Earnings Call: Q1 2020

May 5, 2020

Good afternoon, ladies and gentlemen, and welcome to the Quantrex Corporation Quarter 1 2020 Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. I I will now turn the conference over to your speaker today, Mr. Omar Chiragal. Sir, you may begin. Thank you, Chrissy. Good afternoon, everyone, and thanks for joining us today. With me on today's call is Kevin Rozowski, our CEO, President and Chairman. Before we begin, I would like to remind you about a few things. Today's call will be recorded and will be available on the Investor Resources section of our website. Today's call will contain forward looking statements that are based on management's beliefs and assumptions and 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 the uncertainties that we face are described in our most recent filings with the Securities and Exchange Commission. During today's conference call, we will discuss some financial measures that are not presented in accordance with U. S. Generally Accepted Accounting Principles or non GAAP financial measures. In the Q1 earnings release and in the appendix of our presentation, which are available on our website, you will find additional disclosures regarding these non GAAP measures, including reconciliations of these measures to comparative GAAP measures. We believe that these non GAAP financial measures provide investors with relevant period to period comparison of our operations. These financial measures are not recognized under GAAP and should not be considered in isolation or as a substitute for a measure of financial performance prepared in accordance with GAAP. With that, I would like to turn the call over to Kevin. Thank you very much, Amol. I'd like to discuss today our Q1 highlights, our vision and strategy, both execution and the aspirational value creation. Navigating the COVID-nineteen is a big focus of our discussion today. We've defined in previous webcast call that we're going to continue focusing on neuro plus the near term, what we call the CAC pivot, which stands for COVID Accelerator in China pivot. And then we're going to further discuss just beyond COVID-nineteen. Amol will provide a financial update and then I'll open it up for Q and A and then close the call. So on Slide 4, it's a slide you've seen in the past. It shows our publications are continuing to evolve very rapidly, which is very important part of our business and we're starting to see some acceleration in areas beyond just neuro and neurology, now with infectious disease. Biomarkers, we've added another 8 to it, so a total of 330. You can see we've had a very strong Q1 in this category of neuro as well as infectious disease in our accelerator and we continue to do a lot of we'll call them, drug trials and studies, 116 total now. We continue to place instruments. We're up to 429 installed base instruments. And you can see our overall growth for Q1 despite COVID and some of the other issues confronting the world right now was plus 27%. And you'll see that that is actually 34% on an organic basis if you exclude the Oman acquisition and 38% if you exclude the one time large order we had last year for Novartis in the drug trial for MS. On Slide 5, you'll see that our growth has been 7%, 38%, excluding that one time. And we also feel that this is pretty important because we've been overhauling our installed base moving from HD1 to HDX, pretty exciting. Advanced HDX has more throughput, much higher reliable, much more prepared for the clinic as well and a lot of clinical trials that are being run. And this is despite the COVID-nineteen impact, which was minimal on Q1 in our eyes, really just part of Q3 of the 3rd month of the quarter was impaired primarily in North America. We also have seen some we took early steps to protect our employees and we have a resilience plan in place. We moved 100 people from in the facility to outside the facility. So now we have 180 outside the facility, 100 remain in the facility. And we've had just really great performance over the last 2 quarters, from 2 months sorry, last month, despite some of the concerns around COVID. Cannot say enough about our team worldwide, just stellar, working around the clock 20 fourseven. Once we had safety well in hand, which we started early on, we had repositioned to start allowing our exquisite sensitivity technologies help with the COVID virus. And so a lot of our work over the last month and a half has been actually waking up the worldwide, hiring precision health networks to the really remarkable data that's coming out around measuring the immune system response to the COVID virus as well as drugs to try to impair that response. Because in some cases, this response is so great that it leads to cytokine storm, which leads to pneumonia and death. So it's pretty important to continue to monitor carefully the innate immune system as well as now you've got to learn we're moving into the system with our serology testing that we're planning to launch for research use only this quarter. Our accelerator, we continue to expand it and to allow customers to use it while they were down with their labs. And this is an important part of our growth in Q1, which we predicted would have already occurred just based on the HD1 to HD X crossover where many of our customers were already doing HDX validation runs, which prevents them from using the HDX technology on the initial install. So we had already planned for that expansion. So it was great that we were there for our customers as some of those labs did close. And I think throughout the industry, we've heard numbers anywhere from 30% to 60% have closed their laboratories. Many times, what we've seen is laboratories have shifted from running the trials that they have been running into COVID labs. So many oncology and neurology labs have been converted over into COVID labs. We have continued to engage our PPH collaborators worldwide and the publication flow is continuing, which is really good to see during these times. And we're really continuing to reinforce our utility in the Simoa technology and neurology. And you can see that we had growth even in products, instruments and consumables, particularly if you remove the one time, our growth was about 17% in consumables despite this COVID activity in the HD1H6 crossover. But you can see that we nearly doubled our lab and other services revenue in the quarter, now in this past quarter representing almost 37%. And gross margins continue to improve if it went for the HD1, HDX conversion, we would have another over 100 basis point expansion. Slide 6 just illustrates the demographics. We won't spend a lot of time on this slide. It's not as meaningful to look at growth percentages on this spot as past given that we're now dealing with the one time effect of COVID. But