Quotient Limited

Good day and welcome to the Quotient Limited First Quarter Fiscal Year 2022 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Peter Buehler. Please go ahead, sir.

Thank you, Cecilia. Good morning, everyone, and welcome to Quotient's Early Conference Call for the quarter ended June 30th, 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's filings with the U.S. Securities and Exchange Commission, as well as in this morning's release. The forward-looking statements, including guidance and projections provided during this call, are 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. Thank you for joining us today. We've accomplished a lot in the last couple months. Consistent with our last earnings call, today we'll be updating you on three pillars, the Mosaic solution, ABBA by quotient, and quotient's financial position. First, regarding our Mosaic solution, we will provide an update on the Mosaic transfusion pipeline, which includes three modalities, immunohematology, serological disease screening, and molecular disease screening. Next, we will look into the continued progress in our mosaic commercial execution as we prepare for our upcoming launch in Europe. Additionally, we provide an update on our continuing evaluation of ways to leverage the full capacity of mosaic solution to expand into new market segments. The second pillar that we will comment on is the expansion of the ABBA by quotient customer base, product portfolio, and geographical coverage. And finally, we will provide an update on our third key pillar, the strengthening of quotients financial position. Regarding the transfusion market, let's begin with our first mosaic transfusion modality, the mosaic expanded immunohematology microarray. I'm happy to announce that the EU field trials are progressing as expected. We wanted to share some preliminary data in advance of the completion of the field trials. The detailed performance results were published in our press release as of this morning. The preliminary results are very good. The microarray contains all the key commercial relevant specificities. Most specificities demonstrate performance of 99% or better. Additionally, we received positive feedback from our customers who stated that the Mosaic time-to-result is much faster than the competition, is very easy to use, and requires minimal training. We are pleased to hear that our customers are happy with the Mosaic solution. We expect the CE mark approval around year end, followed by the commercial launch in the EU and other countries which accept the CE marking. In the U.S., the immunohematology field trial activities have commenced. Protocols have been finalized and accepted by IRBs. Site-specific testing agreements are being completed. Instruments have been installed. and staff have been trained on operating the MOSAIC system. Now, I would like to update you on our second MOSAIC modality, the serological disease screening microarrays. Firstly, let's review the updates on the initial STS microarray for the U.S. The initial STS field trials in the U.S. are on track to commence in Q3, followed by the submission of the 510 pre-market notification around year end. Secondly, we're encouraged with the progress of the expanded STS microarray development. We integrated the test into the microarray. Internal performance data results were 99% or better for most tests. The R&D team are working on the optimization of the microarray performance. Our target is to submit for CE marking in Q3 of calendar year 22 and to the USDA by Q3, Q4 calendar year 22. Next, our third mosaic modality, the molecular disease screening microarray, continues to regress through development with primers and synthetic target sequences selected for HIV-2, hepatitis E, and West Nile virus. Additionally, we established external partnerships to accelerate the development of the commercial MDS menu and the system and assay integration. Shifting beyond development, our focus has also been on mosaic commercial execution. Our commercial team and technical teams have been working on the qualification of the expected immunohematology tenders within the next two years. Within that time, we expect to participate in approximately 25 tenders, which represents approximately 50% of the total 21 million annual donations in the European market. Currently, we have 15 customers with first-hand experience on the Mosaic solution. and we have made progress with the previously committed 12 MOSAIC evaluations, five of which are scheduled to take place by year end. As an outcome of the evaluations, we expect to be able to participate in tenders which require evaluations, generate scientific data for white papers, and build country reference sites. In addition to these evaluations, we expect to perform another 10 workflow assessments before the year end of the fiscal year. These assessments will not necessarily require the installation of an instrument and will focus on a lean assessment of the lab workflow. Additionally, we have targeted a distribution program in countries which accept a CE mark approval. We have identified 25 potential distributor relationships across 40 countries with a view to driving market adoption in alternate geographies to our current direct model. The strong performance of the MOSAIC solution is documented in soon to be published peer review publication on the MOSAIC COVID-19 antibody microarray and its comparison to other commercially available high throughput SARS-CoV-2 serological assays. The findings are another testament to the value of our MOSAIC solution. I'd like to conclude our update on the MOSAIC solution by providing you with information on how we've leveraged MOSAIC's power and flexibility by exploring opportunities in new market segments. Part of our strategy has always been to develop and commercialize Mosaic beyond transfusion diagnostics. As the commercial launch in transfusion diagnostics goes closer, we invested time to analyze the market and assess the capabilities of the Mosaic technology. The first and most obvious market is the 750 million plasma market that we have referenced in previous communications. This market requires serological and molecular testing. We will first deploy a mosaic serological disease screening microarray that will essentially be a reduced version of our expanded SDS microarray. As such, we have decided to include a testing for the plasma market in the upcoming expanded SDS field trials. Our analysis also shows the mosaic technology is well suited for clinical diagnostics. The two areas that we will explore in more detail and expect to address first are allergy testing and autoimmune diseases. Based on our assessment, these two markets represent a total opportunity of greater than $5 billion, and we have determined that Mosaic is well-suited for both clinical areas. Finally, in collaboration with an external party, we have completed a companion diagnostic study to assess the feasibility of Mosaic to help differentiate between vaccine-induced seropositivity and natural seropositivity. The results of the study are very encouraging. We look forward to providing you with further information on our expansion into new markets in the coming quarters. Now, I'd like to update you on our second key pillar, ALBA by Quotient. Our ALBA by Quotient business generated $9 million in sales and grew 2% over the first quarter of last year. The growth of our ALBA business was adversely impacted by a contractual price decrease of our largest OEM customer and a lower number of shipping cycles in the quarter. We continue to see solid growth potential for our ALBA business and have evaluated several opportunities. These opportunities include the expansion of the product portfolio, the expansion of our customer base with the acquisition of new OEM customers, and the geographical expansion where we are now in the process of registering the Al-Baba Quotient products in additional markets such as Germany, Switzerland, Spain, and other countries. Finally, our third and final key pillar that I'd like to update you on is Quotient's financial position. At the end of May and early June, we issued convertible notes with an aggregate principal amount of $105 million at an attractive interest rate of 4.75%. These added cash to our balance sheet, which at June 30, 2021, showed $166.7 million in cash and short-term investments. We believe the fact that we are able to raise this amount with Hybridge, one of our important long-term shareholders, and other investors, demonstrates the confidence of the investor base in our technology. We are well-financed to execute on our plans. Additionally, we are in discussions to restructure or refinance our existing debt of $133 million, with the main purpose to avoid further principal payments coming due before the commercial launch of Mosaic. Another action related to our financial flexibility, we are currently reviewing our P&L structure and how we allocate resources. As an outcome of this analysis, I have initiated actions to optimize our cost structure and reallocate resources as Mosaic transitions into the commercial phase. We will further elaborate on these measures later in the calendar year. I would like to comment on the situation around our investments into Credit Suisse supply chain funds. At the beginning of July, we received a further payout of $5.8 million, which reduced the remaining balance of our investment in those funds to $28.9 billion. Based on the latest communication from Credit Suisse, we expect a further payout in August. we continue to remain confident that we should recover the remaining balance. With this, I would like to turn it back to Peter for the financial update.

