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Operator
Good day and welcome to the Accelerate Diagnostics Incorporated first quarter 2024 results conference call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions with our covering analysts. I would now like to turn the conference over to Ms. Laura Pearson of Accelerate Diagnostics. Please go ahead, ma'am.
Laura Pearson
Before we begin, it is important to share that information presented during this call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include projections, statements about our future, and those that are not historical facts. All forward-looking statements are made during this conference call are subject to risk, uncertainties, and other factors that could cause our actual results to differ materially. These are discussed in greater detail in our annual report on Form 10-K for the year ended December 31, 2023, and other reports we file with the SEC. It is my pleasure to now introduce the company's president and CEO, Jack Phillips.
Jack Phillips
Thank you, Laura. Good afternoon. Today I would like to provide a detailed update on the WAVE program. Before I provide my update, I will pass it on to David Patience, our CFO, to summarize our financial results for the quarter.
David Patience
Thank you, Jack, and good afternoon, everyone. Net sales were approximately 2.9 million for the quarter, which compares to approximately 2.8 million for the same period in the prior year. This was driven by an increase in reoccurring consumable net sales. Gross margin was approximately 25% for the quarter, which compares to approximately 36% for the same period in the prior year. The overall decline in gross margin was driven by product mix. Selling, general, and administrative expenses were approximately $5.7 million for the quarter, which compares to $10.1 million for the same period in the prior year. The SG&A expenses for the quarter include approximately $900,000 in non-cast stock-based compensation. The overall decline in SG&A expenses were primarily due to lower employee-related expenses in the current period, as well as non-recurring legal and advisory-related expenses in the prior period. Research and development expenses were $5.2 million for the quarter, which compares to $7 million for the same period in the prior year. R&D expenses for the quarter included approximately $400,000 in non-cast stock-based compensation. The overall decline in R&D expenses resulted primarily due to both lower employee-related expenses as well as lower third-party development expenses for our WAVE program. Our net loss for the quarter was approximately $14.2 million, resulting in a loss per share of 74 cents. Cash used for the quarter was approximately $9 million, excluding cash raised related to our January equity offering. Our cash used for the quarter includes over a million in prepaid annual expenses. As discussed on previous calls, we are focused on driving significant reductions in operating expenses and cash burn in the coming quarters. Now back to Jack to discuss our exciting innovation with WAVE.
Jack Phillips
Thanks, David. As discussed during our last earnings call, Accelerate is uniquely positioned to disrupt the microbiology susceptibility testing market, surpassing emerging positive blood culture and traditional isolated colony systems. The global antibiotic susceptibility testing market is estimated at close to $2 billion and growing at about 6% annually. Divided into two segments, the PBC market represents about $800 million, with the isolate market at approximately $1 billion. WAVE offers a consolidated platform that can process both PBC and isolate specimens on the same instrument. Further key product differentiators include same-shift results, scalability, high-throughput workflow, and profitable cost structures. We received positive feedback and strong interest in WAVE during the European Society of Clinical Microbiology and Infectious Disease Conference earlier this month. Our team presented several technical posters on WAVE. Accelerate was also chosen to participate in a session on breakthrough innovation in microbiology. One of our leading scientists presented an oral presentation focused on the unique benefits of holographic imaging technology deployed on the WAVE system. Enthusiasm continues to grow from current and prospective customers. Moving to our preclinical trial, we have incurred an installation delay at our second preclinical site due to final site contracting, and as a result, the preclinical study is still ongoing. However, we continue to target starting our clinical trial towards the end of the second quarter. No IVD clinical trial and FDA submission is without risk, but we feel confident in our team and ability to manage technical and timeline risks. In parallel to the clinical trial work, we are developing our gram-positive PBC menu, Once completed, this will round out our PBC menu before moving on to the high-volume isolate testing segment. Now turning to our wave commercial strategy. The first step in our three-step commercialization strategy is to extend our leadership in the rapid PBC AST market. To this end, we continue to present WAVE to our current base of loyal customers and secure long-term rapid susceptibility testing contracts. The interest in WAVE remains very high due to its differentiated and highly valued features. Microbiologists, pharmacists, and clinicians alike understand same-shift reporting enables critical therapeutic adjustments which improve patient care and hospital economics. In addition to our ongoing discussions with our existing customer base in both the US and EMEA, we continue to present Wave and its unique benefits to over 500 accounts in our sales funnel. We remain focused on launching Wave and converting our existing customers as this provides a commercial platform for not only quick wins, but it also reduces our overall cash burn with an increased margin contribution per customer. Additionally, we submitted our 510 to the FDA for our Arc system, which is the first automated PBC sample preparation method to enable rapid PBC ID on Bruker's MALDI biotyper instruments. This will give customers another option for rapid ID and will complement WAVE. The second step of our commercialization strategy is to expand our available market by launching an isolate menu on the same instrument already in the lab, producing PBC susceptibility results. WAVE will deliver rapid, same-shift isolate results with a competitive cost structure and one of the largest up-to-date drug menus available compared to legacy isolate platforms. The last step in our commercial strategy is to pursue both geographic and technology expansion. Along with a commercial partner, our goal will be to expand beyond the U.S. NMEA to be a true global provider of rapid ID AST solutions. We will also be expanding the AST menu with more esoteric microorganisms and partnering with pharmaceutical companies to further enable their drug discovery. Also, we envision numerous applications of holographic imaging outside of rapid susceptibility testing, which we plan to pursue. And finally, as discussed on our prior call in late March, an important part of our strategy is signing a global partnership to commercialize our innovation with WAVE. We continue to have robust interest in multiple partners. We remain confident in our ability to secure a partnership by mid-year. In summary, we continue to make progress on WAVE timelines and deliverables. We are excited about the next phase of clinical trials and the FDA submission later this year. Our experience in the market and strong customer base will position us for early success with WAVE upon launch. At this time, I'm happy to take any questions from our covering analyst.