you can see that we do maintain about a fifty-fifty split between pharma CROs and academia. And we are continuing to build out our Asia position despite some of the issues that we're seeing. And neurology continues to dominate our overall position, but we're continuing to expand that. So on Slide 7, as we've shown in the past, getting to answers that used to be late in the disease pathology and required invasive procedures like operations for biopsies or cerebral spinal fluid, spinal taps to get answers. We're really evolving that late and invasive testing into early and non invasive testing. And on Slide 8, you can see on the left side is probably 1300 protein biomarkers in the RSU markets today. And there's 205 that have crossed over into IVD with the high content, high concentration proteins. But when you go below what today's technologies can measure, you can see there's almost a magnitude more proteins that we think are opportunities for further providing insights to clinical relevance as we start to roll out our Simoa technology. Primarily today, we're only an RUO, but as we've pointed out, we have aspirations to move it into the clinic. And on the right hand side, you can see many of those very important biomarkers. Many of these actually are being measured for COVID. And these are many of the cytokines that turn into cytokine storm and create the pneumonia and the lethal dimensions for COVID. And so that's why it's critical to monitor these and we're really excited that our technologies are getting deployed to support many of the COVID ICU patients around the world in the hot zones. Slide 9 is a slide you've seen for no regulatory reimbursement risk on the left hand side. We see this as being a much higher probability opportunity for drug companies to get drugs approved because if you can attract earlier cohorts before symptoms of the diseases using biomarkers and then gauge the efficacy of the drug using biomarkers, you can actually achieve great efficacy with lower dosing. And that's what's enabled us to showcase much higher probability of an approval after Phase 1 approval biomarkers are used. And that has led to many multiple growth catalysts and allowed us to go from basically no revenue to $57,000,000 in 2019. As you can see in Q1, we're continuing that growth. We are doing some level of expansion of our overall market opportunity into infectious disease. We were there once with HIV very successfully with p24, but now we're reentering it because this is now structural change globally that we think infectious disease will be a core research category for the next 5 years globally. So our PPH ecosystem is well engaged and we're now migrating into a lot of studies and a lot of work that will lead to publications in this landscape. I think one just came out already this quarter or this month for COVID, which is pretty exciting. And then we're starting to see accelerator projects looking at COVID cohorts as well, which is also very exciting. Again, it still stays low regulatory, I think we do with RUO, and we do think we have a very strong economic profile, and we're very early in the penetration. We do have a very proven management and founder and David Wall, who himself has done a lot of great work over the last 2 months in the area of serology, showcasing our technology across all three of the immunoglobulins, IgG, IgM and IgA, as well as across 4 different antigens, some pretty compelling data is being shown with our high fidelity and even quantitative technology for IgG. And on the right hand side, this is what we said at the beginning of the year, We would start working towards the aspiration of moving across, we said in neurology first, but we're now starting to see some very interesting opportunities even in the serology landscape that we're at least exploring as we move from CDx, companion diagnostics into LDT. Then ultimately, we felt it would take several years to get into IVD, probably through partnerships. But with the current serology landscape being that it is, we're going to continue to explore if there might be possibilities for us to enter into that landscape as well. So we do think, our blood test being so precise, high fidelity with great sensitivity opens up a lot of high value creation optionality. And again, we've added COVID-nineteen now to that optionality. And we are looking at rolling out a high fidelity serology test in RUO on the left hand side. So we will consider if that would make sense someday that you go into actual clinical markets for serology on from an IVD basis. We do continue to see high potential IVD partnerships and we're going to continue exploring those and some of the companies that already do own our technology and do a lot of work with us are shown below. On Slide 10, our focus on the left side as we've talked in execution mode is primarily in neurology, the light blue area. But we started to evolve into oncology and our plan was to use the HDX and SPX where we're less than 1% penetrated. But many of the larger competitors, Luminex, MSD, Bio Techne are in that landscape of oncology. We're still less than 10% penetrated in neurology. So we were going to expand into oncology, but we found a lot of those assets and those products are quite adaptable to the COVID-nineteen pandemic. And so now we've redeployed many of our oncology assets and many of those labs have become COVID-nineteen labs anyway. So it's almost an earlier entry way for us to teach the world about the attributes of exquisite sensitivity and how that can be redeployed to create reductions in false positives and false negatives. And in the area of serology, we know that's very important. And across almost every test in COVID-nineteen, it's important to minimize the false positives and negatives. So on the right hand side, we still have those aspirations, but we are exploring HD X as well as the SP X in the landscape of infectious disease now as well as the continued evolution of HDX and SRX for neurofilament light for MS particularly on the right hand side. So Slide 11 just shows the 3 pronged attack that we mentioned in our pivot. And we're looking now to be able to measure both the innate and the adaptive immune serology tests sometime in Q2. And this is helping companies with drug targets and try the drugs effective for COVID-nineteen as well as trying to predict cytokine storm before it's lethal and try to intervene with immune modulation drugs. And so we also see vaccine development in important area for our technologies and we'll continue to evolve them for drugs, vaccines and the covalescence plasma treatments. The accelerator services is also a very strong opportunity for us during these times of interruptions. We think this full year will have a very strong opportunity. We're even seeing interest now in serology and