Earnings Call: Q2 2021

Aug 5, 2021

Good day, and thank you for standing by. Welcome to the Quanterix Corporation Q2 twenty twenty one Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer I would now like to hand the conference over to your speaker today, Mike Doyle, CFO. Please go ahead. Thanks very much, Mae. Good afternoon, everyone, and thanks for joining us today. With me on today's call is Kevin Rozovsky, our Chairman and CEO. 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 on information available as of the date of this call. We may not actually achieve the plans, intentions or expectations disclosed in our forward looking statements. Forward looking statements involve known and unknown risks, Uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements. The risks and 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 presented in accordance with U. S. Generally accepted accounting principles were non GAAP financial measures. In the Q2 earnings release And in the appendix of our presentation, which are available on our website, you'll find the 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 relevant period to period comparisons 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'll turn the call over to Kevin. Thank you very much, Mike, and hey, welcome on board. It's Mike's first call with me. Very excited to have Mike Doyle with us as our new CFO. Hey, today we're going to go through 3 major agenda items. First, the major advances that we've had in Q2 and really the first half of this year It's accelerating our growth as well as enabling a new term, not just therapeutic drug discovery and development, but Diagnostic therapeutics, which we think is a new category, it's pretty exciting for neuro. Mike will then talk us through the financial results And I will then end up with the objectives and we'll open up for questions and answers. So I'd like to just start on Slide 4 with I'm impressed that you're starting to see out there. This is what we've been describing for really the last 6, 7 years and it's been a big Component of our powering precision health ecosystem and foundation, it's about, blood based biomarkers, Fast becoming the gold standard. PERSERIA gets traditional tau and al beta PET imaging. So Transforming drug discovery in neuro primarily from spinal taps and imaging into blood based is a key opportunity area that we're Very focused on and making a lot of progress within. And the other quote here coming from Fierce Biotech, Lilly Adds on to biomarker bombardment in Alzheimer's, TENU, lenalidomab analyses. And it's really ever since the FDA approved Biogen And Eastside's Alzheimer disease treatment, Aduhelm, the buzzword among competing companies has become the biomarker. And that's just What Eli Lilly has to offer with 2 new analyses on their candidate, dinadimab, and we will describe in more detail these opportunities. Let me now turn to Slide 5, where we really have some pretty important news to convey. We did have record growth, Record adoption and we continue to evolve what we would consider to be the momentum for plasma biomarkers. And surprisingly, many of us were very much excited to learn that There was a new Alzheimer disease modulating therapy approved. And what's also interesting is we've launched PTAU-one hundred and eighty one and also a Neuroplex, which has had very strong growth and it's continuing to accelerate, we consider it to be an important catalyst. You may have also read from Lilly and also heard from their presentation last week at AAIC that Simola plasma pTAL-two seventeen correlates with denazimab efficacy reported by Lilly. And Interestingly, our NFL, which we at one time called a engine check light on the brain and we do think Someday everyone should know their NFL number in case they ever come in harm's way with neurodegeneration or concussions. There's a lot of momentum continuing to advance the breadth of that biomarker as well. From the business update standpoint, strategy updates, Payer adoption continues to be an area that we focus on because in the end, getting these drugs paid for and approved, we think diagnostics play an important role there for monitoring drug performance and making sure there's real, coverage with evidence. We also as you know, there was some of our technology airfreight down in Bethesda, Maryland to Anthony Fauci's labs. And in those labs, looking at using our test measuring the antigen For new drugs and current drugs to better arrest the COVID virus. And there's also a lot of long haulers that are continuing to be plagued with symptoms. And those who have lost taste and smell and have brain fog, there's been a lot of publications now linking using our NfL neurofilament light Showing neuronal death and there's growing concern that could be linkages in a lot of publications recently published between COVID and early Alzheimer's. So that's further fueling both of those categories. We also are almost a 50% of our HD fleet because of a lot of Sales of HDX primarily linked to Alzheimer's and this revitalized landscape for Alzheimer trials and growth. We also, as I mentioned, Mike's joined us, but so has Masood Talu who joined us from PerkinElmer running our Quanterix Diagnostics division plus he's our overall President of Quantaix. We have nearly $500,000,000 of cash on our balance sheet, which we were successful in raising a couple of times in the last You're both of them were up rounds. I mentioned that we had a lot of