the key thing for us.
Kyle is that we're trying to scale with quality and trying to organize our ability to deliver products.
Customers and as we do that we mentioned some specific changes to our the way we do our inventory quality process the way.
Mix changes as we as we get new demand from our customers. So.
Part of that was our gross margin.
That we view as a low point, but we see us improving that gross margin with a lot of these process.
Tom.
Initiatives that we plan on implementing.
Yes to pick up on that.
The quarter call. It a couple of things happened and I think we mentioned that.
As <unk> discussed our focus of scaling with quality and I think we've taken.
Hard luck and.
Doing different things now in terms of how we manage our inventory.
And what that impact was in the quarter was we basically we had we drove up the excess in obsolete we had to record a larger charge there and then we changed our methodology and our change in estimate in terms of how we look at the reserve and a go forward basis that we think is.
Reflecting what's going on so when you make that initial change, which effectively was instead of a look back at three months worth of history to look back at 12 months worth of history that initial change has you bump up your reserves. So I think thats something that that occurred in quarter that that's not going to repeat itself, but to <unk> point, our focus is on really.
Really finding ways to scale very effectively with quality I agree with your assessment that this is this is a mid <unk> margin business and Thats what were Grand March our way back towards.
Alright, perfect and with regard to <unk>.
Yes with regard to accelerator.
Obviously, we have really running through there.
And Thats.
The beauty of that arrangement is really beginning to leverage our accelerator lab.
And as a result.
Should start seeing margins that are meaningfully different year over year versus last year.
As the year progresses.
We haven't put our stated margin goal out there.
For accelerator, but.
It's as we've said before I think our consumables businesses, our highest margin, but accelerator at scale. It should it should approach that over time.
Okay.
Great. Thanks, so much for that and then just looking at like <unk> ratification by disease type of Rguest application oncology.
Obligations grew 31% year over year last quarter that was flat I know this includes.
Immunology inflammation, but could you guys just walk through like what's driving the growth if it's sustainable because it's obviously exciting given neurology clearly remains strong but oncology.
Interesting application for you guys.
Yes, Thanks, Paul I think from a.
The macro view, obviously neurology was a big pick up for us as well.
On the neurology side, we see a lot of increasing demand from our customers on the oncology side.
There were a few publications key publications that came out.
Mainly as you said on the immunology side and.
<unk> continues to be a area, that's growing especially from the academic standpoint. So so I would say probably our biggest impact though has been on neurology.
Okay actually on that note. So you receive funding from the Alzheimer's drug Discovery Foundation to accelerate this multi analyte test I'm just wondering.
Incremental to your other tests that you've mentioned for Alzheimer's and other diseases that is what's kind of like the end game and how many like shots on goal do you want to really have here with this type of a test and what's the kind of path forward with this in particular.
Obviously was interesting just wanted to kind of ask about that.
Yes, yes, heiko the way we look at this.
This market.
Anything you've seen up to us up till now on the FDA filings.
Even what we've mentioned is on <unk>. Those are all single analyte test and we think theyre going to be very important and in Triaging, Inc. At screening.
Then when you start to look towards Hey, what's a test that's going to be able to replace and in the future imaging or supplant more invasive method, we think thats going to be a multi analyte test that's anywhere between three.
And four or five analytes and so with this.
Funding and this collaboration that we're doing with UMC and we're going to be developing an algorithm along with those melty analytes for us.
First diagnostic test that actually replaces some of these more invasive methods.
That's the basic idea so a little bit different from what we're offering today are what we've announced.
Alright, great if I could just ask a final question.
Great to see the guidance being reaffirmed today, but clearly it kind of implies.
Exploration in the second half of the year or at least kind of going forward, meaning the second quarter could you guys talk about what's going to drive that second half performance is there any kind of pharma contribution baked in there or something like that I'm just curious about that.
Yes, I'll take that and then Mike might have some additional color.
The view is that.
It's definitely.
Backend loaded for in terms of our revenue if you look at how we performed this quarter.
We maintain on track until the end of the year.
I think you hit it on the head it's exactly our pharma partnerships collaborations.
A big part of that obviously is the big announcements with Lilly and then follow ons from Lilly.
Ability to offer new antibodies on the neuro side and this being a very active area of research.
<unk>.
Testing clinical testing and neurology is really going to drive that back half.
And I think the only other comment I would add Cal I mean, I think we've said even on our fourth quarter call. We had a lot going on that we're going to start the year with that.
With new Chief commercial officer, he is adding to his team all of those things are going to benefit us in the second half as people ramp and as we stay focused on resolving some of these other processes that enables us to scale and quality.
The busy part of our first part of the year and I think as we get a lot of that behind us you're going to see our ability to accelerate it.
<unk> in the second half.
Alright, great. Thanks, so much guys.
Thanks Carolyn.
Thank you as a reminder to ask a question you need to press the star one on your telephone to withdraw your question press the pound key.
Our next question comes from Matt <unk>.
Of Goldman Sachs. Please proceed.
Sure.
Hi, good morning, Thanks for the questions Susan Mike.
Maybe if I could just start out with.
On the Opex side, you guys I think it was the third quarter of last year, you talked about increasing opex growth this year.