population studies for COVID, population around who has actually caught the COVID and has immunity built either innate or adaptive and how can they start to figure out ways to get the population of the world back to work. We think this will be a pretty important area of RUO research use only for our accelerator. We also believe China is coming back on the market sooner and we wanted to catch that wave. So we've accelerated our build out of China. You can see on the slide 12 all the different collaborators around the world and our PPH network that are really helping enable the There's a large installed base, a lot of sample sets in banks around the world in all the hot zones. We've been having webinars with those live that investors can actually tap into. If you want to listen to the one we had 3 weeks ago, that's accessible and it was pretty compelling. And we'll probably have another one in the next several weeks as we roll out the planned for SIRAL drug test kits. So on Slide 13, you can see, we've already been in an NAIT, number 1, based on what we were doing for storm on a furon and pro inflammatory markers. And on the right hand side is where we're moving next with our RUO franchise, moving into this area of immune response adaptively. There are some EUAs in this landscape. We're only exploring it at this point. But we do think passport immunity is going to be important as well as disease severity, vaccines and drug development as well as, as we mentioned, convalescent serum in that antibody production area. This Slide 14 just further showcases all of the panels that we have established in the different product lines for measuring the innate immune system and the cytokine storm, both for predictive and drug interactions. Slide 15 just describes some of the key componentry of what we're working on right now for our COVID-nineteen serology panel. Starting with IgG quantitative tests, we'd like to launch that in Q2 into the RUO markets and have some Q3 volume from it. We see it being very high sensitivity and specificity, reducing false positives and negatives. And we can see these immune much earlier, even potentially providing orthogonal opportunities in blood for infection determination almost potentially as early as the infection itself. And we know today that there's a lot of false positives in the serology landscape. We also know there's a lot of false negatives in the viral detection landscape. It's hard to get many of these viruses onto nasal swabs. And as a result, as much as 30% could be missed. So having early understanding of the immunity build is a great orthogonal way to go after some of these tests. Our technology does HD X can measure as many as 1,000 tests per day per instrument if in fact utilized around the clock. And as you know, we've got over 250 HD1s and HDXs around the world. Our initial rollout would be probably on something that would deploy the HDX further enhancing the HD X value to our customers and hopefully, still helping accelerate HD-one to HD X opportunities. Sample banks, as we mentioned, around the world. We hope to launch in Q2 an IgG quantitative RUO test. The next several slides just talk about number 2, the adaptive. You can see on the right hand side, there's a lot of IgG and IgM. There's a lot of historic viruses that are tricking a lot of today's serology tests. They measure a lot of those historic viruses creating a lot of false positives, which could lead to someone thinking they have immunity when they don't, and that's an important trait. So by having this exclusivity, we can dilute these samples a 1000 fold and we can look at, as you can see in these next several slides, different curves of the IgG, particularly is what we're interested in and see it earlier with quantitation. So, we think that it's all ultra sensitive is key for telomeres negative even from the viral detection. And so in summary, on Slide 20, we see the ultra specific sensitive quantitative RUO test being highly productive and we want to utilize and roll that out to try to help the world. In top right corner is our sensitivity. We also are going to explore getting the answer from finger pricks and dry blood clots and in potentially saliva at some point because of its exquisite sensitivity and the need to dilute anyway to eliminate matrix effects. So, and the need to dilute anyway to eliminate matrix effects. So on Slide 21, this is a similar commercial group. We've already had 42 meetings in the month of April with a PPH network, did that webinar and we're trying to build some momentum for Q3 and Q4 to drive at this. We know Q2 has probably got some headwinds obviously from COVID, but our intent would be by end of Q2 to roll out some really nice product offerings for COVID and infectious disease for the second half of the year. Accelerator, you can see we already are starting to see trials. I think one has already been signed up for COVID, which is important for and that one is the innate immunity, where we can look at all these different cytokines to see how a drug is interacting with it modulating appropriately. And we're also linking our commercial organization together, accelerator and product sales together to further enhance the ability to move companies that have our technology that might be shut down into the accelerator to continue running retrospective trials, particularly in neuro. And in China, we're continuing to try to build out that footprint. And we hope by the end of the year to actually have an accelerator position in China to help further help demonstrate our safety. Slide 22 just shows the various products that we sell. Once again, there's 2b based HDX and SRx and then the planar based, which is a high cytokine panel 10plex that's been used in oncology, but now we're evolving into COVID is the SP X. And then you can see the kits that we sell and the services that we provide. Slide 23 is a repeat slide from the past. It just shows that if you can use our technology and increase the probability of a drug being approved by 300% after a Phase 1 approval, it really creates a lot of momentum for drug companies to want to utilize it. And that's where all of our a lot of our growth has come from, from the last 3 years by further modulating down toxicity and modulating up efficacy by seeing these earlier cohorts. And you can see the number of CROs that now deployed it, which is also important if they're going to be looking at serology tests. We'd like to engage our LabCorp and Quest and others that are very strong partners, rules based medicine, frontage, other places have CRO capability. If we roll out serology RUO tests, we'd like to be able to run those in those facilities for many of our pharma customers that are trying to interact with drugs and vaccines with those technologies. And we ourselves now have 116 