All right. Good afternoon, everybody. Winding it down here. First of all, I'm Luke Sergott, Life Science Tools and Diagnostics analyst here at Barclays. With me today is Masoud Toloue, CEO of Quanterix, he's gonna give a presentation on the company and the current trends.
Hey, Luke. Thanks for having us.
Of course. Excited to be here.
Before we begin, I just wanna point to the, our safe harbor statement. We have, you know, for any forward-looking statements or any GAAP to non-GAAP reconciliations, you can take a look at the statement we have here. You can also find it on our website. You know, we're at a very exciting time in the history of the company, and I would say in the tools and diagnostics market in general. Never before, are there, you know, great number of discoveries happening in the protein signature space and the conversion of those signatures into biomarkers. That really goes to the mission of Quanterix. We have an ultra-sensitive detection method for converting, protein signatures, into biomarkers, which are going to drive therapies and ultimately, transform healthcare.
You know, in that mission, and executing that mission, we're a, you know, global scale company at over, just over $100 million in revenues. Strong instrument placement base with just under, you know, 900 placements and a lot of publications, you know, growing quickly. You know, I would say the three key messages I'd like, you know, folks to take away from the presentation are, number 1, you know, the technology is unmatched. It's a key competitive advantage for our market leadership. Two, it's a great market. I think we saw, you know, an excellent wave of genomics opportunities and now, you know, a very large market in proteomics becoming, you know, unraveled and, you know, we're very excited about that.
You know, finally, you know, our role and our strategy to take the value in unlocking this proteomics research by moving it across a continuum from discovery, research, pharma and testing, all the way through to diagnostics. First, quick highlight overview on the technology. Technology is called Simoa, single-molecule array technology. It was invented in David Walt's lab back in 2007. The company IPO'd in 2017. The main basis of the technology has to do with the ability to look at single-molecule resolution to achieve a detection limit, you know, unlike traditional ELISA. We view the traditional methods of detection very analog-based, and then, you know, Simoa technology being very digital.
It's sort of, you know, single-molecule resolution, you know, and several orders of magnitude, a better improvement in detecting these protein signatures versus traditional technology. The reason that's incredibly important has to do with the proteome. The proteome is dynamic and closest to clinical actionability. While there are, you know, 20,000, you know, gene-encoded proteins, there are over 1 million proteoforms of those proteins. You know, a great example of that is tau and phosphorylated tau. It's the phosphorylated versions and the misfolded versions, which we find are very important in neurodegeneration. You know, I think maybe five years ago, people, you know, used to say, "Hey, why is sensitivity important?" You know, it's like, hey, that's like asking, why is the 1,000x objective on a microscope important?
For us, you know, the Simoa sensitivity really enables being able to look at a sample type that's less invasive, so smaller amounts of input. We're identifying new biomarkers and new isoforms, and with that greater sensitivity, you know, we're able to multiplex. You know, our vision on the research side is that, you know, just as you have that 1,000x objective, and you put it on, and you're discovering new things that, you know, prior to that objective couldn't see, the Simoa platform is doing the same, but with the protein space. Our view is that, you know, to democratize Simoa, you're gonna need, you know, one of these platforms in all laboratories.
The key differentiator for us is gonna be that, you know, three orders of magnitude improvement in sensitivity, and that sensitivity will enable more discovery and unlock diagnostics. On the diagnostic side and the screening side, you have to think about this as non-invasive screening. You know, a few examples of this are we're able to detect cytokines in infectious disease at a very early stage before symptoms. We're able to do the same thing in immunology. A big case that we talk about a lot are in neurology, us being able to detect these phosphorylated taus early in, you know, before symptoms, before cognitive impairment.
By doing it in blood, by doing it non-invasively, you know, without, you know, imaging or a spinal tap, we think that that's a key differentiator for not only driving therapy, adoption of those therapies, screening onto a drug, but ultimately treatment of healthy individuals versus those at late stage. We look at the continuum. You see that, you know, obviously it's a very large market. You know, similar to genomics, the proteomics is incredibly large, and we sort of break it up into the four segments. We, you know, break into discovery, research, drug trial and diagnostics. You can see that, you know, we play a big role in the translation. You know, I think we play an even bigger role in taking things from discovery, where there are a lot of players in the proteomic side.
