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Hi, welcome to the Canaccord Jury Growth Conference. I'm Kyle Mixon. I cover life science tools and diagnostics for Canaccord. Pleased to welcome you to this fireside chat with Quanterix. Here with us today, Quanterrix offers a highly sensitive platform based on digital ELISA for, you know, I guess a target on neurology and oncology, and we'll talk a little more today, I guess. From the company, we have CEO Everett Cunningham. Thanks, Everett, for joining us today. Appreciate it. Thanks for having me. Appreciate it, man. All right, so starting with the performance in the second quarter, you guys announced your earnings, I think it was on like a few days ago, Monday. What were some key drivers of performance during the quarter and any, you know, I guess revelations or like changes that kind of arose from the update? Yeah, thanks for that question. And we had our earnings call on Monday morning. So it's kind of fresh. Let me talk about the things that we feel good about at Quantarix. We had our earning call. We talked about kind of what drove, you Know, our top line and bottom line. First of all, we did our acquisition of Akoya. We announced it a year ago, a year under our belt. And the synergies that we acquired or that we drove from that acquisition, $85 million of revenue synergies over the last year. We completed that in Q2, along with our ERP integration. So just the discipline around our spending, hitting those synergy targets, I commend the entire company. With regards to kind of our top line, you know, Mike Miller, who's in the audience, and I, our chief technology officer and product officer, we did and just exhausted ourselves with scouring our different regions, talking to customers, and what they tell us in terms of what we offer on the spatial side and our legacy Samoa side is just differentiating from a technology standpoint. and validated by our customers and how they use our technologies from instruments, consumables, our clinical trials business. So just what we offer there has been very, very positive. And just some green shoots that we've seen quarter over quarter, our accelerator clinical trials bookings were up quarter over quarter. We feel really, really good about that. We've added some things on the commercial side to give us a little bit more scale and drive more net new business in terms of lead generation reps um and also added some revenue some investments on the marketing side um where we're challenged a couple places right the academic u.s academic and government market uh listen there's funding constraints we're not just saying that due to our research but talking directly to customers so that's been a it's been ahead win for us and then our commercial execution um we are very uh forthright and transparent around we need more out of our commercial organization to start driving some sequential growth and so we've done what i would say the right focus the right transforming and the right adding of resources on the commercial side so we can get that sequential growth okay all right awesome um maybe just on that on that note um the mix of the company's revenue you know but the combined company now as you know with aqua it's you know biopharm is pretty material it's it could be you know near half or it could be like, you know, definitely over a quarter of the business. So maybe you just talk, I talk about the, the A and G, the academic and government challenges, but how was the biopharmacide a little bit pressured as well? Yeah. So, um, our biopharma side, uh, what we're seeing is we're doing the same amount of, you Know, clinical trials, biopharma deals. Those deals are just smaller deals. Um, and the feedback we get from our customers are again, they might be constrained a little bit from a funding standpoint, but this is mostly on us. And where I feel optimistic about our clinical trials business is, if you go back a year ago, we did not have solely dedicated resources on the clinical trial side. We've added back a team that would be solely dedicated to clinical trials. And you talk about a quick transformation. Looking at Mike, Mike ran that business two years ago, solely ran that clinical trials business. We have people that are currently at our company that have experience, have pharma relationships. What we're doing is we're just deploying them the right way. So now they'll be dedicated. It's not a team of about seven to 10 people moving forward that they'll drive our bigger deals with key pharma customers. And where, you know, so if the total dollars or dollars per project are lower, what do you think that the money is going, I guess, is it to other, you know, I guess competitors or just to other you know the AI stuff or something? I don't know. Listen, they, everybody has, you know, spending choices. Again, in doing our research, what we feel is we have our opportunity to compete for those deals. You know, some of those deals are going to our competitors. And some of the deals we're just missing out and we're not there at the right time, having the right conversations with the right people we've also done a good job i give credit to our our operations team on that side we know which companies are doing uh neurological clinical trials we got to be at the right time at the right place with that dedicated team i'm confident we're gonna start to see that pick up yeah i mean i will say i think monterix did have um you