advances in NFL, but In general, we had record publications on our biomarkers and our disruptive technologies and new biomarkers. We also hired Will Geist to further advance and accelerate the scaling of our company to catch up to the demand that we're creating And Matt has been going very well. He and his team, he's recruited a lot of top guns into our company to help us scale And catch up to the demand. We do have some stock outs just stemming from the increased demand that none of us probably expected this level of Alzheimer enthusiasm and that's continuing to create a lot of opportunity for us in the future. So our timing of bringing Wilt and his team in was really quite good now that we look back given this advance in the Alzheimer landscape. We also are expanding our laboratory. Masood has taken over control of the accelerator lab helping us to further expand that because we do see linkages ultimately Diagnostics and we are continuing to progress our 100x and have had success 100x increase in sensitivity, which will allow us to see disease even earlier, even sooner than we can today with many of the biomarkers and enable certain biomarkers that you can and see today in On Slide 6, we just wanted to let you know we had a pretty strong Q2. We had 86%, we'll call it Non GAAP growth, the actual GAAP growth was 93%. We took a little bit of the RADx revenue Out of that, because that was a one time event with the NIH around bringing our COVID solutions to the market. We now have 2 EUAs, one for Serology Semi Quantitation working for advancing that with the delta virus as well, working towards a label claim for it And also the antigen test. And that is, a growth primarily a lot of that was due to Q2 last year being pretty flat with the previous year, maybe even a little bit lower. But still, when you look at our CAGRs, You can see that we're staying within the 30% to 40% from the 2019 base year. We're still advancing very productively And we continue to de risk that with all this new momentum in neuro. And on the right hand side, you can see that our strength here was In fact, instruments, I do believe Lilly purchased 5 HDXs in Q2, just as an example of that Scaling up that they're planning for a lot of what they've got coming in their neuro franchise as well as their Alzheimer franchise. And consumables Fulfilling a lot of these trials is also up. We expect the lab services to be flat at best and That's even more true now that many of our customers are buying new HDXs and trying to run their trials out in pharma. And so we know that for the next year or so, we're going to have just a lot of stronger growth probably in consumables Than we've had historically and some of that maybe at the expense of our accelerator, which doubled in growth last year Because many of those labs from that were shut down for COVID utilized, that's given us a lot of growth last year. And so we'll be able to at least achieve last year's level and maybe even beyond that, but the consumables will be the big story here. And you can see That our overall growth really also helped us with our gross margins on a non GAAP adjusted basis, which Again, taking out the RADx revenue, we're up 1100 bps, which is a very significant advance. This next slide just shows you the same exact approach just looking at first half. And our overall non GAAP growth, which was slower than GAAP growth As we removed the RADx was 71% for the first half. And on the right hand side, you can see a very similar story. We're pretty flat in accelerator, but triple digit growth in the consumables and instruments and very strong CAGRs in those categories. This just shows you on Slide 8 the distribution and you can see we continue to evolve our position In Europe and Asia, we also are seeing a fifty-fifty between academia where a lot of publications are coming from that fuel then ultimately pharma And CROs with a lot of those new biomarkers. And neurology is now 80% of our focus and our achievement. And you can see the Civils now represent almost half of our company. Slide 9 is key because it's the fuel of our business and the publications Continue to roll in. We're now up to nearly 1400 third party peer reviewed publications validating across 432 different Biomarkers and our instrument placements, you can see we're now up to 621 worldwide and we continue to run trials inside the Accelerator Phase 1, 2, 3 trials. There's been over 1,000 Phase 1, 2, 3 trials running and that's the fastest adoption cycle we've ever And pharma biotech over the last 5 years, further a testament to how these biomarkers allowing you to see disease non invasively before symptoms It's a transformative value proposition and strategic approach for pharma. This next slide just summarizes that We've been saying that we've got both execution and then aspiration. The execution is primarily around research and development where We don't see regulatory reimbursement or risk. And you can see now we've got 3 major growth catalysts. These Pete, this phosphorylated tau that we mentioned, the neuroflex is where we combine multiple biomarkers for Alzheimer's as well as Many of the other neurodegenerative diseases and this new term that we're coining today, the diagnostic therapies, we believe that by Deploying therapies before symptoms, you're actually bringing a level of value that we think is unprecedented for patient treatments and outcomes. And In a way, we think this actually brings a lot more value to diagnostics