Quanterix Corporation

may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements. Forward-looking statements involve known and unknown risks, 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. The risks and the uncertainties that we face are described in our most recent filings, with the Securities and Exchange Commission. During today's conference call, we will discuss some financial measures that are not presented in accordance with U.S. generally accepted accounting principles or non-GAAP financial measures. In the Q3 earnings release and in the appendix of our presentation, which are available on our website, you will find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures to comparative GAAP measures. We believe that these non-GAAP financial measures provide investors with relevant period-to-period comparisons of our operations. These financial measures are not recognized under GAAP and should not be considered in isolation or as a substitute for a measure of financial performance prepared in accordance with GAAP. With that, I would turn the call over to Kevin.

Thank you very much, Mal. I will start off with a on slide three of the deck that's on our website, going to review the strategic and financial progress that companies made, starting first with some of the key advances in Q3, and then ultimately describing the vision and strategy, which continues to evolve very comprehensively. Let me start with slide four, where we're showing publications. As you know, about three, four years ago, we really started on a key focus of showing the world about how non-invasive early detection could lead to a real game change in healthcare. And we now are up to nearly 1,000 third-party peer-reviewed publications, and there's been over 268 biomarkers run. And on the right-hand side, you can see that Alzheimer's already has surpassed where we were last year in publications. There's some pretty key things that have gone on here. Samoa PTAL 181 has been shown to be highly specific for Alzheimer's and allowing cohorts to be enriched and to eliminate frontal temporal dementia as well. Serum NFL levels have been able to reveal 16 years before dementia in familial patients, Alzheimer cascades, which that is a real early detection opportunity and also serum NFL has continued its evolution and MS disease progression. And even it's found its way into COVID and some of the publications showing that if you lost taste and smell and neuro function, we, um, these scientists been able to measure it with our NFL. Um, and there's obviously a lot of excitement going on right now around abucanumab from Biogen as being another key market mover in this whole landscape of neuro products. The next slide basically illustrates our continued revenue ascent. And as you know, we pivoted towards really putting a lot of focus on our accelerator to support overall customer activities, given some of the issues that we know are out there with customer labs during this pandemic. And you can see that we've already surpassed significantly our full year revenue from last year with the third quarter results. And we've now run $128 phase 1, 2, 3 drug trials inside of the accelerator. Also, you can see our instrument placements continue to evolve, mostly, again, focused on neurology, but we're beginning to see expansion in oncology, and certainly at some point we'll start to see some in infectious disease as well because of our pivot into COVID and trying to support the world aggressive battle against COVID. And on a total revenue basis, you can see that we have surpassed last year's revenue as an entirety, but there's some one-time very large wins that are incorporated into our third quarter revenue, which we'll detail out. But even without that, we grew 22% in Q3 versus last year's Q3. So without significant tailwinds, COVID tailwinds, we're pretty excited that we're offsetting most of the COVID headwinds with this performance. Some of the big wins in this past quarter, given the advances and our focus on neuro and the CAC pivot. CAC stands for COVID Accelerator, China Pivot. And you can see that the Alzheimer drug trials momentum has really kicked up. And we have a lot of customers that are running trials. And we launched this PTAL 181, also a fourplex that is being utilized in many Alzheimer trials. Those have further advanced our position in this important evolving landscape. We also had the approval in Q3 of a Novartis drug, Kesimpta MS drug approval. It was a secondary surrogate endpoint. And the normative study showing what NFL levels do between ages 7 to 70 has been completed in Switzerland. It will be key to anything we do moving forward around getting the FDA to sanction NFL as a disease progression marker Hopefully for a single-site IVD will be our pursuit primarily in 2021. In the COVID arena, we won $18.2 million in Q3. We'd won the initial grant of a couple million for feasibility in the end of Q2, and then we were rewarded to scale this antigen test up, which is showing incredible utility in blood, dry blood spots as well, which is the area that we think can eliminate a lot of the PPE and potentially even