Quanterix Corporation

Thank you for standing by. My name is Andrea and I will be your conference operator today. At this time, I would like to welcome everyone to the Quantarix Corporation Q3 2024 earnings call. All lines have been placed in mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one in your telephone keypad. If you would like to withdraw your question, press star one again. I would now like to turn the call over to Vande Nassaram. Thank you. Please go ahead.

Thank you and good afternoon. With me on today's call is Masood Tulu, Quantarix's president and CEO. Before we begin, I would like to remind you of a few things. This call will be recorded and a replay will be available for investors on the investor 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 include, among other things, statements regarding our preliminary results for the third quarter and the expected impact of the restatement of our historical financial statements. 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 include that we may have underestimated the scope and impact of the restatement, risks and uncertainties around the effectiveness of our internal control over financial reporting, the risk that our restated financial statements may take longer to complete than expected, and other risks described in our filings with the Securities and Exchange Commission. To supplement our preliminary financial statements presented on a GAAP basis, we have provided certain preliminary non-GAAP financial measures. These preliminary non-GAAP measures are used to evaluate our operating performance in a manner that allows for meaningful period to period comparison and analysis of trends in our business and our competitors. We believe that such measures are important in comparing current results with other periods results and assessing our operating performance within our industry. Preliminary non-GAAP financial information presented herein should be considered in conjunction with, and not as a substitute for, the preliminary financial information presented in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures set forth in 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. Other than revenue and cash balance, the financial results we are discussing today for the third quarter are preliminary only, are based on currently available information and are unaudited and subject to adjustment, included in connection with the finalization of the restatement of our financial statements. We will report our final results for the third quarter of 2024, which could vary from the preliminary financial statements discussed today in our quarterly report on Form 10-K, following the filing of our restated financial statements. Now, I'd like to turn the call over to Masood Tulloo.

Thank you, Vandana. I'm

pleased to report Quinterix continues to outperform, delivering a sixth consecutive quarter of double-digit revenue growth. Despite market pressures, our industry continues to face related to capital funding. We're a technology leader in a uniquely positioned category where continued demand for Samoa ultra-sensitivity, our unique business model, and our ability to serve customers has shown resiliency. Revenues of 35.7 million grew 13% this quarter, driven by 36% growth from our Accelerator lab, 8% growth from our consumables business, and continued traction with partner enablement in diagnostics. On a preliminary basis, third quarter non-gap gross margin of 53% reflects our disciplined approach to operational improvements, cost, and price, where we see continued opportunity for expansion. We are advancing our strategic priorities with a balance sheet of nearly 300 million of liquidity and cash usage down to 3 million in the quarter. Vandana will touch on these results and our reaffirmed guidance in more detail. As a reminder, our three core growth objectives are, one, high growth menu, specifically maintaining our leadership position in neurology and growing into adjacencies. Two, our goal to achieve ubiquity of Samoa in all labs where we are allocating resources to provide our customers with solutions in immunology and oncology. We will achieve this with new menu and higher multiplexed, ultra-sensitive protein detection, which we expect will culminate in a new platform sometime in 2025. And three, leading to build the global diagnostic testing infrastructure for Alzheimer's disease. We're making great progress on growing our menu and expanding into adjacencies. Year to date, we have commercialized a total of 16 new products, including several novel multiplexes with plans to launch another four assays by the end of the year. In neurology, we recently launched a N4PD assay, which combines BDTAU with additional relevant neurology markers. Our neural multiplexes perform well and we expect similar adoption for N4PD. In the last couple of months, we launched three new cytokine fourplex kits that will support our immunology and inflammation customers, performing long running studies and transitional work.