Are you still kind of in line with where you see opex growth over the course of this year, how should we think about the cadence in terms of Opex as we move through 'twenty, two and maybe into 'twenty three.
Thank you.
I think we're in line, we're down a bit versus the fourth quarter.
I think that Masoud has taken a hard look at where we sit right now and I think from a resource standpoint, I think we're in a good place I mean, we said we were going to staff to to begin to get our arms around all of the opportunities. We had in front of us. So I think from from here on out Matt you should see quarter.
Over quarter are probably a little bit more consistency I don't expect that were going to have a big jump up this year in opex.
Got it thank you for that and then in.
In terms of.
Segment revenues I think you've talked in the past about this being probably higher growth year for consumables and maybe the accelerator less so for instruments, but as you think about maybe instruments versus consumables, how should we think about that mix in terms of growth over the course of the year.
Yes, so I can tell.
Take that one Matt.
The view that we have is that obviously the instruments that we have in the field there increasing utilization and as a result, we see that driving our consumable increase in the quarter.
And we.
We also are thinking of this as accelerator when we see a lot of demand in the field the fastest way to get an answer.
On biomarkers to send the sample.
The test to accelerator and so we see that growing.
The year, especially towards the back half.
Hi.
2022, so between consumables and accelerator, that's where we see a lot of attention I think instruments.
Can be a little bit quarterly but.
That instrument drive.
It is going to continue but consumables and accelerated or expect.
Probably the strongest drivers in the quarter and the year and some color on instruments, Matt because I know you focus on that our placement activity has been remarkably consistent in terms of what we add on a net basis, but what we saw this quarter was a higher mix of <unk> versus HD X. So that impacts you have that revenue mix impact because the.
<unk>, obviously is our highest priced machines. So we had a little bit of a mix issue going on when you look at the activity in quarter, even though our overall net placement was consistent with what it was in Q4, it's just more of a mix towards Srs.
Got it great and then Mike just one last one for you on this inventory management that you put in place in Q1.
Sounds like the reserving and the processes you've put in place is more of a onetime event in terms of Q1 should we should expect gross margins to trend upwards as you kind of talked about earlier in the call.
But just maybe help me understand about sort of the onetime nature of these process improvements is it sort of isolated to Q1 and move forward or should we be thinking about these types of adjustments as we move through the year I just want to understand how that works I think sure. Its a good question Matt.
Because there's really two components to.
Our gross margin activity one was just the.
The amount of product that we obsolete it in quarter and that that is high I think we've taken a a.
Strong look at what's going on there so that was high and then as a result of that and also as a result of our Q4 activity with.
We looked at our.
Our estimate for reserves and we changed how we looked at that we basically went to a 12 month look back versus a three month look back. So the initial time when you do that and you're bumping up the reserve, which is what happened in the quarter, that's more of a one time, but.
But the other component of the activity of the actual obsolete product.
That has the potential to be ongoing obviously.
That's the focus that masoud is talking about is how do we we manage inventory better in house. So that we don't have as high an obsolescence rate as we've had the last couple of quarters, so that could persist, but the actual adjustment to.
Estimate is more one time and then now it's just a matter of how we manage inventory going forward. So I think both masoud and I believe that margins are going to improve from this point, that's what we're working towards but.
Could there be a bumper to I don't know has suspect there is always a possibility, but that's where we're managing to expanding the margins off of this after this point.
Got it thanks, Michael I appreciate it.
Thanks, Matt Thank you Matt.
Thank you. Our next question comes from Puneet <unk>.
<unk> of <unk> Securities. Please proceed.
Yes, hi.
And.
Thanks for taking my question so.
The first one is maybe I missed this.
Can you just elaborate a bit maybe at a high level person on ACX, what where are you seeing.
Penetration for this product at this point in time.
And who is who.
Who is glu continues to ask for this product versus I'm sorry. Thank you pointed out <unk> was more stronger in the quarter.
Just also help us understand the slower HD X in the quarter was that just largely inventory side of things or was there.
Outside of things or was there something else.
Going on there and how should we think about sort of as we think about that.
2022, and maybe even to 2023, how should we think about the instrument placements I mean, obviously <unk> had strong placements before but I mean, the story has evolved with more clinical trials. So how should we think about.
The core business of instrument placements overall.
Longer term as well thank you.
So I think.
The instrument story Hasnt changed significantly I mean, we're going to have some.
Variation in the quarter, obviously, the our high throughput customers use the HD X and that Hasnt changed that's still the preferred instrument for.
High throughput farm, our CRO customer and Thats Rx is still.
<unk>.
More comment in academia and low throughput users.
That hasnt changed but what has.
Changed and <unk>.
Interesting view is that.
As there is new breakthroughs as we have access to new technology, New we announced $2 17.
How can you get your samples.
And tested with that biomarker as fast as possible and Thats through accelerated laboratory and so youll see our accelerator growing.
Faster this year based on some news in the market.
Some of the Alzheimer's drugs shots on goal that we expect to see over the next year.
Just demand for some of the new Biomarkers that we announced so thats.
A little bit of a mix shift towards accelerator and consumables, but no significant.
Events or changes on our instrument, we expect that to continue.
Okay, that's great and then.