projects, Phase 1, 2, 3 in our own accelerator lab. And the FDA continues to explore even neuro in COVID, believe it or not, there's a lot of examples where there's loss of smell, loss of taste. Those are CNS functionality. So we have a lot of customers now starting to run NFL, even looking at COVID implications of neuronal death and neuronal damage, which we think is just another way to showcase our technologies. Slide 25 just shows all the companies, either in research institutions, pharmaceuticals, biotechnologies and CROs and others that now are deploying our technology, further building a strong installed base and validation for what this technology can do. Slide 26 is now just saying post COVID, we are still very focused on MS trials. There's several drugs that we know have already utilized our technology in Phase III trials of secondary surrogate endpoints. There's just a very strong avalanche of publications. We would like to think that there's an opportunity to get MS as a disease progression opportunity for NFL in the FDA. We'd like to have a meeting with them this year. Originally, we wanted to be in the first half, but at least this year, now with some of the delays due to COVID, we talk about getting NfL approved as a disease progression monitoring technology for NfL for MS, which there's all that evidence. And this slide just shows the way our commercial organization starts to look at total clinical trials using NFL, which ones are actively using it and how we can start to then go and find companies where there are NFL opportunities, where drugs are trying to be approved, but aren't currently using our NfL. And so we're you can see we still feel we have a very low penetration. So our sales force is becoming more educated each quarter as we use these kind of tools to point out where there's opportunities for neuronal pipelines that can benefit from using NFL to get approvals. This Slide 28, it then shows that Novartis and they have a drug that they're hoping to show approval for in June that used our technology as a secondary surrogate important to Phase 3 trial. Roche and others have used it as well and key trials, Biogen. So we're continuing to just evolve this. We think someday everyone should know their NFL level. And the difference between dying standing up versus being in a wheelchair could be by measuring NfL because it will allow patients to get on the right drug sooner versus waiting as long as 2, two and a half years with today's MRI to figure out whether a drug is working. Testing NfL non invasively in blood, we think within 3 months, there's evidence and some publications can tell you whether the drug is stopping and slowing down and reducing neuronal death via our NFL test. This is pretty compelling data. And this is the 2 big trials that we talked about previously. On the left is an analytical validity, 17 different sites around the world getting the same results with our NFL, which we think proves analytical validity. And then there's a major trial normative study currently going on in Switzerland, which attempts to show with healthy patients what the average NfL level should be at different age groups from age 7 to 70 if you're healthy. So anything above that would suggest that there's some neuronal damage occurring from some neurodegeneration of some disease, whether it be Alzheimer's or MS, Parkinson's or concussions or other physical damage to the brain. And we think that's going to further support clinical validity claims. So, we wanted to update the slide given some of the things on in COVID. We still see strong utilization potential for our technology, but we think it's going to be more like 40% for the full year, as well as HDXs by year end. We think we can get 40% installed still, which still a pretty remarkable move. We're continuing to develop the high resolution COVID-nineteen immune response, and we see the potential for $3,000,000 to $5,000,000 of revenue this year from the Jolt that we're putting into the pivot into infectious disease. We can't say for sure, but that second half we think does have real potential for that infectious disease opportunity. From a strategic standpoint, the IBD partnership is still something we're focused on, plan to continue to look for it, also opportunistic M and A. We have a strong balance sheet. We know that this industry is going through a lot of trauma right now. And so we want to be there to support any, what we'll call, opportunistic ways to accelerate our strategy for penetration. You can see our goals for gross margin. For the moment, taking that off the line just based on the total revenue that we're trying to sort out for the full year, but we still think we can have 75 HDXs in place by year end and 75 SRXs and SPXs. And we still continue to look for 100x sensitivity increase, seeing great work in our pilots right now, continuing to advance our R and D investments and not slashing a lot of headcount for the moment. We feel like this is, we got a very strong offensive opportunity to grow our company into the second half. And we don't want to in any way damage our long term growth opportunity that we think remains probably more bullish now than ever before. And now we're having the chance to even showcase faster, we think, the technology in COVID. So, Amol, I'd like to stop there and turn this slide over to you. Thanks, Kevin. I'm going to provide some additional financial details about our Q1 2020 performance and will be referring to Slide 31. As Kevin noted, revenue in Q1 of 2020 was $15,700,000 This represents 27 percent revenue growth compared to $12,300,000 revenue in Q1 2019. Service revenue grew by 107%, driven by accelerator services where we have expanded capacity to support customers transition from HT1 to HTX and overcome interruptions in their operations. Instrument revenue grew by 10% and was limited by inability to access certain customer sites to complete installations due to COVID-nineteen. Consumables revenue of $6,100,000 was flat versus prior year. However, prior year consumables revenue included 0 $900,000 in connection with a large one time customer study. Consumables utilization was adversely impacted by customers transitioning from HT1 to HTX and later from interruptions in their operations due to COVID-nineteen. As stated previously, we are not providing revenue guidance. In Q2, we expect COVID-nineteen related challenges such as limitations in accessing certain customer sites to complete installations and drop in consumables utilization due to interruptions in certain customer laboratories to continue until these customers revert to normal operations. On a non GAAP basis, Q1 gross margin was 48.5% versus prior year Q1 gross margin of 48.7%. Q1 2020 gross margin also includes a 200 basis point negative impact from our HT1 trade in program. As