than we've ever seen before as it plays a role now, a complementary role with The therapy. And revitalizing, this whole Alzheimer landscape is what happens when COVID starts to trigger The concern around early Alzheimer's as well as having a drug actually get its first approval, it stimulated a lot of excitement. And then you can see our 3rd Growth Catalysis, the ability to catch up to demand by just expanding the capacity with our scaling of Quanterix with That program we mentioned, we've HDX as having high throughput, 1,000 data points a day, fully automated and then expanding our laboratory Longer term looking towards diagnostics and then bringing on the 100x. Then on the right hand side where we know we've unlocked a much bigger TAM by cutting Crossed into the diagnostic landscape and the $20,000,000 we got from the NIH for COVID bringing 2 EUAs, emergency use authorization diagnostic The market allowed us to build our infrastructure and to attract people like Masoud and we've even got Dawn Matun now who had been Running a lot of the research side of the business. She is now with Mark Roski, both of them working with the strategic accounts Across both research and diagnostics. And so we're building out this right hand side and it's getting accelerated because of the bridge that was built From COVID from the left. And so we do think that as we continue to build, there's some long term very interesting catalysts around Alzheimer Health screen diagnostics and monitoring whether these Alzheimer diagnostic Therapies are in fact bringing down plaque levels and bringing clinical benefit. And the recent data from Lilly says Bringing down plaque as evidenced by measuring our PTALs is also correlated to clinical benefit and that's a pretty important breakthrough that we're all striving to achieve for helping Alzheimer patients. We're also, as we mentioned, increasing our accelerator footprint for LVT And we're working hard with the payers to understand these health screens and UnitedHealth Group now has our technology in their R and D labs. We think this is an important testament to the advances. So historically, we've shown this next couple of slides Whereby just bringing sensitivity to protein measurements, where there had been about 200 IVD proteins being measured by Primarily Abbott, Siemens and Roche collecting $25,000,000,000 of revenue on diagnostics of proteins that Pretty much are measuring disease after symptoms. Our key is by going down in sensitivity on Slide 11, Seeing it non invasive and before symptoms and we think there's 1,000 proteins of reach in this translation going from research on the left The dive markets on the right, more like taking the analog phone of the yesteryear and moving it into the iPhone today, which we're actually recording this conference on. This next slide just shows you on the right hand side that there's about $100,000,000,000 to 100 $10,000,000,000 of value and revenue on TAM that we think by seeing disease before symptoms, You increased the size of these markets even for Alzheimer's. If you look at Alzheimer's being defined at the moment you start having severe dementia But if you can see it 5 years before and as you know, several researchers and third party peer reviewed Publications have shown that you can see Alzheimer's as much as 15 years before dementia using our biomarkers in noninvasive blood. You can significantly expand the size of that market by not only treating patients that haven't Presented yet with dementia, but also increasing your chances that you're going to be able to arrest that disease progression by getting to the disease when it's still much More treatable. And that's the new mantra that this Slide 14 has always tried to showcase and that is that Many neuro patients don't even know they've got neurodegeneration until they see the symptoms of dementia. And you can see in this Click 15, 3 slides coming from Lilly where you can actually see the tau and the amyloid plaques Growing and many times the amyloid plaque is there before dementia and that's what they call the Goldilocks Location, they're trying to find patients that have the amyloid beta, but before they have mild cognitive impairment or when they only have mild cognitive impairment. And then Slide 16 is our goal to go with our new detection sensitivity to move this into Monitoring patients, so you can see the beginnings of Alzheimer's and then treat very early. This next slide is a new slide that I think it's trying to establish a new category. On the left hand side, you see there's been over the years much Investment in protein and antibody discovery and it's the pharmas and the diagnostic companies that are the best in the world at doing that. They feed their learnings into 2 primary categories. 