With

over 3000 publications, there is a lot being built using our Samoa platform. I'll discuss two important developments. First, in a recent paper from Nature Medicine, researchers used Quantarix's TDP43 assay to evaluate the progression of frontal temporal dementia, or FTD, and ALS. This study showed that plasma extracellular vesicles, or EVs for short, aided in the detection of molecular pathology for these conditions with biomarkers related to repeat tau isoforms and TDP43. This example is part of a growing body of literature using Samoa to probe EVs and gain new insights into disease pathology. We believe extracellular vesicles will be an important field of research spanning multiple disease areas and are engaged with leading researchers to evaluate our new products aimed at streamlining EV testing workflows. Second, in an October 16th publication, in the Annals of Neurology, Professor Jans Cooley used Quantarix's GFAP and NFL assays to monitor patients with multiple sclerosis, or MS. Professor Cooley's findings support a rationale for monitoring MS relapse activity with both NFL and GFAP, whereas much of past work has only examined neurofilament light. This data suggests that in MS patients, an elevation of GFAP after B-cell depleting therapy is associated with an increased risk of continued progression. These findings build upon the growing body of evidence that biomarkers such as NFL and GFAP are key informative analytes for our customers to monitor when evaluating drug efficacy and disease progression. Moving to the third pillar in our growth strategy, we continue to progress on Alzheimer's disease testing. Beginning with recent news from the clinical trials of Alzheimer's disease conference last month, we announced the launch of Lucent AD Complete, our multi-marker assay as a lab-developed test. As a reminder, this multi-marker combines PTAO-217 with NFL, GFAP, and amyloid beta-4042 and uses an algorithm to provide a single patient result. In over 1,000 patients across three clinical cohorts, our data has shown that this algorithmic test reduces the intermediate region by threefold while also maintaining overall accuracy above 90%. Demand and interest from our customers has been strong as clinicians want the most comprehensive information for diagnosing patients. This test builds upon our best in class single marker PTAO-217 offering, providing results to more patients. In the long term, we expect multi-marker blood-based testing to be the predominant method to diagnose Alzheimer's disease. We've already begun to see this develop. In September, Mount Sinai Health System announced they would deploy multiple blood-based biomarkers as early detection tools across primary and specialty care settings. Mount Sinai will be examining PTAO-217, NFL, and GFAP using our assays through a grant from the Davos Alzheimer's Collaborative. We also continue to engage with the FDA on our PTAO-217 single marker submission. We expect to wrap up our clinical validation studies next year. Our FDA submission with multi-marker will use the same clinical trials as our single marker test, and therefore we expect its regulatory timeline to closely trail our single marker PTAO-217 process. Finally, an update on global diagnostics development. With approximately 10 million individuals estimated to have Alzheimer's disease, China has been an early adopter of blood-based biomarker testing. As a country with approved therapies such as LeCenB to help treat the disease's progression, we view China as an important region to build critical Alzheimer's testing infrastructure. In September, our partner, UltraDx, received Chinese IVD clinical registration for its UDX system, which uses Samoa technology. UltraDx plans to use the UDX and our highly sensitive Samoa technology for early diagnosis of Alzheimer's and other disease states, thereby making our superior blood-based biomarkers accessible in China, a large market with an aging population. This is a great example of several global initiatives we're working on to build the infrastructure for non-invasive blood-based Alzheimer's testing. Vandana will now discuss our financial performance.