<unk>.
On the product side, obviously, you came in softer versus.
Our expectations and.
Maybe can you help us understand I mean, given the large NFL study that you had.
A number of things that where youre seeing momentum.
You're obviously, you're now as a result, youre keeping your guide intact, which makes the second half a little bit.
More steeper than before but maybe just help us understand where we're at.
Where do you expect to see the most momentum maybe help us just.
Sort of.
Essentially described a little bit.
More details on the guide itself. So we can get trying to get comfort on which segments are going to where we should see most acceleration versus the others.
Yeah, great. So.
The way we have this backend increase we think it's going to be continue to be accelerator and our pharma customers. So whether it's our NFL test or 181.
And even 2017.
Thank you.
The biomarkers that are in highest demand.
And that's where we expect a large pick up a bigger pickup in Q3 Q4, while we keep the guidance.
<unk>.
The NFL study that you mentioned was also a very positive for us.
I was one of our.
And our biggest selling biomarkers together combined with <unk>, we're able to get ultra sensitivity and the key part about that study is that in the past there wasn't really a normal serum NFL levels and that People's NFL levels as you age and.
As your BMI is higher.
Those increase so this study really established at baseline and at examined over 10000 samples.
1000 subjects and.
<unk> put together a normal range a normative range. So that was not just critical for MFS, but a database that is completely open to the public and that makes <unk> a more versatile tool for all types of research. So we're very excited about that it was a very large study.
Basel.
And we think that this helps that biomarker in the.
Prognosis of disease activity.
Okay and then just last one are you seeing any.
Changes on the competitive landscape overall.
With respect to Alzheimer's diagnostics. Obviously this is an exciting field. So it seems that there is significant interest so just wondering.
Given the capability do you have the 2017, the NFL other NFL being your own capability I mean, just overall.
Are you seeing sort.
The changes in the competitive landscape obviously.
It's good that you have breakthrough designation on some of these products, but just wanted to get a sense from you as to how you see the rest of the market is evolving.
Jim.
Yep.
The one thing I would.
Emphasize is that it's pretty hard to measure phosphorylated Tau and blood at the sensitivity required for some of the pre cognitive disorders, including Alzheimer's and.
If you think about <unk> 81 for example, our <unk> 481 test is 0.03 <unk>.
<unk> per mill and Thats two orders of magnitude.
Better analytical sensitivity than other <unk> out there so.
We have two orders of magnitude.
Delta between us and some of our competitors, especially around <unk> 81, and if youre going to test it in blood.
<unk> is one of the.
More sensitive products in the market. So I think that remains CSF, we obviously have tests per CSF.
CSF, you need less sensitivity and.
Some good news some positive news in the market around tests that the FDA has cleared.
For CSF measurement, which was more invasive.
We are excited about that news because.
That's also a good step in the direction for.
This research in general and we can compare to.
More invasive test. So overall I think the dynamic is interesting you see a lot of activity.
We're excited to participate in it.
Okay. Thanks, guys.
Thanks Bonnie.
Thank you I would now like to turn the conference back to MS. <unk> for closing remarks.
So when I joined <unk>.
It's very simple and for I think for every employee joining gets equally as simple on average every day there are between one and two peer reviewed research findings use our technology.
And so even more simple than that is that <unk> is unlocking new discoveries.
Every day and this quarter, we talked about the linkage between Epstein Barr and EMS, which was a discovery that opens a doorway for more attention and focus and intervention towards this debilitating disease and as our customer demand increases.
<unk> research like that we need to make this technology more available technology like some of what needs to get into more hands and so one of our key areas of focus will be several changes in the organization that will ensure scale scale with quality and this process begins with.
A new operational model incredibly talented individuals and the close connection to our user base. So its early stages of this journey and we look forward to providing you updates on our progress in subsequent calls.
This concludes today's conference call. Thank you for participating and you may now disconnect.
[music].
[music].
Good morning, everyone and thanks for joining us today.
With me on today's call, it's Masoud, Lu President and CEO of Quanta Eric's.
Before we begin I'd like to remind you about a few things the 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 on information available as of the date of this call.
We 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.
With that I will turn the call over to Ms. Sue.
Thanks, Mike and good morning.
Before we start.
Like to thank Kevin and the board for their support in this new chapter Eric One Terex.
Kevin dedication and passion for this company and its impact on health care goals.
Our shared and I look forward to working with him the board our employees and customers.
Since I joined <unk> last year and transition to this new role two weeks ago. What has been very clear to me is that our ultra sensitive single molecule array Samoa.
Technology is being used every day to see.
Detect and measure of proteins in a way that's unparalleled.
But it's how we effectively deploy this technology that counts.
This includes unlocking new biomarkers.
A key role in breakthrough research.
And then ultimately developing tests that will have a significant impact on the human condition.
Last quarter, we reported total revenues of $29 6 million, which represents a 9% growth year over year.
And as previously stated we are on track to achieve revenues between 122 and $134 million with higher growth rates on the back half of the year.
Our growth was driven by strong performance in our consumables segment, which grew 28% year over year.
Excluding R 22, Lilly collaboration that growth was partially offset by instrument and accelerated decline driven by strong demand in 2021 for a pandemic testing in our laboratories.