know a head starter like a nice lead in neuro um what do you think it is from others and other vendors in this in this space that you know your competitors again that maybe um makes their platform or portfolio a little bit more attractive or maybe like you know makes a biopharma company open to try testing it out at least yeah when i think of that biopharmapiece um you know i it's all within our control right meaning you know if i look at our competitors maybe and this is a littlebit in hindsight we've been through a lot of transformation over the last year. Bringing over Akoya, a lot of resources. You say distractions. I'll say distractions, but a lot of, you know, transformational efforts, which is important while, you know, our competitors that are in this space maybe had a little bit more, you know, less distractions, let's just say. We're back. We'RE back. Like I said, we finished our synergies and the synergies actions back in Q2. We'Re now focused our theme is we're now investing to grow and people now have their focused roles to go after and go after it so i'm i'm really optimistic about our pharma clinical trials piece because as you know in that business right it takes like one or two deals to start to turn that to turn that around our bookings are up quarter over quarter we get a couple of deals in the second half um we're confident that that business will start to generate growth yeah great And just one more on this note. So I guess I'm just kind of asking, like, you know, the low-plex, high-sensitivity approach that Quanterix has historically had, that's the path forward to getting into the Marines, like a good strategy. Yep. So let me just touch on that. like you said, low-plex, you know, ultra-sensitivity, what we're hearing from our customers are, especially in the clinical trials, translational space, as it goes into diagnostics, the reproducibility of our instruments, the way that we develop assays, that reproduciibility is critical in clinical trials. Especially in the second and third phase, you need lot-to-lot, play-to-play, lab-to lab consistency. And that's where we differentiate. Oh, so that's a positive attribute of the platform now. Okay, yeah, in the past that was like more of an issue. All right, so in the second quarter update a couple of days ago, you talked about the pivot, you know, kind of like the, you're going down the diagnostics road a bit more and like focusing a little less on the kind of core research side, let's say. Just talk about like the rationale for that. Because it's been in the works for a while, and your background is very diagnostic-heavy, obviously. But what does that also look for in the longer term, and why does it make sense to do it now? Yeah, let me rephrase that a little bit. What I love about our company is the balance of our research tools business and diagnostics. So when I think about our comments, and not just our comments but our plan moving forward, we have three major priorities. Number one, we Have to Stabilize and Start to Grow Our Research Tools Business. And I'll just give you a little bit of color of what we've done there. If you go back a year ago, when we were Akoya and Quanterix, you had people with deep expertise selling in spatial. You had people in with deep expertize selling the Quanterics, BloodBase, Samoa, low plex, high ultra sensitive, sensitive platforms. Right. Then we came together and a hypothesis was we can have one person sell the entire portfolio. We can have one person sell Spatial, one person sell Samoa, and one person even sell clinical trials, right? That assumption was wrong. We burden our commercial organization with too much. And if you look at our customer base, how we grow our business, our sales executive, they have to have deep expertise within that segment. So what we've done is we've now segmented our organization. We've unburdened our commercial organization, so they can go deep within their expertise. So moving forward, we're going to have one person sell Spatial, a separate person sell Samoa, and a separate person sell Accelerator without expanding our commercial organisation, because we already have the people there. So that's on the research tool side. So we're focused. We just announced on Monday a new chief commercial officer, Jim Goot from Exact Sciences. Jim is well experienced in selling commercial tools, capital equipment service, and he comes in with amazing discipline in terms of driving pipelines, forecast accuracy. I know that because I've worked with Jim over the last six years of prior companies. So that's on the research tool side. So we've made changes, we've added leadership, we feel good about that. And we're really excited about our diagnostics opportunity. Just three months ago, we added a diagnostics leader, Jeff Albrecht, 28 years at Quest Diagnostics, well-versed in terms of blood-based biomarkers, because he sold blood- based biomarkERS at Quest Dignostics. And Jeff, in short order, has taken our diagnostics opportunity and set up an internal team focused on how are we going to scale from a commercial selling standpoint, how do we focus on reimbursement and taking our clinical utility studies and using that data and to get widespread reimbursement, and also working on order to cash in the lab. So our diagnostics opportunity with Lucent AD Complete is really, really positive and optimistic. Yeah, let's go to the Lucent ad in a second. But first, just understand the sales