Quanterix Corporation

Good day and thank you for standing by. Welcome to the Quantorex Corporation Q4 2023 Earnings Conference 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 this session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising you 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 speaker today, Vandana Shirom, CFO. Please go ahead.

Thank you, and good afternoon. With me on today's call is Masood Tulloo, President and CEO of Quintero. Before we begin, I would like to remind you of a few things. This call will be recorded, and a replay will be available on the investor relations section of our website. Today's call will contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act. These forward-looking statements are based on management's beliefs and assumptions and on information available as of the date of this 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 statements. 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 with 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. I will now turn the call over to Masood.

Thank you, Vandana. Starting with Q4 of 2023, we hit record consumables production, delivering 17.5 million in revenue, contributing to 31.5 million of total revenue. Non-GAAP gross margins improved 515 basis points versus fourth quarter prior year, and cash use was 6.4 million, leaving us with over 320 million of liquidity on our balance sheet, and in a strong position to deploy capital for growth investment. As a reminder, we began a corporate transformation process six quarters ago with a focus on three core principles, quality, innovation, and positioning Quanterix to unlock the value of the transitional markets. In 23, we built newly formulated assays, improving margins and manufacturability. Testing capacity in our accelerator and manufacturing output improved by 50 and 300% respectively, each with new capacity to grow threefold from where they are today. New assays rolling off production lines are now getting into the hands of our first customers. These accomplishments over six quarters are the result of our team's focus, determination, and strong operating discipline. The efforts have positioned us for better quality, higher throughput, faster innovation, and are reflected in our financial performance for 23, with revenue growing 16%, non-GAAP gross margin improving over 1,300 basis points, all while we reduced cash burn by 40 million in 23 as compared to 22. In 2024, our three strategic objectives are growth in menu, new innovation in tech, and Alzheimer's disease diagnostics. Starting with the first objective, we intend to leverage our newly built product development engine by introducing approximately 20 new assays by the end of this year. This is not a small feat. Second, we're allocating resources to expand our technology platform. While Fortify Plex satisfies the vast majority of neuro programs today, our goal is to have Samoa not just in specialty neuro labs, but Samoa in all labs. We're working on multichannel lossless resolution, which means no loss measurement of the lowest quantity of protein that can be distinguished from the absence of that protein across multiple channels. Developing this would be a significant breakthrough. Expanding PLEX, maintaining sensitivity, improving footprint, and reducing cost will enable research and clinical work in immunology and oncology laboratories. I expect we'll discuss more toward the end of the year. Finally, on diagnostics, our stated goal is to build the global testing infrastructure for Alzheimer's disease. Identifying patients by invasive methods, including PET and lumbran puncture, is not scalable and limits access to newly available Alzheimer's disease-modifying therapies. There's now abundant evidence showing non-invasive testing methods using blood-based biomarkers are equal to or better than invasive methods, and we believe they will be the best solution for broadening access of therapies to patients. It has also become clear that identifying patients early in a disease cascade results in better patient outcomes, and this is where we believe Samoa technology will play a critical role. I want to make an important point here. Samoa digitally interrogates proteins in femtoliter wells, providing exquisite signal-to-noise separation and amplitudes a couple orders of magnitude beyond noise floor where other technologies reside. The combination of ultrasensitivity and precision enables much lower limits of detection and quantitation than other technology. So, as part of a diagnostic follow-up if a Samoa PTAL 217 test is used throughout the diagnostic workup. A physician can track a patient's levels if symptoms progress or if they undergo treatment. Other tech may not have the sensitivity or precision to do this across the full range of PTAL 217 concentrations that are diagnostically relevant. Precision at the very low concentration levels that pTAL217 is present in blood allows SAMO assays to provide high diagnostic accuracy given the need to resolve small changes around cutoffs corresponding to low and high likelihood of amyloid pathology. Our test uses a two cutoff design as recommended by the NIAAA and other expert groups providing a high confidence result extending to both ruling in and ruling out amyloid pathology. This has the potential to reduce approximately 70% to 80% of PET scans and lumbar punctures during the Alzheimer's diagnostic process. Over the next two years, we will allocate $20 million of capital to advance the access of our diagnostic tests. We will also focus our clinical studies for diagnostics in two main areas, one, development and validation of a multi-marker blood test, and prospective studies with health systems to establish blood-based biomarkers as part of a routine Alzheimer's diagnosis and treatment. For the multi-marker test development and validation, we're wrapping up the first two phases of two important studies, BioHermes and Kentaday. BioHermes is a prospective study that enrolled individuals from 17 sites across the U.S., including significant numbers of underrepresented populations, and collected blood samples as well as PET images. Phase one of the study is now complete and with publications expected later this year. Kentade is our ongoing collaboration with researchers at the Amsterdam Medical Center, where blood is being collected as well as CSF with corresponding biomarker measurements to assess amyloid. We expect to announce results from phase one of these studies later this year. Quanterix is also sponsoring and taking part in several new studies to establish blood biomarkers as part of routine Alzheimer's diagnosis and treatment. In addition to helping expand the adoption of laboratory-developed tests based on Samoa technology, such as Plasma 217 and our planned future multi-marker test offering, these studies are expected to provide clinical validation data to support an FDA submission for an Alzheimer's blood biomarker diagnostic. In 2024, we will focus our efforts on building out our commercial capabilities to support diagnosis of Alzheimer's disease and what we would expect to be a corresponding uptick in the adoption of new therapies. We've already onboarded a dedicated commercial team and they've hit the ground running. We're pleased to announce that we're now working with five leading health networks in the U.S., an important step as we build out the infrastructure that supports testing for this disease. Each will have access to the Lucent AD test at our CLIA-certified lab or our instruments and assays to develop and validate their own laboratory-developed tests. These networks will provide reach to over 140 hospitals caring for approximately 21 million patients. I will now turn the call over to Vandana to cover our financial results.