1 of them is the diagnostics industry and the other one is a drug industry. And in the center here, I'm showing the brain with all these biomarkers now that we have in our menu that are basically proteins that Are being released from the brain and you can see them non invasively in blood with our technology. And it's interesting that Roche is the one pharma That has a diagnostics position. And interesting also is Lilly has some really strong, diagnostics Capabilities that we've been able to team up with over the last 5 years, which makes them pretty impressive to work with on this New category that we're coining the neuro diagnostic therapies and going for coverage with evidence and getting better outcomes More efficiently is what we think can happen when you start to commercialize these drugs and deploy them before symptoms. This next slide is the overall engine that we've used to build our company. We start with a biomarker Being discovered by a researcher and then pharmas adopted based on that research and those 3rd party peer reviewed publications where they may come to Powering Precision Health Summit learn about it, then they start to apply it. That's the first phase of adoption. And that's where you saw on the front page of New York Times and USA TODAY, the ability to see Alzheimer's 16 years before symptoms using NFL and also PTAL's 2017. And then it moves into step 2, which is demonstrated clinically with high validity and utility. And that's the phase we're in right now around these phosphorylated tau linking it as you've seen evidence from Lilly to specific disease pathology that can actually also be linked to the clinical benefit through cognitive impairment scores. And historically, they've used CSF Spinal taps, cerebral spinal fluid spinal taps or PET scan to get that data. And this is our disruption is this incredible correlation And CNN a very low cost, noninvasive blood test even earlier than what you can see it in many of these more invasive techniques. And so while you move from that number 2 category to actually then evolving it into a diagnostic and a health screen, that TAM Goes from $500,000,000 back in the research level to 20 times that to $11,000,000,000 once it becomes a True diagnostic. And by all along, you're increasing the odds of that drug getting approval by 300% based on pharma's own data. So that's why we think we've got an engine here of value creation that is unprecedented. This next slide says that it's the jigsaw puzzle connecting the pharmas With the payers, with the FDA NIH where we've had a lot of advances because of the money that NIH gave us in the RADx program of COVID, That infrastructure and them learning about Simoa and Quanterix has been key. We've got all these CROs and pharma partners too down in the bottom right corner, What Terex does. And we've seen major progress in every one of these puzzle pieces over the last 8 to 9 months. And that's creating the opportunity we think for disrupting this whole approach of bringing a diagnostic into A therapeutic realm of benefit by moving these therapies earlier and allowing that with disruptive technology. And 100x, We like to form partnerships now with pharma, with our accelerator lab looking for biomarkers using our 100x, using our antibody and our assay capabilities with these KOLs around the world and tapping into the samples from pharma to help them advance in every disease category. So it's not limited to neuro, but Our initial focus and priorities are around neuro. I did want to point out that there's a lot of evolution that's occurred with Aduhelm and a lot of controversy on whether Reducing plaque is ultimately going to lead to a new drug. There is some great history and looking at HIV where biomarkers got started As maybe cell counts and then they move them into viral loads. And once those biomarkers got established that led to some pretty significant advances Going from CD4 cell count to viral load, you end up 20 years later with 29 therapies and You really now see HIV being somewhat chronic. Well, I'd like to draw the parallel to the cholesterol market for the brain or for the heart where There's still a lot of questions regarding the long term qualitative linkage between cholesterol management and heart health and life expectancy, but yet there's a $1,000,000,000,000 Patent market, in the cancer world, there's a lot of evidence to accelerated drug approvals. You can reduce the size of the tumor, but It doesn't necessarily mean you're going to live longer, but yet these are ways to get the drug industry going down these paths. And I think the top right corner, You're starting to see that in this landscape of Alzheimer's where there hasn't been any drug modulating therapies approved. We're getting it started now Some biomarkers that might be game changing and make them less invasive with our technology. I don't want to forget though that NFL continues to be, I think, a long term and Incredible opportunity and there were some publications that came out this quarter looking across 40 different sites, 13 different neurodegenerative Types of diseases ranging from carcassins, ADS, ALS, Down, psychiatric disorders, Torrential temporal dementia, all of these showed that the NFL levels elevated as the disease progressed. And we even found evidence that A elevates faster if there's psychological issues with the disease Neurodegeneration. So these correlations are beginning to build a body of evidence around NFL that makes it a real long term, we think, check the engine light For your brain health, for that everyone should someday know their NfL level. This next slide shows now there's 3 drugs that used NfL, Our NFL should get themselves approved as a secondary or primary endpoint. And this is important because we also think If you can see in blood very rapidly MS disease progression, you can actually use it to get patients on the right drug sooner allow them to get the benefit of the drug quicker. In this Slide 24, this shows that we bought the Ubon company where we have Just about every publication is either in our Simoa and or that antibody care from Uman, which I think has led to a lot of advance for us. Overall, this slide