Thank you, Manuel. Fiscal first quarter product sales were $9 million, an increase of 1.3% from last year's fourth quarter. First quarter, sir. Alba by quotient sales increased by 2%, while sales of mosaic COVID-19 antibody tests decreased versus prior year. Within the Alba by Quotient business, OEM sales represent 65% of all product sales and reached $5.9 million, a decrease of 5.3% versus prior year. This decrease is mainly related to a lower number of shipments to one large customer in Q1 of FY22 versus prior year. Direct and distributor sales of $3.1 million increased 20% year-over-year and represent 35% of product sales. Sales of the Mosaic COVID-19 antibody test decreased versus prior year, driven by a lack of market demand for antibody testing. In the first quarter, gross margin on product sales was 41%, an increase from 39% in Q1 of last year. The improvement is in line with the trend observed over the last few quarters and driven by a better sales mix. In the first quarter, we recorded an operating loss of $22 million compared with $19.7 million last year. In the quarter, operating expense were $25.8 million, an increase of $2.5 million over the prior year. Research and development expense were $12.5 million, an increase of $1 million year-over-year. This increase is related to the start of our expanded IH field trials in Europe and to write-off of R&D raw materials. General and administrative expense were $10.8 million, an increase of $1.3 million compared to prior year. Included in G&A is stock compensation expense that increased from $1 million to $1.8 million year-over-year. The increase in total G&A cost is mainly driven by costs related to leadership changes. Sales and marketing expense of $2.5 million increased $250,000 from the prior year's first quarter, reflecting a continued scaling up of the commercial group in view of the launch of our first commercial menu for donor labs. In the first quarter, depreciation and amortization were $1.4 million versus $2 million one year ago. Depreciation and amortization decreased due to changes in the estimated useful economic lives of certain operating equipment. Net other expense were $2.4 million compared with $5.7 million in the first quarter of last year. Net other expense consisted of interest expense of $600,000 $2 million expense related to the change in fair value of the convertible loan derivative and $200,000 foreign exchange gain compared to interest expense of $5.9 million and the foreign exchange gain of $200,000 in the last year's first quarter. Interest expense were lower in the first quarter of FY22 due to a decrease in accrued royalties. The decrease in accrued royalties is due to a shift of expected future revenues to its market outside the U.S. and Europe. Our net loss for the quarter was $24.4 million, or 24 cents per ordinary share, compared with $25.4 million, or 32 cents per ordinary share in the prior year's first quarter. Net cash used in operating activities totaled $32.1 million in the first quarter of fiscal 2022, compared with $24.8 million in the prior year's first quarter. These numbers include interest payments. The increase of cash used in operations is primarily driven by changes in the timing of D&O insurance payment and payments related to changes in senior leadership. Capital expenditures in the first quarter of fiscal 2021 was $1.4 million compared with $800,000 in the prior year. Expenditures mainly include the purchase of mosaic instrument and manufacturing equipment. Moving on to the balance sheet. Available cash and cash equivalent and short-term investments at June 30, 2021 were $166.7 million compared to $111.7 million one year ago. In addition, we held $8.3 million restricted cash reserve related to our senior secured loan and rent deposit for our Swiss facility. Our short-term investments include investments into two credit Swiss supply chain finance funds. Credit Suisse suspended redemption and announced liquidation of these funds in March 2021. Between March and July, the company received three payouts and the total remaining investment at June 30th, 2021 was $28.9 million. These funds continue to be subject to significant valuations and uncertainties and the company has taken an impairment charge of $2.3 million in March 2021. To date, there is no evidence that would lead to a different valuation. And although timing and amounts of further payouts is not clear, we believe we will be able to recover the outstanding funds within fiscal year 2022. During the first quarter, the company issued convertible senior notes for the total aggregate principal amount of $105 million or $100.5 million net of costs to issue these notes. The notes carry 4.75% interest and will mature on May 26, 2026, unless converted into equity or redeemed in cash prior to that date. The convertible debt is included in our balance sheet under long-term debt for a total amount of $73 million, while $29.9 million are reflected as convertible loan derivatives. This derivative reflects the value of the call and put option related to potential conversion or voluntary redemption. the value of the derivative will be reassessed quarterly. In addition, quotient has an outstanding senior debt for the total amount of $133 million, out of which $30.2 million are classified as current portion of long-term debt. This amount relates to principal payments due in October 2021 and April 2022, respectively. As previously announced, we are in advanced discussions to refinance or restructure this outstanding debt facility. With our current strong cash position and the expected finalization of the debt restructuring, we are well financed and do not anticipate any liquidity constraints in the foreseeable future. Accounts receivable totaled $4.5 million and inventory totaled $23.2 million. Compared to March 31st, accounts receivable decreased by $900,000 due to seasonality in sales, while inventories increased by $1.1 million. The increase in inventory is related to the acquisition of instruments and an increase in raw materials for our conventional reagent business. Moving to guidance. For fiscal 2022, we are maintaining a full-year revenue forecast from product sales of our Alba by Quotient reagents in the range of $35.5 million to $36.5 million. No milestone related to other revenues are expected. For the second quarter of fiscal 2022, we expect sales of Alba by Quotient reagents between $8.2 and $8.7 million. We forecast capital expenditures in the range of $5 to $10 million. With the acceleration of our Mosaic field trials, we expect cash use in operations of approximately $6.5 to $7 million. This amount does not include debt service costs or capital expenditures. No guidance is provided on operating loss. We do not expect major revenues derived from Mosaic through the balance of the current fiscal year. With that, let me now turn the call back to Manuel.