enable home care sampling. So we're really excited that the NIH has seen the potential in this test and has invested aggressively in scaling us up, which we also see the benefit of scaling up can also help us with a lot of the trials that we're running in our research side of our business, both in neuro and in COVID. Also, we've secured and already have begun major IRB investigative review board studies with one of the largest payers in the United States for COVID, running five different IRBs at the current moment inside of our accelerator lab. In addition, the accelerators we've shown is growing, and we've built our China position, recently naming a new general manager of our Asia Pacific business. The HDX performance continues to evolve and improve, which is a key to our strategy, and we continue to get trade-in revenue as well as new system sales. You may have seen the major announcement around Abbott where we have a non-exclusive license with them now, which pretty significant advance given that Abbott is one of the premier big three. Plus we were able to do it in a non-exclusive way with major upfront payment. I think it's a 10 million upfront payment for this license that longer term they will try to deploy and bring out instrument platforms to have Samoa inside. And we also were very successful raising capital this quarter, $100 million. Once again, one of the largest up rounds that we've had, plus we've continued to advance post that round with many of these major announcements. When you look inside of our revenue, when you remove some of the one-time effects, you can see here that we had very strong lab accelerator lab growth, which is what we had pointed out earlier. And this was for two reasons. One is COVID and they're using our labs. Two is we had a lot of HDX transitions where there was validation work going on in our customers and they were utilizing our accelerator lab, which we don't pull out the consumables, but a large portion of that revenue would be consumables utilized in the laboratory for the accelerator support of our customers trials. And we did get back to instrument growth and consumable growth in Q3, which we find to be a real productive advance. You can also see that the four-year basis, we've continued to evolve. We certainly are over a lot of the Q2 challenge, but on a four-year basis, you can see our mix is now about 40% consumables, 40% services, and about 25% instruments. When you look at the actual geography customer disease demographics, you can see that our growth was actually strongest in Europe, but North America was close second in Q3. And this is actually the 12-month trailing revenue. And you can see that about 60% of our revenue is coming via pharma biotech. And it continues to grow rapidly with all these trials, particularly in the neuro sector and also beginning in oncology. And you can see that from a disease specificity standpoint, we're still mostly neurology, but oncology is coming up very rapidly, particularly with a lot of the trial work going on in the accelerator. Now, moving strategically, we've talked a lot about moving the life sciences and the medical landscape into a digital opportunity for measuring ELISA. Digital ELISA is a lot of what we've done, and this chart depicts slide nine, how we've increased the sensitivity by a thousand fold. And we've recently announced four months ago, another hundred X, and we've got a prototype that we're rolling out. That's really probably a year, year and a half away from being fully deployed, but this is a big advance allowing us to reach down underneath of what the traditional levels of sensitivity were to see new proteins of relevance and then to reduce the invasiveness of the testing in the samples with the sensitivity to increase the TAM. And this is, we think, going to lead to a fairly significant revolution in proteomics with this deployment. We are moving, as you can see from the right-hand side of the slide, from high invasiveness, liquid biopsies, cerebral spinal fluid taps, spinal taps as well, as even radiation from imaging, down to really non-invasive early detection. And the protein, once again, we believe, captures many of the environmental triggers. And there's a lot more proteins in our genes, and we think they're much more phenotypic, which makes them highly relevant. And so we're really advancing the field of proteomics with this sensitivity and creating a lot of translation, not only in these drug trials, but ultimately, we believe, for the clinics. This slide is a slide we've used for really five years to depict on the X axis when you can detect a disease. And you can see the cancer and neurology are all the way over to the right. And they're typically very much the latest stage lethal diseases to be detected. And you can see how many publications we now have using biomarkers to get at an earlier detection. And depicted on the bottom, you can see Samoa moves the concentration detection levels to levels that you can see these diseases much earlier. Then on the Y axis, the invasiveness, once again, by creating the sensitivity of Samoa, we can reach and see answers in blood