Q3 2024 T2 Biosystems Inc Earnings and Business Update Call
Operator: Welcome to the T2 Biosystems Incorporated third quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation.
Greetings and welcome to the <unk> Biosystems incorporated third quarter 2024 earnings Conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your tongue.
Operator: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded.
The phone keypad. Please note. This conference is being recorded I will now turn the conference over to your host Joe Taylor with Investor Relations you may begin.
Tripp Taylor: I will now turn the conference over to your host Tripp Taylor with Investor Relations. You may begin.
Tripp Taylor: Thank you, operator. I'd like to remind everyone that comments made by management today and answers to questions will include forward looking statements. Those include statements related to T2 Biosystems future financial and operating results and plans for developing and marketing new products.
Joe Taylor: Thank you operator, I'd like to remind everyone that comments made by management today and answers to questions will include forward looking statements. Those include statements related to key to bias systems' future financial and operating results and plans for developing and marketing new products.
Tripp Taylor: Forward-looking statements are based on estimates and assumptions as of today and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied by these statements, including the risks and uncertainties described in T2 Biosystems' annual report on Form 10-K, filed with the SEC on April 1, 2024, and other filings the company makes with the SEC from time to time. The company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law.
Joe Taylor: Forward looking statements are based on estimates and assumptions as of today and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied by these statements, including the risks and uncertainties described in teacher Biosystems annual report on Form 10-K filed with the SEC.
Joe Taylor: <unk> 2024, and other filings the company makes with the SEC from time to time.
The company undertakes no obligation to publicly update or revise any forward looking statements, except as required by law with that I'd like to turn the call over to chairman and CEO John <unk> John.
John Sperzel: With that, I'd like to turn the call over to Chairman and CEO, John Sperzel. John?
John Sperzel: Thank you all for joining our third quarter 2024 results call. I'll start by discussing our recent highlights and providing an update on the progress across our three corporate priorities.
Thank you all for joining our third quarter 2024 results call.
Joe Taylor: I'll start by discussing our recent highlights and providing an update on the progress across our three corporate priorities before turning the call over to John Sprague, Our Chief Financial Officer, who will review our financial results.
John Sprague: Before turning the call over to John Sprague, our Chief Financial Officer, who will review our financial results.
John Sperzel: I will then provide closing remarks before opening the call for questions and answers. T2 Biosystems is focused primarily on sepsis. And I will remind everyone that sepsis continues to take an enormous human and economic toll. Sepsis is the leading cause of death in U.S. hospitals and claims the lives of approximately 350,000 Americans annually. Sepsis represents the leading cost of hospitalization in the United States, costing our health care system an estimated $62 billion annually. Lastly, sepsis is the leading cause of 30-day hospital readmission in the United States, with 19% of sepsis survivors re-hospitalized within 30 days and 40% within 90 days.
Will then provide closing remarks before opening the call for questions and answers.
Joe Taylor: <unk> Biosystems is focused primarily on sepsis and.
Joe Taylor: I will remind everyone that step just continues to take an enormous human and economic toll.
Joe Taylor: <unk> is the leading cause of death in U S hospitals and claims the lives of approximately 350000 Americans annually.
Jeff: Jeff just represents the leading cause of hospitalization in the United States costing our health care system and estimated $62 billion annually.
Jeff: Lastly, <unk> is the leading cause of 30 day hospital readmission in the United States with 19% of Subsys survivors re hospitalized within 30 days and 40% within 90 days.
John Sperzel: On previous earnings calls, I've described the limitations of blood culture-based diagnostics. which are the current standard of care for the management of patients suspected of sepsis. Relying on blood culture as a clinical specimen for patients at risk of sepsis represents several challenges. including poor sensitivity, which can lead to false negative results or missed infection. and slow time to results, typically one to five days. Despite these shortcomings, blood culture remains as the standard of care for patients at risk of sepsis. And except for T2 Biosystems sepsis products, all other FDA-cleared products authorized for pathogen detection or antibiotic resistance testing require a positive blood culture as the clinical specimen.
Jeff: On previous earnings calls I've described the limitations of blood culture based diagnostics.
Jeff: Which are the current standard of care for the management of patients suspected of sepsis.
Jeff: Relying on blood culture, as a clinical specimen for patients at risk of sepsis represents several challenges.
Poor sensitivity.
Jeff: Which can lead to false negative results or missed infections and.
Jeff: In slow times of results typically one to five days.
Jeff: Despite these shortcomings blood culture remains as the standard of care for patients at risk of sepsis.
Jeff: And except for <unk> Biosystems sepsis products, all other FDA cleared products authorized for pathogen detection or antibiotic resistance testing require a positive blood culture as the clinical specimen.
John Sperzel: These blood culture dependent diagnostic products, which include virtually all of our competitors in this space, provide little to no clinical value if blood culture yields a false negative result due to poor sensitivity or if blood culture is not available due to supplier issues.
Jeff: These blood culture dependent diagnostic products, which include virtually all of our competitors in this space provide little to no clinical value if blood culture yields a false negative result, due to poor sensitivity or blood culture is not available due to supplier issues.
John Sperzel: The recent BD BAC Tech blood culture supply interruption, which led to customer letters from the U.S. Food and Drug Administration and the U.S. Centers for Disease Control and Prevention, or CDC. and resulted in blood culture media bottles being added to the medical device shortage.
Jeff: The recent BD bad blood culture supply interruption.
Jeff: Which led to customer letters from the U S food and drug administration in the U S centers for disease control and prevention or CDC.
Jeff: And resulted in blood culture media bottles being added to the medical device shortage list.