We realize the benefits of our collaboration with Eli Lilly, which is a partnership that <unk> has been working towards for several years and provided $2 $7 million in revenue during the quarter.
As a reminder, this multifaceted agreement provides <unk> access to Lilly's P. Tau <unk> antibody technology for near term similar based research products and services.
And future in vitro diagnostic applications.
It also establishes a framework for collaboration that we expect will drive continued growth as well as revolutionize the diagnosis and treatment of Alzheimer's disease.
Our adjusted gross margin of $49 three declined by approximately 1000 basis points compared to last year.
As part of our transformation and scale with quality focus we are implementing several new processes, one of which is around inventory management, which did have an impact on margins this quarter.
These new process changes will be an important foundation for future performance.
Operating expenses were approximately $32 7 million compared to $26 1 million in Q1, 'twenty, one due to personnel increases and lab expansion to take on several new projects.
In terms of cash we spent approximately $22 1 million to support our operations and additional factors that Mike will discuss.
Looking at our revenue growth by geography, we continue to have very strong presence in North America, where we grew 18%.
Our year over year growth in Asia was driven primarily by a lack of activity in 'twenty, one due to COVID-19 and a reduction in the EU.
Prior year Covid related demands for pandemic testing in our labs.
We maintain a roughly even split between revenue earned from pharma CRO clients and academic clients during the first quarter.
Publication pull through continues to grow are similar technology was highlighted in a record 151, new publications in the first quarter of 'twenty, two bringing total similar specific inclusions to over 1700 since its inception in 2006.
82% of our first quarter revenue stem from <unk> related offerings up 77% compared to prior year period, driven by strong adoption of Quant, Texas narrow capabilities strong demand for our <unk>, one and neuro multiplex assays.
Now I'd like to spend some time, highlighting a few of our exciting operational and business development that we announced this quarter starting with receipt of our breakthrough designation from the FDA for our <unk> narrow <unk> light chain, our NFL plasma test, which follows our announcement last year for the same designation on our <unk>.
Test.
Using our technology researchers from Boswell, we're able to quantitatively measure NFL in human serum plasma, which when used in conjunction with clinical imaging helped to identify relapsing remitting multiple sclerosis patients who are at risk.
At lower higher risk relapsed within four years.
This could therefore be useful and tailoring the therapeutic approach to more effectively treat the disease.
If approved the similar NFL could help the MSM community by offering a more effective detection method.
It was really important to achieve this but I want to caution that developing these IBD test takes time and.
And we don't expect any near term revenue impacts from regulated products.
One of the limitations of the NFL biomarker test was establishing a baseline that corrected for age and.
Body mass.
People age their NFL levels increase this study looked at over 10000 samples from over 5000 subjects to establish a baseline.
And give us a better understanding of NFL and identifying individuals with brain health concerns.
The database established by this study was published in the Lancet and is an important milestone for our similar NFL test.
<unk> technology also.
Enable the completion of multiple other high profile studies the results of which were published during the quarter.
Through a recent study from the Harvard School of public Health similar technology was instrumental in detecting NFL protein at ultra level.
Levels to reveal a high prevalence of Epstein Barr virus associated with MFS.
Evidence suggests that EBV is a leading cause of MFS a truly revolutionary finding for the entire <unk> community.
We're thrilled somebody was a key part of this discovery.
Now I'm going to turn it over to Mike to discuss some more financial details Mike.
Thank you masoud.
Are going to provide some additional financial details about our first quarter 2022 performance.
And for your reference for those following on the call it will be slide number eight.
As <unk> noted our total revenue in the first quarter of 2022 was $29 6 million, a 9% increase versus the first quarter of 2021 revenue which included.
Approximately $2 3 million of revenue from our nonrecurring now completed <unk> Awards.
We had product revenue in the first quarter of $20 7 million, an increase of 13% versus the first quarter of 2021.
Within product revenue consumables revenue once again had solid growth increasing 28% in the first quarter versus the prior year driven by our strong demand for <unk> 181, and our neuro multiplex assays.
First quarter 2022 surface revenue increased 37% versus the prior year first quarter to $8 8 million.
Included within services revenue is $2 7 million recognized during the first quarter of 2022.
Our collaboration with Eli Lilly announced during our Q4 2021 release.
We feel comfortable that customer's activity has returned to pre COVID-19 levels.
However, potential spread of new variants could force renewed Lockdown. In addition, global uncertainty with rising inflation and the war in Ukraine continues to have the potential to impact our performance.
Our Q1 2022 gross margin was 49, 3% compared to 61% in the first quarter of 2021.
There are a few factors that drove this change are.
Our recent growth as highlighted inefficiencies in our inventory management processes and response, we made a change in the way, we estimate and reserve for excess and obsolete product.
Change looks at 12 months activity versus three months and should result in a more accurate assessment of the <unk> reserves.
The initial impact of this change materially affected our results for this quarter.
Due to higher inventory balances, we also instituted a longer early quarter shutdown in Q1 of 2022 as compared to Q1 of 2021 to perform our annual physical inventory count which impacted productivity.
Made a number of process changes to how we manage inventory that will allow us to scale with quality and improve margins going forward.