Thank you, Masood. I will now go over our third quarter preliminary results and our reaffirmed guidance for 2024. Before we go through the financials, I'd like to remind you that the company disclosed the need to restate certain prior period financial statements to correct non-cash errors related to those periods. I refer you to the schedules attached to our earnings release. These represent our preliminary best estimates of the potential impacts of the restatement, and we leverage these for our prior period comparisons. Please note that these preliminary figures set forth in the schedules are based on currently available information and are unaudited and subject to adjustment. We intend to complete the restatement by the end of this year. Actions are also underway to continue to strengthen in reporting processes and internal controls, and I'd like to emphasize that there is no impact from this restatement on the underlying strength of the business and on our above market revenue growth rates. As Masood described, the third quarter continued our trend of double digit growth and margin expansion compared to the prior year, and sequential improvement in revenue and cash flow. Total revenue for the third quarter of 2024 was 35.7 million, an increase of 13% compared to the prior year. Accelerator Lab revenue was 10.5 million, an increase of 36%, driven by strength in testing services for clinical trials and custom assay development. Consumable revenue was 17.3 million, an increase of 8% offsetting the decline in instrument revenue, which was 2.4 million, a decrease of 39%. Similar to prior quarters, the instrument outlook continues to be challenging. However, our differentiated accelerator offering has created a valuable franchise that has helped us weather a tough cycle and demonstrate double digit growth, highlighting the continuing demand for our ultra sensitive Samoa technology. Other sales of 5.5 million in the quarter includes 1.5 million of licensed revenue related to diagnostics, an increase of half a million from the prior quarter. Total revenue from our diagnostics enablement partners was 2.7 million. In terms of revenue stratification, our customer makes in the period approximately 50-50 between pharma and academia, and 92% of our assay and accelerator sales were for neurology disease states, including testing services for multiple phase one, two, and three trials. Revenue from lucent patient testing was immaterial for the quarter. Our revenue growth was led by North America, which grew 27% due to strong momentum in lab services and from our diagnostics enablement partners. The Europe region grew 2% and the Asia Pacific region was down 34% in the period. Moving on to gross margin for Q3. On a preliminary basis, gap gross profit and margin were 21.1 million and .9% respectively, up 2.2 million and down approximately 100 basis points compared to the prior year. Third quarter preliminary non-gap gross profit was 19.1 million and preliminary non-gap gross margin was 53.4%, up 2.8 million and approximately 160 basis points respectively compared to the third quarter of 2023. We ended the third quarter of 2024 with 296.1 million of cash, cash equivalents, marketable securities and restricted cash. Cash flow in the period was a net outflow of 3.3 million, which was higher than the prior year period by 1.5 million, but an improvement from the prior quarter by 1.7 million. As we had outlined at the beginning of the year, this includes significant investments in our strategic priorities, asset development, advancing into adjacencies and diagnostics. We continue to improve core RUO cash burn as demonstrated by improving margins and continue to expect that the RUO business will achieve cash flow break even in the 170 to 190 million revenue range. With a strong balance sheet, we continue to implement our disciplined capital allocation strategy to support our three pronged strategic plan. I will now address guidance for the remainder of 2024. We are reaffirming the guidance we previously issued. We expect full year 2024 revenue of 134 to 138 million, representing double digit growth of 11% at the midpoint. Similarly, we are reaffirming our gap gross margin guidance of 57 to 61% and our non-gap gross margin guidance of 51 to 55%. Finally, there is no change in our previous cash burn assumption of approximately 30 million for the year. I will now turn it back over to Masood for his final thoughts before opening the call for questions.

Thank you Vandana. Quantarix continues to deliver despite the industry's macro backdrop for three reasons. First, Samoa sensitivity is unparalleled and its demand robust. Second, we're able to deliver on this demand through instruments or accelerator services, which is a non-cap ex and efficient way for BioFarma to receive Samoa data. Third, our translational customers are heavily invested in phase two and three studies and there's no sign of slowing when it comes to neurology related trials. We are at the beginning of a neuro decade. Today, Quantarix is a tools company growing double digit, differentiated through our resilient business model, uniqueness of Samoa ultra sensitivity and clear path to RUO cash breakeven. Breakeven such that we're using our balance sheet to fund and drive large upside opportunity to our existing double digit tools growth story. Specifically leading the way in non-invasive testing for Alzheimer's disease.

Operator, we can take some questions.

Thank you. At this time, I'd like to remind everyone in order to ask a question, press star then the number one in your telephone keypad. If you would like to withdraw your question, press star one again. We'll pause for just a moment to compile the Q&A roster. And your first question comes from the line of Matthew Sykes with Goldman Sachs. Thank you, please go ahead.