John Sperzel: underscores the risk of creating guidelines based on a single diagnostic technology, that is blood culture. We believe this is the perfect time to lobby for changes to the guidelines. to include diagnostic products that are able to detect bacterial and fungal pathogens and antibiotic resistance genes directly from blood, independent of blood culture. and we are actively lobbying for such change.
Jeff: Underscoring the risk upgrading guidelines based on a single diagnostic technology that is blood culture.
Jeff: We believe this is the perfect time to lobby for changes to the guidelines.
Jeff: To include diagnostic products that are able to detect bacterial and fungal pathogens and antibiotic resistance genes directly from blood.
Independent of blood culture.
And we are actively lobbying for such changes.
John Sperzel: In response to this critical supply situation, a manuscript titled changing the culture of blood culture, end quote, was recently published in The Lancet, a world leading medical journal. It highlights the potential for culture-independent diagnostics, like the T2 Bacteria Panel, the T2 Candida Panel, and the T2 Resistance Panel, to complement and improve the existing protocols for patients suspected of sepsis. T2 Biosystems has developed and is commercializing a technology that is designed to address the challenge. associated with the other diagnostics used to detect sepsis-causing pathogens and antibiotic resistance. We provide the only FDA clear diagnostics able to detect sepsis causing pathogens directly from whole blood without the need to wait days for a positive blood.
Jeff: In response to this critical supply situation.
Jeff: New script titled vote, changing the culture of blood culture and quote.
Jeff: It was recently published in the lancet.
Jeff: World, leading medical journal.
Jeff: It highlights the potential for culture independent diagnostics like the G. G bacteria panel the G tube Candida panel and the teacher resistance panel to complement and improve the existing protocols for patients suspected of sepsis.
Speaker Change: Do you do Biosystems has developed and is commercializing a technology that is designed to address the challenges associated with the other diagnostics used to detect sepsis, causing pathogens and antibiotic resistance.
We provide the only FDA cleared diagnostics able to detect sepsis, causing pathogens directly from whole blood.
Speaker Change: Without the need to wait days for a positive blood culture.
John Sperzel: The combination of our FDA-cleared T2DX instrument, T2 Bacteria Panel, and T2 Candida Panel can detect sepsis-causing bacterial and fungal pathogens in three to five hours. directly from blood. No other company in the world can make that It's important to note that our expanded T2 bacteria panel, which now includes the detection of Acetidobacter baumannii. covers approximately 75% of all sepsis-causing bacterial pathogens commonly found in bloodstream infections. Likewise, our T2 Canada panel covers approximately 90% of Canada species commonly found in bloodstream infections.
Speaker Change: The combination of our FDA cleared T to Dx instrument.
Bacteria panel and teaching Candida panel can detect sepsis, causing bacterial and fungal pathogens in three to five hours.
Speaker Change: Directly from blood.
Speaker Change: No other company in the world can make that claim.
Speaker Change: It's important to note that our expanded T. Two bacteria panel, which now includes the detection of Acinetobacter Bombardier covers.
Speaker Change: Covers approximately 75% of all sepsis, causing bacterial pathogens, commonly found in bloodstream infections.
Speaker Change: Likewise, our T to Canada panel covers approximately 90% of candida species, commonly found in bloodstream infections.
John Sperzel: Now turning to review the progress we have made across our three corporate priorities. Accelerating our sales, enhancing our operations, and advancing our pipeline. Starting with our first corporate priority, accelerating our sales. In the U.S. market, our commercial team continues to prioritize increasing sales of our sepsis test. The T2 Biosystems team generated third quarter revenue of $2.0 million, representing 34% growth compared to the prior year period. Growth was driven by $1.4 million of sepsis test panel revenue. that included a 173% increase in the sales of T2 bacteria panel in the U.S. market. During the third quarter, we executed contracts for 11 T2DX instruments.
Speaker Change: Now turning to review the progress we have made across our three corporate priorities accelerating our sales enhancing our operations and advancing our pipeline.
Speaker Change: Starting with our first corporate priority accelerating our sales.
Speaker Change: In the U S market, our commercial team continues to prioritize increasing sales of our sepsis test panels.
Speaker Change: But you do Biosystem team generated third quarter revenue of $2.0 million, representing 34% growth compared to the prior year period.
Speaker Change: Growth was driven by $1.4 million of sepsis test panel revenue.
Speaker Change: That included a 173% increase in the sales of two two bacteria panel in the U S market.
Speaker Change: During the third quarter, we executed contracts for 11 T G Dx instruments.
John Sperzel: including one in the United States and ten internationally. The international contracts helped drive a 78% increase in sales of the T2DX instrument compared to the third quarter of 2023.
Speaker Change: Including one in the United States and 10 internationally.
Speaker Change: The international contracts helped drive a 78% increase in sales of the <unk> Dx instrument compared to the third quarter of 2023.
John Sperzel: To strengthen our U.S. commercialization efforts with our sepsis products and capitalize on what we believe is a significant opportunity to improve the standard of care, we're extremely pleased to have entered into an exclusive commercial distribution agreement with Cardinal Health. Cardinal Health is a distributor of pharmaceuticals, a global manufacturer and distributor of medical and laboratory products, and a provider of performance and data solutions for healthcare facilities. Cardinal Health trades on the New York Stock Exchange under the symbol CAH. has annual revenue of more than $200 billion, has operations in more than 30 countries, and has approximately 48,000 employees.
Speaker Change: To strengthen our U S commercialization efforts with our sepsis products and capitalize on what we believe is a significant opportunity to improve the standard of care we're extremely.