just illustrates on 25 that there's a lot of neurodegenerative diseases. If you just look at the point when you have symptoms of 6,000,000 patients worldwide, but if you again can move it forward 5 years, that could double. And our last slide here around these biomarkers just show how we're populating in blood These various biomarkers for these different diseases allowing us to become the neurodegeneration leader And trying to help pharma bring them to bear. And I'll close by just saying that this phosphorylated tau-two seventeen remains in our minds really interesting. We launched the 181 and there's now evidence that you can even see the disease Sooner with the 2.17 with greater dynamic range, which could make it even a better possibility for becoming a diagnostic. With that, Mike, I would like to turn it over to you for some financial summary, then we'll come back to close it off with our strategic objectives. Great. Thanks very much, Kevin. Now I'm going to provide some additional financial details about our Q2 of 2021 performance. And for your reference, I'll be referring to Slide 28. As Kevin noted, GAAP revenue in the Q2 of 2021 was $25,400,000 and included $900,000 of revenue from our Radix awards. Excluding this non recurring item, our non GAAP Q2 2021 revenue was 24,400,000 an 86% increase versus the prior year. We had record product revenue in the Q2 of 2021 with $18,700,000 in revenue, an increase of 175% versus prior year. Within product revenue, Consumables revenue grew 2 19% in the Q2 of 2021 compared to the Q2 of our prior year and grew record $12,800,000 driven by extraordinary demand for PTAL-one hundred and eighty one and neuromultiplex assays. Like Q1, our revenue performance for the Q2 may include some recovery of previously deferred demand due to pandemic as customers return to more normal operations. Service revenue decreased 11% in the 2nd quarter to $5,600,000 and was somewhat limited as compared to the Q2 of 2020 due to customer labs opening back up from COVID related shutdowns, Resources and supply diverts support our strong consumables demand. Year to date total revenues are 52,600,000 Excluding revenue from our non recurring RADx awards, non GAAP year to date total revenues of $49,300,000 a 71% increase from year to date 2020. On a GAAP basis, our 2nd quarter gross margin was 54.7% and was favorably impacted by our Radix grant revenue versus prior year gross margin of 39.7%. Our non GAAP gross margin was 5.1% in the 2nd quarter, which is an approximate 1100 basis point improvement compared to 44.1% the same quarter of 2020. Non GAAP gross margin was 56.8% For the year to date period 2021, an approximate 1,000 basis point improvement from the same period in 2020. Our non GAAP gross margin excludes the impact of our Radix awards as well as non cash acquisition related purchase accounting adjustments relating to our 2019 acquisition of Ooma, thus providing investors with the relevant period to period comparisons of our operations. Gross margin expansion was driven by volume, productivity gains and price demonstrating the significant opportunity for gross margin expansion in the future as we evolve the mix towards higher margin consumables and scale our overall business and reduce product costs. Our GAAP operating expenses totaled $27,500,000 in the Q2 of 2021. Non GAAP operating expenses, which primarily exclude non recurring expenses associated with RADx grant revenue, totaled $26,400,000 for the Q2 of 2021. During Q2 of 2021, Our cash balance decreased by $11,900,000 driven by our scaling efforts. Ending unrestricted cash balance was $430,800,000 as of June 30, 2021. Basic weighted average shares outstanding for EPS totaled 36,300,000 for the Q2 of 2021. Overall, we're pleased with our Q2 2021 performance and progress made on strategic priorities and remain committed to delivering solid 2021 results in line with expectations. With that, I'll turn it back to Kevin. Thanks a lot, Mike. And before opening up for questions, I wanted to go through Slide 29 just to say that Our neurology franchise is faster and more furious than we expected going into the year. So we're going to be outpacing a lot of what we had proposed and projected. Immunology as a result, we've not made as much of a priority on it in order to make sure we catch this incredible wave in the neuro field. And COVID continues to be an area that is allowing us to grow up in diagnostics. As you heard, our financial performance is very solid and outlooks Continue to be quite productive and derisking the future of our growth. And we're continuing to evolve our platforms With the 100x sensitivity. With that, I'd like to open up for questions. Your first question comes from the line of Kyle Mixon of Canaccord Genuity. Your line is open. Great, thanks. Hi, everyone. Thank you for the questions. Congrats on the quarter. So Kevin, we're hearing from a number of companies Talking about like an uptick in protein based research, one company today actually said protein based research applications are actually on fire. I was wondering if you're seeing anything similar in your customer base. Like basically broadly speaking, are there are the number of proteomics research projects accelerating faster than Projects based on genomics and nucleic acids? Thank you. Yes. In general, in previous Calls, Kyle, I've actually shown slides describing DNA and RNA And the pipeline and the evolution of how that evolved versus proteomics and the way we see