force, the change in the strategy. makes sense that you wouldn't want to have one person with these three different jobs basically but essentially when the companies combine let's say the total entity had like 150 sales reps or something like that and then obviously there were synergies and maybe it ended up being like 100 and now it's and they were each of those 100 people were doing the three the clinical trials the research the diagnostics now it is like split in three like equal parts to do each one right so So maybe, obviously, the prior, like, I'm not sure why, you know, why that was taken, that strategy, but the thought was it was a large team going, like across, you know, these, these areas is, you know, for the, in this, in this scenario, 33, 33 people enough for each of these different segments. You understand? Yes. No, I totally understand your question. And listen, we've done, before we went and announced this, we actually went out and looked at our deployment, state by state, country by country, and we're looking at do we have the right head count uh the right reach you know to really drive our second half and 27 and beyond the answer is yes um now what we're going to do is we're gonna have people then say take boston as an example we have four you know commercial salespeople within boston um we asked those four people to cover from boston all the way up to the canadian border now we're to take and those four salespeople thank goodness to our legacy akoya to our Quantarix, we might have to add one person just due to the amount of business that's here in the New England area. But those additions are onesie-twosie globally. And because we kept the right amount of Akoya legacy, the right amount Of Quantarx legacy, we're going to be deployed correctly in this new model. Okay. And you guys are guiding to a third quarter revenue number. I believe it's kind of flat to the second quarter levels, and you did decrease the guidance by quite a bit, but it still implies a pretty nice, meaningful step up in the fourth, and that's driven by what exactly? Yeah, so these commercial, not just commercial. I mean, I know I'm talking a lot about commercial, but we've added firepower in our assay development. We've added, you know, firepower and our manufacturing in terms of being intentional about bringing some spatial talent back in our organization. So we feel good about that. We started all that at the end of Q1. These things take time, right, especially commercially. It takes time to kind of build up. So from a guide standpoint, that's why you see kind of flattish from Q2 to Q3. And then what we imply in Q4 in terms of the sequential improvement, these commercial things are going to start to take hold. Our accelerator bookings, Q1 over Q2, hopefully some of these deals will pop. our new assays that we've launched in the first half of this year on the spatial side, we think will give us some added, you know, juice, if you will, or momentum into Q4. You kind of put that together. That will justify kind of our sequential improvement. Okay. Now, on the diagnostics business, so Lucina AD completes is kind of the flagship test you're going on with, I guess, that's an ultimate market test. All right. So you had roughly 10 million in diagnostic revenue last year, diagnostic enablement revenue with partners. And then this past quarter, maybe it was like nearly 2 million. And for the year, maybe 10 million is a good way to think about it. So what I wanted to ask to start off was, you know, current, like the run rate of revenue you have now with the diagnostics, is that all Lucent AD complete? And what is this program, And as I sort of look at it, what learnings have you taken that will help you commercialize next year and so forth? Yeah, we're excited about our entire diagnostics framework or moat is what we say. Maybe let me start with some of the milestones or levers that need to hit. We filed our 510K for Lucent AD complete in January. We've been having productive conversations with the FDA. and we're looking for, you know, kind of that to come to fruition in terms of FDA approval of loose and AD complete sometime in Q4, maybe it might slip into Q1. It's hard to say we can't control the FDA, but what we can say is our conversations have been very productive. So that's good from that standpoint. We have three clinical utility studies that are out there with three reputable partners and those clinical utility study should read out in the second half. And I say that only because we're going to take that, the clinical utility studies data, that's the discussions we're gonna have with payers. Because that's real life, you know, looking at LucentAD compared to the single marker and how they work in real life settings. So we're happy about those studies. Just recently, July 1st, Anthem Blue Cross Blue Shield started covering blood-based biomarkers, which includes Lucin-AD Complete. So that, to me, is representative of the legitimacy of blood- based biomarker and what they play into that journey of the treatment of Alzheimer's, right? So we're really happy about that. We have a CMS price crosswalk of Lucin AD Complete of $897. So we feel good about CMS and how they, again, validated our five marker test. And then lastly, and this gives us variety, our flagship instrument, our HDX machine, we are actually filing and going to file a 510K, and that will be submitted in 2027. So that gives us the opportunity to not just have a