Speaker Change: We are pleased to have entered into an exclusive commercial distribution agreement with Cardinal health.
Speaker Change: I don't know help as a distributor of pharmaceuticals, a global manufacturer and distributor of medical in laboratory products and.
Speaker Change: And he provider of performance and data solutions for health care facilities.
Cardinal Health trades on the New York stock exchange under the symbol C. A H <unk>.
Speaker Change: Has annual revenue of more than $200 billion.
Speaker Change: Has operations in more than 30 countries.
Speaker Change: And has approximately 48000 employees.
John Sperzel: Cardinal Health is one of the largest healthcare companies in the United States and sells to 90% of U.S. hospitals. through its extensive commercial organization. and holds contracts with a large number of U.S. group purchasing organizations or GPOs. Cardinal Health's reach includes the 200 plus children's hospitals in the United States. which we are now targeting following the recent T2 Candida panel FDA clearance for use in pediatric patients. Our agreement grants Cardinal Health exclusive rights to the only FDA-cleared, direct-from-blood, pathogen-detection product. In addition to the economic benefits, having access to T2 Biosystems direct-from-blood diagnosis strengthens Cardinal Health's product offering to microbiology laboratories.
Cardinal Health is one of the largest health care companies in the United States and sells to 90% of U S hospitals.
Speaker Change: Through its extensive commercial organization.
Speaker Change: And holds contracts with a large number of U S group purchasing organizations or G. P. S.
Speaker Change: Cardinal Health's reach includes the 200 plus children's hospitals in the United States.
Speaker Change: Which we are now targeting following the recent teach you Candida panel FDA clearance for use in pediatric patients.
Speaker Change: Our agreement grants Cardinal health exclusive rights to the only FDA cleared direct from blood pathogen detection products.
Speaker Change: In addition to the economic benefits, having access to tier two biosystems direct from blood diagnostics strengthens Cardinal health product offering to microbiology laboratories.
John Sperzel: We believe our agreement with Cardinal Health will be transformative. with the objectives of accelerated revenue growth and a faster path to profitability by expanding our access to the more than 6,000 U.S. We expect the exclusive nature of the agreement to align interests and motivate the cardinal commercial. and give Cardinal a competitive advantage vis-a-vis their competitors. While the terms of our agreement with Cardinal Health are confidential, in general, the economics and logistics are similar to those we have with our international distributors. For example, T2 Biosystems will sell our FDA-cleared products to Cardinal Health, including the T2DX instrument, the T2 Bacteria panel, and the T2 Candida panel.
Speaker Change: We believe our agreement with Cardinal health will be transformative.
Speaker Change: With the objectives of accelerated revenue growth and a faster path to profitability.
By expanding our access to the more than 6000 U S hospitals.
Speaker Change: We expect the exclusive nature of the agreement to align interests and motivate the Cardinal commercial team.
Speaker Change: And gift Cardinal our competitive advantage vis vis their competitors.
Speaker Change: While the terms of our agreement with Cardinal Health are confidential in general the economics and logistics are similar to those we have with our international distributors.
Speaker Change: For example, could you biosystems will sell our FDA cleared products to Cardinal Health, Inc.
Speaker Change: Including the G to Dx instrument.
Speaker Change: The teacher bacteria panel and the teacher Candida panel.
John Sperzel: and Cardinal Health will sell these products to you. We expect this collaboration to greatly expand our access to the U.S. hospital market as Cardinal Health has an extensive commercial and distribution infrastructure. including capital equipment specialists who will sell the T2DX and At this point, we've trained the team at Cardinal to fully understand the science behind our technology, its features and benefits, and the clinical and economic value it offers to customers. Our products are now established in the Cardinal Health ecosystem.
And Cardinal Health will sell these products to U S hospitals.
Speaker Change: We expect this collaboration to greatly expand our access to the U S Hospital market.
As Cardinal Health has an extensive commercial and distribution infrastructure.
Speaker Change: Including capital equipment specialists, who will sell but T to Dx instrument.
Speaker Change: At this point, we've trained the team at Cardinal to fully understand the science behind our technology, its features and benefits and the clinical and economic value it offers to customers.
Our products are now established in the Cardinal health ecosystem.
John Sperzel: They are in the process of launching the initial sales campaigns, and our teams have begun working together in the field.
Speaker Change: They are in the process of launching the initial sales campaigns.
Speaker Change: And our teams have begun working together in the field.
John Sperzel: In the United States, we recently announced a co-marketing collaboration with Precision aimed at pioneering a new frontier in antibiotic stewardship to combat the growing threat of antimicrobial resistance. Antibiotic resistance is one of the greatest threats facing modern medicine, with millions of lives at risk. Over 1.27 million deaths are reported annually due to antimicrobial resistance or AMR. which threatens to render essential antibiotics useless. The stakes are high. time is critical. Each hour of delayed targeted treatment can increase the risk of death by up to 8% for sepsis patients. Precision is a New York-based private company that is leveraging two decades of expertise in antibiotic development to create a real-time, AI-powered decision support platform.
Speaker Change: In the United States, We recently announced a co marketing collaboration with precision Inc. Aimed.
Speaker Change: Aimed at pioneering a new frontier in antibiotics stewardship to combat the growing threat of antimicrobial resistance.
Speaker Change: Antibiotic resistance is one of the greatest threats facing modern medicine with millions of lives at risk.
Speaker Change: Over 1.2 dollars 7 million deaths are reported annually due to antimicrobial resistance or ALR.
Which threatens to render essential antibiotics useless.
Speaker Change: The stakes are high.
Speaker Change: And time is critical each hour of delayed targeted treatment can increase the risk of death by up to 8% for sepsis patients.
