Quanterix Corporation

Good day and thank you for standing by. Welcome to the Quinterix Corporation Q2 2023 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising you that your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Ed Joyce, VP of Investor Relations. Ed, the floor is yours.

Thank you, Stacey, and good morning. With me on today's call is Masoud Tolu, President and CEO of Quinterix, and Mike Doyle, Chief Financial Officer. Before we begin, I'd like to remind you of a few things. The call will be recorded and will be available in the Investors Resources section of our website. Today's call will contain forward-looking statements within the meaning of the U.S. Private Security Litigation Reform Act. These forward-looking statements are based on management's beliefs and assumptions and on information available as of the date of the call. We 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 statement. The risks and uncertainties that we face are described in our most recent filings with the Securities and Exchange Commission. To supplement the company's financial statements presented on a GAAP basis, the company has provided certain non-GAAP financial measures. Management uses these non-GAAP measures to evaluate operating performance in a manner that allows for meaningful period-to-period comparison and analysis of trends in its business. The company believes that such measures are important in comparing current results to the other period results and are useful in assessing the company's operating performance. The non-GAAP financial information presented here should be considered in conjunction with and not as a substitute for the financial information presented in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures set forth in the appendix of the presentation posted to our website and in the earnings release issued today. With that, I'll turn the call over to Massoud.

Thank you, Ed. Good morning. Before I get into results, I would like to start by acknowledging the intense effort and progress the talented Quanterix team has made with our corporate transformation started last year. The magnitude of the improvements made while continuing strong operational execution is testament to the capabilities of our people. and these improvements have set a solid foundation to drive long-term future growth. This quarter, those strides became more apparent in our business and financial performance. Second quarter revenue increased 32% to $31 million, and our non-GAAP gross margin increased to 56.4% versus prior year, with significant sequential improvement. We're seeing strong customer demand, driven by consumables, and accelerator lab business, with increases of 65% and 94%, respectively. Our corporate transformation is also already positively impacting bottom line performance. This quarter, we achieved a break-even cash flow milestone. With our accelerating redevelopment progress, we increase our full year 23 revenue guidance to be in the range of $110 to $116 million, and full year non-GAAP gross margin percentage in the high 40s. We also expect less cash burn and now estimate to be in the range of 30 to 35 million this year. To remind you, we initiated our corporate transformation a year ago following a strategic business review with the prime objective of maximizing the potential of our Samoa technology and delivering high-quality assays at scale with strong margins. We're now in the last two quarters of our transformation process and remain on track. Work that remains includes launching new assay kit SKUs and further implementation of newly scaled systems and modern processes in our operations lines. The intensity at which our team at Quanterix have made progress is remarkable. These efforts will directly impact our long-term growth and drive future positive cash flow. In early July, we launched LUCIN-AD, a test to aid in the Alzheimer's disease diagnostic process. This blood-based biomarker test measures an isoform of phosphorylated tau protein 181. Using our high sensitivity platform, this protein has been positively correlated with the presence of amyloid pathology in brain, a hallmark of Alzheimer's disease. LUCIN-AD provides measurements with cut points to indicate unlikely or possible amyloid pathology. With the recent approval of LeCambie, one of the first promising therapies for Alzheimer's disease, we anticipate this test will enable access to quick and scalable screening. There's a lot of attention on Alzheimer's disease, and we will deploy focused effort on building global infrastructure, as well as patient and provider education around these tests. Moving to recent events. There were two notable announcements from the Alzheimer's Association International Conference that I'd like to bring to your attention. First, new guidelines were recommended by the National Institute of Aging and the Alzheimer's Association for the use of blood biomarkers to detect and diagnose Alzheimer's disease. All of the biomarkers listed are available on Samoa. This makes a lot of sense, being able to screen large numbers of people with with suspected cognitive symptoms require scalable, cost-effective testing. Numerous studies using our Samoa technology have demonstrated high correlation between blood-based biomarkers, like those measured by LucinAD, to the more expensive and invasive methods of testing in Alzheimer's, such as spinal fluid analysis and amyloid PET scans. Any lab anywhere in the globe can order the Samoa platform and begin running every biomarker listed in the guidelines today. That reach, along with the scale of our CLIA lab, puts us in a great position to help build the global testing infrastructure needed for Alzheimer's therapies. Second, data from a study was presented demonstrating the possibility for home blood collection for Alzheimer's biomarkers. Researchers at the University of Gothenburg in Sweden used Samoa technology to test for biomarkers from dry blood spot cards collected from a finger prick. That's not a lot of blood. We're talking tens of microliters. Starting card samples were shipped to a testing facility without temperature control, and results showed high correlation to regular blood-drawn samples for all biomarkers tested, including PTAL-181, PTAL-217, NFL, and GFAP. Although this was an early study, it demonstrates the ultra-sensitive capabilities of our similar platform, as well as promise for patients and providers as the potential for a home test would be a significant advance over traditional blood collection. Pretty incredible advance. Now this decade, we expect a number of emerging disease-modifying neurological therapies, and most of these will need early cascade diagnosis and routine monitoring. which will require ultrasensitivity to identify biomarkers in blood. As we discussed last quarter with the approval of Tofersen measuring neurofilament light chain, or NFL, we're seeing increasing attention of this biomarker for neuroinjury conditions. However, normal NFL levels vary between adults and adolescents, and there's a need for a comprehensive reference data set by age. Recently published in Lancet Neurology, Samoa enabled a study to produce a robust data set for pediatric NFL levels. This data set will provide a foundation for the clinical use and management of neuro conditions in children. This work was a significant step forward and further establishes Samoa as the go-to test for blood NFL measurement. Moving to our clinical efforts. This quarter, we achieved a positive top-line readout of our BioHermes clinical trial, which was a 1,000-patient prospective validation study done in collaboration with the Global Alzheimer's Platform Foundation. The study had 18 sites and aimed for a diverse demographic to better represent the entire base of potential patients, an important consideration by physicians and regulators. I'm pleased to announce Our primary objective with the study to show high correlation between 181 and amyloid positive PET scans was achieved. This work supported both our new LACIN-AD LDT and is expected to support our IBD filing with the FDA. Now before I turn the call over to Mike, I want to take a moment to recap. Our corporate transformation, while not yet complete, is bearing accelerated gains because of the focus, discipline, and execution of people at all levels of the organization at Quanterix. Discoveries in the next 10 years will change the way we currently understand, test, and treat neurological disease, and we expect that much of that work will be performed on Quanterix's similar platform. Mike?