You know, in order to detect something at a very low concentration or something that's hard to measure, you got to use a Quanterix simple platform. We're moving things from discovery to research, where it's still a protein signature, and then translating that in a clinical trial or a test to a biomarker that's going to have some important readout, whether it's the drug or disease condition. Even further moving that to a screen, an aid to a diagnostic, an LDT, or you know, a full-on diagnostic. I think typically, what you see in the proteomics market is a handoff of the value creation. You discover the interesting protein marker, and then you transfer it to a $10 ELISA, and a ton of screening happens with that ELISA.
Then it's handed over to a tracking system of, you know, a large diagnostic player that's on there. You see this value handoff or this value transition. With Quanterix, because these markers are, you know, have to be measured with a Simoa platform, we see, you know, a continuum of that value capture. Going and focusing on the discovery and the research side, we're in a, you know, very unpenetrated, you know, under-penetrated and large, really expanding market. We have, you know, about 70% of our installed base are in neuro labs, and that's less than 10% of the therapeutics funding. The reason why we've been so focused on the neuro is because we're moving things across that continuum and owning each of those categories.
you know, one of the views is that, hey, you know, we can do a lot in immunology, in oncology. We're letting our customers develop a lot with a simple platform, you know, in these other potential areas. going back to the vision in the research lab that, hey, there needs to be, you know, one in every lab to be able to discover these, you know, interesting proteins. In our view, there's, you know, over 100,000 labs that benefit from the Simoa platform. there's, you know, good opportunity to expand this TAM, not just in therapeutic areas, but improving sensitivity, further advancing ultrasensitive, quantitative proteomics, and increasing access from a footprint, price, and workflow standpoint.
You know, going back to the focus on the neuro market, we think this is, you know, an upcoming highly productive neuro decade. Blood biomarkers are ushering a new generation of neuro health assessment. At a very high level, you have to think that these blood biomarkers are an incredibly great proxy for brain health. If you have the best proxy for non-invasive brain health, you're going to power a lot of therapy. You can see kind of the early stage of this cascade, a lot of exciting news on Alzheimer's, but, you know, there's hopefully great work happening with MS, ALS, Parkinson's, frontotemporal dementia, Lewy body.
Downstream, later half of the decade, you know, mood disorders, pain, general cognition are some of the initial activities we've already begun in anticipation for yielding therapies in the future. You know, continuing down that cascade, you know, we're translating these as a signature becomes a biomarker once it's validated through a trial. It's this conversion in a clinical trial is expanding. We highlighted, you know, several of the work that we're doing in, you know, various phases of therapy trials. These are all non-invasive biomeasurements to power both pre and post-market clinical trials. You know, you can see we're very busy, especially on the neuro side. I think one thing that, you know, has, you know, recently been incredibly exciting is what's happening in Alzheimer's.
You see, you know, this continued drumbeat for, hey, to scale a Alzheimer's test with 55 million people around the world, who suffer from dementia or Alzheimer's, you're going to need a way to determine whether the patient is suitable or not for the therapy. In our view, as a single marker test, you know, that's going to be phosphorylated tau. So, you know, you see a lot of the, the change here and the pathological change and the need for early detection, for therapy to be effective, and tau is one of the key markers for that pathology change. In January, we're very excited to see, obviously the fast-track FDA approval for Leqembi. We think this is great for the field.
We were, you know, duly excited to see our plasma p-tau 181 biomarker on the Leqembi label as a biomarker endpoint. You know, very, you know, in a very exciting fashion, we saw that 10 milligrams per kilogram of Leqembi every two weeks reduced mean plasma p-tau 181, that's our Simoa biomarker, by 24% from baseline in 79 weeks. That was a very significant, highly significant decrease versus some of the other biomarkers. You know, immediately the question is, you know, what does that mean? What's going to happen in the Alzheimer's treatment workflow? The way we view this is that blood biomarkers are the streamline a workflow.
