Q3 2024 Quanterix Corp Earnings Call
Thank you for watching!
Andrea: Thank you for standing by. My name is Andrea and I will be your conference operator today. At this time, I would like to welcome everyone to the Quanterix Corporation Q3 2024 earnings call.
Andrea: All lines have been placed in mute to prevent any background noise.
Andrea: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one in your telephone keypad.
Speaker Change: If you would like to withdraw your question, press star 1 again. I would now like to turn the call over to Vandana Sriram. Thank you. Please go ahead.
Thank you and good afternoon.
Vandana Sriram: With me on today's call is Masoud Toloue, Quanterix's President and CEO.
Speaker Change: Before we begin, I would like to remind you of a few things. This call will be recorded and a replay will be available for investors on the investors section of our website.
Speaker Change: Today's call will contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act.
Speaker Change: These forward-looking statements include, among other things, statements regarding our preliminary results for the third quarter and the expected impact of the restatement of our historical financial statements.
Speaker Change: These forward-looking statements are based on management's beliefs and assumptions, and on information available as of the date of this call.
Speaker Change: We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements.
Forward-looking statements involve known and unknown risks.
Speaker Change: 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.
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Speaker Change: The risks and uncertainties that we face include that we may have underestimated the scope and impact of the restatement, risks and uncertainties around the effectiveness of our internal control over financial reporting, the risk that our restated financial statements may take longer to complete than expected, and other risks described in our filings with the Securities and Exchange Commission.
Speaker Change: To supplement our preliminary financial statements presented on a GAAP basis, we have provided certain preliminary non-GAAP financial measures.
Speaker Change: These preliminary non-GAAP measures are used to evaluate our operating performance in a manner that allows for meaningful period-to-period comparison and analysis of trends in our business and our competitors.
Speaker Change: We believe that such measures are important in comparing current results with other periods results and assessing our operating performance within our industry.
Speaker Change: Preliminary non-GAAP financial information presented hearing should be considered in conjunction with, and not as a substitute for, the preliminary financial information presented in accordance with GAAP.
Speaker Change: Investors are encouraged to review the reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures set forth in the presentation posted to our website and in the earnings release issued today.
Speaker Change: Finally, any percentage changes we discuss will be on a year-over-year basis, unless otherwise noted.
Other than revenue and cash balance,
Speaker Change: The financial results we are discussing today for the third quarter are preliminary only.
are based on currently available information.
Speaker Change: and are unaudited and subject to adjustment, included in connection with the finalization of the restatement of our financial statements.
Speaker Change: We will report our final results for the third quarter of 2024, which could vary from the preliminary financial statements discussed today in our quarterly report on Form 10-K following the filing of our restated financial statements.
Speaker Change: Now, I'd like to turn the call over to Masoud Toloue.
Thank you, Vandana.
Masoud Toloue: I'm pleased to report, Quanterix continues to outperform, delivering a sixth consecutive quarter of double-digit revenue growth, despite market pressures our industry continues to face related to capital funding.
Masoud Toloue: We're a technology leader in a uniquely positioned category where continued demand for Samoa ultrasensitivity
Masoud Toloue: Our unique business model and our ability to serve customers has shown resiliency.
Masoud Toloue: Revenues of $35.7 million grew 13% this quarter, driven by 36% growth from our Accelerator Lab.
8% growth from our consumables business.
and continued traction with partner enablement in diagnostics.
Masoud Toloue: On a preliminary basis, third quarter non-gap gross margin of 53% reflects our disciplined approach to operational improvements, cost, and price, where we see continued opportunity for expansion.
Masoud Toloue: We are advancing our strategic priorities with a balance sheet of nearly $300 million of liquidity and cash usage down to $3 million in the quarter.
Masoud Toloue: Vandana will touch on these results and our reaffirmed guidance in more detail.
As a reminder, our three core growth objectives are, one,
High-Growth Menu
Masoud Toloue: specifically maintaining our leadership position in neurology and growing into adjacencies.
Two.
Masoud Toloue: Our goal to achieve ubiquity of Samoa in all labs, where we are allocating resources to provide our customers with solutions in immunology and oncology.
Masoud Toloue: We will achieve this with new menu and higher multiplexed, ultrasensitive protein detection, which we expect will culminate in a new platform sometime in 2025.
and three
Masoud Toloue: leading to build the global diagnostic testing infrastructure for Alzheimer's disease.