centralized strategy of people sending samples back to our lab, but it will also give us a decentralized strategy of putting our machines, our IBD HDX machine, into labs so we can scale in that way. So we're excited about our diagnostics opportunity. In terms of, you know, yeah, we have 10 million in the plan in 26. We're pacing to hit that 10 million. I even think with a little bit of upside is kind of our trend. Okay. Yeah, there's like a lot there to kind of walk through. I guess with the HDX IBD, I mean, would the throughput need to be maybe increased with that version of it, or is it just simply like a filing? It's a filing. There's more of a stability standpoint. We have to get that up to about 98% from a machine standpoint. There is some software that we're adding to the HDX machine, but all in all, Mike and I had a trip to Stuttgart and talked to our contract manufacturer. We're making the right strides with the HDx machine. Okay. And in terms of the interactions with payers, I guess, because this This will be like a prior to Medicare age, most likely, right? Because it's kind of like younger patients. So it's good to see the Anthem. But did Anthem, will they most likely honor the $900 rate that you have? Do you think? I mean, I know it's not final, but. It's early on. It was just July 1st. You know, we've seen, yes, that's what we're assuming, that they will honor the $897 price point. But with early on, we haven't really seen much volume yet in terms of, you know, gaining approval but we'll keep our eye on it and we just look at that as a as a really good sign for blood-based biomarker are you eligible to be reimbursed today I think there's like other criteria that you don't FDA approval and stuff yeah right now before FDA approval we are yeah we are eligible for reimbursement so the volume should pick up in the revenue but I guess you know in terms of now going towards the revenue cycle management and the billing and the government affairs and all that. I mean, that's what we're building up. This is, you know, Jeff, what I like about Jeff Albrecht and, you know, he has this experience at Quest Diagnostics is what I would call the end to end build out of our diagnostics plan. You know, if you start with, first of all, the lab, we have a lab right now that, you Know, has been accepting samples of lucent AD complete. We're used to that. We have lab capacity now that when that volume starts to pick up, we have capacity at the lab. You talk about our government affairs. We have to be front and center in Washington, D.C. to start impacting guidelines around how Alzheimer's is treated. Jeff is doing that. Recent hire around billing. We have two people now that we've hired to really focus on billing to make the easy button. We've been in diagnostics before with our past experience. If you make blood-based biomarkers, especially for primary care, challenging, man, that's a deal stopper, right? So what can we do from the billing side? And we have two people working on that. And then Jeff is bringing in a seasoned pro that will handle our payer navigation. And we Have a large Rolodex of people that have been there and done that. So So Jeff's putting a team together that's not just sales. And, oh, by the way, we just hired a sales leader for diagnostics two weeks ago. But it's end-to-end in terms of how we approach this market. We look at it this way. We have, when I look at the competition, we have a year head start. And we need to continue to take advantage of that. So when these key milestones hit, we're ready to go. Yeah. In terms of competition, it seems like there's either the larger companies that are maybe not as focused as, like, on this one. like a niche kind of area, then you have the smaller companies that there's no way they have the resources that you just talked about. Here's how, because I was once one of those larger companies, right? And I won't speak to any name, but when I was part of that larger company, we focused on scale. We're like, we're a logistics company, right, scale, right. And listen, good for them. And what I think, when I think about the larger companies in this space, I like it because it raises the noise level of the importance of non-invasive blood-based biomarkers. Where we differentiate is around the effectiveness of a blood-base biomarker. We're five analyte, five marker test, right? Every patient that takes our test gets a quantitative score versus the other competitors, only 70% get a quantitative school. The indeterminate zone of our competition, the indeterminant zone is 30% or more. Because of the five-marker test, our indetermined zone, we've lowered 10% or below. Especially in going into primary care, primary care physicians need answers. Especially in Alzheimer's, we provide more answers. So that's where we're going to differentiate ourselves to garner more share in the space. Yeah, no, the performance is definitely very, very strong compared to the other tests out there. um however you're going on it alone it seems like mostly however you have this like tempest partnership probably of others in the in the fold i would ask like why why hasn't the quest partnership happened yet you know it's kind of kind of a competitor honestly but well maybe just on that note what is like tempus how does that help you and other partners that have a neurology kind of endpoints no i appreciate that you know this this is a market that we can't we can'T do by ourselves. And