discussed previously, while this may create a near term unfavorable impact on gross margins, it is a very compelling investment to drive future consumables growth and excitement around our technology. Our non GAAP gross margin excludes the impact of non cash acquisition related purchase accounting adjustments related principally to acquisition of Oomaan in 2019 and provides investors with relevant period to period comparison of our operations. On a GAAP basis, our Q1 gross margin was 43.3% versus prior year Q1 gross margin of 48.7%. We believe we have a significant opportunity for gross margin expansion in the future beyond our current performance as we evolve the mix towards higher margin consumables and accelerator services business, scale our overall business and reduce product cost. Operating expenses totaled $18,500,000 in Q1 2020. The balance sheet is in good shape as of March 31, with approximately $96,000,000 in unrestricted cash. We continue to aggressively pivot and work towards enabling researchers on COVID-nineteen pursuits. Concurrently, we also continue to evaluate different scenarios on the COVID-nineteen impact, including degree of demand reductions and length of shutdowns. Beyond the COVID pivot, our emphasis is on preserving cash through managing operating expenses and CapEx to best position us to utilize our strong balance sheet for opportunistic strategic pursuits. High due to payout of employee bonuses and annual premiums. During Q1 2020, our cash balance decreased by $12,800,000 driven by our $7,900,000 P and L loss excluding non cash items such as stock options, depreciation, amortization and $4,900,000 use of cash for working capital, largely driven by payout of employee bonuses and annual premiums. Weighted average shares outstanding for EPS totaled 28,200,000 for Q1 2020 period. Overall, we are pleased with our Q1 2020 performance and remain focused on proactively managing and navigating the crisis to protect our employees and their families, while we continue to optimize our business operations for customers, collaborators and investors. With that, I'll turn it back to Kevin. Thank you very much, Amal. And what I'd like to do now is open up for questions. Our first question comes from the line of Sung Ji Nam from BTIG. Hi, thanks for taking the questions. Hope everyone's staying healthy and safe. Thanks, Sanjit. Kevin, I was wondering about your service revenue. Obviously, very strong growth there. Could you tell us a bit more about what's driving that in terms of your is it coming mostly from your existing customers? Or are you able to add new customers there? And also if you could talk about what would be contribution from COVID related activity in terms of driving that growth for the quarter? Hello? Kevin, are you there? He has disconnected his line. One moment, please. I'm going to step away in just a minute. Kevin, you're welcome. Hi, Kevin. We can hear you now. Okay, great. Yes. Sorry about that. Somehow, we got kicked out. Basically, I would say that the demand profile for our services, we did know going into the quarter that we were going to see a fairly significant uptick because of the HD1 to HDX revalidation of the HDXs was a critical component and customers couldn't use the HDXs during that time. So I would say Okay. He has, hit that again. One moment. Okay. Kevin is now live. Okay. Sorry about that. A little bit of technical problems working from home here. My apologies. But most of that demand came via the HDWAN to HDX and we wouldn't expect seeing demand for the COVID related activities. The earliest would be late Q2. So, most of what we have seen around COVID would not be related to COVID actual trials running infectious disease biomarkers. It would be more that some of the labs of customers were shut down and that they would rely on us as a result. So I would say that probably 1 third to maybe 10% of that demand was from customers shutdown because most of the shutdown from customers didn't occur until later in the quarter. So most of this was just due to that HD1, HDX, which we did predict. Is there any other questions? Kristi, can you hear us? Yes, I'm here. Our next question comes from the line of Puneet Souda. Yes. Hi, Kevin. Thanks for the questions and hopefully you can hear me well. So, just want to understand a little bit, I mean, obviously services were strong accelerator opportunities here. Those customers are coming to you. But just wanted to sort of get a sense of that and how much of that could continue going forward? How much are you seeing that on a sort of ongoing basis? And I apologize if I missed the comments earlier, but could you give us a view sort of how that plays out in the next couple of months here before we all emerge from this crisis? Yes, absolutely, Puneet. And I would say that, again, we're very fortunate to have built that capacity up of the accelerator planning for a lot of this to have occurred in the first half of the year. So, we did further expand that and again getting our employees safe and effective in that facility was paramount. We've got great employees that have really adopted all of the right principles of social distancing, protective gear, deep cleaning, etcetera. So our operations have been pretty much flawless because of this incredible performance. And then I think that has allowed us as you know, there are companies even like Biogen that pretty wrapped up into a lot of the COVID activities early on. They would be one of our top 20 customers. So I would say that in general, when you have companies shut down their facilities, our facility gives them a chance to continue running, particularly retrospective trials where the samples have already been collected. So I would expect that we're going to see a good surge of demand and fulfillment of that demand, assuming that we continue with our flawless operations to fill in that demand in our accelerator for the next, I would say, not only next couple of months, but probably into Q3 as well. So on a full year basis, clearly, I see the accelerator this year given the circumstance of what's occurred, combination of HD1, HDX plus the ability to help customers through disrupted labs, plus our evolution of being able to actually run biomarkers towards COVID population studies. Those three things, I think, bode very well for our ability to respond in the current year to provide nice growth of that accelerated lab. So I think you're going to see it through at least the 1st three quarters and I wouldn't be surprised if we see it in Q4 as well. Okay. That's very helpful. On the HD X platform, could you give us a sense of the customer orders, sort of if you could provide any color on the ones that you expect to ship out or and as you emerge from this crisis, sort of what is an expectation what are some of the