Masoud Toloue: We're making great progress on growing our menu and expanding into adjacencies. Year-to-date, we have commercialized a total of 16 new products, including several novel multiplexes, with plans to launch another four assays by the end of the year.
Masoud Toloue: In neurology, we recently launched a N4PD assay, which combines BD-Tau with additional relevant neurology markers.
Masoud Toloue: Our neuromultiplexes perform well and we expect similar adoption for N4PD.
Masoud Toloue: In the last couple of months, we launched three new cytokine 4-PLEX kits that will support our immunology and inflammation customers, performing long-running studies and transitional work.
Masoud Toloue: With over 3,000 publications, there is a lot being built using our Samoa platform.
I'll discuss two important developments.
Masoud Toloue: First, in a recent paper from Nature Medicine, researchers used Quanterix's TDP-43 assay to evaluate the progression of frontal temporal dementia, or FTD, and ALS.
Masoud Toloue: This study showed that plasma extracellular vesicles, or EVs for short, aided in the detection of molecular pathology for these conditions with biomarkers related to repeat tau isoforms and TDP-43.
Masoud Toloue: This example is part of a growing body of literature using Samawa to probe EVs and gain new insights into disease pathology.
Masoud Toloue: We believe extracellular vesicles will be an important field of research spanning multiple disease areas and are engaged with leading researchers to evaluate our new products aimed at streamlining EV testing workflows.
Masoud Toloue: Second, in an October 16th publication in the Annals of Neurology, Professor Jans Kulé used Quanterix's GFAP and NFL assays to monitor patients with Multiple Sclerosis, or MS.
Masoud Toloue: Professor Cooley's findings support a rationale for monitoring MS relapse activity with both NFL and GFAP, whereas much of past work has only examined neurofilament light.
Masoud Toloue: This data suggests that in MS patients, an elevation of GFAP after B-cell depleting therapy is associated with an increased risk of continued progression.
Speaker Change: These findings build upon the growing body of evidence that biomarkers such as NFL and GFAP are key informative analytes for our customers to monitor when evaluating drug efficacy and disease progression.
Speaker Change: Moving to the third pillar in our growth strategy, we continue to progress on Alzheimer's disease testing.
Speaker Change: Beginning with the recent news from the clinical trials of Alzheimer's disease conference last month,
We announce the launch of Lucent-AD Complete.
Our multi-marker assay as a lab-developed test.
Speaker Change: As a reminder, this multi-marker combines Ptau 217 with NFL, GFAP, and amyloid beta 40, 42, and uses an algorithm to provide a single patient result.
Speaker Change: In over 1,000 patients across 3 clinical cohorts, our data has shown that this algorithmic test reduces the intermediate region by 3-fold, while also maintaining overall accuracy above 90%.
Speaker Change: Demand and interest from our customers has been strong as clinicians want the most comprehensive information for diagnosing patients.
Speaker Change: This test builds upon our best-in-class single-marker P-Tau 217 offering, providing results to more patients.
Speaker Change: In the long term, we expect multi-marker blood-based testing to be the predominant method to diagnose Alzheimer's disease.
Speaker Change: We've already begun to see this develop. In September, Mount Sinai Health System announced they would deploy multiple blood-based biomarkers as early detection tools across primary and specialty care settings.
Speaker Change: Monsignor will be examining PTAL 217, NFL, and GFAP using our assays through a grant from the Davos Alzheimer's Collaborative.
Speaker Change: We also continue to engage with the FDA on our P-Tau 217 single-marker submission. We expect to wrap up our clinical validation studies next year.
Speaker Change: RFD submission with multi-marker will use the same clinical trials as our single-marker test, and therefore we expect its regulatory timeline to closely trail our single-marker PTOW217 process.
Finally, an update on global diagnostics development.
Speaker Change: With approximately 10 million individuals estimated to have Alzheimer's disease, China has been an early adopter of blood-based biomarker testing.
Speaker Change: As a country with approved therapies such as Lekembi to help treat the disease's progression, we view China as an important region to build critical Alzheimer's testing infrastructure.
Speaker Change: In September, our partner UltraDx received Chinese IVD clinical registration for its UDX system, which uses Samoa technology.