You know, someone will have a memory concern, and that memory concern will go to a physician, and they'll be referred for to a memory clinic for a cognitive assessment. That's typically a manual test. Our view is that you're gonna need a blood biomarker pre-screen to determine, hey, whether there's amyloid pathology ahead of a PET scan, you know, for a confirmatory answer and finally treatment and monitoring. We think that's the scenario today is that a blood biomarker screen is great for the pre-screen. Given the cost of imaging at, you know, around $5,000 and the cost of a pre-screen, we think economically that just makes a lot of sense. In the future, we're working to sort of change that paradigm.
A PET is not available around the world, access to PET, which is, you know, 4M, it just doesn't exist. You know, blood biomarkers, we view, will replace PET. Some of the effort we're doing are looking at, you know, a four or five marker panel to be able to do that in the future. Neurology, you know, definitely, Our strength definitely enables the clinical diagnostic market with taking our menu. We're, you know, providing access to market in a, you know, in a variety of these disease categories. We're happy to announce at the beginning of the year, we launched our CLIA NfL LDT to assess brain health. NfL is a great general marker, you know, check engine light for the brain that's involved in stroke, ALS, Parkinson's, Alzheimer's.
A great proxy for assessing brain health in clinical care. Finally, you know, it's a great example of us taking things through a continuum, working very closely with researchers on the discovery side to identify the important biomarker research and then the, you know, involvement of several drug trials and us taking it now fully through the continuum, offering it as an LDT for laboratories, not just for clinical studies and testing, but in the future for screening and diagnostics. You know, we're gonna continue building a blood biomarker LDT set to serve this broad market. We talked about the launch of our LDT, our p-tau 181 last year. I just mentioned the NfL LDT. We have plans for some more activity in 2023.
On the regulatory side, we have a couple of trials underway, prospective trials to validate these and get data for our Breakthrough Device designations with the FDA. You know, look, in order to unlock all of this value, and be a company that's involved in the translation from research, taking it to discovery, managing clinical trials, you know, wanting to be there and then moving to diagnostics, the organization and the company needs to be mature and have the ability to scale to meet that demand. We began a very large corporate transformation in August of last year. The biggest part of that transformation was the progress on our assay redevelopment roadmap.
Every quarter we show, you know, the slide, and we provide updates on, you know, what's happening in the roadmap, what the progress on redeveloping these assays and, you know, the gross margin and productivity. You know, very excited to say that progress has been according to plan. We expect, you know, two quarters into our transformation, profitable growth and, you know, by the end of 2023, non-GAAP gross margins in the low forties. From a, you know, 2023 standpoint, you know, we view that the core product and service revenues will increase. If you look at the midpoint of the guidance, about 9% on a year-over-year basis.
From a cash standpoint, you know, we're going to be reducing, you know, our burn in 2023 by 10% and moving in the right direction. We give a, you know, also some guidance on when we expect to be cash flow breakeven. You know, great corporate transformation on track, really changing the, you know, operations and the ability to deliver to the, you know, great demand of some of our products, but at the same time, changing the structure of the corporation and the organization to be able to deliver on, you know, a strong promise. You know, I'll end here. You know, Quanterix, strong leader in proteomics, one of the very few at scale global commercial companies. You know, we are accelerating faster.
We have the most sensitive protein measurement in blood. We're translating very effectively. You know, in our HD-X platform, you put blood sample in, and you get a result out. We have an innovation project that we're, you know, continuing to innovate and a great balance sheet to accelerate. Finally, you know, I would say completely new team, and it's really the people at Quanterix that are making all of this happen. You know, we're just getting started.
That's great. A couple of things on the technology. I mean, you guys are talking about 3-fold increase in sensitivity going down to femtomolar. Usually when you have. You know, there's the trifecta of technology, right? Like, so you're keeping up on throughput or sensitivity or cost, right? Talk about that, how the interaction of the three pieces of the technology play out. Can you dial it down to where you don't need to have that deep, deep sensitivity, and you can actually increase the throughput for higher throughput assays or more multiplexing. Talk about the flexibility of that.