Hello, this is Jake on format. Thank you for taking my questions. The first one I wanted to talk about the accelerator lab as this continues to outperform our expectations. How would you characterize the sales in the quarter in terms of new versus existing customers? And for my followup, how would you frame the level of utilization from your Alzheimer's diagnostic health system partnerships and has this trended in line with your expectations? Thank you.

Yep, hey, you know, I think the, obviously we're very excited about the accelerator business. Accelerator grew 36% this year. I mean, this quarter it made up about 30% of our business. You know, if you add sort of our consumables and accelerator together, you have, you know, what is 80% reoccurring revenues, which is really a unique position of strength, you know, in the market. So, you know, I would say about 70 to 80% of the reoccurring customers in accelerator this quarter are customers that are just coming back to us. In terms of the diagnostics capabilities, you know, while Lucent AD testing was immaterial, you know, for the quarter, then we continue to enable partners around the globe and, you know, we did see, you know, some instrument placements and consumables being driven through that enablement strategy for that quarter.

Yeah, that's right. You know, on the enablement front, we talked about 2.7 million of revenue this quarter. Last quarter, we had reported 700,000. So, you know, these will ebb and flow as we get individual partners stood up, but we're seeing good interest from our partners. We also referenced what Mount Sinai is doing with our instruments in terms of being able to use them for diagnostics testing. So very pleased with the progress. I'm starting to see, you know, similar technology spread

through our diagnostic footprint. Operator, do we have another question?

Thank you. Yes, our next question comes from the line of Sung Jinam with the Scotiabank. Thank you. Please go ahead.

Hi, thanks for taking the questions and congrats on the quarter. Maybe just on, I know the diagnostics revenue will be immaterial this year, but as we think about next year, without providing guidance, could you kind of give us a sense of how we should frame, you know, in terms of puts and takes and what the different scenarios could look like from a diagnostic, you know, how that could contribute to your

overall

top

line growth next year?

Hey, Sung Jinam, you know what? That's going to be an important question we're going to answer, you know, more towards the beginning of 2025. And obviously it's gonna be directly related to, you know, patient utilization of the leukembia and cosumla and how that ramps. And so, you know, we were just at the CTAT conference last month and, you know, part of the kind of the situation with this ramp is really, you know, accessibility to PET scans and how PET isn't accessible in rural areas, uncertainty and eligibility for the therapy and then obviously infusion accessibility. You know, we think obviously that blood-based markers changes this, we can really reduce cost versus PET and overall streamline diagnostics and that should help with, you know, more people getting access to the therapies. So I'd say, you know, answer your question, it really kind of correlated to how the therapies ramp in the year. We're seeing excitement, we're seeing obviously a lot of utilization of our markers in clinical trials for, you know, anti-amyloid, anti-TAO trials that are happening and we'll comment at the beginning of the year on how much of that we think is diagnostic testing could really be to the therapy.

Gotcha, thank you for that. And then just on the biomarkers, congratulations on launching the multi-panel assay. And you mentioned that you expect the Lucin-AD complete to be used predominantly in the future over the single marker assay. Just kind of curious, I know you mentioned kind of a three-fold improvement or reduction in terms of the intermediate zone. And was wondering, could you remind us again what the difference is between this multi-marker panel versus your own 217 single marker assay from being able to kind of narrow this intermediate segment of the diagnosis? And then also kind of maybe, you know, you also presented data on the BD-TAO assay and was wondering kind of how all these different assays will fit together in the future. Do you expect the BD-TAO to be used more for kind of the new therapies under development or do you think the BD-TAO could also be utilized for LeCenB and QCENLA as well? Thank you.