Thank you, Peter. Looking forward now, I would like to share upcoming plans for the three key pillars, as I mentioned a few moments ago, beginning with the mosaic solution and transfusion pipeline. The CE marking field trials of our first mosaic transfusion modality, the expanded immunohematology microarray, are progressing as planned, and we expect the initial European regulatory submission to be completed in the third quarter of the current calendar year. We expect to obtain the CE mark of our expanded immunohematology microarray around year end. U.S. field trials are expected to start in the third quarter of fiscal year 2022 with an FDA submission anticipated before fiscal year end. Regarding our second modality, the serological disease screening microarray, we will commence field trials for the initial SDS-510K submission in Q3 calendar year 2021 and we expect to resubmit to the US initial STS microarray around year end. The R&D team will continue to optimize the performance of the expanded STS microarray. We expect to start EU and US field trials in Q2 calendar year 2022 with an anticipated European regulatory submission and FDA BLA submission in the third quarter of calendar year 2022. As mentioned before, We plan to include the STS plasma microarray in the expanded STS field trials. This will help accelerate the timelines associated with our plasma opportunity. On the patient side, we are developing the patient microarray according to the letter agreement with Ortho and expect a European submission in the third quarter of calendar year 2022. Regarding the outlook of our third mosaic transfusion modality, the molecular disease screening microarray, we're currently evaluating alternatives for the instrument setup to integrate extraction and amplification as we already have detection. Shifting now to mosaic commercial execution, we will continue to provide customers with insight on how to optimize the workflows with the mosaic solution prior to the first European tenders. I'd like to conclude with the Mosaic solution portion by providing you with all a look into how we plan on leveraging the Mosaic technology in new market segments. We will continue the assessment of the market opportunities and seek additional external partnerships, particularly in companion diagnostics. Additionally, we will dive deeper into this opportunity and provide an update in our Q2 earnings call in early November. Moving on to our second key pillar, Alba by quotient. The team continues the assessment of opportunities to accelerate sales growth and have identified opportunities to expand our product portfolio, and our team is in discussions with potential new OEM customers and will continue to register products in new markets to expand direct business. And finally, to our third key pillar, our financial position. We have a healthy cash position that allows us to sufficient financial flexibility to execute on our plans. We are confident that we can address our outstanding senior debt notes in the near future, which will further improve our cash runway. That brings us to the end of our forward-looking plans. Before we conclude, I'd like to take a moment and to thank Peter for his commitment and contribution to Quotient. Peter joined us a year and a half ago, and in that time, he's made a significant impact to the business and our company. On behalf of the Quotient family, I want to thank Peter for his value contribution and support to help drive our company and strategic vision. We are in the final stages of our CFO search, and we hope to be able to share a more detailed update by the end of this quarter. As you know, Peter will stay with us until the end of the year, but I just wanted to take the time to thank him for his contribution and the work we've done so far since I joined the company. Now I would like to turn it over to Cecilia to open the Q&A session. Cecilia?

