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spk10: Good day and thank you for standing by. Welcome to the Quantarix Corporation Q1 2024 earnings call 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 the session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker for today. Frances Pruill of
spk09: Investor Relations. Please go ahead. Thank you and good morning.
spk01: With me on today's call are Masood Tulu, Quantarix's president and CEO, as well as Vandana Sriram, our chief financial officer. 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 US 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 Securities and Exchange Commission. To supplement our financial statements presented on a GAAP basis, we have provided certain non-GAAP financial measures. These non-GAAP measures are used to evaluate operating performance in a manner that allows for meaningful period to period comparison and analysis of trends in our business. We believe that such measures are important in comparing current results with other periods results and are useful in assessing our operating performance. Non-GAAP financial information presented herein should be considered in conjunction with, 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. Finally, any percentage changes we discuss will be on a year over year basis unless otherwise noted. Now, I'd like to turn the call over to Massoud Toulou.
spk03: Thank you, Francis. Starting with our first quarter results, total revenue of 32 million grew 13%. This strong performance was driven by 22% growth from our consumables business and 57% growth in our accelerator lab, more than offsetting softness in instrument revenue, which was anticipated due to a challenging capital environment. Our accelerator lab continues to provide nice buffer to these macro capex headwinds. The lab has completed over 2,300 projects for more than 480 customers from all over the world using our Samoa platforms. First quarter non-GAAP gross margin of .5% grew approximately 140 basis points and our balance sheet remained strong with 305 million of liquidity. Our cash usage in the period was approximately 19 million, which was higher than the prior year given timing of certain working capital items. Vandana will touch on these results in more detail later in the call. Moving on from the quarter's financial performance, I'll expand on our leadership and innovation, focusing on new asset development and the durable moat advantage by our incredible sensitive Samoa technology. Samoa provides researchers the ability to examine and detect critical proteins at ultra low levels with digital single molecule readout. Breaking sensitivity barriers is a key reason why we've been a pioneer in the discovery of biomarkers and a trusted partner to our pharma and academic customers, evidenced by more than 2,900 publications. Building on the foundation our incredible team has built over the last year and a half, we have a new product development engine. We remain on target to introduce approximately 20 new biomarker assays by the end of the year in the areas of neurology, immunology, and oncology. First, we're working on a comprehensive approach for Parkinson's disease, a neurological disorder that impacts millions of people around the world. There remains a critical need to identify treatment pathways to slow the disease's progression over time with nearly 140 Parkinson's therapies in active clinical trials. To date, biomarkers such as NFL and GFAP have been implemented as key tools to monitor Parkinson's disease development. For example, in a January publication of the scientific journal Nature, researchers used Quantarix's NFL assay to measure whether late stage Parkinson's disease is associated with an increase in neurodegeneration. However, this is only the beginning. Last month, we launched our S-TREMP2 assay, a microglial marker implicated in Parkinson's and other diseases, and we continue to focus on clinically relevant forms of alpha-synuclein and lysosomal storage biomarkers. These are important efforts requiring some mobile level sensitivity and supported by our partners such as the Michael J. Fox Foundation. Turning next to a biomarker that has garnered a significant amount of recent attention, TAU. The Alzheimer's Disease Research Community is just getting started in holistically evaluating this powerful protein and its many phospho isoforms. Quantarix has been the leader pushing forward the measurement and correlative data behind an evolution of TAU biomarkers, not only with PTAU-181 and PTAU-217, but also for less discussed markers such as PTAU-205, 212, and 231. Each of these specific isoforms may have unique characteristics that are useful in a diagnostic setting with the potential to improve clinical utility if included in a multi-marker assay. Today, the NIAAA recommends PTAU-217 as the best biomarker for accurately diagnosing amyloid pathology. However, progress with TAU does not end with PTAU-217. Quantarix is leading the way to develop further evidence that more specific biomarkers and robust panels of related brain-specific analyzes may add diagnostic sensitivity to the detection and monitoring of Alzheimer's disease. In an April Nature publication, researchers led by a group from the University of Gothenburg in Sweden, using