Yeah, sure. So starting with your question on Lucin-AD complete. So Lucin-AD complete is a significant improvement on the single marker test and that our single marker test, Lucin-AD is a 217 marker and then the Lucin-AD complete is not only 217 but it adds the NFL, GFAP, A-Beta, 40 and 42. So it's a five marker test with an algorithm that takes a look at the five markers and provides a single patient score. Now, when we use the additional markers on the algorithm, we're able to reduce the intermediate zone by threefold, which essentially provides a more definitive result to a higher number of patients versus any sort of single marker test. As I compare, if you look at Immunoassay single marker test in the industry, they typically have an intermediate zone that's 20 or up to 30% and so this is a market improvement for patients and we've been seeing a lot of excitement about the test at CTAD where we launched it and also in follow up conversations after CTAD. So we're excited about that. And then I think, so your second question was around BDTAU and so BDTAU we launched a quarter ago and now recently we added BDTAU in a fourplex test and really where we're excited about these top proteins is being able to differentiate TAU variants from what's happening in the brain versus peripheral sources and we think that is gonna be important in staging the TAU pathology but also important for monitoring patients in clinical trials and ultimately could enter into some of our multiplexes in diagnostics. So I would say it's still very much a research marker to be used in research applications and clinical applications but could have potential for diagnostics in the future.

Great, thank you so much. We'll get back into queue.

Thank you, next question comes from the line of Kyle Mixon with Kencar Genuity, thank you, please go ahead.

Hey guys, thanks for the questions. Congrats on good results. So first I wanna talk about the product line for revenue. I think it was touched on earlier but specifically just this kind of interplay between instruments and accelerator, I think instruments was down 34% in the quarter, -over-year I think accelerator was up conversely like kind of 36% or so. Any instrument revenue slip into accelerator in three queue and how does that kind of like, that exchange that overlap progress over the next several quarters let's say given macro kind of dynamics changing and evolving? Thanks.

Yeah, so let me address the first part of the question and then we'll talk about how we expect the macro to evolve. So at this point there's definitely that toggle of instrument versus accelerator. We've seen that play out for almost six quarters at this point now and what we've seen really is the reduction in the instrument revenue is more than offset by what they're pulling through from an accelerator perspective. So that toggle has in the short term worked in our favor. In the longer term of course we would like all our customers to buy instruments and buy consumables with that, et cetera. So with that backdrop, again very pleased with how accelerator has performed. It's not just the benefit of the instrument toggle, it's also the fact that there's a lot of activity from a research and trial perspective that accelerator is getting more than its fair share of. In terms of how we see this move forward in the future, we like others would love to see instruments come back. At this point we haven't seen any concrete signs of it, so I think it's gonna be a bit of a slow recovery here. From the perspective of accelerator though, we do expect that even when instruments come back, this will continue to be a double digit grower for us, just based on all of the work that we're seeing on asset development as well as in terms of trial work. So in the future we would love to see a place where instruments are back to their double digit growth, but in that scenario we also believe that accelerator could continue to grow double digit.

Okay, that's interesting bottom to that. And maybe just pushing on the instrument kind of theme. It's in flat past three quarters or so as you predicted next quarter. I assume it's kind of a similar outlook probably. We're waiting for the restatement, but I'm sure it's gonna be relatively flat. Maybe early 25 and throughout the year next year, are you assuming any gradual improvement or like kind of inflection at some point or maybe should we assume kind of steady instrument revenue levels or something like that and then maybe picking up towards four Q?

Yeah, so it's a little early to talk about 25. For Q4, our early indicators are that it'll look a lot like instrument revenue will look a lot like what Q3 look like. For 2025, it's a little early for us. We haven't seen any signs this way or that. So as we get into the early part of the year, we'll give more color on that.

Okay, and I'd parse out consumables as well because it looks like that kind of missed our model a little bit. I can come back to that offline. Maybe just for Lucent AD complete, just in terms of the reimbursement next steps. Masood, what's next from a commercial payer perspective? What can you do in the meantime with them, I guess? And from a Medicare perspective, like the CLFS didn't look super favorable for these AD detection tests from a payment perspective. How are you thinking about that, I guess, going forward? And then how will you scale with, I guess, next year? Could you use partners? Is it mainly going to be with a sales team? Just walk through that one more time.