Thank you. If you wish to ask a question at this time, please press star one on your telephone keypad. Please ensure the mute function on your telephone is switched off to allow your signal to reach our equipment. Again, please press star one to ask a question. We will take our first question from Josh Jennings from Cowan. Please go ahead.

Hi, this is Eric on for Josh. Thanks for taking the question. Looking at the preliminary EU field trial data that you reported today, which looked very strong, could you help us understand what the remaining steps are for these results to be finalized? Is there any risk that the correlation of these antigen identification tests could drop in the final analysis? And then are there any other antigens that could be included in the final IH or expanded IH menu? Thank you.

Yes, thanks for the question. I appreciate it. Yeah, so next steps is basically we're gathering more data in the three different sites that we are engaging in our field trials. As we continue to consolidate and generate additional data, of course, the results will change, but we don't expect them to be any major difference with the specificities that we've outlined. There are more specificities that that are being evaluated, like the reverse grouping and, you know, antibody screening. Those will be, you know, further analyzed and shared. We could not share the data now as we're, you know, we're sort of gathering additional information on those, but also the performance of those is also looking, you know, very good. So, yes, as we continue to do that, we'll continue to share more information, and, you know, we'll go forward. Anything else you want to add, Peter? Yeah, so we talked about the additional specificity, so that should be included. So we expect at least to have 17 to 18 specificities in our submission.

Great. And then looking beyond the clinical programs and thinking about future commercial traction, If you're able to capture IH tenders in the coming months, how long do you think it would be before those centers are really able to pick up their utilization of Mosaic to the point that we're seeing meaningful revenues come through? Are there any other training requirements on the system that we should have in mind as well?