our SAMOA technology, determined that brain-derived TAU, or BD-TAU, is a marker that has elevated levels in the presence of amyloid beta pathology and may provide additive sensitivity to a standalone PTAU-217 assay. Studies suggest that blood total TAU originates principally from peripheral non-brain sources. However, BD-TAU comes directly from the brain instead of elsewhere in the body, and therefore may offer greater precision compared to the current standard of measurement. BD-TAU may improve the current ATM framework for the definition and staging of Alzheimer's disease. We believe this is an important advancement in the field and plan to release our BD-TAU assay this quarter. Staying on Alzheimer's disease, our development of a multi-marker test continues to progress. More specifically, we plan to present four abstracts using data from the BioHermes and Cantate trials in support of this effort at the upcoming Alzheimer's Association International Conference in late July. As a reminder, BioHermes is a diverse prospective study across 17 domestic sites, enrolling approximately 1,000 participants, with 200 from underrepresented populations. And Cantate is a multi-year, multi-phase study. Phase one of this study encompassed 1,200 retrospective samples, and phases two and three of which we're currently engaged are targeting 1,200 prospective enrollees across memory clinics and primary care settings. In addition to using these data for a multi-marker test, results from BioHermes and Cantate have been used for clinical validation of our Lusin AD -tau-217 assay. Shifting now to progress in the field of Alzheimer's diagnostics, during Q1, we announced that our -tau-217 blood test was granted breakthrough designation by the FDA. In February, the American Medical Association confirmed new CPT codes for amyloid beta-40, amyloid beta-42, phospho-tau, and total-tau. We expect CMS to price these codes later in the year. Finally, we are pleased to highlight our collaboration announced in 2022 as resulted in Eli Lilly's launch of Sirtuit AD, a blood test that can provide additional diagnostic evidence for Alzheimer's disease, measuring -tau-217 and run on Quantarix's SPX platform. This test is now available on SirtuitAD.com. Moving next to recent events, in the last several weeks, a few new plasma -tau-217 LDTs have entered the market with varying levels of validation and approaches for interpreting results. While it is still early, this suggests several platforms will serve different use cases in the market. Currently, we believe there are three -tau-217 tests available clinically that meet the Alzheimer's Association Working Group recommendations of 90% accuracy. Two of these three tests use Quantarix's SIMOA technology and as such have been thoroughly validated through well-powered clinical studies. Preliminary results have been presented at recent technical conferences and journal publications are expected later this year. We're not aware of any immunoassay that provides higher sensitivity than Quantarix's SIMOA technology. The sensitivity to precisely measure -tau-217 at very low levels ensures the ability to deliver clinically meaningful results across a range of use cases. First, reportable concentrations can be provided for 100% of patients, even those at the very earliest stages of disease. Lucent AD -tau-217 has a single femtogram per mil limit of detection and Quantarix has yet to encounter a single sample unreadable below this level in over 2,000 samples tested, including the biohermes and VUMC cohorts and hundreds of healthy control participants. In similar patient cohorts, other technology platforms have shown up to 30% of samples were unreadable below the platform detection limit. Second, based on results from recent therapeutic trials, it has been shown that individuals at the earliest stages of the disease experience the greatest benefit from therapies. Early detection is enabled by higher sensitivity. Third, there is emerging potential to track progression or response to therapy by monitoring tau levels. In any monitoring application, you wanna start measuring early and continue to follow the patient as the disease progresses. Resolving small changes at the lowest levels is not only important for early intervention, but also provides confirmation when therapeutic benefit has been achieved. While we believe the TAM for testing is large and infrastructure will be built by several immunoassay providers, we believe the SIMO platform will be uniquely competitive for these applications due to its sensitivity. We are expanding on this foundation with multi-marker, multiplexed testing that other platforms are unable to perform. Multi-marker testing has the potential to bring definitive results to a larger proportion of patients, as well as provide guiding information for differential diagnosis of non-AD dementia. As we see therapies advance, anti-tau therapies will require independent measurement of tau pathology and amyloid pathology to understand how combination therapy should be managed. This requires examination of multiple markers to improve amyloid detection and support diagnosis. We look forward to sharing updates on our progress in the coming months. With that, I'll turn the call over to Vandana to cover our financial results.