Speaker Change: UltraDx plans to use the UDX and our highly sensitive Samoa technology for early diagnosis of Alzheimer's and other disease states.
Speaker Change: thereby making our superior blood-based biomarkers accessible in China, a large market with an aging population.
Speaker Change: This is a great example of several global initiatives we're working on to build the infrastructure for non-invasive blood-based Alzheimer's testing.
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Vandana will now discuss our financial performance.
Thank you, Mahfouz.
Speaker Change: I will now go over our third quarter preliminary results and our reaffirmed guidance for 2024.
Speaker Change: Before we go through the financials, I'd like to remind you that the company disclosed the need to restate certain prior period financial statements to correct non-cash errors related to those periods.
Speaker Change: I refer you to the schedules attached to our earnings release.
Speaker Change: These represent our preliminary best estimates of the potential impacts of the restatement, and we leveraged these for our prior period comparisons.
Speaker Change: Please note that these preliminary figures set forth in the schedules are based on currently available information and are unaudited and subject to adjustment.
Speaker Change: We intend to complete the restatement by the end of this year.
Speaker Change: Actions are also underway to continue to strengthen a reporting processes and internal controls and I'd like to emphasize that there is no impact from this restatement on the underlying strength of the business and on our above-market revenue growth rates.
Speaker Change: As Masoud described, the third quarter continued our trend of double-digit growth and margin expansion compared to the prior year and sequential improvement in revenue and cash flow.
Speaker Change: Total revenue for the third quarter of 2024 was $35.7 million, an increase of 13% compared to the prior year.
Speaker Change: Accelerator lab revenue was $10.5 million, an increase of 36%, driven by strength in testing services for clinical trials and custom assay development.
Speaker Change: Consumable revenue was $17.3 million, an increase of 8%, offsetting the decline in instrument revenue, which was $2.4 million, a decrease of 39%.
Speaker Change: Similar to prior quarters, the instrument outlook continues to be challenging. However, our differentiated accelerator offering has created a valuable franchise that has helped us weather a tough cycle and demonstrate double-digit growth, highlighting the continuing demand for our ultra-sensitive SEMOA technology.
Speaker Change: Other sales of $5.5 million in the quarter includes $1.5 million of licensed revenue related to diagnostics, an increase of half a million from the prior quarter.
Total revenue from our Diagnostics Enablement Partners was $2.7 million.
Speaker Change: In terms of revenue stratification, our customer mix in the period was approximately 50-50 between pharma and academia, and 92% of our assay and accelerator sales were for neurology disease states, including testing services for multiple Phase I, II, and III trials.
Revenue from lucent patient testing was immaterial for the quarter.
Speaker Change: Our revenue growth was led by North America, which grew 27% due to strong momentum in lab services and from our diagnostics enablement partners.
Speaker Change: The Europe region grew 2% and the Asia-Pacific region was down 34% in the period.
Speaker Change: Moving on to gross margin for Q3. On a preliminary basis, GAAP gross profit and margin were 21.1 million and 58.9% respectively, up 2.2 million and down approximately 100 basis points compared to the prior year.
Speaker Change: Third quarter preliminary non-GAAP gross profit was $19.1 million, and preliminary non-GAAP gross margin was 53.4%, up $2.8 million and approximately 160 basis points respectively, compared to the third quarter of 2023.
Speaker Change: We ended the third quarter of 2024 with $296.1 million of cash, cash equivalents, marketable securities, and restricted cash.
Speaker Change: Cash flow in the period was a net outflow of $3.3 million, which was higher than the prior year period by $1.5 million, but an improvement from the prior quarter by $1.7 million.
Speaker Change: As we had outlined at the beginning of the year, this includes significant investments in our strategic priorities, asset development, advancing into adjacencies, and diagnostics.
Speaker Change: We continue to improve core RUO cash burn, as demonstrated by improving margins, and continue to expect that the RUO business will achieve cash flow breakeven in the $170-$190 million revenue range.
Speaker Change: With a strong balance sheet, we continue to implement our disciplined capital allocation strategy to support our three-pronged strategic plan.
I will now address guidance for the remainder of 2024.
Speaker Change: We are reaffirming the guidance we previously issued. We expect full year 2024 revenue of $134 to $138 million, representing double-digit growth of 11% at the midpoint.
Speaker Change: Similarly, we are reaffirming our GAAP gross margin guidance of 57-61% and our non-GAAP gross margin guidance of 51-55%.