Our operating expenses totaled $32 7 million in the first quarter of 2022, an increase of $6 6 million versus operating expenses in the first quarter of 2021.
Major expense drivers were volume related activity personnel increases outside services and laboratory expansion as we scaled the organization and invest in process improvements.
During the first quarter of 2022, our cash balance decreased by $22 1 million.
Ending unrestricted cash balance of $374 3 million at March 31, 2022, and basic weighted average shares outstanding for EPS totaled $36 9 million for the first quarter 2022 period.
Cash outflow from operations was $22 $1 million driven by higher operating expenses, primarily driven by headcount increases timing of vendor payments and cap capex.
With $10 per share in cash and no debt our balance sheet is in excellent shape, and we're well positioned with adequate resources to pursue our strategic objectives.
Overall, we're pleased with the first quarter performance.
And the progress made on our strategic priorities and remain committed to delivering solid remainder of the year of 2022 results in line with expectations with that ill turn it back to masoud.
Thanks, Mike.
Where we open up the line for questions I want to recap, we're calling terex is today and talk about where I see the company headed in the future looking ahead to the rest of fiscal 'twenty two.
We wanted to be clear that we're focused on three primary areas starting with scale with quality.
As we enter a new chapter and realize the full potential of our platform. We're keenly focused on scaling our products and services to meet increasing demand.
I want to send a message out there that we want the best operations people on scientists to join an existing group of extraordinarily talented individuals.
And organizing around these incredible people and executing our new model are going to be critical for us.
Second in the biomarker space.
It is clear that we are on the Frontlines of innovation.
Key drivers behind this innovation are our people.
The feedback we received through our deep relationships with customers and researchers.
<unk> is rooted a deep heritage of scientific breakthrough and we believe it early innings for us.
We announced the release of our 100 X sensitivity in our accelerator by the end of this year and we expect to provide for the first time <unk> 2017 on a similar platform in the same timeframe.
We will pursue both organic and inorganic investments as we enter this new chapter.
Finally, we are focusing on the translation of research Biomarkers to those that are being used in clinical testing and ultimately diagnostics.
<unk>, both <unk>, one and then it fell in our CLIA lab and look forward to making these tests available in the near future.
Similar is uniquely positioned to detect biomarkers early and plays a differentiated role in this continuum.
Let's open up the lines for questions operator.
Thank you as a reminder to ask a question you will need to press star one on your telephone.
Draw your question press the pound key please standby, while we compile the Q&A roster.
Our first question.
From Max Masucci of Cowen and company. Please proceed.
Okay.
Hi, Thanks for taking the questions.
Yes first of all on last week. The FDA approved the first IBD test used to aid in the detection of Alzheimer's disease at the CSF based test that earned approval through the breakthrough device designation pathway.
Macedo would be great to hear your thoughts on the CSF based test approval, whether you've had any recent dialogue with the FDA related to breakthrough device designation for <unk> one.
Cheryl Carolus home at night.
And whether you would expect a similar timeline in terms of how quickly and your two tests can advance through the breakthrough device designation pathway.
Hey, Max Thanks for the question. So the way we look at this is that.
Our breakthrough.
The designation on the NFL test, we just received that.
This quarter in Q1, and very excited about that.
And being able to measure NFL on what it's going to do for relapsing remitting Ms patients, we heard about the test.
The CSF test obviously.
We had the 181 breakthrough designation in last year for Alzheimer's and.
I think when you look at measuring whether it's at 181 or NFL. The best screen is probably going to be ultimately in blood and CSF.
CSF, it's great for us.
Because it now serves as a marker that we can.
Measure to as opposed to a pet so we're very happy.
It was approved.
But we think that the plasma blood screen will be the final ultimate.
Perfect screen for the market.
Okay great.
And can you give us any sense for how your conversations and interactions with Alzheimers drug developers.
Tori authorities have changed in the past months since the <unk>.
Anil NCD sort.
Amyloid antibodies.
It's been about a month now and just if you've seen any any changes in.
The behavior in your customer base over the past months.
I think.
Obviously, the NCD came out and there's a lot more interest now to do more testing and more trials with our 181 or 2017 and a lot of the other antibodies at a beta of $40 42.
Clearly theres a few other shots on goal for Alzheimer's or the few other pharma companies.
Now what what is consistent is that some more work has to be done in the field and when those people are doing that work, they're using our tools and our technology. So.
It's been positive for us.
A lot more interest in doing more testing.
An examination of different types of Biomarkers from a regulatory standpoint, we don't see any major differentiator, we talk about our.
<unk>.
Our single site IBD breakthrough designations with the FDA at the same time, we also announced at the beginning of this year that we're also looking at some <unk> through our CLIA laboratory.
So that as a first step and then the single site IBD is a second step in the future.
Great final quick one for Mike.
We've seen a number of companies in our coverage chart out their path to profitability, we'd just be great to get a sense for how youre thinking about the revenue level that would be required for <unk> to crossover and to cash flow breakeven or any other details around how youre thinking about the path to profitability.
Yes, great question, Max Thanks, and while we haven't.
We've talked about seeing on our UL business cash flow breakeven in Q4 up 23 early 'twenty four and we haven't changed our posture. There. We didn't we didn't assign a revenue number but I think from our perspective, our goal continues to be to maintain our revenue.