this pipeline evolving. And One of the things that we've shown in those illustrations is if you can find a protein And you can find one that's got good clinical validity. You can substantially increase the value of that protein. And also we show on that same slide that the proteome is probably only 5% discovered. So what you have Kyle is 2 forces at play. You've got the value of a specific Protein evolving very rapidly as you increase the utility and you can see things in blood that you used to be able to only see And images or in spinal taps. And then you also have this incredible long term opportunity Define the other 95% that are more relevant to disease cascades as well as More phenotypic. And so both accesses in our minds are very much, I don't know if I'd use the word on fire, But I would say that it's an opportunity that's been untapped and these new tools that are coming into the landscape Are absolutely allowing a more relevant and a more impactful phenotypic biologic To be measured in a way that you couldn't see before and that historically was where the markets have started was in protein And then I went to DNA and RNA, there's still a lot of excitement there, but that's more of the recipe. Finding out what the actual meal is That was made is more important to the disease cascade and there's more interest to catch disease early than to have And understanding about the predisposition of disease, which may or may not actually manifest into disease. So that's why I do think protein is the future. We've been at this for a large number of years trying to really put on the what we'll call precision health eyeglasses Looking at this proteomics landscape and to invest where we think the value and we actually see 90% of the TAM Downstream, once you can bring the utility into the diagnostic, and that's why we think the plan in the drug, I'll call it drug development landscape with our pharma customers and translating the value of these Protein Solutions and CNM disease much earlier is probably going to, in the long run, showcase where the value creation is going to be greatest. And so we're very excited about the upstream discovery work that's going on and making sure that when a protein of interest As discovered, we then hone in and bring its utility across translation with pharma on their drugs into the diagnostic landscape Where the combination diagnostic and therapy can be deployed. Okay, perfect. That was fantastic, Kevin. Thanks a lot. Also was wondering about, obviously the COVID testing opportunity, I guess, if that's going to be a material contributor in the second half of the year, I guess. And so We would imagine that with all this discussion around antibodies losing their anti pathogenic properties or maybe like fading, maybe you thought there could be an uptick in For your serology test, and if you think it would be material, how should we just think about that contribution in terms of magnitude and pacing in the second half of the year? Yes. We believe very much in serology and we also believe that Every person seems to have unique ways of combating COVID and or Comparing the vaccine, which sometimes creates its own side effects. And so what is that Serology and each individual we think does spawn a lot of opportunity for serology testing. While it's an area that we've Invested in because of the need for the country, we believe we've got the ability to quantitate many aspects of antibodies, Which will be important. We don't look at it as our number one priority from a business perspective. We're trying to do everything we can To build out those assets and we feel very good that we'll have some revenue in the second half, but we don't At this moment, see it being explosive or plan on it being explosive because we don't want to divert our attention away from the Alzheimer We know right now that there will absolutely be just a lot of growth. And so, I think the antigen, we actually rather play in COVID in the research landscape that's got sustainability beyond the current epidemic. And there's many COVIDs coming in the future. And so having our technology, for instance, at the laboratories of Anthony Fauci's and looking at how drugs are working against COVID, either As an acute patient or as a long hauler patient, we think those are the areas of opportunity as well as our cytokines. I think there's going to be A major webinar coming up in the next few weeks showcasing how our cytokines can really Play a role around a lot of the long hauler assessments as well as acute management. So we do think that research might be overlooked Because everyone is so focused on trying to create short term revenue from COVID, our view is more of a long term view and we feel very, Very good about that long term opportunity in infectious disease. All right, perfect. And if I could just ask one more. I was wondering like, nice to Steve, that consumables was strong recently, right? And so was ordering if utilization trended up throughout the quarter and maybe Most recently in June or July, if it was at a pretty high rate, basically customers are running the projects at full scale basically or maybe above. Yes. So Kyle, thanks for your questions and they were all good and appreciate it. The consumable utilization It's way off the map from where we originally set our estimates. When we started 3, 4 years ago with These drug trials, we thought 33% of our equipment revenue would be where we would end up, but we're north of 50% of