Speaker Change: Finally, there is no change in our previous cash burn assumption of approximately $30 million for the year.
Masoud Toloue: I will now turn it back over to Masoud for his final thoughts before opening the call for questions.
Thank you, Vandana. Quanterix continues to deliver.
despite the industry's macro backdrop for three reasons.
first
Samoa sensitivity is unparalleled and its demand robust.
Masoud Toloue: Second, we're able to deliver on this demand through instruments or accelerator services, which is a non-CAPEX and efficient way for biopharma to receive SEMOA data.
Masoud Toloue: Third, our translational customers are heavily invested in phase two and three studies and there's no sign of slowing when it comes to neurology related trials.
We are at the beginning of a neurodecade.
Today, Quanterix is a tools company growing double-digit.
differentiated through our resilient business model
Masoud Toloue: Uniqueness of SEMOA Ultrasensitivity and Clear Path to RUO Cash Breakeven.
Masoud Toloue: break even such that we're using our balance sheet to fund and drive large upside opportunity to our existing double-digit tools growth story.
Specifically, leading the way in non-invasive testing for Alzheimer's disease.
Operator, we can take some questions.
Speaker Change: Thank you. At this time, I would like to remind everyone, in order to ask a question, press star, then the number 1 in your telephone keypad. If you would like to withdraw your question, press star 1 again.
Speaker Change: We'll pause for just a moment to combine the Q&A roster.
Speaker Change: And your first question comes from the line of Matthew Sykes with Goldman Sachs. Thank you, please go ahead.
Thank you for watching!
Speaker Change: Hello, this is Jaygon from MAP. Thank you for taking my questions. The first one I wanted to talk about the Accelerator Lab as this continues to outperform our expectations. How would you characterize the sales in the quarter in terms of new versus existing customers? And for my follow-up, how would you frame the level of utilization from your Alzheimer's Diagnostic Health System Partnerships and has this trended in line with your expectations? Thank you.
Speaker Change: Yeah, hey, you know, I think the, obviously, we're very excited about the accelerator business. Accelerator grew 36% this year. I mean, this quarter, it made up about 30% of our business.
Speaker Change: So, you know, I would say about 70 to 80% of the reoccurring customers in Accelerator this quarter are customers that are just coming back to us.
Speaker Change: In terms of the diagnostics capabilities, you know, while lucent AD testing
Speaker Change: Yeah, that's right. You know, on the enablement front, we talked about $2.7 million of revenue this quarter. Last quarter, we had reported $700,000.
Speaker Change: So these will ebb and flow as we get individual partners stood up, but we're seeing good interest from our partners. We also referenced what Mount Sinai is doing with our instruments in terms of being able to use them for diagnostics testing. So very pleased with the progress and starting to see similar technologies spread through our diagnostics footprint.
Operator, do we have another question?
Thank you. Yes, your next question comes
Speaker Change: Hey Sengji, yeah you know what, that's going to be an important question we're going to answer you know more towards the beginning of 2025 and obviously it's going to be directly related to you know patient utilization of the of Lekembi and Kazumla and and and how that ramps.
Speaker Change: And so, you know, we were just at the CTAD conference.
Speaker Change: last month and you know part of the kind of the situation with this ramp
Speaker Change: is really, you know, accessibility to PET scans and how PET isn't accessible in rural areas, uncertainty in eligibility for the therapy, and then obviously infusion accessibility.
Speaker Change: You know, we think obviously that blood-based markers changes this. We can really reduce cost versus PET.
Speaker Change: kind of correlated to how the therapies ramp in the year. We're seeing excitement. We're seeing obviously a lot of utilization of our markers in clinical trials.
Speaker Change: for, you know, anti-amyloid, anti-tau trials that are happening. And we'll comment at the beginning of the year on how much of that we think is diagnostic testing related to the therapy.
Speaker Change: Gotcha, thank you for that. And then just on the biomarkers, congratulations on launching the multi-panel assay and you mentioned that you expect the complete Lucent AD Complete to be used predominantly in the future.