No, you know, I think, look, I think it's going to be a matter of the speed of implementation as they complete the tender process as we participate. And then, you know, we'll be trying to accelerate, you know, as part of that process. What we have identified is, you know, a project manager, let's say, that we would provide as part of those, as well as the IT component that we know becomes critical, you know, for any type of implementation. So having a team ready to support that process in a phased approach, you know, as we move work collaboratively with customers in that implementation. But we don't foresee, again, we don't have a specific timeline. We've talked about we will be going at either the speed of the institution or trying to provide resources to accelerate the adoption of those to go live much quicker. So we're looking at different options to be able to do that.

That's helpful. And then one more, if I may. Thank you for sharing all the detail around the tender process. Can you help us understand how many blood centers have experience with Mosaic through the hypercare program, adoption of COVID-19 antibody testing, and through ongoing evaluation programs? Are all of these centers factored into your comment around 15 customers who have Mosaic experience? We're just trying to get a sense of how many centers... represent the lowest hanging fruit for quotient 1C, Mark, is in hand?

Yeah, those are included in the 15 that we referenced in my remarks. So far, and that's basically mainly, you know, between Europe and the U.S. And certainly our goal is as we, you know, move forward, you know, with the evaluations, as I mentioned, you know, of the 12, you know, to complete five of those, And then we're looking at additional, you know, workflow analysis, which may or may not include an instrument installation. So our goal is to get the mosaic in the hands of, you know, our customers because the feedback that we've received every time is so positive that, you know, so we're going to be working with that in the next, you know, months to come and be aggressive in that. in those evaluations or even lean assessments to be able to continue to drive that adoption. And then the other piece that I would add, which may be sort of additional to your question, is also, as I mentioned in my remarks, we're looking at distributor models for countries that receive CE markings to ensure that there are opportunities in those countries. once we get CE marking that, you know, then we don't perhaps not even have to participate in tender process, but that could, you know, be an interesting opportunity for us going forward as well.

Understood. Thank you.

We will now take our next question from Brandon Coulard from Jeffries. Please go ahead.

Hey, thanks. Good morning. Manuel, in terms of sort of the pre-market process, you know, detailing activity. You talked about some workflow assessments, which I think is a new strategy. Can you sort of explain the difference between an evaluation and a workflow assessment? Will those be the same customers, and how does a workflow assessment help lead to a Mosaic installation?

Yeah, thanks, Brandon. Good to hear from you, and thanks for the question. So basically a workflow assessment is, or a lean assessment as we call it, is really to help the customer understand as they go through a transition process, maybe or even before then, what are some of the inefficiencies related to the operations of a laboratory or a donor location. And so it's really understanding inefficiencies from a staff perspective, from a space perspective, turnaround time. So there's all these different factors that we find, and we have tools to be able to say, hey, you can gain efficiency and effectiveness with how they're running a laboratory. So we have the skill set in our teams, and then that leads into opportunities being generated, because if we can then help a customer understand those inefficiencies, then we say, hey, by the way, those inefficiencies can be helped addressed by introducing the Mosaic solution. So it's sort of a way to, you know, help customers understand how they can be better. And then on top of it, you know, as you justify, you know, the Mosaic opportunity, then you say, okay, well, I can help save X percent on your current operations because of this solution. So then not only does it help efficiencies on, you know, the way they operate, but then going forward, what the Mosaic solution can help address to justify the investment they would make on our system, our solution, and then even have savings beyond that, which I think has been referred to by Franz, my predecessor, as a 20% savings in operations even before, you know, while the Mosaic solution has been implemented. So that's the goal. And then versus an evaluation may not be as deep as the lean assessment, but in our target, we would try to see if we can combine both. But, you know, some of the evaluations are part of a tender process, which may or may not include a lean assessment, but our goal would be to sort of include that because it will clearly, you know, help address some of the efficiencies and effectiveness that they can gain with our solution.

Okay, that's helpful. You alluded to, you know, a review of the cost structure that seems, you know, somewhat preliminary. Would you expect to be in a position to sort of elaborate on those plans? And will this exercise lead to net cost savings or more of a reallocation of current spending? And where do you see, like, I guess, the – Yeah, it's a combination of both.