spk02: Thank you, Masood. I will now add color to our first quarter results and also expand on our reiterated guidance for 2024. As Masood described, Q1 was a solid quarter and consistent with our plan. We are pleased with the momentum we have to start the year. Total revenue for the first quarter of 2024 was 32.1 million, an increase of 13% compared to the prior year. Accelerator lab revenue was 8.7 million, an increase of 57% as customer appetite for our in-house clear lab services remains strong. Consumables revenue was 17.1 million, an increase of 22%, and instrument revenue was 2.5 million, a decrease of 52%. In terms of revenue stratification, our customer mix in the period was nearly 50-50 between academia and pharma, and 85% of our assay and accelerator sales were for neurology disease states. For the quarter, our total installed base increased by a net of 16 instruments. As others have noted, the capital budget environment remains challenging. However, we are seeing healthy demand from our accelerator lab to offset this weakness. Shifting next to gross margin for Q1, gap gross profit and margin were 19.6 million and .2% respectively, up 2.7 million and approximately 170 basis points compared to the prior year. First quarter non-gap gross profit was 17.5 million, and non-gap gross margin was 54.5%, up 2.4 million and 140 basis points respectively, compared to the first quarter of 2023. Expanding on gross margin for a moment, our non-gap gross margin improved considerably on a sequential basis, up approximately 800 basis points compared to the fourth quarter of 2023. We're pleased with this performance as we more efficiently managed inventory in the period, achieved higher pricing, and continue to see the benefits of our corporate transformation. Moving down the P&L, first quarter gap operating expenses were 33.6 million and increase of 7.2 million compared to the prior year. Non-gap operating expenses were 31.4 million and increase of 6.9 million compared to Q123. Within operating expenses, higher spending compared to the prior year was primarily due to investments we continue to make in our R&D and commercial efforts. Moving to the balance sheet, we ended the first quarter of 2024 with 304.5 million of cash, cash equivalents, marketable securities, and restricted cash. Cash flow in the period was a net outflow of 19.4 million. Q1 for us historically is our quarter with the largest cash outlay given the timing of bonus payments, which was an outflow of 7 million in the period. In addition, the quarter's cash results were impacted by the timing of receivables and inventory. Receivables were up 4 million due to the timing of revenue versus billings, and inventory was higher by nearly 4 million to support our growth initiatives. Our liquidity remains strong and provides excellent flexibility in what remains an uncertain funding environment. Moving on from the first quarter, our full year 2024 outlook is unchanged with a revenue range of 139 to 144 million and a non-GAAP growth margin profile in the low to mid 50s. As a reminder, this guidance does not include revenues from diagnostics testing, which were immaterial in the first quarter. We expect the pacing of our revenue and growth margin throughout the year to be in part dependent on the rollout of our new Advantage Plus assays, as well as customers switching to these new products. We are still in early stages of this activity and expect the sequencing of revenue to be weighted to the second half of the year. Within our guidance, we continue to assume cash usage between 25 to 30 million, which assumes approximately 20 million of investments in strategic initiatives, such as ramping up our commercial capabilities in diagnostics and in product innovation. I will now turn it back over to Masood for his final comments.
spk03: Thank you, Vandana. Our principal framework remains creating tools to enable discovery and improve health outcomes. This is a quantarics commitment to product innovation. We're working towards pushing beyond the industry standard we set for ultra sensitivity, approaching the boundaries of physics and improving PLEX across new sets of protein biomarkers. This year, we're making significant investments in menu, technology, and diagnostic testing. We're doing this with a new operating model that effectively scales and expect to realize operating leverage as we drive toward profitability. Our ability to identify new markers, translate these analytes into assays for research, and now into clinical applications is unparalleled. Neurology is on the doorsteps of the next era of exciting discovery and quantarics is poised to help unlock this opportunity. We can now take
spk09: some questions.
spk10: Thank you. At this time, we will conduct our question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. We do ask all participants to limit themselves to one question and one follow-up. Please stand by while we
spk09: compile the Q&A roster. Our first question comes
spk10: from the line of Punit Suda of Lear Inc. Partners. Your line is now open.