Speaker Change: and was wondering could you remind us again what the difference is between this multi marker panel versus your own 217 single marker assay from being able to kind of narrow this intermediate
Speaker Change: segment of the diagnosis, and then also kind of maybe, you know,
Speaker Change: You also presented data on the BD Tau assay and was wondering kind of how all these different assays will
Speaker Change: fit together in the future? Do you expect the BD Tau to be used more for kind of the new therapies under development? Or do you think the BD Tau could also be utilized for Lekembe and Kisanla as well? Thank you.
Speaker Change: Yeah, sure. So, starting with your question on Lucent AD Complete. So, Lucent AD Complete is a significant
Speaker Change: improvement on the single marker test and that our single marker test
Speaker Change: Lucent AD is a 217 marker and then the Lucent AD complete is not only 217 but it adds the NFL GFAP
Speaker Change: A-beta 40 and 42. So it's a it's a five marker test.
Speaker Change: which essentially provides a more definitive result to a higher number of patients versus any sort of single marker test.
Speaker Change: As I compare, if you look at immunoassay signal marker tests in the industry, they typically have an intermediate zone that's 20% or up to 30%. And so this, you know, is a marked improvement.
Speaker Change: for patients and we've been, you know, seeing a lot of excitement about the test at CTAD where we launched it and also in follow-up conversations after after CTAD.
Speaker Change: So we're very excited about that. And then I think, Sanjeev, your second question was around BD Tau, and so
Speaker Change: BD Tau, we launched a quarter ago and now recently we added BD Tau in a 4-Plex test.
Speaker Change: And really where we're excited about these tau proteins is being able to differentiate tau variance.
Speaker Change: from what's happening in the brain versus peripheral sources, and we think that is going to be important in staging the tau pathology, but also important for monitoring patients in clinical trials.
Speaker Change: and ultimately could enter into some of our multiplexes in diagnostics. So I would say it's still very much a research marker to be used in research applications and clinical applications, but could have potential for diagnostics in the future.
Great, thank you so much. We'll get back into queue.
Thank you. Next question comes from the
Speaker Change: Hey guys, thanks for the questions. Congrats on the good results. So first I want to talk about the product line for revenue. I think it was touched on earlier, but specifically just this kind of interplay between instruments and accelerator. I think instruments was down 34% in the quarter. Year-over-year, I think accelerator was up conversely like 36% or so. Any instrument revenue you slip into accelerator,
Speaker Change: in 3Q, and how does that kind of like, you know, that exchange, that overlap, progress over the next, you know, several quarters, let's say, given macro kind of dynamics changing and evolving. Thanks.
Speaker Change: Yeah, so let me address the first part of the question and then we'll talk about how we expect the macro to evolve.
Speaker Change: So, you know, at this point, there's definitely that toggle of instrument versus accelerator. We've seen that play out for almost six quarters at this point now. And what we've seen really is the reduction in the instrument revenue is more than offset by what we're pulling through from an accelerator perspective.
Speaker Change: So, you know, that toggle has, in the short term, worked in our favor. In the longer term, of course, we would like all our customers to buy instruments and buy consumables with that, etc.
Speaker Change: So, with that backdrop, you know, again, very pleased with how Accelerator has performed. It's not just the benefit of the instrument toggle. It's also the fact that there's a lot of activity from a research and trial perspective that Accelerator is getting more than its fair share of.
Speaker Change: In terms of how we see this move forward in the future, you know, we, like others, would love to see instruments come back. At this point, we haven't seen any concrete signs of it, so I think it's going to be a bit of a slow recovery here.
Speaker Change: From the perspective of Accelerator, though, we do expect that even when instruments come back, this will continue to be a double-digit grower for us, just based on all of the work that we're seeing on asset development as well as in terms of trial work.
Speaker Change: So in the future, we would love to see a place where instruments are back to their double-digit growth, but in that scenario, we also believe that accelerators could continue to grow double-digit.
Speaker Change: Okay, that's interesting, Vandana. And maybe just pushing on the instrument kind of theme, you know, it's in flat past three quarters or so, as you predicted. Next quarter, I assume it's kind of a similar outlook, probably just, you know, we're waiting for the restatement, but I'm sure it's going to be relatively flat. Maybe early 25 and throughout the year, next year, are you assuming any gradual improvement or like kind of inflection at some point? Or maybe should we assume, you know, kind of steady instrument revenue levels or something like that, and then maybe picking up towards 4Q?