and saliva and urine that you couldn't see without really invasive procedures. And that combination is really what we believe is allowing us to shift cancer and neurology, even COVID and infectious disease, further to the left and earlier in lower invasive testing, which we think in the end creates significant TAMs and opportunities to disrupt the way medicines practice. The initial deployment of this sensitivity and this capability is to help drug companies recruit better cohorts of patients that are more specific to the disease and the drug that they're actually trying to get approval, and to get cohorts when the disease is earlier stage when it's easier for a drug to be effective. And that also allows lower dosing, which allows lower toxicity. The combination of higher efficacy, lower toxicity leads to a 300% improvement in the areas that these biomarkers are deployed. And on the right, you can see the number of CRO instruments now that have been placed, 55 of them running these phase one through three trials. Over a thousand have been run across these CROs. And you can see that we mentioned earlier, 128 have been run in our own facilities. This is just a slide that shows how rapidly the adoption has occurred for the Samoa technology. We really had no revenue about five years ago, and we have really accelerated rapidly with the adoption of these drug companies for this purpose. And we did mention earlier Novartis' new drug with the secondary surrogate endpoint that was presented at Ekstrom's using our NFL neurofilament light assay. Roche also had an approval, utilized our technology as a secondary surrogate endpoint in MS as well. So these are good test cases further validating the utility of this technology. Just for NFL, you can see that when you have a brain trauma or neurodegeneration, what happens is the proteins in NFL, they actually break down from the neurons and the axons on the neurons dying. And those neurofilament-like then goes into the CSF. And you can see on the right-hand side that it actually crosses the blood-brain barrier, but at a much lower concentration. And so we can see NFL levels at 2 to 4 picograms per ml versus them being almost 100 times, 50 to 100 times more concentrated in CSF. So this enables the correlation. There's many publications now showing that correlation, which has allowed them a much less invasive way to look at brain health. And we're now actually looking at dry finger pricks, dry blood spots from finger pricks, which is even a less invasive sample. And so these are pathways for measuring the NFL. And you can see on the left-hand side of this chart the traditional way of doing a spinal tap, which is $10,000 per procedure, very painful, very invasive. You can see that there's a lot of biomarkers that they would have liked to have measured via the spinal tap, but most people won't accept that for a drug trial. And so we've been able to move many of these markers into serum and plasma, as evidenced on the right-hand side with check marks. And most of these now, except for the ones in black, have already been shown in publications by these various researchers around the world, as well as the pharma companies on the right have use cases seeing these biomarkers in blood. And almost 100% of the publications utilizing, um, particularly NFL are all done with, um, the Samoa technology and also now we've acquired them a year ago. It's their antibody pair. That is also utilized a hundred percent of those publications are showcasing both us, um, in the antibody as well as in the instrument. Now this is a game changing slide, but two times, um, this in the last 18 months, we've been, we've been publicized as having technologies that have been able to see Alzheimer's very early in a cascade. On the bottom left, there's a publication where NFL showcased 16 years before symptoms on familial patients that had genotype that they knew when they were going to get dementia based on their genes, and then they ran trials, and this NFL was able to reveal it. There were several technologies deploying PTAL 217 that we're able to show as early as 20 years, you can see there's a lot of publicity this year around the the P tau series. In the middle, we had some publications come out game changing one on P tau 181, which we've now launched, that actually shows a correlation in blood between the images of amyloid, as well as the images of a tauopathy. So images of tau and of the brain images of the brain for amyloid have been correlated to PTAL-181 in Alzheimer patients in blood. And that's what is shown on the bottom is the correlation between the CSF of 181 PTAL and blood. And on the right-hand side, the advances that you've been hearing and reading about from Biogen is clearly advancing the drug, and they have increasing the dosing of aducanumab reduces the level of the P tau 181 in the cerebral spinal fluid. And the reason for the arrow going over to the left is that correlation from the cerebral spinal fluid into blood, which we think longer term creates a lot of promise around a blood test that could be used as a screen to help move patients into drugs that get approved