Absolutely. I would say the throughput stays constant or fleets a lot, you know, anywhere from one to four molecules. If we look at some of the innovation work we're doing on future platform developments, we're looking at, you know, some quite multiplex capacities. From a cost standpoint, there's definitely a price premium for the Simoa technology versus an ELISA. You know, we have the digital readout, we can get the sensitivity. I think the third, you know, part of that trifecta is the dynamic range. You know, do you need? In some cases, could look at something in CSF or another sample type where you don't need as much sensitivity, you know, the dynamic range for assays. The answer is yes.
We're able to measure that, you know, at, in an effective rate without the, that sensitivity requirement. I would say, Luke, that the majority of the customers that come to us are using the Simoa platform for the molecules that just aren't detectable in blood with other platforms.
Yeah. I mean, that's like, especially the NfL. I remember when you guys started launching like that. Talk about the opportunity right now, the clinical trial, the number of clinical trials you guys are on. I don't know if you put that up there, number of CNS drugs that you're involved with, we can get some type of sense of the upside here.
Yeah. Yeah. We haven't disclosed, you know, sort of on a regular basis the number of trials we're in. We are definitely involved in the most number of funding mechanisms that, you know, we have been previously. It's demand is really increasing.
Mm-hmm.
We're in a lot of early preclinical tests and trials that are gonna be moving to phase I. Several, as I showed here, that are going to phase II and phase III. I would say, you know, very broadly, if it's a program in Alzheimer's, anywhere, we're likely involved in that program.
If there's an approval on that side, you'll have the, excuse me, the CDX or kind of the disease monitoring test. That's why you're talking massive volumes here.
Yeah.
Yeah. What's the hurdle?
To adoption, essentially.
Yeah. You know, I think a lot, as you've heard maybe from a few of the earlier presentations is blood's going to be critical for the scale of any sort of Alzheimer's therapy. In terms of barrier to adoption, we need to get our platforms into, you know, more labs. We think that the LDT is a great first start. We think that this is a good triage or prescreen to a PET. We want, you know, a PET to be, you know, successful in the adoption of the therapies. Our view is, you know, data, clinical trials, information, and, you know, getting this out into as many hands as possible.
Yeah. Lastly on the, in combination with PET, With the data readout, is it that much more powerful and or is it you can totally displace PET with these biomarkers?
Our view, I'm a little biased, Luke.
Yeah.
Our view is that, yeah, absolutely. I think, in the future, I can't see a scenario where you wouldn't do a blood test and not the other thing. I think, today PET is the gold standard. PET, you know, has comparisons with, you know, autopsy-
Mm-hmm.
patients. I think, you know, it has been the gold standard, but I think that, you know, that'll be displaced in the future with our technology.
Yeah. That's what... 'cause usually when you're displacing something that's the gold standard, it's much harder to sell into the clinical market than if you're additive. Actually, there's a company, Thrive, they did that with the imaging on the liquid biopsy and cancer screening, right? The test would've been great by itself, they're like, "Well, we're not gonna displace TC then. In fact, together our data is that much better and predictive.
Yeah.
I was wondering if that's part of your strategy as well.
It is. Right now our view is you need PET. It's, you know, the confirmation test and validation test before, you would get, you know, prescribed a therapy. In combination, you know, the blood test is key from an eco-economic standpoint. You have, you know, half of patients coming into a pre-cognitive, or are cognitively impaired, and half of them have amyloid, half of them don't have amyloid.
Mm.
You don't wanna give everybody PET.
Yeah.
I think it works hand in hand and in cooperation with the imaging today. We think that screen is actually a, you know, even a larger market than, just, you know, the subset of patients that would eventually get PET. Our view is screen today, in the future with multi-analyte and PET. We could see, you know, a future where, you know, it's we're able to, you know, get more people to therapy with just a blood test.
Awesome.
Awesome, man.
Thank you.
Great, Luke.
This has been great.
Thanks for having us.
Thanks. Of course.
Thank you again. Appreciate it.
My pleasure. Thank you.