spk04: Hey, guys. Thanks for taking my questions. So first one on the accelerator growth that you're seeing here, can you talk a little bit about if there is some contribution from sort of biotech funding picking up in the first quarter? Are you seeing some of that come in? What sort of is contributing? Is it just a large... You pointed out neurology obviously being the driver, but just maybe talk to us about what's driving that growth, how sustainable is that? And should we expect the 20 new biomarker assays to be contributing to the growth in accelerator services through the year as well?
spk03: Hey, Punit. Yeah, so accelerator has been a great story. As you know, we've built a lot of testing capacity and scale in the business. We had 50% improvement in our testing scale. We're currently able to, and looking at 750,000 tests with capacity to increase threefold. So we built that, seeing that there's a lot of interest in neuro trials over the last year or so, and they continue to be strong. So I think most of that growth has come from pharma versus some of the smaller biotech. And 80% of that has been reoccurring customers. So we have a pretty decent visibility into projects coming into the accelerator group and remain very excited about the prospect for additional work there. On the assays, one of the great parts of accelerator that we're very thrilled at is, we get with our customers, we get to sit down and we have a early perspective of the important markers for future clinical trials and future neurology projects. And we work there in collaboration, and that work does feed our product pipeline, our kit and assay pipeline. And as we develop assays, it helps with clinical trials. So it's a strong flywheel that has been great for the business. Got
spk04: it. And then you talked a little bit about competitive dynamics. I mean, recently there was a large peer in diagnostics that also announced their breakthroughs for PTAO-217, I believe. And can you elaborate how you're thinking about the competition for sort of SIMOA, how SIMOA will differentiate itself, and HDX will differentiate itself versus what appears to be more automated, high throughput systems to serve the Alzheimer's diagnostics market?
spk03: Yeah, so I think it comes down to two key points, and I'll expand on that. But the first point is sensitivity. The Quantirix platform, SIMOA technology, just has incredible sensitivity that a lot of other platforms just can't match. And the second is our ability to multiplex. And those two technology features really open up a lot of doors. So first, our limit of detection really isn't a single femtogram per mil limited detection. And when we look at patient samples or patients, we don't get an unreadable result. And so we had a nice diagram where we're showing that the Quantirix platform, although there hasn't been clinical data or a lot of clinical data out there with new platforms, we've put a lot of clinical data, but other platforms haven't seen that clinical data. If you give full credit to, let's say, the results, I would expect competitor platforms to perform similarly with patients that have signs or are symptomatic for Alzheimer's disease. And that's one portion of that market. The issue is that you have, when you look at situations in the clinic, you're not looking at a fixed cohort of patients that have the disease. You're looking at people at the very early stages, folks that have memory concerns, but don't have amyloid pathology. And so the clinical utility is a very different sort of situation than fixed studies. So you have patients coming in who have a very low result, may have memory concerns, and those results are not readable. And so we haven't missed a patient in any of our clinical trials. So that's number one. Number two, 30% of the symptomatic patients that are in the pipeline or that come because they have an issue, don't have Alzheimer's disease. They have some other pathology and would benefit from a multi-marker test. And so we think there's a real opportunity there. We'll be talking about our multi-marker in a month or two at the AAIC conference. And then finally, progression of disease. And there was an interesting paper about APOE in the, recently a couple days ago that came out. And if you're measuring folks that have suspect or history or genetic history of the disease, you need to measure someone who's early and you need to resolve changes early in the cascade. And so as disease progresses, we think that you're gonna need sensitivity for that as a person progresses through that disease cascade. So those are the three kind of main areas and why we think the similar platform is gonna be, have a leadership role in Alzheimer's testing.
spk04: Got it, thanks, thanks Basud for the context there. And if I could just to squeeze one quick one in for one that can you elaborate where the pricing improvement was coming from? And how should we expect the gross margin cadence through the year, specifically on pricing? Was it more RU assays or accelerator side?