Speaker Change: Yeah, so it's a little early to talk about 2025. For Q4, you know, our early indicators are that it'll look a lot like, instrument revenue will look a lot like what Q3 looked like. For 2025, it's a little early for us. We haven't seen any signs this way or that. So as we get into the early part of the year, we'll give more color on that.
Speaker Change: Okay, and, you know, I'd parse out consumables as well, because it looks like that kind of missed our model a little bit. I can come back to that offline. Maybe, just for lucent...
Speaker Change: A.D. complete, just in terms of the reimbursement next steps, you know, Massoud, what's next from like a commercial place perspective? What can you do in the meantime with them, I guess? And from like the Medicare perspective, I liked the CLF didn't look super favorable for these A.D. detection tests from like a payment perspective, how are you thinking about that I guess going forward? And then how will you scale with, I guess, next year? Could you use partners? There's guy only going to be like a sales team, just walk through that one more time, thanks.
Yeah, Kyle. So, I think, you know, the first...
Speaker Change: point I want to make on the on Lucent AD is that you know from a reimbursement perspective
um
Speaker Change: If you look at single markers, you know, there was the, obviously, the $17 decision.
Speaker Change: that came out and for a single marker and we think that ultimately that probably ends up at, you know,
$90 to $130
Speaker Change: Regardless of that decision, our goal had always been that the company was going to focus on, you know, a four or five marker test. And with Lucen AD, you know, we have a five marker test that we're really focused on clinical utility studies, the ongoing clinical trials that are going, which we expect.
will complete in 2024.
Speaker Change: and really provide us with the data for, you know, an LCT and, you know, submission for an ADLT.
Speaker Change: sometime in 2025. So that that's sort of the reimbursement time frame that we're looking at and you know because it's a multi marker test we expect you know something materially larger than what was decided for single marker.
Speaker Change: I was kind of like... Partners. Yeah, the growth of the partners I think was your question. How to scale it basically. Yeah, are you... Because now we're at an important time with budgets and so forth. Are you going to build a team out here or are you going to use partners or something like that?
Speaker Change: Yeah, you know, our strategy, Kyle, has been both we, you know, as one of the key things that we continue to reiterate is that our focus is building on.
Speaker Change: It's to build the global infrastructure for testing. And that means that we're not going to do it just by ourselves, right? So, you know, we continue to sign hospital partnerships. We continue to enable.
Speaker Change: folks using our reagents, and we want to get this test out there, not just in the U.S., but globally, and we talked about some of our initiatives.
Speaker Change: globally. At the same time, you know, we're going to have a lot of capacity here in Boston. You know, we have 24 HDX systems, we have a superb
Speaker Change: team in the accelerator group, which is our CLIA lab over here, and significant capacities to ensure access to the test.
Speaker Change: All right, that was great. And then just one final one, kind of like a forward-looking question on diagnostics. What are some of the kind of like proof points that you're looking for next year, like in 2025, that's going to help you basically decide to accelerate or pull back on that investment in that business? You know, I understand that it's immaterial revenue most likely for the near term, but it just, you know, kind of like the definition of success for you in that diagnostics business in the near term could be interesting to hear.
Speaker Change: Yeah, so, you know, I want to make a clear point that now that there are two therapies approved...
The
A number of trials and excitement for additional therapies.
Speaker Change: it's pretty significant, you know, pretty material. And we're seeing that with our 36 percent accelerated growth rate. People are coming to us for these phases one, two, and three trials, and I haven't seen, you know, this demand in the market for these neurology trials before. We think that's robust, and they'll continue to be robust.
Speaker Change: I think, you know, the key driver for diagnostics will come down to the two therapies that are approved.
Speaker Change: And if we start to see that ramp, I expect demand for blood-based testing...
Speaker Change: to also similarly ramp. So, you know, obviously we're paying very close attention.
Speaker Change: to that, as we think that, you know, a non-invasive blood test will streamline the whole diagnosis process and obviously is more scalable and accessible in the market.
Speaker Change: In terms of resource utilization, you know, we've talked in prior calls.
Speaker Change: about our RUO business becoming cash flow break-even between 170 and 190 million revenue. And our plan is to achieve that and use our balance sheet for investments like diagnostics.
Speaker Change: Key items for continuing to invest, obviously reimbursement is a critical part of that. We have high ambitions on what this reimbursement rate will be for Lucent AD, as it's a much more sophisticated test than a single marker.
much more accessible than pets.