Who is there and get our revenues.
Yes.
That historical levels of 30% to 40% growth. That's obviously not the guidance that we gave this year, but I think we're looking to come out of this year and accelerate into 'twenty three getting ourselves back into that range. So that's how we're thinking about it.
And we.
We'll probably at some point provide more color and detail on that in a future call.
Great. Thanks for taking the questions.
Thanks, Max Thanks Max.
Thank you. Our next question comes from Paul mixed.
Mixed in with Canaccord. Please proceed.
Thanks, Hemant student Mike Thanks for the questions.
I wanted to start with the financials. So on the soft gross margin recognizing that 49% is not.
Is that well below like what I would think quanta Rx kind of.
Could be in the near term, maybe like mid fifties activities kind of business, but I just wanted to understand if theres any kind of number one supply chain issues I heard Mike Youre kind of explanation there in the remarks, but obviously your supply chain is pretty topical so I understand that and then the accelerated gross margin dynamics I mean, what could margins be at scale for that business versus maybe difficult consumables I know I think it's stu.
Longer I believe but it really was in there of course I am just curious about that and then maybe Mike pharmacy can you just comment on like next quarter, how should we kind of think about that going forward in the near term for gross margins.
Thanks, Yes.
Hey, Kyle Thanks for the question I'll.
To start and then I'll have Mike chime in on parts of.
Your second part of the question. So I think the key thing for us.
Kyle is that we're trying to scale with quality and trying to organize our ability to deliver products.
Customers and as we do that.
We mentioned some specific changes to our the way, we do our inventory quality process.
Hey.
Our mix changes as we as we get new demand from our customers. So.
Part of that was our gross margin effect that we view as a low point, but we see us improving that gross margin with a lot of these process.
Sure.
Initiatives that were planning on implementing.
Yes to pick up on.
The quarter call. It a couple of things happened and I think we mentioned that.
As <unk> discussed.
Our focus of scaling where quality and I think we've taken.
A hard look and we are.
Sure.
Doing different things now in terms of how we manage our inventory.
And what that impact was in the quarter was we basically we we drove up the excess in obsolete we had to record a larger charge there and then we changed our methodology and our change in estimate in terms of how we look at the reserve and a go forward basis that we think is.
Reflecting what's going on so when you make that initial change, which effectively was instead of a look back at three months worth of history to look back at 12 months worth of history that initial change has you bump up your reserves. So I think thats something that that occurred in quarter that that's not going to repeat itself, but to <unk> point, our focus is on really.
Really finding ways to scale very effectively with quality I agree with your assessment that this is this is a mid <unk> margin business and Thats what were Grand March our way back towards.
Alright, perfect and with regard to that.
Yes with regard to accelerator.
Yes, obviously, we have really running through there.
And that's.
The beauty of that arrangement is really beginning to leverage our accelerator lab.
And as a result.
Should start seeing margins that are meaningfully different year over year versus last year.
As the year progresses.
We haven't put our stated margin goal out there.
For accelerator, but.
It's as we've said before I think our consumables businesses, our highest margin, but accelerator at scale.
Should approach that over time.
Okay that was good.
Thanks, so much for that and then just looking at like rugby stratification by disease type of Rguest application oncology.
Obligations grew 31% year over year last quarter that was flat I know this concludes.
Immunology inflammation, but could you guys just walk through like what's driving the growth if it's sustainable because it's obviously exciting given neurology clearly remains strong but oncology is of.
Interesting application for you guys.
Yes, Thanks, Karl I think from a.
Macro view, obviously neurology was a big pick up for us as well.
On the neurology side, we see a lot of increasing demand from our customers on the oncology side.
There were a few publications key publications that came out.
It mainly as you said on the immunology side and.
<unk> continues to be a area, that's growing especially from the academic standpoint.
So I would say probably our biggest impact though has been on neurology.
Okay actually on that note.
We received funding from the Alzheimer's drug Discovery Foundation to accelerate this multi analyte test I'm just wondering.
Incremental to your other testing that you've mentioned for Alzheimer's and other diseases.
Kind of like the end game and how many like shots on goal would you want to really have here with this type of a test and what's the kind of path forward with this in particular.
Obviously was interesting just wanted to ask about that.
Yes, yes, heiko the way we look at the.
This market.
You have seen up to us up till now the FDA filings.
Or even what we've mentioned is on <unk>. Those are all single analyte test and we think theyre going to be very important and in triage, Inc. At screening.
And then when you start to look towards Hey, what's a test that's going to be able to replace the future imaging or supplant more invasive method, we think that's going to be a multi analyte test that's anywhere between three.
And four or five analytes and so with this.
Funding and this collaboration that we're doing with UMC, we are going to be developing an algorithm along with those melty analytes for us.
First diagnostic test that actually replaces some of these more invasive methods.
That's the basic idea so a little bit different from what we're offering today are what we've announced.
Alright, great if I could just ask a final question.
Great to see the guidance being reaffirmed today, but clearly it kind of implies.
Exploration in the second half the year or at least kind of going forward, meaning the second quarter could you guys talk about what's going to drive that second half performance is there any kind of pharma contribution baked in there or something like that I'm just curious about that.