spk02: Yeah, thanks for the question, Vineet. So really pleased with where we landed on gross margin for the quarter. On the pricing front, we implement an annual price increase every year that went into effect at the beginning of the year. That's across all of our products. So you see that kind of across the portfolio. On the accelerator side, there's a little bit more bespoke project work that goes on. So there is a little more variability there. And this quarter, the projects that we executed were very favorable from a pricing perspective and helped on the margin front. So, you know, for overall margin, so we feel really good about the margin. You know, the prices help, the revenue mix also definitely helped out this quarter. And then a lot of the fixes that we put through in the transformation also have started to take hold.
spk04: Got it, okay, thanks guys.
spk10: Thank you for your question. Please stand by
spk09: for our next question. Our next question comes
spk10: from the line of Matt Sykes of Goldman Sachs. Your line is now open.
spk05: Good morning, thanks for taking my questions. Maybe the first one for me, just looking at the instrument accelerator lab mix, how much of that do you think is due to the weaker capital equipment demand? So we have a mix of capital equipment demand environment and customers just more willing to use accelerator lab. And if we do see an improvement in the capital equipment demand environment, do you expect that mix to shift back? Or are there some customers that have gotten used to the accelerator lab services and will be more willing to use them? And then longer term, if that mix stays that way with accelerator lab growing at a faster rate, what is the impact on margins going forward?
spk02: Yeah, thanks for the question, Matt. We think it's really both. On the one hand, the accelerator product has become a really unique offering on its own. So we think there's a value crop for it that stands on its own. And Masood mentioned that about 80% of the customers are now repeat customers. So we feel like that will continue to grow. Maybe those growth rates won't be as high as they are right now, but we think that value crop stands on its own and will continue to have a really important place in our portfolio for many different reasons. On the instrument side, certainly for this quarter, we definitely saw a lot of that GAPEX pullback show its way in accelerator. So in the short term, that might be something that continues for another quarter or two, but our expectation would be at some point that balance is out and as the funding environment eases, we have both models running together where we're still selling instruments, but we still see accelerator as a really viable franchise.
spk03: And Matt, the only other thing I would say is that, when you think of accelerator, and you think the value of Samoa and the sensitivity that we offer, when we perform these services, they're margin-accretive to the total business, meaning there's a valuable service that we offer with valuable technology and they're priced as accordingly.
spk05: Got it, thanks for that. And then, Masoud, just now that we have the Denenemab ad-com date for June 10th, there's obviously focus on both safety, but also on tau levels and detection. What is your expectation for labeling? And if there is tau on the label, is this their to it AD offering sort of the preferred testing platform, and do you believe for Lilly to execute those tests that they need to get in order to get people on to therapy?
spk03: So, we don't have a really good sense of what the label will look like. Obviously, we're very interested to see what the outcome is going to be of that ad-com meeting. I think we're hopeful that the results are positive for patients and having another therapy or therapy option in the market, I think, is just overall good for patients. But as to the label, we don't have a sense of what that would look like. From the laboratory or to it AD, we've been working very closely and collaborating with Lilly over the last year, several years, and super excited that it resulted in the development of this test.
spk05: Got it. And just one more for me. Just given the manufacturing changes that you've made over the past year and looking at Q1 and the consumables growth, it was quite healthy. Is there still an element of switching over to that new process that might have held some growth back in consumables? And do we see that kind of progressing from a ease of manufacturing and higher throughput through the manufacturing lines as a potential accelerator for consumables?
spk03: Yeah, that's a great question. To your point, over the last year, we've improved production by 300% since we began the transformation. We were able to produce 4 million tests annually with capacity to ramp. So we announced all the work that we had done had come and resulted in new assays that we'd released in Q1. And so now we're in the process of customer switching to those new assays. So we probably hadn't done a lot of conversion in Q1. I mean, it's a process, switching from an old assay to a new assay, but we expect that conversion to ramp in Q2 and subsequent quarters. Great, thanks, guys. Thanks,
spk09: Matt. Thank
spk10: you for your
spk09: questions. Please stand by for our next question. Please stand by.
spk10: Our next question comes from the line of Kyle Mixon of Kenakord Genuity. Your line is now open.