our total dollars of Installed base now being consumables and so we've definitely advanced the utilization and we'll continue to advance it. And the more we move into larger trials, that's where you can actually at a given single account, you could actually drive above 100 utilization on some instruments. In the CRO landscape, you could actually find yourself 150% to 200%. Great. Okay. Thanks very much. Sure. Your next question comes from the line of Max Musushi of Cowenan Capital. Your line is open. Hi, good afternoon. Congrats on another great quarter. So clearly, there's been major focus on the neuro drug landscape lately for reasons discussed on this call. Can you just give us a sense for how the recent breakthroughs in neuro have impacted your customers' desire to And Simoa to be used in additional programs internally and then separately, if it's led to any change in your pace of new customer wins. Yes. So first of all, congratulations, Max, on your new position. We're all excited for you. You've been one of the more impressive analysts over the years. So Excited for your new opportunity. I would say, also over the years, you've gotten to know us incredibly well. And As you know, we had a slide back about a year ago that said, if an Alzheimer drug ever gets approved, there will be a tipping point. But we never really expected it to happen in 2021. Our view was that this was likely going to be 2022 at And the reason it's a tipping point is it creates a significant halo effect for all of those customers out there that have hopes And have what I would consider to be impressive agents to try to combat Alzheimer's. And What we're learning is that if you can get to the disease pathology before symptoms, you've got a significant opportunity that you never really had before. So drugs could actually be rescued that historically failed. So I think what you have is the beginnings of a drug rescue opportunity as well as New drugs that are focusing on some of these biomarkers in new unique ways and having a biomarker that's noninvasive, high throughput, low cost Creates an opportunity to design your programs around those biomarkers. So we see excitement for recruiting, Using biomarkers to enhance the cohort for a better chance of a higher probability approval. Two ways we see that occurring, get into the disease earlier when they think the disease is more vulnerable to a drug treatment. And then secondly, stratifying out of those cohorts, confusing types of pathology that historically We're lumped into the cohort because there was no biomarker to separate them out. And we have evidence with our p Tau-one hundred and eighty one, for example, The Lewy bodies dementia and frontotemporal dementia were both types of dementia that were being Invaded into many of the cohorts for Alzheimer's, but those agents for Alzheimer's will not work for Lewy bodies and for frontotemporal dementia. They weren't designed for that. So getting a more pristine, pure Alzheimer cohort coupled with it being earlier, That represents disruption. And that disruption in research also then finds its way And feeds its way into the landscape of getting approval and then commercializing that drug and having payers feel really good about Coverage with evidence and bringing better outcomes with much less investment. So we think that this whole diagnostic that we're starting out in research evolves into the clinic. And once our technologies can play a role in helping Pharma companies get payment with much lower cost ways to monitor disease, minimum residual disease as well as Try to screen people into the drug, more progress we make on that front with payers, we think the more excitement it's going to create on the research side for other biomarkers. So we do think that there's a halo effect on both research and diagnostics in neuro and we are seeing evidence. And I think the best evidence is the mix. We went into the year saying that at best we would sell 60% of our new HDXs as new placements And that 40% would be what we call trade in, taking the HD-one and trading it in for an HD X. But once this wave started to hit around enthusiasm, many of our customers wanted new HDXs And many of them couldn't even shut down their HD-one because they needed the capacity and that has Shifted the percent of our HDXs that are new purchases versus trade ins. I think right now we're running year to date about 70% of our new HDX sales Our new HDX sales versus trade ins and originally again we thought at best it'd be 60%. So I think that Some of the evidence and I think we're also seeing some stock out of some of these Biomarkers that we just recently launched as we see people shifting their priorities towards Drug trials that they hadn't originally planned on running, and that then creates new demand in areas that none of us predicted. So I think all of it's been boding very well Absolutely. It makes sense. Those are some great data points. I also want to extend a congrats To Michael on his appointment as CFO. But in the same vein, just given the recent breakthroughs, have your Conversations with partners around the use of companion diagnostics become, I guess, more increasingly productive in terms of how quickly CDx test can become the standard for neuro focused drugs? I think that Every time I've watched payers, they can get very conservative, particularly when you have a medical industry that's Primarily has doctors at the top of the ecosystem. In our Precision Health, Power