Quotient Limited

Greetings. Welcome to Quotient Limited's fourth quarter and fiscal year 2021 financial results conference call. At this time, all participants are in 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 telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Peter Buehler, Chief Financial Officer. Thank you. You may begin.

Thank you, Sherry. Good morning, everyone, and welcome to Quotient's earnings conference call for our fourth quarter and fiscal year ended March 31st, 2021. Joining me today is Manuel O. Mendez, Chief Executive Officer of Quotient. Today's conference call is being broadcast live through an audio webcast, and the replay of the conference call will be available later today at www.quotientbd.com. During this call, Quotient will be making forward-looking statements including guidance and projections as to future operating results and expected development and commercialization timelines. Because such statements deal with future events, actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements can be found in quotient filings with the U.S. Security Exchange Commission, as well as in this morning's release. In forward-looking statements, including guidance and protections provided during this call, are owed valid only as of today's date, and Quotient assumes no obligation to publicly update these forward-looking statements. With that, I would like to turn the call over to Quotient's Chief Executive Officer, Manuel.

Thanks, Peter, and good morning, everyone. This is my first earnings call since I joined Quotient 60 days ago. Over the past couple of months, I've been meeting with investors, customers, internal associates, both in person and virtually in Switzerland, Europe, and the US. This external and internal perspectives enabled me to develop a clear understanding of the company informed by my many years in the diagnostics and life science industries. When I reflect on the short time I've been here, I believe we are well positioned for the future. I look forward to keeping you updated on the progress over the coming months and years. I would like to begin by providing you with an overview on the following three topics. First, the MOSAIC solution development and commercial readiness, where I will inform you of the progress we've made on each of our transfusion modalities, immunohematology, serology, and molecular. Next, I will provide you an ALBA by quotient full year and Q4 performance update. And lastly, I will provide you with an update on the company's financial position. Regarding our MOSAIC solution and development progress, To further strengthen the company's R&D tech transfer and overall mosaic development strategy, we have added a new member to the Quotient leadership team, Dr. Michael Hausman. Michael will join as Chief Technology Officer in Q2 of this fiscal year. Most recently, Michael served as the Senior Director of Global R&D Clinical Diagnostics Division at Thermo Fisher Scientific. Michael brings over 20 years of experience in the in vitro diagnostics industry and most recently a Thermo Fisher Scientific, he expanded the adoption of Brahms Procalcitonin in China and the US. Prior to Thermo Fisher, Michael led a team at BMRU to develop the VITAS and VITAS-3 assays. And while at Abbott, Michael developed an ex-US architect infectious disease portfolio for blood screening and diagnostics. We will benefit from his experience specifically in assay and instrument development, and across other functional areas, such as manufacturing. I'm extremely excited with Michael's joining, and I know he's gonna make a big impact. During the last few weeks, I've had an opportunity to visit our customers in the US and Europe, and I was encouraged to hear our Fusion Mosaic customers are eagerly awaiting the commercial launch of our innovative system. One of our customers shared The mosaic solution will improve our workflow and help solve the staffing shortages in our industry is facing today. I'm confident the multimodal multiplexing mosaic solution can help address lab complexity, staffing shortages, budget constraints, and for sure the safety of the blood supply that our customers need. We look forward to collaborating with our customers to gain share in the 3.4 billion transfusion diagnostics market in the near future. Next, I'd like to share the continued progress we've made on our three modalities key to the transfusion diagnostic and alternate markets. On expanded IH, or immunohematology, we have made further improvements in our manufacturing process, which resulted in improved performance levels than we have previously published. The ABO, RH, and CELS system performance levels met 100% accuracy. Also, most of the extended phenotyping tests were above 99% accuracy. We now have a confirmed menu and are ready to enter CE marking field trials this month. Very exciting. US field trials will commence shortly thereafter. With recent new hires and with the capital raise, as you've seen from our previous press release, we have the human and financial resources we need to complete the commercialization of the expanded immunohematology product. Regarding our serological disease screening panels, the continued development for the expanded STS menu has brought the performance of the detection of the antibodies for the individual markers to the expected performance level. We have finalized the development for most of the antibodies and antigens and are working on the integration of those markers on the microarray. I will provide more information regarding the next steps at the end of this call. Moving on to our MDS or molecular disease screening, previously we provided performance updates on the MDS assay concordance against the predicate device and we have now completed a successful phase of testing aimed at challenging the assay's limit of detection against the Roche-Cobas. This testing confirmed the Mosaic MDS assay has similar levels of sensitivity for HIV-1, Hepatitis B, Hepatitis C, and this gives us confidence in our ability to extend the development to the full targeted product menu, which I will share on the second part of the presentation. On commercial readiness, we have great news as well. We continue to make progress towards Mosaic commercialization and customer partnerships. Currently, we have received commitment from 12 customers to evaluate and demo the Mosaic solution. The placement served to strengthen our chances of tender success, but also gives us the ability to generate third-party data supporting our scientific narrative. We anticipate 25 potential tenders in 2021. FY22 and FY23. Additionally, our commercial team evaluated various global market expansion opportunities for Mosaic and have identified potential distribution partners. Also, we've hired additional key account managers to support coverage in new geographies such as Poland, Czech Republic, Slovakia, Italy, and Benelux, among others. Lastly, we will expand our laboratory process consultant team to partner with customers to create workflow and efficiency value as they implement the Mosaic solution. Moving on to Alba by Quotient Reagent Business Update. Alba by Quotient is a steady business with 67% of sales based on standing orders, mainly from a small number of OEM partners. We have had a good fourth quarter with 7.4% growth year-on-year, The 2021 full-year sales of Alba by Quotient grew 9.2% over the last year, mostly fueled by direct business growth of 8.8% and our largest OEM customer growth of 11.1% year-on-year. Peter will be sharing some additional data. Lastly, our team has evaluated various global market expansion opportunities for Alba and have identified potential new geographies and distribution partners to fuel the growth. Regarding financials, as the last point, I will give you a brief summary of our current financial position. Last week, we announced the private placement of convertible notes for a total amount of $95 million. The agreement also includes a re-opener for a total amount of an additional $15 million. We are very excited with the prospect of closing some of this additional opportunity in terms of additional funds. Securing this financing from an existing, long-standing stakeholder like Hybridge and other investors strengthens Quotient's balance sheet at a pivotal time for our business. Importantly, the funds allows us to meaningfully advance our strategic vision of developing a multi-modal, multiplexing diagnostic MOSAIC solution for the transfusion market and accelerate our expansion to our commercial opportunities. In the next few months, we will assess possibilities to restructure or refinance our existing senior secured debt, which I know is in some of you's minds. Regarding our investments in Credit Suisse supply chain funds, to date, more than 68% of our initial investment was returned, and we have a remaining $34.7 million outstanding. We believe Credit Suisse should reimburse any potential loss to the company which may incur on these investments. So far, Credit Suisse has not yet committed. We will monitor this in the coming months ahead. With this, I will turn it back to Peter for the financial update.