spk07: Hey, thanks, guys. Just a finer point on the near-term outlook. Just wanted to ask what the 2Q instrument placement and revenue forecast could be, how you're thinking about that relative to 1Q perhaps. And I know we just kind of talked about the consumable rebound, I guess. I mean, not even rebound, just like the continued strength. Pull through was decent, 1Q a little higher year over year, sat down from 4Q, but how could all these updated SKUs and new assays in manufacturing kind of affect, I guess, sequential growth and improvement in consumables and 2Q just based on what you just said, Masood?
spk02: Yeah, thanks for the question, Kyle. I take a crack at it first. So you mentioned there's a lot of stuff going on in consumables. That's certainly a factor as we look at our Q2 as well as the sequencing of revenue for the rest of the year. If you look at our history for the last three years, we've generally been about 50-50, 49-51 from a revenue mix perspective, first half versus second half. This year, we think that mix is going to be more like 45 to 47% because of all the factors that you mentioned below. On the consumable side, we're still very, very early in the process of customers switching over to the new assays. So we think that's a bit of a longer process and it's gonna take some time to really take hold. In addition, we have new assays coming out every quarter, but that pace does pick up in the second half of the year and that'll also contribute to revenue for consumables. On the instrument side, it's been tough. It's been a tough environment for all of us. We see the pipeline there, we see the interest, but we still see a lot of time to actually convert to revenue. So again, we're cautiously optimistic there, but it's really too soon to call how that shapes up for the second quarter. We've had other instances where it started with a good pipeline, but takes very, very long to convert. So we're a little bit cautious there on how soon that bounces back.
spk07: Okay, that was great, Vansana, thanks for that. And then follow up on Matt's question about the ADCOM, the Aloui ADCOM. Definitely gonna be focused on, I guess, safety and efficacy, but I know we don't know any of the topics for the questions yet for that meeting, but are there any read-throughs to Quantarik, specifically from that we should be looking for when that takes place in June? I guess assessing tablet baseline, limited duration dosing, those are important features of the, of kind of like the, of Denunamab. And then in the meantime, it looks like Louie's going to prepare the market for launch post-ADCOM. Like, what does that mean for your kind of diagnostic business in 25 and beyond?
spk03: Yeah, I mean, Kyle, I think the way to think of this is that up until, let's say, a year or two ago, the need for testing just wasn't there. There wasn't a therapy on the market. There weren't real solutions for folks suffering from Alzheimer's disease. And now that there is a therapy and potentially, hopefully, soon two options, two therapies for patients, there's gonna be a real need for testing. And that's kind of a wide range of tests, right? Picture yourself in an office and you have patients that are coming in that have family history, but aren't exhibiting memory symptoms. They have actual memory issues or symptoms, and they're asking, hey, is this therapy right for me? And so then the need for a large infrastructure of testing for clinical trial work, validation of which tests, when, where, is it a diagnosis, prognosis? Is it for monitoring? Is it post-treatment monitoring? These are all important questions, and it's not going to be one test that answers all of them. And so we think that it's dynamic. It's a dynamic situation, dynamic market, and we're excited to participate with what is a leading test when it comes to sensitivity. So I have no specific comments today with regard to the outcome other than we're hopeful that there's more options for patients.
spk07: Okay, helpful. And then finally, it's on the brain derived tau. Interesting. Did you talk about which antibodies you're using for that? I think I saw bioligin and thermo in the publication. And is that going, is this BD tau marker going to be added to the multi-marker panel that's due to come out, I guess, in the next six to 12 months?
spk03: Yeah, so on the BD tau, I don't recall if we've disclosed the antibodies that we're using, but it's a really interesting marker. I mean, if you look at just tau in general, large portion of that are from peripheral sources, meaning not from the brain. And for as much as you can make it more brain specific, we believe that could improve the testing and it could improve both the accuracy of the test and sensitivity of the test. So there, we're looking at BD tau in combination in a multi-marker setting. One, having it alone, but two, in a multi-marker setting, potentially with some of the phospho-taus that we've talked about to see if we can see improvement there. Obviously, you want to be measuring the brain tau specifically and not peripheral sources for Alzheimer's pathology.