Great. Okay, that's helpful. Thanks, Vandana. Thanks, Carl.
Speaker Change: Thank you. And next question comes from the line of Dan Brennan with Teddy Cohen. Thank you. Please go ahead.
Speaker Change: Hey, good afternoon. This is Kyle on for Dan. I wanted to go back and maybe follow up on a question that was asked.
Speaker Change: earlier. So now that you have data on p-tau 217 in a multi-marker in bd-tau, all showing good accuracy, do you see specific use cases for each assay or do you think the one that has the highest accuracy and lowest intermediate zone will take essentially all the potential business? Thank you.
Speaker Change: Yeah, Kyle, first, you know, I think an important factor to consider is that, you know, with the Samoa platform, because it's an ultra-sensitive platform, all patients coming to see a neurologist will get a result.
And that can't be said for other, less sensitive platforms.
Speaker Change: So, I think that's the first key differentiator factor with, you know, when a clinician tries to make a decision between different immunoassay systems.
Speaker Change: I think the second thing comes down to this intermediate zone. When you add the multi-marker test, you know, the five markers with this algorithm,
Speaker Change: you're giving a more definitive result and hopefully less follow-on invasive testing and now that's not just only good for you know decision-making but it's also
Speaker Change: much more accessible and scalable for a patient making the decision. So that's like another really second key pillar of why you would use the SimMobile platform in our multi-marker test. And then that, you know, maybe the third is that, look,
Speaker Change: Pretty short after we launched a five marker test and if you, you know, if a customer or clinician chooses
Speaker Change: the CIMOA platform, they know that we have really exciting markers coming down the pipeline and you can expect an innovative company delivering innovative products to a clinician and to a laboratory who's looking to make that investment.
Speaker Change: Donna, maybe as a follow-up, I guess in your conversations with customers, is the larger gaining factor for clinical revenue therapy uptake performance and availability of blood-based assays or is it really something else? Thank you.
Speaker Change: You know, so it was interesting. This was an item that was discussed.
Speaker Change: I think that, you know, therapy adoption really is gated by sort of this, you know, inaccessibility to pads, you know, obviously there's an infusion, uncertainty and eligibility, and these are all sort of key gating factors.
Speaker Change: But ultimately, testing and diagnostics is an important, you know, important to have that infrastructure there. And so you have this chicken and egg and you need the infrastructure to be out there so that folks can see if, hey, you know, will I even be
Speaker Change: Is the therapy right for me or am I even a patient that has the amyloid plaques? We think blood is the first line test for that and it's going to help clinicians make a choice and it's definitely
Speaker Change: a key component for scaling the therapy and getting therapy to more patients.
Got it, thank you.
Thanks, Kyle.
Thank you and next questions come from
Speaker Change: You can ultimately classify patients all the way from, you know, late stage to screening. And why is it, just help us understand, why is it harder for other immunoassay platforms to be able to do this?
Speaker Change: Yeah, thanks, Puneet, for the question. You know, Lucent AD complete is a five marker test with an algorithm. The majority, or almost all, of the other systems
Speaker Change: immunoassay-based systems and diagnostic systems out there, we'll look at a single marker at a time or maybe at most two markers. And so this is the first immunoassay test that looks at five markers, uses an algorithm to provide a answer for Alzheimer's disease.
Speaker Change: So I think that that's a key unique factor and when we looked at, you know, single marker tests in the market, you have this large intermediate zone.
Speaker Change: With the multi-marker test that zone is reduced significantly And and so makes for a much better test
Speaker Change: You know, two years ago, when we were developing these tests, we always assumed and had planned that a multi-marker test is ultimately going to be the best test for patients when it comes to a blood-based test.
Speaker Change: Got it, that's helpful. And then maybe for one, I mean, just given the efforts ongoing for both, I mean, the FDA study, current studies ongoing, FDA approval and commercialization efforts underway, just can you elaborate, how should we think about OPEX in 2025?
Speaker Change: When we started at the beginning of the year, we had taken into account all of the costs that would go into getting through all of the studies as well as all of the other efforts required to commercialize the tests.
Speaker Change: So, I would say the run rate that we've had over the last couple of quarters for OPEX is representative of where we expect to be for this year.
Speaker Change: Getting into next year, you know, we expect the study costs to be somewhat constant. We've been planning for that all along. And then on the commercial side, you know, we have the ability to move as fast or as slow as the market develops.