Thanks. Yeah, Kyle. So I think the first point I want to make on Lucent AD is that from a reimbursement perspective, if you look at single markers, there was obviously the $17 decision that came out for a single marker. And we think that ultimately that probably ends up at $90 to $130. Regardless of that decision, our goal had always been that the company was going to focus on a four or five marker test. And with Lucent AD, we have a five marker test that we're really focused on clinical utility studies, the ongoing clinical trials that are going, which we expect will complete in 2024, and really provide us with the data for an LCD and submission for an ADLT sometime in 2025. So that's sort of the reimbursement time frame that we're looking at. And because it's a multi-marker test, we expect something materially larger than what was decided for single marker. As I was answering that, Kyle, I forgot your second question. Oh, it was growing. Yeah, it was kind of like... Oh, yeah, partners. Yeah, the growth of the partners, I think, was your question. Had

a scale with basically, yeah, because now we're at an important time with budgets and so forth. Are we going to build a team out here, or are you going to use partners or something like that? So yeah, thanks.

Yeah, you know, our strategy, Kyle, has been both. We, you know, one of the key things that we continue to reiterate is that our focus is building on... is to build the global infrastructure for testing. And that means that we're not going to do it just by ourselves, right? So, you know, we continue to sign hospital partnerships. We continue to enable folks using our reagents. And we want to get this test out there, not just in the US, but globally. And we talked about some of our initiatives globally. At the same time, you know, we're going to have a lot of capacity here in Boston. You know, we have 24 HDX systems. We have a superb team in the accelerator group, which is our CLIA lab over here, and significant capacities to ensure access to the test.

All right, that was great. And then just one final one, kind of like a forward-looking question on diagnostics. What are some of the kind of like proof points that you're looking for next year, like in 2025, that's going to help you basically decide to accelerate or pull back on that investment in that business? You know, I understand that it's immaterial revenue most likely for the near term, but it's just, you know, kind of like the definition of success for you in that diagnostics business in the near term could be interesting to hear.

Yeah, so, you know, I want to make a clear point that now that there are two therapies approved, the number of trials and excitement for additional therapies is pretty significant, you know, pretty material. And we're seeing that with our 36% accelerator growth rate. People are coming to us for these phases one, two, and three trials. And I haven't seen, you know, this demand in the market for these neurology trials before. We think that's robust, and they'll continue to be robust. I think, you know, the key driver for diagnostics will come down to the two therapies that are approved. And if we start to see that ramp, I expect the demand for blood-based testing to also similarly ramp. So, you know, obviously we're paying very close attention to that as we think that, you know, a non-invasive blood test will streamline the whole diagnosis process, and obviously it's more scalable and accessible in the market. In terms of resource utilization, you know, we've talked in prior calls about our RUO business becoming cash flow breakeven between 170 and 190 million revenue. And, you know, our plan is to achieve that and use our balance sheet for investments like diagnostics. Key, you know, items for continuing to invest, obviously reimbursement is a critical part of that. We have high ambitions on what this reimbursement rate will be for Lucent AD, as it's a, you know, much more sophisticated test than a single marker and much more accessible than PET. And then, you know, obviously the number and demand in the market for the current two therapies on the market. So I would kind of view those two as important proxies for our gauging investment in capital allocation towards diagnostics.

Great. Okay, that's helpful. Thanks, Lucent. Thanks, Antoine. Thanks, Kyle.

Thank you. And next question comes from the line of Dan Brennan with Teddy Cohen. Thank you. Please go ahead.

Hey, good afternoon. This is Kyle on for Dan. I wanted to go back and maybe follow up on a question that was asked earlier. So now that you have data on PTAW-217, you know, multi-marker in BDTAW, all showing good accuracy, do you see specific use cases for each assay? Or do you think the one that has the highest accuracy and lowest intermediate zone will take essentially all the potential business? Thank you.