I mean, I'll have – yeah, thanks for the question. I think it's going to be a combination of both, and I'll have Peter comment on that. But as I was coming in, you know, I started looking at different functional areas of spend, you know, how are we spending against benchmarks, one for an established business like an ALBA business and one for are we investing for growth for our Mosaic solution. And, you know, from that standpoint, we've looked at some potential efficiencies, you know, that we see. One, there is reallocation opportunities. Also, there's some savings opportunities. So we're going to be looking at both. So, again, I think as we transition to commercial phase, there's some things that are pretty obvious to us as we look at the different distribution. But, Peter, you want to comment?

Yeah, no, I think it's indeed both. So we basically just took a step back and did a fresh look at our cost structure and where we allocate our cost, especially as they grow as well. And then how would we reallocate those as we get into commercial? And also making sure we continue to properly fund the ALBA business to make sure we can support the future growth there versus, of course, investing into the Mosaic opportunity. So a lot of it will be rebalancing, especially external spend, but then also, of course, making sure we get more efficient and get better value for the money we spend.

And then the last thing I would add on that is, as I look at also, so we need to make sure we deliver on the here and now on the transfusion. And so that's, of course, the main focus for us on the mosaic solution. But additionally, as I mentioned in my remarks, we believe there's some low-hanging fruit, as I would say, on the plasma and, you know, on the clinical market that we need to be able to, you know, also fund and, you know, perhaps even accelerate. Because We think that the mosaic could be a really great solution in some of these clinical areas. As you guys probably saw in our AK, I think we released Dr. Hausman has joined us starting Monday, this past Monday. And, you know, so we're already in discussions on, you know, how we can leverage his expertise in clinical diagnostics across our business. So I'm not saying that we're going to distract ourselves now and not deliver on transfusion because that's the here and now. We are fully committed to do that. But I think there's other opportunities that I think as a team we believe would be very interesting for us to pursue.

Great. And then last one, just on the U.S. field trials for the expanded IH menu, it sounds like you've got most of the pieces in place. Kind of what's left to do before you can start the trial?

Well, frankly speaking, it's now we're completing the CE mark trials. So we're actually, to be honest with you, some runs that we have to do from a manufacturing perspective that are scheduled in there. That's pretty much it. The team is working on some smaller tweaks in some of the specificities that we want to be able to do for the U.S. market. But I think from a clinical trial or field trial perspective, all the things are in place for us to be able to deliver on that. So it's a matter of, you know, just shifting some of the resources, you know, there from the CE mark field trial to the U.S. But, you know, again, nothing should be in the way for us to be able to do that at this point.

Great. Thank you.

And, again, we're excited with the, look, I'm sorry, I wouldn't say we're very excited with the field trial data on the CE mark. Again, it's a place that the teams are excited because we haven't been there before, you know, at the level of quality of the results. So I think it's super encouraging, again, and everybody's kind of pumped internally for that.

We will now take our next question from Matt Sykes from Goldman Sachs. Please go ahead.

Thank you, and thanks for taking my questions, Manuel and Peter. I appreciate it. Just first on plasma. Hey, Matt, how are you? Hey, I'm great. Just maybe on plasma, you kind of hinted at last quarter, and now you're going to leverage your clinical trial sites for that. How should we think about the timeline for plasma? Has this been accelerated a little bit, or how do you think about the timeline for plasma?

Yeah, so I think it will follow. So it's been pulled in because I think previously we've communicated that to be in 2023. So as we run them in parallel then, you know, with our STS for U.S., I think it will be more in parallel with, you know, with what we have there. So, you know, in terms of launch, so I would say maybe a couple quarters in. Let me look at Peter and see if we have a –

We haven't really finally determined the exact timelines for the submission. What we said is we're going to bring it into the SDS field trials, right? And then I think the submission, we still need to figure out exactly how we sequence that.

But I think, look, it looks like it's a couple quarters in at a minimum, Matt. I'm pushing for this one site that we have, which is going to be sufficient for us to then take this data and then submit for approval. So, Again, I would say, you know, at least, you know, two quarters of six months prior to, you know, to where we had it originally.

Great.

Thanks. Maybe more like you. Like, I would say it mimics the STS approval for the U.S. and CE marking the same, you know, so it matches the STS expected approvals that we see instead of lagging it by, you know, that time.

Okay, that's really helpful. And then just on Alba, you mentioned a couple things in terms of expanding the product portfolio, expanding out the geographies. I know we're going to get more details on the cost structure, but I'm just wondering how those investments in Alba fit into how you're thinking about sort of the future cap allocation within the company.