spk07: Perfect, thanks guys.
spk03: Thanks, Kyle.
spk10: Thank you for your question. As a reminder, to ask a question, simply press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by for
spk09: our next question. Our next question comes from the line
spk10: of Sung G. Nam of Scotiabank. Your line is now open.
spk08: Hi, thanks for taking the questions. Maybe on the five health network collaborations you announced earlier this year, as well as the non-exclusive licensing opportunities for laboratories, could you kind of give us an update? I know it's early on, but kind of the progress you're making there or the traction you're getting currently and kind of any feedback there, early feedback from...
spk03: Sorry. Yeah, Sung G, so the feedback has been very positive. I think each of the partnerships and collaborations that we've signed, they're very enthusiastic about the sensitivity of the platform. You know, very, I would say immaterial revenues in Q1 that will probably be paced by adoption, adoption of the LeCan B therapy and future therapies that might come in the market. So we're looking at that as the largest pacer, but in the meantime, there's been a lot of interest to be able to adopt the Sunwell platform. We announced five in the first quarter and we hope to continue those announcements as we go into the second quarter.
spk08: Got it. And then just my follow-up is on the roughly 85% of the business or the growth drivers currently coming from neurology applications. Just kind of curious, how much of that is driven by Alzheimer's disease specifically? And then within Alzheimer's also, how much of it, do you have a sense of how much of the growth is coming from truly novel mechanisms of action or biomarkers?
spk03: Yeah, that's a very insightful question. I don't, you know, right now I would say that it's a pretty even split. There's a large interest in Alzheimer's, but just off the top of my head here, I wouldn't say it's the largest portion of the business. I think if you look at some of the other neuro markers that we have, just general neuro markers for neuro health are extremely attractive in a lot of these tests and trials. You have to imagine these markers are, you know, ultimate proxies for brain health. And short of doing surgery and going into the brain, you need some sort of proxy of, hey, is the therapy creating an issue in the brain? Or is the patient improving? Are there clinical attributes that might not be detectable today, but I'd be able to measure something in the, you know, in blood that would give me a good proxy for that. And so those tests, those trials are all ongoing and they're not necessarily the taus that we have in the portfolio. So good portion is not Alzheimer's related. And I would say a growing portion are for future, you know, neuropathies, you know, pathologies of the brain.
spk08: Got it, thank
spk10: you.
spk03: Thanks, Enjie.
spk10: Thank you for your question. Please stand
spk09: by for our next question. Our next question comes
spk10: from the line of Dan Brennan of TD Cohen, your line is now open.
spk06: Thank you, thanks for the questions and congrats on the quarter. Maybe just, if you couldn't, Sue, just maybe zoom out. You know, we spent a lot of time on Denomimab and what impact that could have, but just, you know, it's still obviously very early, patient volumes on the table, but we're still in the early stages of therapies and obviously for blood-based testing with, you know, regulatory reimbursement, you know, still a lot of that to come. So could you just give us a sense of, for investors, if we're looking out, say over the next six to 12 months and we're trying to identify some of the key events that will give us more clarity on the initial uptake of your clinical business and maybe the competitors, just what are those key events you think we should be looking at that'll give us some important guideposts for, you know, how this market will begin to develop and the impact for Quantarix.