Yes, I'll take that and then Mike might have some additional color.
View is that.
It's definitely.
Backend loaded for in terms of our revenue if you look at how we performed this quarter.
We maintain on track until the end of the year.
And I think you hit it on the head it's exactly our pharma partnerships collaborations.
A big part of that obviously is the big announcement with Lilly and then follow ons from Lilly.
Ability to offer new antibodies on the neuro side and this being a very active area of research.
Testing clinical testing and neurology is really going to drive that back half.
And I think the only other comment I would add Kelly.
I think we said even in our fourth quarter call. We had a lot going on that we're going to start the year with that.
With new Chief commercial officer, he is adding to his team all of those things are going to benefit us in the second half as people ramp.
And as we stay focused on.
Resolving some of these other processes processes that enables us to scale and quality.
The busy part of our first part of the year and I think as we get a lot of that behind us you're going to see our ability to accelerate.
<unk> in the second half.
Alright, great. Thanks, so much guys.
Thanks Carolyn.
Thank you as a reminder to ask a question you need to press the star one on your telephone.
Your question press the pound key our next question comes from Matt <unk>.
Of Goldman Sachs. Please proceed.
Hi, good morning, Thanks for the questions Mike.
Mike.
Maybe if I could just start out with.
On the Opex side, you guys I think it was the third quarter of last year, you talked about increasing opex growth this year.
Are you still kind of in line with where you see opex growth over the course of this year, how should we think about the cadence in terms of Opex as we move through 'twenty, two and maybe into 'twenty three.
I think.
I think we're in line, we're down a bit versus the fourth quarter.
I think that Masoud has taken a hard look at where we sit right now and I think from a resource standpoint, I think we're in a good place I mean, we said we were going to staff to to.
Begin to get our arms around all of the opportunities we had in front of us. So I think from here on out Matt you should see quarter over quarter are probably a little bit more consistency I don't expect that we're going to have a big jump up this year in opex.
Got it thank you for that and then.
In terms of.
Segment revenues I think you've talked in the past about this being probably a higher growth year for consumables, maybe accelerator lessor for instruments, but as you think about maybe instruments versus consumables, how should we think about that mix in terms of growth over the course of the year.
Yes, so I can.
Take that one Matt.
The view that we have is that obviously the instruments that we have in the field there increasing utilization and as a result, we see that driving our consumable increase in the quarter.
And we.
We also are thinking of this as accelerator when do you see a lot of demand in the field the fastest way to get an answer.
On a biomarker as to some of the sample or some the test to accelerator and so we see that growing.
In the year, especially towards the back half.
Of 2022, so between consumables and accelerator.
Where we see a lot of attention I think instruments.
Can be a little bit quarterly but that.
Instrument drive is going to continue but consumables and accelerated or expect.
Probably the strongest drivers in the quarter and the year and some color on instruments, Matt because I know you focus on that our placement activity has been remarkably consistent in terms of what we add on a net basis, but what we saw this quarter was a higher mix of <unk> versus HD X. So that impacts you have that revenue mix impact.
<unk> is our highest priced.
So we had a little bit of a mix issue going on when you look at the activity in quarter, even though our overall net placement was consistent with what it was in Q4, it's just more of a mix towards Srs.
Got it great and then Mike just one last one for you on this inventory management that you put in place in Q1.
It sounds like the reserving process you put in place was more of a onetime event in terms of Q1 should we should expect gross margins to trend upwards as you kind of talked about earlier in the call but.
But just maybe help me understand about sort of the onetime nature of these process improvements is it sort of isolated to Q1 and move forward or should we be thinking about these types of adjustments as we move through the year I just want to understand how that works I think sure. It's a good question Matt.
Because there's really two components to.
Our gross margin activity one was just the.
The amount of product that we obsolete it in quarter and that that is high I think we've taken a.
A.
Strong look at what's going on there so that was high and then as a result of that and also as a result of our Q4 activity with.
We looked at our.
Our estimate for reserves and we changed how we looked at that we basically went to a 12 month look back versus a three month look back. So the initial time when you do that and you're bumping up the reserve, which is what happened in quarter, that's more of a one time, but.
But the other component of the activity of the actual obsolete product.
That has the potential to be ongoing obviously.
The focus that Masoud is talking about is how do we we manage inventory better in house. So that we don't have as high an obsolescence rate as we've had the last couple of quarters, so that could persist, but the actual adjustment to.
Estimate is more one time and then now it's just a matter of how we manage inventory going forward. So I think both masoud and I believe that margins are going to improve from from this point, that's what we're working towards but could.
Could there be a bumper to I don't know her suspect theres always a possibility, but that's where we're managing to expanding the margins off of this after this point.
Got it thanks, Mike I appreciate it.
Thanks, Matt Thank you Matt.
Thank you. Our next question comes from Peter of maybe Securities. Please proceed.
Yes, hi.
Thanks for taking my question so.
The first one is may.
Maybe I missed this.
Can you just elaborate a bit maybe at a high level first on ACX, what where are you seeing.
<unk> penetration for this product at this point in time.
And who is.