expectations for capital equipment purchases in your mind because obviously we're expecting capital equipment purchases to be down and as a result of the crisis, but HDX X is some is an instrument that you are providing at a discount. So help us understand that dynamic and what's your expectation for that pickup and potentially into the second half? Yes. I'm actually fairly bullish, Puneet, and I'm fairly conservative. But I'm actually bullish around the prospects for the second half for HD X, mainly because I think whatever we do in the accelerator lab is going to further demonstrate the ability to provide a lot of high throughput, high precision, exquisite sensitivity results. And historically, the more we did in the accelerator, the more it helped us with our pipelines. And given that the HD X is somewhat of a disruptive advance and its reliability coupled in with all these other features of sensitivity, it's enclosed as well, which I think for infectious disease is another nice look forward, I think the second half should have a pretty strong HD X componentry. I also hope that we have real success around the world in our PPH ecosystem with serology testing where around the world everyone's trying to get back on their feet and there's a lot of false positives and a lot of frustration today in serology testing where folks are different countries are trying to create immune licenses immunity licenses or passports. But if you have positives based on previous viruses that you can't get out of the result, it could mislead a lot of the policy making and could make it harder to know who it is that isn't immune. There's a lot of questions too like if you have immunity, how long would that immunity last? And what level of immunity represents protection? There's so many questions that we think are quantitative research use only IgG tests are going to be able to help answer But we would like to think that around the world HD X will be utilized to run a lot of those studies through our various cohort samples everywhere around the world that we think in populations. And we even look at like Sweden having herd immunity where they think they might be 30% immunity at this point. We've had some researchers say we should be testing the entire country of Sweden. Then right next door you have Denmark that's gone a very different direction. Instead of going for herd immunity and really driving, continuing to work. There they had more isolation techniques similar to United States. And so what are the differences in those strategies? I think having a quantitative serology RUO test will, I think, lead to a pretty important opportunity for the HD X. On the serology assay, and thanks for those comments, Ed. On the serology approach, if you could elaborate what in terms of the cytokines research market, what is the opportunity that you're expecting there? And secondly, within serology, do you expect to have antibody titer information and then potentially pursue both vaccine and convalescent plasma trials, meaning with partners pursuing any of those trials. So if you could cover those three topics cytokine and titer and vaccine convalescent plasma? Thanks, Kevin. Absolutely, Puneet. And I do think that historically, once the analysts start to report on the disruptive capability that we have, it's amazing how many investors learn about it and then they go to their companies and teach the companies that they own, are you using the Quanterix technology? We're hopeful that that exact same cascade is going to occur here, Puneet. I know you've got a Ph. D. And really seen deepened the whole protein landscape and that it helps when you report on this, as I said. And so in our case, first of all, in the innate immune system, that's where you have the cytokine storms already around the world. We've got that being deployed. New publications are coming out, particularly around interferon alpha. That's the first spike you see in the innate system. And it's interesting that it can actually spike up as quickly as anything in serology. So that's the adaptive immune system. So 1st and foremost, I think we've shown around the world a great publication, great data on our interferon alpha. And we now are working on products that we think we can launch within the next two quarters to take interferon alfa and break it into maybe as many as 6 to 8 subtypes. Our exquisite subcinn might be able to allow people to further stratify. And so this is a real important area. There's some pretty profound publications that just came out on this. But then all of the pro inflammation markers or SP X can measure even the coreplex, 10plex. We think that that's going to be a very strong growth opportunity, moving our cancer research products right into this landscape of predicting cytokine storm before it hits like a radar. The area of serology, I think it's exquisitely important to be able to quantitate. And you mentioned tighter, I think we're actually looking at building our own calibration curves using chimeric antibodies, which really would enable the 1st in the world ability to know what level of immunity someone has with IgG. We would like to be able to roll that out sometime in Q2 for research markets in the major population studies, so that we can start to understand what it represents immunity. And why do some people not have symptoms, others have symptoms? Can we see differences in the immunity of one person versus another? And when you're looking at vaccines, the first step is making sure that the cohorts that you're putting the vaccines into got to make sure that they don't already have some level of COVID-nineteen immunity based on having an exposure or transmission some point along, because since there's so much non symptomatic or asymptomatic COVID, it's going to be very delicate for vaccine producers to know that they've got a really good cohort for their vaccines. And so we think that it's important not only for serology to have that quantitative capability, but even in the innate immune system, we have a lot of our vaccine customers wanting to look at that. Hey, when does covalescence plasma really work? Both the donor and also the recipient, we think knowing their cytokine profile as well as knowing their serology in IgG, we think that there's opportunities to even look for neutralization antibodies and know which antibodies truly are neutralizing the disease. So we think that there's going to be studies, particularly by drug companies using our exquisite technology to look at neutralization. So we already had several use cases from PPH researchers looking at different compounds to connect in with the different antigens that we can look at, in a multiplex capability, looking at all 3 immunoglobulins across potentially more than one antigen, spike antigen being the most popular, but there