spk03: Thanks, Dan. So, you know, well, first I'm gonna do an ultra zoom out and say that first, you know, when, if you think of the field of diagnostics and you're a company that's interested in doing something that's differentiated in the market and you wanna have a test or a solution that's not MeToo, it's gonna come down to sensitivity. Can you detect disease early? And that's the fundamental paradigm of healthcare versus sick care. Can you measure something early and can you detect it so that you can do something about it? And Quantarix has been working on this on, you know, several disease fronts and when it comes to Alzheimer's, you know, we're putting this into practice because there's now therapies on the market and testing early, we believe is gonna be important. Specific to sort of market conditions and what's happening, you know, we think that adoption is gonna be, of testing is gonna be paced by therapy. It's gonna be paced by additional clinical work, clinical trials as we look at the limit of detection that we're at today and future clinical cutoffs. I think there's gonna be more and more interest in testing earlier. As we see additional readouts from clinical trials that show better efficacy for patients that are measured early, I think that's also gonna be a positive sign for testing. And, you know, there are complicated problems in the clinic which, you know, 30% of symptomatic patients have pathologies other than Alzheimer's disease and that needs to be assessed through differential diagnosis. So at a very high level, I would say, there's a lot of research work that has to be done and that will be done in conjunction with these pharma companies through our accelerator program. There's a lot of clinical trials that we're performing but our partners are also performing with our platform that has to be done to progress the field. And, you know, as patients make the decision of whether they wanna get onto the therapy, there's gonna be testing that has to happen. For those patients and we think that, you know, Quantarix is gonna play a role in each of those categories.
spk06: Great, so maybe as a follow-up then, I know you mentioned a few of the trials that are gonna be reporting after yourselves. Could you just give us a little more color on, you know, the timing around those trials and could you also update us on kind of where things stand with the FDA?
spk03: Yeah, so we talked about on the FDA front, so we were excited about the breakthrough designation. We're working obviously with the FDA on the trial and the testing and the results that we're gonna be providing throughout the year. And so, you know, as we get, as we make more progress, we can provide an update. The trial work has been great. We're gonna announce a multi-marker data that's coming from both by Hermes and Quintate late July at AAIC. And we'll probably save some of the highlights for that meeting. But the trial work has been great. It's supported our 217 work, both by Hermes and the VUMC cohort of Quintate. We've done some early publications of that and we expect, you know, peer-reviewed publication to be submitted in May. So strong progress, very happy with the results. I think I'm, you know, just, you know, I mentioned that, you know, we're measuring, you know, of the 2000 samples that we measured in bioHermes and VUMC cohorts of which, you know, a large number of those, you know, where, you know, had normal levels, we were able to detect all of those patients. And so I guess, you know, couldn't be going better in terms of a clinical trial perspective for both Quintate and bioHermes. More to come in July. Great,
spk06: and maybe one for Manana. Maybe just on the gross margin solid beat, just maybe what drove the strength? How do we think about the progression? And I know there was a question earlier on kind of the components of your revenue growth. And I know you kind of gave some qualitative thoughts, but would you be willing to kind of give us some more granularity, like how we think about, like kind of full year components for instruments, consumables and accelerated projects? Thank you.
spk02: Sure, let me do our gross margin for the quarter and then we'll do revenue. So for the quarter, there were a handful of factors that really helped on the gross margin side. Revenue mechs were favorable, you know, higher accelerator sales with individual projects that were at really good margins. We talked about the price list that we implemented at the beginning of the year, as well as the fixes that we put through in the transformation. So overall, you know, more productive process, better cost control in the process. And then lastly, our inventory management costs were also low. Recall that Q4 is our quarter for physical inventory and there's normally some noise that comes out of there. So that's kind of the profile on the gross margin. You know, there are a couple of variables that can swing it a little bit on a quarter over quarter basis. Revenue and project mechs is a big piece of that. We're working really hard to drive instrument volumes out and as and when that happens, that would be slightly dilutive to margins. And then the second factor there is, we're still in early stages of the customer switch to the new assets. So there's probably some headroom that we need there in case that's longer or more expensive than we expected. So overall, really pleased with where we landed, but planning for a couple of points of variability as we go into the next few quarters. From a revenue perspective, you know, I indicated that Q2 probably points to, call it getting us to 45 to 47% of revenue within the first half of the year. For the second half of the year, we continue to see accelerator have good momentum. So even as we drive instruments up and as we try to bring that back up to where we'd like it to be, we still see accelerator as a growth engine. And consumables, you know, possibly a slower start in the second quarter as we finish up all of the switching activity, but definitely expecting that to do well in the second half of the year, partly from completing the switch and also partly from the new assets that they're bringing in.
spk06: Great, thank you.
spk10: Thank you for your question. This does conclude our question and answer session. Thank you for participating in today's conference. This does conclude the program. You may now disconnect.
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