Yeah, Kyle, first, you know, I think an important factor to consider is that, you know, with the SAMOA platform, because it's an ultra-sensitive platform, all patients coming to see a neurologist will get a result. And that can't be said for other less sensitive platforms. So I think that's the first key differentiator factor with, you know, when a clinician tries to make a decision between different immunoassay systems. I think the second thing comes down to this intermediate zone. When you add the multi-marker test, you know, the five markers with this algorithm, you're giving a more definitive result and hopefully less follow-on invasive testing. And that's not just only good for, you know, decision-making, but it's also much more accessible and scalable for a patient making the decision. So that's like another really second key pillar of why you would use the SAMOA platform in our multi-marker test. And then, you know, maybe the third is that, look, I would say two years ago, PTAL 181 was interesting. We've since launched PTAL 217. And pretty short after, we launched a five-marker test. And if you, you know, if a customer or a clinician chooses the SAMOA platform, they know that we have really exciting markers coming down the pipeline. And you can expect an innovative company delivering innovative products to a clinician and to a laboratory who's looking to make that investment.

Got it. And maybe as a follow-up, I guess in your conversations with customers, is the larger gaining factor for clinical revenue therapy uptake, performance and availability of blood-based assays, or is it really something else? Thank you.

You know, so it was interesting. This was an item that was discussed. I think that, you know, therapy adoption really is gated by sort of this, you know, inaccessibility to PET, you know, obviously, it is an infusion, uncertainty and eligibility. And these are all sort of key gating factors. But ultimately, testing and diagnostics is an important, you know, important to have that infrastructure there. And so, you have this chicken and egg, and you need the infrastructure to be out there so that folks can see if, hey, you know, will I even be... Is the therapy right for me or am I even a patient that has the amyloid plaques? We think blood is the first line test for that, and it's going to help clinicians make a choice. And it's definitely a key component for scaling the therapy and getting therapy to more patients.

Got it. Thank you. Thanks, Kyle.

Thank you. Next questions come from the line of Puneet Suda with Lurink Partners. Thank you. Please go ahead.

Yeah, hi, Mrs. Thanks for the questions here. So first one on the rule in rule out test, can you elaborate a bit on where the multi-marker assay stands today versus the rest of the rest of the broader market? And, you know, do you think this is an assay where you can ultimately classify patients all the way from, you know, late stage to screening? And why is it... Just help us understand why is it harder for other immunoassay platforms to be able to do this?

Yeah, thanks, Puneet, for the question. You know, Lusin AD Complete is a five marker test with an algorithm. The majority or almost all of the other systems, immunoassay-based systems, diagnostic systems out there, will look at a single marker at a time or maybe at most two markers. And so this is the first immunoassay test that looks at five markers, uses an algorithm to provide a answer for Alzheimer's disease. So I think that that's a key, unique factor. And when we looked at, you know, single marker tests in the market, you have this large intermediate zone with the multi-marker test. That zone has reduced significantly and so makes for a much better test. You know, two years ago when we were developing these tests, we always assumed and had planned that a multi-marker test is ultimately going to be the best test for patients when it comes to a blood-based test.

Got it. That's helpful. And then maybe for one, I mean, just given the efforts ongoing for both, I mean, the FDA studies, the current studies ongoing, FDA approval and commercialization efforts underway, just can you elaborate how should we think about OPEX in 2025?

Yeah, thanks for the question, Puneet. When we got at the beginning of the year, we had taken into account all of the costs that would go into getting through all of the studies as well as all of the other efforts required to commercialize the test. So I would say the run rate that we've had over the last couple of quarters for OPEX is representative of where we expect to be for this year. Getting into next year, you know, we expect the study costs to be somewhat constant. We've been planning for that all along. And then on the commercial side, you know, we have the ability to move as fast or as slow as the market develops. So we do expect that in total, there will be additional investment next year in diagnostics on the OPEX side. But we do have the flexibility and the ability to move that very quickly or very slowly, depending on how the market develops. So we'll watch for the leading indicators that Masood talked about. And if at that point it makes sense to step up the investment, we'll do that or vice versa.