Yeah, so what we're saying, look, and I'll give you some little simple things. I mean, we didn't have the product registered in in my opinion, key countries in Europe. So, you know, that doesn't take a lot of investment, but we're going to get a nice return. Even, you know, outside of Europe, like there's opportunities, you know, in Asia that we were not really going after, which we are now. So that doesn't take a lot because it's more tender based. So it's just, you know, a margin in a discussion with, you know, through a distributor in specific countries. So I think, again, in terms of portfolio, it's not a huge investment. It's just, you know, we can absorb that within the allocation that we have currently for, you know, R&D and development in the ALBA business. So it's not like a huge investment on the ALBA. So I would say for ALBA, it's very minor investment, you know, if any incremental to what we have allocated there. but it's going to give us a big return. So it's more on those sides that we were commenting. So I hope that answers your question.

Yeah, no, that's helpful. And just the last one for me, just given COVID and the resurgence we're seeing, how are you factoring this into your plans? And obviously it's incredibly uncertain, so it's hard, but just how are you thinking about potential resurgence in COVID and access going forward as we go into the back half of the year?

Yeah, we don't. So right now, Matt, we don't anticipate any impact from COVID into the projections that we have, whether it's on timeline or, you know, our ability to continue with our path that we've described during this call. So in terms of business resruption, we don't see that today. On the contrary, what we've seen is the UK just opened starting this past Monday where, you know, you don't have to quarantine. So For the first time, I'm going to be able to visit our Edinburgh site because I was not allowed to go. So I think what we've seen is sort of going the other way. What we have seen is that, you know, I think you've also read it in the news that even people who have been vaccinated, you know, because of the Delta virus, you know, they're getting infected, which, you know, we had, you know, a consultant that came to visit us experienced that. So, again, we don't foresee anything, any major impact to our operations or our business, but we are keeping a close look on how we're going to be managing that from a company standpoint and our employees going forward. Thanks very much.

Yeah.

As a reminder to ask a question, please press star 1. We will now take our next question from Sanjeev Munnam from BTIG Research. Please go ahead. Hi, thanks for taking the questions.

Just a few questions for me. Maybe starting out with the 25 distribution contracts targeting 40 countries. Sorry if I missed it, but what's the addressable market there outside of Europe?

Yeah, we have not really communicated on this yet. I think, again, the team is working on that, Sanjeev, and we'll be looking at... releasing some of this data in the near future. So, you know, I'd rather not comment on that right now, but what we can foresee is that it can be a significant opportunity both from an instrument as well as then reagent standpoint, you know, for us to, you know, participate in these alternate markets. Again, we're going to be providing a little bit more color on revenue targets, not just for distribution, but for Europe in the coming weeks. Because I think, again, we realize it's a little bit hard for some of you guys out there to plug into your sort of projections. So Peter and I have discussed that we need to sort of come out with a little bit more clear what is our revenue expectation, what are the assessments, et cetera. So we'll be sharing a little bit more of that in the future.

Gotcha. And then on the molecular testing side, the partnership that you're establishing, would you mind characterizing the types of partners there? Are they largely large global IDD players? You know, it's kind of kind of curious.

I'd rather not comment on that because, you know, we have not put out any comments on this. I think I'm sorry. I would love to share more, but I will as soon as we're ready to make it make this public, we will. The idea here is, again, we believe there are opportunities for us to accelerate on the instrument side, and there are opportunities for us to accelerate on the assay development side. So, again, we're going to be looking at, you know, then how that's going to then help impact our timelines and then come back with a more detailed communication on that in the future.

Okay. Don't worry. And then lastly, on plasma testing and the inclusion in the expanded SDS trials, kind of just to clarify, does that just expand the number of samples you're analyzing? Or does it also potentially impact the timeline for expanded SDS trials and submissions?

Yeah, no, it shouldn't. Yeah, no, it shouldn't. It's just we're adding one site. One additional site that will then generate the data that we need in order to get a plasma claim. So it should have no bearing or impact on our STS, you know, submission, field trials or submission for that matter. So we'll ensure that that doesn't happen. And, again, it's planned this way anyway.

Okay, gotcha. Thank you so much.

Thank you. Good to hear from you.

As there are no further questions in the queue at this time, I would like to turn the call back to Manuel for any additional or closing remarks.

Well, I just want to thank everyone for joining us today on this call, and we look forward to updating you on our progress during the next quarterly earnings call. And great to hear from you. Have a nice day, guys. Take care.

Thank you. That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.