we know that. I love the fact that our company is thinking that way. Our new CFO, Jason Fessler, who I've been working with, we're really thinking about how do we invest prudently to grow this market? We're going to do it in two ways. We will build out our internal team, but we're going be smart the way we do that. We cannot do the likes of the Quest, the LabCorp, the Exact Sciences, and build out armies of 500 people. It's just, we can't do that. What we can do though, is we can invest and really segment the market and say, if we have the number of reps that we can afford, we got to make sure that we go after neurologists, memory care centers, people that are really seeing a large volume of cognitively impaired patient. And we're going to do partnerships like Tempest AI, which help us in the health system space. They're vertically integrated with EMR. And so, right now, we're working with Tempest to say, here are the select health systems that we're going to go after with their reps, and they're going represent Lucent AD Complete. It makes sense. What I also love that Jeff is doing, because Jeff has deep experience in doing this, is we're looking with reference labs, too. Hopefully, we'll be able to announce some here in the near future of reference labs. They have representatives themselves they're selling their capabilities within a certain geography and how do they partner with us again to help us help us scale so i think an avrup um collaboration was announced in recent years so like that that's an example of a reference lab that's a great great example avrup is a reference lad they're right now um you know um partnering with us with our with our single marker test okay and that's good example we're going to have partnerships with our five marker test right also okay so and you mentioned quest you know jim davis and i the ceo we're good friends we probably talk too much but we talk on a bi-weekly basis listen jim's rooting for me and i'm rooting for him so we'll continue to do so yeah and and i from what i understand about the neurologist kind of market i think you know i think there's like over 10 000 of neurologists in the country but it's like a more concentrated market so you need so you don't need as many salespeople. You don't need a, you know, like a screening, like 1,000 people salesforce going for PCPs. It's less maybe, right? Is that fair? Yeah, it's very fair. I was at AACI and I was pleasantly surprised with a few conversations that Jeff Albrecht and I were having with neurologists. And one thing that's a little different that I haven't experienced with the neurologist primary care, the neurologists are embracing primary care physicians to use blood based biomarkers. They're embracing it because it's going to increase their funnel of patients in the specialty side. So it's not like they're competing. They want us to be very successful, not just with them. They love our five marker tests, but also in the primary care call point. Yeah. And I guess from what you kind of know about the therapeutic side of this, that landscape and have that striving, you know, a reason to even have these tests, like maybe just talk about the developments on that side. Yeah, no, we're happy with the first generations of pharma, you know, therapeutics like Katsunla, Lekembe. We're excited with that. You see and you look at their volumes, you Know, quarter over quarter, and it's very, very positive. You know, what we also like, well, not like, but what we Also need to understand is we need to Understand, listen, this is an unmet disease day. You think of Alzheimer's, you think of the journey that Alzheimer's patients go through, but have gone through in the past. You know, this is they get cognitively impaired. Their loved ones are concerned. There's not many tools that are out there. And they usually go to a neurologist and the neurologist says you have Alzheimer's. Right. Where we want to play is, is we want To play what there's 7 million people in the U.S. that have Alzheimer'S. Another 12 million that are cognitively Impaired. And who knows the younger patients that are out there that are getting plaque buildup? We want to give those people answers so they can start early in their journey with whether it's therapeutics, whether it'S diet, lifestyle changes, things like that. That's where we play to just reshape the way that Alzheimer's disease today is navigated. Yeah. All right. Awesome. Now, with the last minute or two, just on the financials, this is all very exciting and promising. But, like, you know, you push back the cash flow break-even target from the second half of this year to, I guess, I think sometime next year is kind of the language. So, I mean, to be honest, what gives you confidence and why are you comfortable with that target at this point? Yeah. When we think about the cash floor break-Even, why I'm confident is what we've done. You think about $85 million of synergies that we delivered with the acquisition. that really spells out the discipline that we have as a company around managing our cash expenses, that type of thing so that's number one, the other thing what gives me confidence is this is a revenue story and we're doing the right thing, we started back in Q1, we'redoing the right things to show sequential improvement on the top line, you combine those two we're confident that we'll hit our cash flow break even next year. Perfect, thanks Edward Thanks, appreciate you having me.