for Alzheimer's. And so it's not just using these technologies to get drugs approved, but then it's going to be an opportunity to monitor their progress with the drug as well as someday maybe even be in health screens. The NFL, the number of trials continues to expand, particularly for MS, multiple sclerosis, but it is being utilized, as we mentioned already, in Alzheimer's as well as TBI, traumatic brain injury in MS, as well as ALS and frontal temporal dementia in Parkinson's. Now, we've also pivoted, as we mentioned, into COVID-19, And it really kind of started with the recognition of this cytokine technology. We had to measure cytokines and see cytokine storm earlier. Many of the researchers in the hot zones used our technology to reveal that in the predicted to help stratify patients that were going to go serious versus be able to be stable. We then got a lot of interest from an outside payer group to build a serology assay, which we've done. But the number one area that we're really focused right now is on an antigen test, which we've mentioned that the NIH discovered us and helped us and are helping us now fund this and further scale it. And then, you know, in the fourth category on the right, interestingly, NFL as well is going to potentially play a role for long-term disease impairment that COVID could be creating for many that haven't really had symptoms other than maybe loss of taste and smell. So there's a lot of interest in all four of these categories of our biomarkers. And so someday we think there could be a comprehensive look at the disease, looking at these different biomarkers for each patient. And ultimately we see a lot of research opportunities because there's a lot of questions that haven't been answered on this virus. You know, what level of antibodies when the vaccines come out are sufficient to prevent infection? How durable will those antibodies be? What's the role of the innate immune system? How fatigued will the innate immune system be as a result of COVID? So many of the payer groups are very concerned about the long-term implications, and we think our research is going to reveal some pretty important tools for that research. This is just a slide showing how challenging it is today to measure whether someone has the virus, particularly before symptoms. You can see that it's estimated in some publications that the false negative rate meaning that you're told that you don't have the virus. If you don't have symptoms, it can be as high as 80% to 90% of the time when you actually have it. You're told that you don't because of sampling error of the virus onto the nasopharyngeal. And so seeing it in blood could represent an opportunity, and that's a lot of the focus that we've brought to this. And we're also looking to try to expand the window of being able to see the virus. And there's new interest as well as checking therapies and seeing if the antigen level from our measurement come down as the therapy is applied in blood, which is potentially an endpoint opportunity for drug trials and therapy trials in the future, so we're excited about that opportunity as well. You know, working with the FDA around moving to less invasive samples, though, is a challenge, and it represents, you know, a lot of effort, and we've got great relationships with the NIH as well as the FDA now, and we are very happy to that we're trying to advance the ability to see this effectively in less invasive samples. And someday home care, we think, will be a great place to be testing and pulling out samples. But we may not actually do the test there, but we'll do the sampling from home and then get the answers from centralized labs. So this payer group advance is pretty important for us because they're really looking for outcomes. And early detection can change the way they deploy health care And it also can be a way to improve outcomes by getting to diseases earlier and lengthen life. And so across all of the different categories, starting with COVID, we are really excited about running these IRBs for the payer groups because it can represent a whole new way for the value chain to capitalize and leverage the opportunity that our biomarkers with low and base in this early detection potentially home care could represent. And so where there's known biomarkers in therapy in places like MS and diabetes covid we think that can be deployed now within these health care groups if if there's a known biomarker but not a known therapy there's a lot of members we think can get into drug trials to help get early detection of of members with these disease cascades to help these drug trials and then finally we think a long-term study is in um the offing where we are going to monitor with a payer group their membership in the biomarkers over a long period of time and as diseases come into that payer group, the membership group, we can look back and see what biomarkers could have revealed that. That could really be a great way for biomarker research to occur. There was a lot of news this past week with respect to Exact Sciences buying Thrive. And it's a chance to evolve, I think, Exact Sciences from a