Operator
We will now begin the question and answer session. And the first question will come from Dustin Scoring with William Blair. Please go ahead, sir.
William Blair
Hey, guys. Thanks for taking our questions and appreciate all the color on WAVE. Just wondering if there's any more details you can provide on the conversations you're having with potential customers and how these customers are viewing WAVE versus other competing solutions out there.
Jack Phillips
Yeah. Hi, Dustin. Yeah, I'll take that one for us. Yeah, as I said in my comment, prepared remarks, we continue to have a lot of dialogue with customers on WAVE. We were just at ECMED where we met with customers that was in Barcelona, Spain, and then on a regular daily and weekly basis, we review the Wave portfolio with our customers and prospective customers, up to about 500 in our funnel right now. And the feedback is quite consistent. One, the fact that we have a high throughput, random access, scalable system that integrates high-volume testing like the isolate market testing and rapid PBC in one platform is a very big deal. Secondly, the fact that we're seeing results today in about four hours, which is really will be the gold standard. I mean, today, Pheno is about eight hours, and the systems that have been approved on the market on average are around that as well. And then finally, the ability for the high volume throughput system for us to be able to compete on a price point in the isolate market. We do believe we can restate the isolate market because of the speed to result of around four hours versus overnight today for many of the legacy platforms. But all in all, we will be very competitive there and also competitive in the PBC pricing area as well. That resonates strongly as well. And, again, we're getting a lot of consistent positive feedback, and we've continued to secure customers, the existing customers, long-term contracts, and they're also starting to request, you know, upgrade clauses in their current contracts as WAVE becomes available.
William Blair
Great. That actually goes to my next question. Good to see that the percentage of customers went up to 70%. But when you actually get Wave out with ARC, how would that transition look like from a typical Pheno customer to these new products?
Jack Phillips
Yes, so exactly. Good question. So we're working on that right now. There's basically one of the beauties of WAVE is that we're going to give customers optionality relative to the rapid ID solutions. So, for example, some customers already have... a molecular platform that does rapid PBCID, and they've already made the decision that's the ID platform that they prefer to use into the future, coupled with WAVE for rapid susceptibility. Other customers have multi-platforms, and many, many microbiology labs today now are equipped with multi-platforms because it is a growing segment. Those customers are very excited about the opportunity to produce MALDI in a rapid fashion by integrating Arc into their workflow. Arc will basically provide the opportunity for those customers to get a rapid ID off of MALDI in an hour or two versus today MALDI ID takes, you know, it's an overnight process. And so those customers will be transitioning to a complete solution with ARC plus biotype or MALDI plus the wave susceptibility system. And again, that's so we're really covering all the bases there and having these dialogues. And they've been, again, very positive to date.
William Blair
That's great to hear. Around ARC, just wondering if we can get an update on how the broker collaboration has been going and how this is bringing greater awareness to Accelerate's entire portfolio of products, including WAVE.
Jack Phillips
Yes, so sure. So our collaboration with Bruker is extremely positive, and we have a partnership with them to, the partnership is basically to, you know, develop ARC with their biotyper platforms that they have. We've successfully done that, and we've submitted, as I mentioned in my prepared remarks, we submitted that to the FDA. We've already received comments back from the FDA, and we've responded to those. And so bottom line is the ARC is under review today, and we expect to hear back from the FDA in the coming weeks and then be able to further determine when we believe we'll be successful in getting ARC on the market in the U.S. Understood.
William Blair
And then just one last one for us, the collaboration you have with BD, just wondering if you can talk about any stage progression, you know, funnel velocity, and what this is doing to enhance placements with phenol for future products. Thank you.
Jack Phillips
Yeah, absolutely. I'm going to let David Patience take that one for us.
David Patience
Thanks, Dustin. I appreciate the question. So in the quarter, we contracted 12 new pheno instruments and brought another eight instruments live. So we further, you know, we're able to further penetrate the U.S. market for rapid susceptibility testing for positive blood culture, which is, you know, an important competitive moat for us, you know, with emerging competitors. We see progress with the BD partnership and them getting comfortable selling rapid susceptibility, while we're also fortifying our existing loyal customer base, as we discussed earlier. Both are key in our launch of Wave. As Jack mentioned, we are looking to further improve our economics for customer with Wave, and so securing new customers with BD while also preparing our existing customer base for a Wave transition is are both strategically important to us.
William Blair
Okay, great. Thank you, David. That's it from us. Thanks, Dustin.
Operator
This concludes our question and answer session. I would like to turn the conference back over to Mr. Jack Phillips for any closing remarks. Please go ahead.
Jack Phillips
Sure. Thank you. You know, in summary, we've made very good progress in several areas in the quarter. I'm really proud of our team and what we've accomplished. As highlighting some of those, as David mentioned, we added 12 new rapid AST systems in the quarter in conjunction with our partner BD. We executed contract extensions with several strategic U.S. customers, which will secure approximately 70% of Accelerate's customer base to longer-term contracts for WAVE. We successfully submitted a 510 through the FDA for AHRQ and we, as I mentioned prior, we received confirmation already and our submission is currently under review. And then the WAVE program, we continue to make great progress. The preclinical trial remains underway. We're targeting still to begin. clinical trials in late quarter two. And we've also began development of gram-positive, the gram-positive PBC menu. So a lot of good things happening there on the wave front. And then finally, as David highlighted, we continue to implement initiatives to improve our cash burn and extend our runway. So that's going very well as well. I want to say thank you very much for tuning in to our Q1 earnings call. We appreciate your interest in Accelerate, and I wish you a great day.
Operator
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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