Speaker Change: Precision is a new York based private company that is leveraging two decades of expertise in antibiotic development to create a real time AI powered decision support platform.
John Sperzel: The product, also called Precision, is integrated with electronic health records, for example EPIC and Cerner. and provides clinicians with ranked, evidence-based antibiotic regimens tailored to each patient's needs. This approach can potentially stop antibiotic misuse. break the cycle of resistance, reduce health care costs, and ultimately save lives.
Speaker Change: Product also called precision is integrated with electronic Health Records for example, epic and Cerner.
And provides clinicians with ranked evidenced based antibiotic regimens.
Speaker Change: Alert to each patients needs.
Speaker Change: This approach could potentially stop antibiotic misuse.
Break the cycle of resistance reduce health care costs and ultimately save lives.
John Sperzel: We believe that artificial intelligence, or AI, will have an important and increasing role in healthcare delivery. and specifically in the management of patients at risk of substance abuse. AI can be used to diagnose diseases, develop personalized treatment plans, and assist clinicians with decision-making. At T2 Biosystems, we've been searching for an AI-powered decision support platform to combine with our rapid direct-from-blood diagnosis. The PRECISION platform is designed to leverage data from diagnostics, such as our T2DX instrument and test panels. to provide another level of precision, using advanced pharmacokinetic models, pathogen profiles, and real-time patient data to enable clinicians to prescribe the right drug, right dose, and right duration as the patient's condition evolves.
Speaker Change: We believe that artificial intelligence or AI.
Speaker Change: We'll have an important an increasing role in health care delivery.
Speaker Change: And specifically in the management of patients at risk of sepsis.
Speaker Change: Hey, I can be used to diagnose diseases develop personalized treatment plans and assist clinicians with decision making.
Speaker Change: At <unk> Biosystems, we have been searching for an AI powered decision support platform to combine with our rapid direct from blood diagnostics.
Speaker Change: The precision platform is designed to leverage data from diagnostics, such as our <unk> Dx instrument and test panels.
Speaker Change: To provide another level of precision using advanced pharmacokinetic models pathogen profiles and real time patient data to enable clinicians to prescribe the right drug.
Speaker Change: Right dose and right duration as the patient's condition evolves.
John Sperzel: The platform adapts continuously to changing clinical information, providing ranked, evidence-based treatment regimens that help clinicians optimize care and improve outcomes. By combining our direct-from-blood diagnostics with the AI-driven precision plot, We believe we can empower clinicians with the information to stop infections in their tracks. faster than ever before.
Speaker Change: The platform adapts continuously to changing clinical information.
Speaker Change: <unk> ranked evidence based treatment regimens that help clinicians optimize care and improve outcomes.
By combining our direct from blood diagnostics with the AI driven precision platform. We believe we can empower clinicians with information to stop infections in their trucks.
Speaker Change: Faster than ever before.
John Sperzel: Beyond improving patient care, this collaboration is intended to drive product adoption and create exciting opportunities for growth in a rapidly evolving market. With speed and accuracy at its core, we believe the combined solution can provide hospitals with a powerful tool to improve outcomes and reduce costs.
Speaker Change: Beyond improving patient care. This collaboration is intended to drive product adoption and create exciting opportunities for growth in a rapidly evolving market.
Speaker Change: With speed and accuracy at its core.
We believe the combined solution can provide hospitals with a powerful tool to improve outcomes and reduce costs.
John Sperzel: We're really excited about our new initiatives with Cardinal Health and Precision. and we believe each will contribute meaningfully to revenue in 2025 and beyond.
Speaker Change: We're really excited about our new initiatives with Cardinal health and precision.
Speaker Change: And we believe each will contribute meaningfully to revenue in 2025 and beyond.
John Sperzel: In international markets, we continue to execute on our plan to expand our commercial footprint by entering into territory-exclusive distribution agreements to market and sell our products, including the T2DX Instrument, the T2 Bacteria Panel, the T2 Candida Panel, and the T2 Resistance. During the third quarter, we entered into new distribution agreements covering Malaysia and Indonesia. As indicated by our executed international instrument contracts, this expansion is already proving valuable.
Speaker Change: In international markets, we continue to execute on our plan to expand our commercial footprint by entering into territory exclusive distribution agreements to market and sell our products, including the <unk> Dx instrument. The teacher bacteria panel that you do Candida panel and the teacher resistance panel.
During the third quarter, we entered into new distribution agreements, covering Malaysia and Indonesia.
As indicated by our executed international instrument contracts. This expansion is already proving valuable.
John Sperzel: Outside of Sepsis, we're making progress toward commercialization of our T2 Biothreat Panel and T2 Lyme Panel. We're identifying strong potential government targets and fielding interest to procure the T2 biothreat. We've presented to multiple U.S. government agencies. organized by the Administration for Strategic Preparedness and Response, or ASPR. and have ongoing discussions with leading biothreat response laboratories in the United States regarding their interest in the T2 biothreat panel. We believe the unique attributes of the T2 Biotherapy covered with it being the only FDA-cleared, multi-target biothreat panel developed and manufactured in the United States will be of interest under the new administration.
Speaker Change: Outside of sepsis, we're making progress towards commercialization of our T. Dubai threat panel and to do line panel.
Speaker Change: We're identifying strong potential government targets and fielding interest to procure the <unk> panel.
Speaker Change: We presented to multiple U S government agencies organized by the administration for strategic preparedness and response or asthma.
Speaker Change: And have ongoing discussions with leading biotech response laboratories in the United States regarding their interest in the <unk> panel.