Okay, got it. And then this is a broader question, Masood, but just wondering what you're seeing among your academic customers versus your biopharma customers in the core research-only assays market. There have been a number of questions about the academic, just given some nervousness simply around the political environment and NIH concerns as well. So just wanted to get a view of what you're seeing from the academic customers. Thank you.

Yep. And so, you know, half of our business is academic and half on the pharma side. And that was also very similar makeup this quarter. You know, we're seeing excitement from academia around some of the new assays. And, you know, we think we have an install base that has significant underutilized capacity. And our goal is with these new assays is to have the existing systems that are out there in academia being utilized more. And so, you know, like one way to think about this is that if you look at sort of the average throughput of our install base and you compare it to our accelerator lab, you know, we output five to eight times more samples than the average in the install base. So, you know, obviously we want these systems to be running more and it's not a coincidence that, you know, to achieve that we're highly focused on new menu. And these systems running more frequently. So good progress from the team. You know, we did 16 new assays this year. We're going to have 20 by the year end and we'll see the benefits of these. You know, this pull through more in twenty five and that's likely to have an impact specific towards academic or academic customers.

But just clarifying that, did you see softness from the academic customers within your instrumentation for sales?

Yeah, I think the instrument softness was really across the board. Both academic and pharma was slow compared to the prior year on instruments.

Got it. Okay. All right. Thanks guys.

Thank you. And your final question comes from the line of Thomas Deporti with different research. Thank you. Please go ahead.

Hi, guys, just against the question, you know, related to some of your cost efforts that have been ongoing around Samoa Advantage Plus. And I guess, you know, you're refreshing of existing essays as well as adding new essays. Has that contributed to, you know, I guess the improved gross margin and just, you know, just maybe related to the research use only side, you know, to that continue, you know, as you look out the next couple of years. You know, in terms of, you know, obviously better lot to lot consistency, but then also maybe also improved costs. You know, in terms of manufacturing of consumers.

Yeah, I can take a stab at this one. So, you know, to your first question on how we're doing in terms of transition to advantage plus as a reminder, the transition to advantage plus helps us from a margin perspective, but is a process that we are taking. That is taking place with our customers in a very thoughtful manner. So this quarter, about 30% of our consumable sales were on the new advantage plus lines. Very eligible. So that's a good transition. You know, again, it's not a demand signal, but it does help us some on margins. And on that, you know, we continue to make positive developments of margins in terms of, you know, both managing the effects of the transformation and at the same time, being able to introduce new products. So, all of the NPS that we talked about, you know, all of those do cause a little bit of up and down on the margins because they're brand new products that they're making for the first time. But as those stabilize and as it becomes normal for us to introduce NPS every quarter, we expect that to help our margin substantially a lot as well.

Great. And then just one other question. You mentioned, you know, additional biomarkers related to dementia, which obviously, you know, highly related to Alzheimer's. You know, if the patient doesn't have Alzheimer's, ALS and multiple sclerosis, do you see potential diagnostic opportunities down the road, you know, from some of these biomarkers that you're working with pharma and developing?

Yeah, absolutely. You know, the one of the. Research highlights that we made, we did was with a neuroflammate light and then we think neural flammate light is going to be important for relapsing remitting relapsing MS. And I think some of the studies that we highlighted by combining NFL and GFAP are going to be important for monitoring disease progression. And there's been extensive effort with our collaborators to build a research normative database for the purpose of normalizing and taking a look at someone's normal levels of NFL and GFAP. So, I think that this is just the beginning of markers. If you look at some of the growing trials, almost all of the neuro trials have a a neuro marker. That's a tertiary end point or, you know, endpoint that's looking at efficacy. And I expect this to be a pipeline for diagnostic testing in the future.

Great, thank you very much. Thanks, Thomas. Thank you and there are no questions at this time. Ladies and gentlemen, that concludes today's call. Thank you all for joining you. And disconnect.