are others at TAPSA, the others that we are further evolving. So we think that we have the right assay strategy to continue to help unravel some of the mysteries, if we can get our customer base, particularly in vaccines and immunomodulation drugs and also covalent plasma. If we can get them all to understand what we have, the sooner we can do that, the better chance we have of getting inbound demand creation. So we're pretty excited about that possibility and potential. Christy, is there any other question on the line? Sorry, our next question comes from the line of Matt Smitsuki. Hi. How's it going? Thanks for taking the questions. So services revenue were strong. Yes. Hi, can you hear me? Can you guys hear me? Can you hear me? Yes, I can hear you. I can hear you guys. All right, cool. I'll proceed. So just understanding that the COVID nineteen impacted some, but not all of Q1 and now we're just over a month into Q2. And any directional commentary about what you're seeing maybe for each of the different instrument families so far in Q2? And then I guess to what degree do you think the services strength could offset some of the declines that we may naturally see disrupted in Q2, if you sort of looked at that net impact? Can you hear me? Yes. Hello? Okay, great. I can hear you. So, yes, in Q2, I wouldn't expect there to be large implications to us supplying technologies for battling COVID. I would say that that is something that I would be looking more at the second half of the year. And I think that I have the most belief system for COVID related instrument growth in HD X because of what we're considering to be this high fidelity quantitative IgG test that we want to roll out. And then secondarily, in the innate immune system for both SHDx as well as SP X. We think both of those technologies play a role in the innate immune system, which is the cytokines where we run a lot of different cytokines. We can actually run a 6 plex on the HD X. And this interferon alpha when we ultimately evolved that into subtypes, I think you'll see that being probably done initially on the HD X, but then ultimately on the SP X. So I do think that the SR X is a smaller system. There will be some involvement for COVID in that landscape, but I don't think it's going to be as used because the throughput of an SR X is more of a bench top. So I think that gives you the perspectives you're looking for relative to COVID activity in the second half. I mean, we definitely continue to believe very much in the neuro landscape where NfL and we've got some new markers coming in neuro that are getting a lot of excitement, mainly p tau phosphorylated tau. And there are several different types of subtypes of tau that are getting a lot of interest from some of the pharma companies in the Alzheimer landscape. Great, that's helpful. And then just one more if I can. So the role that your company is serving during COVID-nineteen is differentiated, so is your technological capabilities. And with the recent surge in funding that's now available for cutting edge projects that look to help fight against the pandemic. Are you actively going after any of these grants? And what's your approach there? And do you have a better chance of maybe walking one of these down because of the company's sort of unique capabilities? Yes. I would say that there's no question some of the assays and the technology we're developing should have some potential BARDA grant. It's probably not the place though that we're putting most of our focus initially because we're trying to awaken the commercial opportunities in pharma, biotech particularly for vaccines and drugs, drug therapies as well as the convalescent plasma dimensions. We see real opportunities for getting installed base around those technologies that will have some continued evolution of pull through from the consumables. So I think that while we do think that government grants could play a role, it's not where we're putting most of our emphasis right now. I do think once we get ourselves established with the innate immune system and what we can do with it, with the SP X and the HD X, and then the serology high quantitative fidelity serology tests with the HD X. I do think that we will then make sure we turn to make to get any funding that could further support this, but it just isn't our primary focus. That funding can become lumpy too and we don't want to in any way build our future just based on that. So that's why it's probably secondary, but still very important to us. Got it. Thanks for taking the questions. Sure, Max. Our last question comes from the line of Doug Schenkel. Hi, this is Ryan on for Doug. Thanks for taking my questions. Maybe one more COVID-nineteen one. In a press release over the past month, you talked about exploring the use of your Simoa technology for early antigen detection. Can you give an update on your work in that area? And could we see a product at some point over the course of this year? Yes, we're probably less focused on that one. That's the 3rd priority in our COVID landscape focus. First is innate, second is serology as we've been describing. And then 3rd would be the antigen. We do think that there is natural benefit to what our technology can do. And so we are exploring the assay development in that landscape. Whether we roll that out in Q2 is probably still a question mark, but we do think that anything you can do in blood would be a real benefit because of all the protective personal protective equipment concerns of how hospital workers wear them and could actually transmit the disease or there's a lack of PPE and they don't have sufficient protection from the disease. So anything that can be done to get a test in blood would be a pretty big breakthrough. But does it present in blood? How long does it present in blood? These are questions that we want some of our researchers to further explore before we can give you too much insight to just how big of an opportunity that area represents. So we're definitely looking at samples. Securing samples, by the way, has been a real challenge. Securing positive samples, we've had researchers from our PPH network in Europe, even Germany and Bonn that's been just incredible supporting us and getting us samples that we could test to validate some of our serology work. But in the area of antigen, my view is that you ultimately have a shot even in saliva. So obviously blood would be awesome, but if we can get it there, saliva could be even more awesome. But again, sensitivity could be paramount. And that's what we've seen over the years is that the less invasive the sample, the lower the concentration and maybe the more of the matrix effects where you need to use dilution, not only to make the sample larger to be able to get the answer, but to get rid of a lot of the interference