Who is glu continues to ask for this product versus I'm, sorry, I think you pointed out <unk> was more stronger in the quarter.
So maybe just also help us understand the slower <unk> in the quarter was that just largely inventory side of things or was there or the input side of things or was there something else.
Going on there and how should we think about sort of as we think about that.
2022, and maybe even to 2023, how should we think about the instrument placements I mean, obviously <unk> had.
Strong placements before but I mean, the story has evolved with more clinical trials. So how should we think about.
The core business of instrument placements overall.
Longer term as well thank you.
So I think.
The instrument story Hasnt changed significantly I mean, we're going to have some.
Variation in the quarter, obviously, the our high throughput customers use the HD X and that Hasnt changed that's still the preferred instrument for.
High throughput farm, our CRO customer and <unk> is still comment.
Comment in academia, and lower throughput users, so that hasnt changed but what has.
Changed and it's an interesting view is that as there's new breakthroughs as we have access to new technology, New we announced 2017.
How can you get your samples.
With that biomarker as fast as possible and Thats through accelerated laboratory again, so you see our accelerator growing.
After this year based on some news in the market.
Some of the Alzheimer's drugs.
Triangle that we expect to see over the next year and just demand for some of the new Biomarkers that we announced so thats.
Little bit of a mix shift towards accelerator and consumables, but no significant.
Events or changes on our instrument, we expect that to continue.
Okay, that's great and then.
On the product side, obviously, you came in softer versus our.
<unk> and <unk>.
Maybe can you help us understand I mean, given the large NFL study that you had a number of things that where youre seeing momentum.
You're obviously, you're now as a result, youre keeping your guide intact, which makes the second half a little bit.
More more steeper than before but maybe just help us understand whats where do you expect to see the most momentum maybe help us just.
Sort of.
Essentially describes a little bit.
More details on the guide itself. So we can get trying to get comfort on which segments are going to where we should see most acceleration versus the others.
Yeah. So.
The way we have this backend increase we think it's going to continue to be accelerator and our pharma customers. So whether it's our NFL test or 181.
And even 2017.
<unk>.
The biomarkers that are highest demand.
That's where we expect a large pick up a bigger pickup in Q3 Q4, while we keep the guidance.
<unk>.
The NFL study that you mentioned was also a very positive for us and.
NFL is one of our <unk>.
Selling biomarkers together combined with <unk>, we're able to get ultra sensitivity.
And the key part about that study is that in the past there wasn't really a normal serum NFL levels and that People's NFL levels as you age and as.
As your BMI as higher.
Those increase so this study really established at baseline and at examined.
10000 samples.
<unk> 5000 subjects.
And put together a new.
<unk> range, a normative range. So that was not just critical for MFS, but a database that is completely open to the public and that makes <unk> a more versatile tool for all types of research. So we're very excited about that it was a very large study.
Basel.
And we think that this helps that biomarker in the.
Prognosis of disease activity.
Okay and then just last one are you seeing any <unk>.
On the competitive landscape overall.
With respect to Alzheimer's diagnostics. Obviously this is an exciting field. So it seems that there is significant interest so just wondering.
Given the capabilities you have the 2017, the NFL other NFL being your own capability I mean, just overall.
Are you seeing.
Sort of the changes in the competitive landscape obviously.
It's good that you have breakthrough designation on some of these products, but just wanted to get a sense from you as to how you see the rest of the market is evolving.
Around you.
Yep.
The one thing I would <unk>.
<unk> is that it's pretty hard to measure phosphorylated Tau and blood at the sensitivity required for some of the pre cognitive disorders, including Alzheimer's and you think about <unk> 81 for example.
481 test is 0.03 Picamoles per mill and Thats, two orders of magnitude better analytical sensitivity than other <unk> out there. So I think that we have in the two orders of magnitude Delta.
Delta between us and some of our competitors, especially around <unk>.
And if youre going to test it in blood.
That contract is one of the.
More sensitive products in the market. So I think that remains CSF, we obviously have test for CSF.
CSF, you need less sensitivity and.
Some good news some positive news in the market around tests that the FDA has cleared.
For CSF measurement, which is more invasive.
We are excited about that news because.
That's also a good step in the direction for.
This research in general and we can compare to.
More invasive test. So overall I think the dynamic is interesting youll see a lot of activity.
We're excited to participate in it.
Okay. Thanks, guys.
Thanks Bennett.
Thank you I would now like to turn the conference back to MS. <unk> for closing remarks.
So when I joined <unk>.
It was very simple and for I think for every employee joining gets equally as simple an.
On average every day there are between one and two peer reviewed research findings use our technology.
So even more simple than that is that <unk> is unlocking new discoveries.
Every day and this quarter, we talked about the linkage between Epstein Barr and EMS, which was a discovery that opens a doorway for more attention and focus and intervention towards this debilitating disease and as our customer demand increases.
Our research like that we need to make this technology more available technology like some of our needs to get into more hands and so one of our key areas of focus will be several changes in the organization that will ensure scale scale with quality and this process begins with.
A new operational model incredibly talented individuals and a close connection to our user base. So it is early stages of this journey and we look forward to providing you updates on our progress in subsequent calls.
This concludes today's conference call. Thank you for participating and you may now disconnect.