primarily genetic position to also looking at proteins. And we do think, as we mentioned earlier, proteins are very important And there are some specificity challenges with certain parts of CancerSeq that added sensitivity can enhance. And we've been just looking at the proteins that they have in their algorithms and some of the level of detection that they have. And we believe that there could be opportunities to utilize technologies like Simola to further advance more sensitivity in these critical proteins that you can see here. And then for breast cancer, the ones in red on the right-hand side, are some of the most important proteins for these algorithms. And by having a lot more sensitivity, we think it could further power the improvement of these kinds of technologies. And so we really are excited about XactScience's move into the protein. And many of the liquid biopsy companies are also looking to augment, like Freenome, their protein positions with their DNA positions. I wanted to just – this is a visionary slide that tries to illustrate for our investor group just how TAMs get increased, the addressable market, using sensitivity. The greater the sensitivity, the earlier you see disease. That in itself, we already have pointed out, creates the ability to use this technology for very exciting ways to see disease earlier. The less invasiveness, going from cerebral spinal fluid to blood, then to the let's say a dry blood spot or even saliva, that increases the TAM. The ability to multiplex takes away sensitivity. So the more multiplexing you can do, the more disease specificity you can create. So the more sensitivity you have, the more you can create utility for these biomarkers. You also can dilute samples to eliminate matrix effects to allow the false positives and false negative rates to improve dramatically. So The ability to dilute can create a lot better specificity in the technology. And then finally, the ability to quantitate versus just say that a biomarker is there, instead of being qualitative, being quantitative. And we think that in the area of research, particularly for serology, how much of those antibodies is actually there for an individual patient versus the amount of virus. And being able to quantitate those, we think, adds a lot of advantage. This slide just illustrates that there's been a lot of movement in the genomics landscape over the last 25 years for very good reasons. The genomic revolution started with sequencing, next-generation sequencing. It led to a lot of really productive companies with many value-added assays on the right-hand side. We just wanted to showcase that in the protein world, quantarix straddles the end of this pipeline for proteins, and we're doing a lot of drug trials, as we've pointed out, primarily in brain and in COVID areas currently. And as you see, those different proteins do find their way into IVD products, like the Siemens, the Roches, the Abbott, the protein products in the LDT labs, as well as health screens. And we've set up, we think, a lot of good non-exclusive relationships with many of these companies on the right-hand side to further advance the technology and create greater opportunities for it to advance. And we think that moving to the right, like what we see happening with Thrive and Freenome, with the protein is a real important opportunity for this entire landscape. So we're very excited about a lot of the interest to further fuel proteomics, even with upstream technologies, and allow more to advance downstream. So when you look at our TAM, we see it as a $1 billion TAM, primarily focused at COVID-200 million, And Neuro, 350 million. This is on the research side of our business. And as we've been saying, longer term, we want to continue a 30% to 40% CAGR in that growth, in that landscape. We are deploying to the right now the COVID and Neuro, trying to find pathways for things like the Alzheimer's and MS and the Neuro. And even in COVID, given the NIH's support of us for the antigen, we're looking at possible ways to help the world and the nation to for the COVID opportunity. And there's about 1200 proteins we showed early on that have evolved into about 200 proteins on the right hand side. Longer term, we think that this protein revolution really hits, there could be as much as 90 billion based on some consulting research that we're having done right now. Ultimately, maybe as many as 1000 proteins could find their way if you could expand them into diagnostics. So in summary, going back to the telephone, going to the iPhone, We've seen a lot of advances in the computer systems on the top, and certainly we've watched the genomic revolution just bring a lot of value to investors, but more importantly, it's transforming the way patients can look at cancer and look at many of the ailments they have today, and there's been a lot of advances occurring, and we think that the proteomics wave and that fan has a real opportunity over the next 10 years, and we're really excited to be having an opportunity to advance that. What I'd like to do now is turn it back over to Amal to talk through more specifically our finances. Amal?