Speaker Change: We believe the unique attributes of the teacher bio threat panel.
Speaker Change: Covered with it being the only FDA cleared a multi target bio threat panel developed and manufactured in the United States will be of interest under the New administration.
John Sperzel: Finally, we maintain our plan to launch the T2 LIME Panel as a Laboratory Developed Test, or LDT, and we anticipate initiating commercialization by the start of the 2025-60s.
Finally, we maintain our plan to launch the tier two Lyme panel as a laboratory developed test or L. D T and.
Speaker Change: And we anticipate initiating commercialization by the start of the 2025 fixed season.
John Sperzel: Moving to our second corporate priority, enhancing our operation. Operationally, we have converted approximately 80% of our debt to common stock over the past 12 to 18 months. which strengthens our balance sheet and significantly reduces our quarterly interest.
Speaker Change: Moving to our second corporate priority enhancing our operations.
Speaker Change: Operationally, we have converted approximately 80% of our debt to common stock over the past 12 months to 18 months.
Speaker Change: Which strengthens our balance sheet and significantly reduces our quarterly interest payments.
John Sperzel: We're focused on strengthening our task position and making further improvements to our cost As you'll see in our 10-Q filing, we have used our at-the-market or ATM facility intermittently to raise capital during the third quarter and early fourth quarter of 2024. We're continuing to explore other sources of capital, and we are actively engaged with potential strategic investors or partners.
We're focused on strengthening our cash position and making further improvements to our cost structure.
Speaker Change: As you'll see in our 10-Q filing we have used our aftermarket or ATM facility intermittently to raise capital during the third quarter and early fourth quarter of 2024.
Speaker Change: We're continuing to explore other sources of capital and we are actively engaged with potential strategic investors or partners.
John Sperzel: During the third quarter of 2024, we began partnering with ADP TotalSource as our Professional Employer Organization, or PEO, to provide comprehensive and cost-effective HR solutions, including health care benefits, workers' compensation, payroll and tax support, and HR guidance. We expect this change to result in annualized savings of at least $400,000.
Speaker Change: During the third quarter of 2024, we began partnering with ADP total source as our professional employer organization or P. L to provide comprehensive and cost effective HR solutions, including health care benefits workers' compensation payroll and tax support and HR guidance.
We expect this change to result in annualized savings of at least $400000.
John Sperzel: During the third quarter of 2024, we reduced our inventory by leveraging our new Oracle ERP system to drive better demand planning and material management. We believe the Oracle ERP expansion will continue to favorably impact inventory levels, cost of goods sold, and ultimately improve cash flow.
Speaker Change: During the third quarter of 2024, we reduced our inventory by leveraging our new Oracle ERP system to drive better demand planning and materials management.
Speaker Change: We believe the Oracle ERP expansion will continue to favorably impact inventory levels cost of goods sold and ultimately improve cash flow.
John Sperzel: Finally, in the first quarter of 2025, we plan to further consolidate our real estate space by exiting our facility at 4 Hartwell Avenue in Lexington, Mass. and consolidating those operations into our headquarters at 101 Hartwell Ave in Lexington. We expect this action to reduce our facility's costs by approximately $1 million.
Speaker Change: Finally in the first quarter of 2025, we plan to further consolidate our real estate space by exiting our facility at four Hartwell Avenue in Lexington mass and.
Speaker Change: And consolidating those operations into our headquarters at 101, Hartwell App in Lexington mass.
Speaker Change: We expect this action to reduce our facilities cost by approximately $1 million annually.
John Sperzel: Moving to our third corporate priority, advancing our pipe Our pipeline initiatives are focused on expanding the test menu for our T2DX instrumentation. There are four test expansion programs in our pipeline. including the U.S. T2 resistance panel, the T2 Lyme panel, the expanded T2 Candida panel to include detection of Candida auris, and the Expanded T2 Bacteria Panel to include a claim for pediatric testing. Three of these programs have already received FDA breakthrough device testing. including the T2 resistance panel, the T2 line panel, and the candida auris. which should provide for a straightforward path to market and help solve an unmet need for rapid detection of these respective target biomarkers.
Speaker Change: Moving to our third corporate priority advancing our pipeline.
Speaker Change: Our pipeline initiatives are focused on expanding the test menu for our <unk> Dx instruments.
Speaker Change: There are four test expansion programs in our pipeline.
Speaker Change: <unk> the U S teacher resistance panel the T. Two line panel.
Speaker Change: The expanded T to Candida panel to include detection of Candida Auris.
Speaker Change: And the expanded T. Two bacteria panel to include a claim for pediatric testing.
Speaker Change: Three of these programs have already received FDA breakthrough device designation.
Speaker Change: Including the teacher resistance panel the tier two Lyme panel and the Candida Auris test.
Speaker Change: Which should provide for a straightforward path to market and help solve an unmet need for rapid detection of these respective target biomarkers.
John Sperzel: The UST2 Resistance Panel is a CE-marked diagnostic test able to detect antibiotic resistance genes directly from blood in just three to five hours. The T2 resistance panel simultaneously detects 13 antibiotic resistance genes from both gram-positive and gram-negative bacteriopaths. The T2 Resistance Panel is marketed and sold in Europe under a CE mark, and as I mentioned earlier, has received breakthrough device designation, which will provide for a prioritized 510k review. We expect to submit the teacher resistance panel to the FDA during the first quarter of 2025.
Speaker Change: The U S. T. Two resistance panel as a CE marked diagnostic test able to detect antibiotic resistance genes directly from blood and.
Speaker Change: Just three to five hours.
Speaker Change: The teacher resistance panel simultaneously detects 13 antibiotic resistance genes.