Speaker Change: So we'll watch for the leading indicators that Masoud talked about, and if at that point it makes sense to step up the investment, we'll do that, or vice versa.
Speaker Change: Okay, got it. And then, this is a broader question, Masoud, but just wondering what you're seeing among your academic customers versus your biopharma customers in the core research-use-only assays market. There have been a number of questions about the academic, just given some nervousness simply around the political environment and NIH concerns as well. So just wanted to get a view of what you're seeing from the academic customers. Thank you.
Masoud Toloue: So, you know, half of our business is academic and half on the pharma side.
Masoud Toloue: and that was also, you know, very similar make up this quarter. You know, we're seeing excitement from academia around some of the new assays. And, you know, we think we have an install base that has significant underutilized capacity.
Masoud Toloue: and our goal is with these new assays is to have the existing systems that are out there in academia being utilized more and and so you know it like one way to think about this
Masoud Toloue: is that if you look at sort of the average throughput of our install base and you compare it to our accelerator lab
Masoud Toloue: You know, we output five to eight times more samples than the average in the install base. So, you know, obviously we want the system to be running more, and it's not a coincidence that, you know, to achieve that, we're highly focused on new menu.
Masoud Toloue: and these systems running more frequently. So good progress from the team. You know, we did 16 new assays this year. We're gonna have 20 by the year end and we'll see the benefits of these.
Masoud Toloue: This pull through more than 25 and that's likely to have an impact specific towards academic or academic customers.
Speaker Change: Yeah, I think the instrument softness was really across the board. Both academic and pharma were slow compared to the prior year on instruments.
Got it. Okay. All right. Thanks, guys.
Speaker Change: Thank you, and your final question comes from the line of Thomas DeParsy with Nifern Research. Thank you, please go ahead.
Thomas DeParsy: Hi, guys. Just, I guess, a question, you know, related to some of your cost efforts that have been ongoing around Samoa Advantage Plus.
Thomas DeParsy: and I guess, you know, your refreshing of existing essays as well as adding new essays.
Thomas DeParsy: Has that contributed to, you know, I guess, the improved gross margin and just, you know, just maybe related to the research use only side?
Thomas DeParsy: You know, can that continue, you know, as you look out the next couple of years, you know, in terms of, you know, obviously better lot-to-lot consistency, but then also maybe also improved cost, you know, in terms of manufacturing of consumables?
Speaker Change: Yeah, I can take a stab at this one. So, you know, to your first question on how we're doing in terms of transition to Advantage Plus,
Speaker Change: As a reminder, the transition to Advantage Plus helps us from a margin perspective, but is a process that is taking place with our customers in a very thoughtful manner. So this quarter, about 30% of our consumable sales were on the new Advantage Plus lines where eligible. So that's a good transition. Again, it's not a demand signal, but it does help us some on margins.
Speaker Change: And on that, you know, we continue to make positive developments of margins in terms of, you know, both managing the effects of the transformation and at the same time being able to introduce new products.
Great, and then just one other question...
Speaker Change: You mentioned, you know, additional biomarkers related to dementia, which obviously, you know, highly related to, you know, Alzheimer's, you know, if the patient doesn't have Alzheimer's, ALS, and multiple sclerosis. Do you see potential diagnostic opportunities down the road, you know, from some of these biomarkers that you're working with pharma and developing?
Yeah, absolutely. You know, the one of the
Um
research highlights that we made we did was with
Speaker Change: neurofilament light and we think neurofilament light is going to be important for relapsing, remitting relapsing MS.
Speaker Change: and I think some of the studies that we highlighted by combining NFL and GFAP are going to be, you know, important for monitoring disease progression.
Speaker Change: And there's been extensive effort with our, you know, collaborators to build, you know, a research normative database.
Speaker Change: for the purpose of normalizing and taking a look at someone's normal levels.
Speaker Change: of NFL and GFAB. So, I think that, you know, this is just the beginning of markers. If you look at some of the...
Speaker Change: the growing trials, almost all of the neuro trials have a
a Neuromarker, that's a, you know...
Speaker Change: Tertiary endpoint or, you know, an endpoint that's looking at, you know, efficacy, and I expect this to be a pipeline for diagnostic testing in the future.
Great. Thank you very much.
Thanks, Thomas.