Thanks, Kevin. I'm going to provide you some additional financial details about our Q3 2020 performance. I'll be referring to slide 49. As Kevin noted, our GAAP revenue in Q3 of 2020 was $31.4 million and included $11.2 million revenue in connection with our non-exclusive license agreement with Abbott. and 1.9 million revenue from our RADx Phase 1 award. Excluding these non-recurring items, our non-GAAP Q3 2020 revenue was 18.3 million, a 22% increase versus prior year Q3. Instrument revenues increased 8%, and consumables revenue increased 9%, despite challenges in accessing customer sites for installations and customers facing interruptions in their operations due to COVID-19. As previously discussed, we had proactively expanded our accelerator services capacity to support our customers, sustain their research and clinical trials. This drove 56% increase in service revenue, which finished at 6.6 million. The RADx Phase II contract that we entered into at the end of Q3 did not affect our Q3 results. Year-to-date total revenues are $60.2 million, excluding the Q3 non-recurring items previously discussed. Non-GAAP year-to-date total revenues are $47.1 million, a 15% increase. As previously stated, we are not providing the revenue guidance. We do expect to see RADx Phase II contract revenue of about $6 million per quarter, an associated cost of about $5 million per quarter over Q4 2020 and first half of 2021, which we will continue to exclude from our non-GAAP financials. Across Q3, we have seen demand progressively recover in US and Europe. However, a second wave of coronavirus may force renewed lockdowns, resulting in challenges such as limitations in accessing customer sites to complete installations and drop in consumables utilization due to interruptions in certain customer laboratories. On a non-GAAP basis, Q3 gross margin was 51.5% versus a prior year Q3 gross margin of 51.8%. Q3 2020 gross margin includes a 190 basis points negative impact from our successful HD1 trade-in program. Our non-GAAP gross margin excludes the impact of the non-recurring Abbott license agreement and RADx Phase I award, as well as non-cash acquisition-related purchase accounting adjustments relating to the 2019 acquisition of Oman, thus providing investors with a relevant period-to-period comparison of our operations. We believe we have a significant opportunity for gross margin expansion in future as we evolve the mix towards high-margin consumables and accelerator services businesses, scale our overall business, and reduce product costs. On a GAAP basis, our Q3 gross margin was 67.2% and was favorably impacted by the Abbott License Agreement and RADx grant versus prior year Q3 gross margin of 47.1%. Our GAAP operating expenses totaled $18.8 million in Q3 2020 and non-GAAP operating expenses, which primarily exclude non-recurring expenses associated with our RADx grant revenue, totaled $17.5 million. During Q3 2020, we raised 91.4 million in net proceeds through our public offering and use of cash was restricted to 7 million through proactive working capital measures. The balance sheet is in good shape as of September 30th with approximately 173 million in unrestricted cash. Overall, we are very pleased with our Q3 2020 performance and progress made on our strategic priorities. We remain focused on continuing our recovery to strong growth trajectory in the remainder of the year, despite the continued challenges brought on by the coronavirus pandemic. With that, I will now turn it back to Kevin.

Thank you, Amal. And I would like to close, Amal, on slide 50 to just illustrate that, as we've been saying from the beginning, we have an incredible employee group as well as a large ecosystem of thought leaders, and many investors that have actually supported us in creating demand by working with many of the farmers that they have stock positions with to help create opportunities to get drugs approved in the pipelines of many of our customers. This slide just illustrates that on the left-hand side, as we've said, we are mostly a research business today. I'd say 95 plus percent of our revenues really are coming from this research side. there's no real regulatory or reimbursement risk and we feel like it's a solid place to create value for investors with a great backstop but there is absolutely we've been calling it an aspirational opportunity to start to migrate into diagnostics and covid has enabled us a showcase opportunity to help the world with our incredibly inspired employee base but also