Speaker Change: Both gram positive and Gram negative bacterial pathogens.
Speaker Change: The teacher resistance panel is marketed and sold in Europe under our CE, Mark and as I mentioned earlier has received breakthrough device designation, which will provide for a prioritized five day review process.
Speaker Change: We expect to submit the T J resistance panel to the FDA during the first quarter of 2025.
John Sperzel: This one quarter delay is due to our decision to prioritize manufacturing products for current and new customers ahead of manufacturing the T2 resistance panel cartridges for internal R&D. The T2 Lyme Panel is a direct-from-blood molecular diagnostic test designed for the early detection of Borrelia burgdorferi, the bacterium that causes Lyme disease in the United States. Lyme disease is the leading vector-borne disease in America, with an estimated 3.4 million tests performed each year. The current diagnostic product process is a two-tiered antibody test algorithm that relies on the presence of antibodies. and can only be used accurately four to eight weeks after infection.
This one quarter delay is due to our decision to prioritize manufacturing products for current and new customers.
Speaker Change: Ahead of manufacturing the teacher resistance panel cartridges for internal R&D testing.
Speaker Change: But you do line panel is a direct from blood molecular diagnostic test designed for the early detection of Borrelia Bergdorf right the bacterium that causes Lyme disease in the United States.
Speaker Change: Lyme disease is the leading vector borne disease in America with an estimated 3.4 million tests performed each year.
Speaker Change: The current diagnostic product process is a two tiered antibody test algorithm it relies on the presence of antibodies.
And can only be used accurately four to eight weeks after infection.
John Sperzel: If left untreated, the bacteria may spread throughout the body and become much harder to eradicate and treat effectively. Although symptoms of Lyme disease are similar to flu, Reliaburg-Dorferi infections can lead to chronic debilitating disease. To address this clinical unmet need, we have developed an extremely sensitive diagnostic. for the detection of early Lyme disease. with an analytical sensitivity that is in line with our FDA-cleared sub...
Speaker Change: If left untreated the bacteria may spread throughout the body and become much harder to eradicate and treat effectively.
Speaker Change: Although symptoms of Lyme disease are similar to flu rally a bergdorf infections can lead to chronic debilitating disease.
Speaker Change: To address this critical unmet need we have developed an extremely sensitive diagnostic.
Speaker Change: For the detection of early Lyme disease.
Speaker Change: With an analytical sensitivity that is in line with our FDA cleared subsys tests.
John Sperzel: We have recently completed clinical studies required to launch the T2 line panel as a laboratory developed test or LDT. We believe our test will detect Lyme disease within the first 30 days post-infection. compared to antibody tests. that can take 30 to 60 days post. The expanded T2 Candida panel, which will include the detection of Candida auris, is a direct-from-blood molecular diagnostic test designed to detect Candida species in just 3-5 hours, without the need to wait days for a positive blood count. We believe the addition of Candida auris detection will strengthen the value proposition of our T2 Candida panel and lead to increased adoption.
Speaker Change: We have recently completed clinical studies required to launch the tier two Lyme panel as a laboratory developed test or L. D. G.
Speaker Change: We believe our test will detect lyme disease within the first 30 days post infection.
Speaker Change: Compared to the antibody test.
Speaker Change: That can take 30 to 60 days post infection.
Speaker Change: The expanded team to Candida panel, which will include the detection of Candida Auris is a direct from blood molecular diagnostic test designed to detect candida species and just three to five hours without the need to wait days for a positive blood culture.
Speaker Change: We believe the addition of Candida Auris detection will strengthen the value proposition of our teacher Candida panel and lead to increased adoption.
John Sperzel: Canadaurus is a multidrug-resistant fungal pathogen that has a mortality rate of up to 60%. and is recognized as a serious global health threat by the CDC and the World Health Organization. The CDC estimates that costs associated with U.S. fungal diseases are as high as $48 billion annually and has called on public health professionals to help lower the burden of fungal disease by continuing to raise awareness of the life-saving benefits of early detection and proper treatment. A 2022 Journal of Clinical Microbiology study conducted at the Bambino Gesù Hospital in Rome, Italy, found that pediatric patients suspected of fungal bloodstream infection that were tested with the T2 Canada panel received.
Speaker Change: Candida Auris is a multi drug resistant fungal pathogen that has a mortality rate of up to 60%.
Speaker Change: And is recognized as a serious global health threat by the CDC and the World Health organization.
Speaker Change: The CDC estimates that costs associated with U S. Fungal diseases are as high as $48 billion annually and has called on public health professionals to help lower the burden of fungal disease by continuing to raise awareness of the life saving benefits of early detection and proper treatment.
Speaker Change: In 2022 journal of clinical Microbiology study conducted at the Bambino Gay Xu Hospital in Rome, Italy bounded pediatric patients suspected of bungled bloodstream infections that were tested with the T. Two candida panel receives.
John Sperzel: Species identification results 121.8 hours faster. compared to blood culture-based diagnosis.
He sees identification results 121 eight hours faster.
Speaker Change: Compared to blood culture based diagnostics.
John Sperzel: The Expanded T2 Bacteria Panel to include a claim for pediatric testing. We expect to submit a 510K pre-market notification to the FDA to expand the use of our T2 bacteria panel to include pediatric testing in 2025.
Speaker Change: The expanded G. Two bacteria panel to include a claim for pediatric testing.
Speaker Change: We expect to submit a five 10-K premarket notification to the FDA to expand the use of our teacher bacteria panel to include pediatric testing in 2025.
John Sprague: With that, I'll now turn the call over to John Sprague to provide a detailed update on our first quarter financial results. Thank you, John.