so that you get your noise way down so that your signal over noise goes way up. So I would like to think that it's not just blood but potentially saliva for that antigen test. And we'll probably be in a position to comment at our next major PPH forum, where we'll talk to researchers about just how much potential they see in this infection presenting in blood. And also some of the large IBD diagnostic companies, I think have a lot of interest in this potential collaboration too. So we're going to keep exploring that given that it's probably the biggest TAM that we see is the infection itself in viral loading and we were really good with p24. We created an assay for HIV that was 1,000 times more sensitive than showcase that potential. So I know we'll have some homebrew work from a lot of our collaborators already going on in this part of the landscape, but we're going to be working on our own assay trying to get the best antibodies that will grab onto it with the detector light and get the least amount of noise for the least amount of invasive samples. I hope that helps. Got it. Yes. No, very, very helpful. And then one more. Thank you for the color on your full year expectations for instrument placements. Is there any more color you could provide on Q2 for placements or overall revenue? Anything you could quantify to help us? Obviously, it's going to be a little bit tougher environment with customer sites closed, but anything you could help us with just to make sure we're not setting an unrealistic bar for you given all the uncertainty in Q2? Thank you. Sure. No problem. I think it's still an unknown for us and we don't guide and so we don't want to we haven't guided. It's funny we now notice that many companies that do guide, they've taken the same stance now to not guide. So I do see estimates in areas of the same landscape we're in from other companies in our landscape that range from 30% to 60% of their installed base is down. And in our case, while we've had some headwind obviously due to that same predicament, I do think we're seeing some tailwind that comes from 2 different directions. One tailwind is having the accelerator, which we've talked about and allows customers to use us even when their labs are shut down. And secondly then is the ability for us to launch products and assays that are relevant to actually combat COVID. And so those are some tailwinds that could offset the 30% to 60% headwinds that you do see from many of the other companies in our landscape. So I'm not sure if that gives you any perspective, but it could mean that Q2 is going to be rough. We know it's going to be rough compared to what our original Q2 projection was going into the year. But it isn't going to be as bad as most companies that have no way to pivot and to have some tailwinds. And we've got 2 tailwinds that could offset some level of that headwind. But the headwind is real. And Q3, we're hopeful that we're going to come out of this much more productive. And the real question too is how bad will the COVID pandemic affect Q3 revenues? We would like to think of Q3 as hopefully being a rebound quarter coming off of what the world's facing in Q2. So we still believe that that's going to be the case without providing any granularity on our guidance. Very helpful. Thank you. Our pleasure. There are no more questions on the phone line. Perfect. I will close. We have a final slide in our deck that just talks about the combination of the market opportunity being somewhat unprecedented. And when you can do something as disruptive as what we can do with ultra sensitivity, what you start to realize is that the sensitivity that we have can be deployed not just in seeing biomarkers that are very low abundant, but it can also be deployed to create the ability to see it in less invasive samples. And home care is going to become a very significant area of opportunity as we come out of this COVID pandemic because of the ability to get testing done at home just prevents the risk of being infected by going to a center where in fact the hospital workers themselves are trying to battle to prevent themselves from being in any way contaminated with the infection. So home care requires less invasive testing. And that's another way that sensitivity can be deployed is to look for an answer in a finger prick and then to loop that finger prick up, so there's enough volume more. Even look at saliva. So we're actually very encouraged that our sensitivity can be deployed in ways other than just looking for low abundant markers. And immunoglobulins are actually pretty high levels, but being able to see these earlier in their production and see it even at the time maybe closer to when the infection occurs. We see a lot of potential to speeding up the knowledge of knowing if you've got the antibodies and also doing it less invasively and then to do it quantitatively to have such a low LOD limit of detection that allows your limit of quantitation to be in the entire relevant range. So we actually think that diluting samples not only eliminates a lot of the specificity issues that create false positives by eliminating those viruses that previously created antibodies that are at much lower levels, but not only diluting for that specificity, but then also creating this opportunity to see it less invasively and earlier. All of these lead to, we think, a better demonstration of our ability to do something in the world that's highly relevant. So, we just want to leave you that that market opportunity we don't think has ever been brighter for the long term and getting to the clinic sooner could be another big win moving across into our aspirational side of the business. No way to know that, but we felt that that was going to take a few years. But through partnerships and through advances in serology, it's hard to imagine where we might be 6 months from now. So we'll keep very focused on that market opportunity and continue executing like we've been executing with a lot of precision. Superb execution remains one of our true pillars to our advancing our technology in the marketplace. And we've got an employee group that just has been stellar. I cannot say enough. I've never been more proud to be part of a team than to be a part of this Quanterix team. They've literally worked 20 fourseven around the clock for the past 2 or 3 months, keeping themselves highly safe, keeping continuity of operations and really driving for solutions that can help the world. So just want to really give a shout out to that group. And thank all of the investors for your continued support and just staying very linked into what we're doing and then helping us get the story out to help the world know what we're able to do with our technology. So thank you very much for your time today. We'll talk to you soon. Bye bye.