Speaker Change: With that I'll now turn the call over to John Sprague to provide a detailed update on our first quarter financial results.
Speaker Change: John.
John Sprague: Thank you John.
John Sprague: Third quarter 2024 revenues were $2 million, all from sepsis product sales, a 34% increase from the prior year period. International instrument sales increased 78% and sepsis test sales increased 34% compared to the prior year period. Second quarter 2024 cost of product revenues were $4.1 million, a 4% increase compared to the prior year period driven by increased international instrument and sepsis test sales. Research and development expenses were $2.7 million, comparable to the prior year period. Selling General Administrative Expenses were $5.4 million, a 10% decrease compared to the prior year period, driven by decreased headcount, offset by increased legal expenses.
John Sprague: Third quarter 2024 revenues were $2 million all from sepsis product sales, a 34% increase from the prior year period International instrument sales increased 78% and sepsis test sales increased 34% compared to the prior year period.
John Sprague: Second quarter 2020 for cost of product revenues were $4 $1 million, a 4% increase compared to the prior year period, driven by increased international is Brenton sepsis test sales.
John Sprague: Research and development expenses were $2 $7 million comparable to the prior year period.
John Sprague: Selling general and administrative expenses were $5 $4 million, a 10% decrease compared to the prior year period, driven by decreased headcount offset by increased legal expenses.
John Sprague: The third quarter 2024 net loss was $10.1 million, $0.57 per share, compared to the prior year third quarter net loss of $15.4 million, $3.45 per share. Cash and cash equivalents were $2.1 million as of September 30, 2024. We raised $4.3 million in net proceeds with our ATM during the quarter and $3.2 million since September 30, 2024.
John Sprague: Third quarter 2024, net loss was $10 $1 million 57 per share compared to the prior year third quarter net loss of $15 $4 million $3 45 per share.
John Sprague: Cash and cash equivalents were $2 $1 million as of September 30th 2024, we raised $4 $3 million in net proceeds with our ATM during the quarter and $3 $2 million since September 32024.
John Sprague: As we announced last week, the company received a notice from NASDAQ on November 7, 2024, indicating that the company's market value had been trading below listing requirements. We have appealed the notice and expect to put forth a plan of compliance to NASDAQ.
John Sprague: As we announced last week the company received a notice from NASDAQ on November seven 2024, indicating that the company's market value had been trading below listing requirements.
John Sprague: We have appealed the notice and expect to put forth a plan of compliance to Nasdaq.
John Sprague: We expect fourth quarter 2024 total sepsis and product revenues of $2.5 to $3.5 million. This target does not include potential sales of T2 BioThreat or T2 Lyme test.
John Sprague: We expect fourth quarter 2024, total sepsis in product revenues of 2.5 to $3 $5 million. This target does not include potential sales of tea to bio threat repeat to Lyme tests.
John Sperzel: Thank you and back to John Sperzel, closing remarks. Thank you, John. We are very encouraged by our progress made in the third quarter of 2024 compared to prior year period, including total revenue growth of 34%. sepsis test panel growth of 34%. U.S. T2 bacteria panel growth of 173% and T2DX instrument growth of 78% internationally. Moving forward, we're excited by the potential to accelerate the growth of our substance business in the United States through the exclusive commercial agreement with Cardinal Health and the co-marketing agreement with Precision. Our new product pipeline is rich with potential catalysts that have already received FDA breakthrough device designations.
Speaker Change: Thank you and back to John's Perusal closing remarks.
Speaker Change: Thank you John.
We are very encouraged by our progress made in the third quarter of 2024 compared to prior year period.
Including total revenue growth of 34%.
Speaker Change: This test panel growth of 34%.
Speaker Change: U S T. Two bacteria panel growth of 173% and G Dx instrument growth of 78% internationally.
Moving forward, we're excited by the potential to accelerate the growth of our Subsys business in the United States through the exclusive commercial agreement with Cardinal Health and the co marketing agreement with precision.
Speaker Change: Our new product pipeline is rich with potential catalysts that have already received FDA breakthrough device designation, including the teacher resistance panel, which we plan to submit for FDA for five 10-K clearance during the.
John Sperzel: including the T2 Resistance Panel, which we plan to submit for FDA for 510k clearance during the first quarter of 2025.
Speaker Change: First quarter of 2025.
Tripp Taylor: the T2 Lyme panel, the Expanded T2 Candida panel to include the detection of Candida auris and the Expanded T2 Bacteria panel to include a claim for pediatric With that, I'd like to turn the call back over to the operator to open the line for questions.
Speaker Change: The teacher line panel.
Speaker Change: The expanded teach you Candida panel to include the detection of Candida Auris and the expanded teacher bacteria panel to include a claim for pediatric testing.
Speaker Change: With that I'd like to turn the call back over to the operator to open the line for questions operator.
Operator: Operator? At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions.
Speaker Change: At this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing.
Speaker Change: The Star Keys, one moment, please while we poll for questions.
Yi Chen: From our participants, we have Yi Chen with H.C. Wainwright. Just to... have already started marketing T2 Biosystems products.
From our participants we have E Chen with H C Wainwright.
Speaker Change: Oh, Thank you for taking my questions just to just have a few questions regarding the partnership with Cardio House has got a new house or already started marketing teach about systems.
Speaker Change: That's it.
Yi Chen: Do you expect the effects to show in the fourth quarter financials? or quarter.
Speaker Change: When do you expect these effects to show in the fourth quarter financials and a follow up question is in the industry.
Speaker Change: In the third quarter you out.
Out of the 11 instruments play are executed.
Speaker Change: Have wanted to yours do you expect the partnership was cut in the house two shifts.
Instrument executed two to be more in the U S internationally. Thank you.
John Sperzel: You, thanks for the question. So let me just take the second and T2 Biosystems. So, I think there are two parts of that question. One, we absolutely expect the relationship with Cardinal to increase our instrument and consumable sales in the United States.
Speaker Change: Yeah. Thanks for the question. So let me just take the second.
Speaker Change: Two parts of that question, one we absolutely expect the relationship with Cardinal to increase our <unk>.
Speaker Change: Instrument and consumable sales in the United States.
John Sperzel: We have begun the marketing with Cardinal Health, and I just want to add a little bit more color around maybe the why behind a partnership with Cardinal, which we're certainly excited about. As you know, there are over 6,000 hospitals in the U.S. We believe every one of them should have a T2DX instrument and be using our tests. As a small company with limited resources, it's pretty difficult for us to reach them alone. And so, to address that, we have been searching for a partner with a number of characteristics that we found in Cardinal. One would be a partner with a significant presence in U.S.
We have begun the marketing with Cardinal health and I, just wanted to add a little bit more color around maybe the why behind the partnership with with with Cardinal which were certainly excited about.
Speaker Change: As you know there are over 6000 hospitals in the U S. We believe every one of them should have a teacher dx instrument and be using our deaths.
Speaker Change: As a small company with limited resources, it's pretty difficult for us to reach them alone and so to address that we have been searching for a partner with them.
A number of characteristics that we found in Cardinal.
Speaker Change: One would be a partner with a significant presence in U S. Hospitals are large commercial organization and a strong balance sheet, because we think that translates into credibility from a customer perspective.
John Sperzel: hospitals, a large commercial organization, and a strong balance sheet, because we think that translates into credibility from a customer perspective. As I mentioned earlier, Cardinal is one of the largest healthcare companies in the United States. They have over $2 billion in annual sales. They sell to over 90% of U.S. hospitals, and they have broad GPO contracts. So they are a trusted partner of U.S. hospitals. Second, we were looking for a partner with a strong presence in U.S. hospital microbiology labs. As we think that translates into an important customer relationships, which we've already seen with Cardinal throughout the training and early stages of marketing together.
Speaker Change: As I mentioned earlier Cardinal is one of the largest <unk>.
Speaker Change: There are companies in the United States, they have over $2 billion in annual sales.
They sell to over 90% of U S hospitals and they have <unk>.
Speaker Change: Rod GPO contracts. So they are a trusted partner of U S hospitals.
Speaker Change: We were looking for a partner with a strong presence in U S Hospital Microbiology labs, as we think that translates into an important customer relationships, which we've already seen with cardinal throughout the training and early stages of marketing together for example, within the first week of training.
John Sperzel: For example, within the first week of training the Cardinal folks, Cardinal has already set up a meeting with a 20-plus hospital system. We never would have been able to get in front of that system on our own. And then lastly, we were looking for a partner that wanted our products within their portfolio. We know that our products are highly differentiated, but we wanted a partner that was sort of hungry to have them within their portfolio. And we saw that in Cardinal. And they certainly understand that exclusive rights to our products. provides differentiation for them vis-a-vis their competitors.
Speaker Change: Cardinal folks Cardinal has already set up a meeting with a 20 plus hospital system, we never would have been able to get in front of that system on our own and then lastly, we were looking for a partner that wanted our products within their portfolio.
Speaker Change: Know that our products are highly differentiated but we wanted a partner that was sort of hungry to have them within their portfolio and we saw that in cardinal and they certainly understand that exclusive rights to our products.
Speaker Change: Provides differentiation for them vis vis there.
John Sperzel: So all those three reasons are why we chose Cardinal. We're certainly excited about it. We think it's going to have a significant impact in 2025. And it may impact 2024. We have about six weeks left in the quarter. Got it.
Speaker Change: Competitors, so sort of all of those three reasons are why we chose Cardinal we're certainly excited about it we think it's going to have a significant impact in 2025 and it may impact 2024, we have about six weeks left in the quarter.
Speaker Change: Got it and quest.
Yi Chen: And I had a question regarding. That's our plan. The Lyme season typically starts, I mean, starting earlier and earlier each year. Historically, it's kind of started around the April-May time frame.
Speaker Change: Question regarding the L. D. T is that something we should expect to see.
Speaker Change:
Speaker Change: Having a contribution to the top line revenue in the first half of 2025.
Speaker Change: That's our plan the Lyme season, typically starts I mean, starting earlier and earlier each year. Historically, it's it's kind of started around the April may timeframe. So I think sometime in the latter half of second quarter is when we're targeting to launch that as an ODT.
Yi Chen: So I think sometime in the latter half of second quarter is when we're targeting to launch that as an LVT. Thank you.
Speaker Change: Got it thank you.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Okay.
Operator: We have reached the end of our question and answer window.
Okay.
Speaker Change: We have reached the end of our question and answer window.
John Sperzel: And at this time, I would like to see if management has any closing remarks. I'd like to thank you all for participating in our Q3 earnings call and look forward to updating on our next call.
Speaker Change: And at this time I would like to see if management has any closing remarks.
Speaker Change: I'd like to all for participating in our Q3 earnings call.
Speaker Change: Look forward to updating you on our next call.
Operator: Okay, this does conclude today's conference call and you may disconnect your lines at this time. Thank you for your participation.
Speaker Change: Okay. This does conclude today's conference call and you may disconnect. Your lines at this time. Thank you for your participation.
Speaker Change: Yeah.
Speaker Change: Yes.