and Precision Health Conferences, we're learning more and more about how do you disrupt using next generation technologies, some of the traditional practices And I'll call them diagnosing practices as well as prescribing practices of doctors. And I think that I'm starting to see more and more evidence that Payers will probably be the force that creates what we'll call coverage with evidence. We will cover you, but we want some proof That there's performance and the UnitedHealth Group buying their first HDX this year, we think is evidence of us Reaching into that payer group and trying to instill this concept of how our biomarkers can play an Credible role of seeing disease earlier for the payers when the disease is much more treatable, but then secondarily deploying Therapies that you can monitor whether or not they are being effective. That combination we think is something that the payers Should be diving on and so we're trying to educate them to the possibilities of what early detection with proteins, with quantitative understanding of How the proteins of the body then get benefited by the therapy and if it isn't benefiting you, get you off of it. MS is a great example. There's 16 or 17 Prove drugs for $16,000,000,000 We know that today using MRI, it takes 2 years to figure out if they're on the right drug. A lot of evidence that just with the blood test within months after deploying a drug, you can determine whether an NfL level It's coming down or not. And if it's not, you move them to the next drug. So we think the cycle time of getting patients onto the right drug It's going to create much better outcomes more efficiently for payers and payers in the end, we think will bring them pretty important force A transformation to the traditional healthcare field. Thank you, Max. Your next question comes from the line of Matt Sykes of Goldman Sachs. Your line is open. Hey, Kevin and Mike, thanks for taking my questions. Appreciate it. Absolutely, Matt. How are you doing? Doing well. I just wanted to start on the The 100x sensitivity pilot, this looks like it was a success, so congrats on that. And just and in kind of one of your last slides, you talked about the potential pathway for that. There any way you can kind of help us understand the potential timeline and pathway for getting that through to commercial, just given the kind of the advantage they would obviously have in the market And where you are on that? Yes. It's interesting. We've deployed it in a pilot in our SR X technology, which is truly a pilot. It's an alpha slash pilot and we've deployed it with one of our leading KOLs over in Sweden that Has actually been somewhat the inventor of our biomarker for NFL and the home brew. He's also been a major pioneer in our Phosphorylated tau-1 hundred and eighty one's and is evolving across all of the phosphorylated taus right now. His early indications are very productive. And what we're learning in this pilot is that every antibody Care for different proteins behaves differently as we use magnetics So basically increase the filling of our arrays by using a magnet to pull the magnetic beads and that have the antibodies on them that Are attaching to the proteins. We're increasing the bead loading with magnetics and every assay is different. So We see some of them getting better than 100x, some of them getting 100x, some of them getting less than 100x. And so now we're trying to learn through Antibody technologies, which ones are benefiting, which ones aren't and why. And so I think that the reality is that innovating 100x across All of these assays is not just an instrumentation challenge, it's also an assay development challenge. We did bring, Will Geist and Masood in, Dawn Matoon, as you know, she was Head of all of R and D and Product Development at Cell Signaling, which was one of the Best antibody houses in the world as obviously Techni is too and AvCan are some really great houses out there. Having that capability in our company coupled in with the instrumentation advance, we think will give us the opportunity to innovate. I'm thinking that what we said was by the end of 2022, the concepts that we currently have will be evolved into Actual instruments. And I think that that timeline still feels right for me. And I think we're at a pace of innovation here that What we're finding now is many of the pharmas want to deploy the 100x right now on certain markers because of this Explosion in what we're calling diagnostic therapeutics, where you're combining the therapy with earlier intervention. And so that 100x May get deployed in our accelerator lab as we take on larger deals, to basically fulfill An opportunity to do biomarker research. And so we've got several farmers now wanting to negotiate with us larger accelerator deals That might even play into the 100x earlier, given an earlier access from an alpha standpoint to see if we can help them advance biomarkers Key therapies they're trying to get approval for. So again, if you look at a product launch global, Earliest I see it will be the end of 2022. Deployment in our accelerator, I could see it happening even later this year depending on how things evolve for Specific types of biomarkers. Got it. That's really helpful, Kevin. And actually leads to my second question, which is about the accelerator. An obvious impact from folks switching from in a postcode environment to their own instrumentation and consumables. And as the consumables It's great high margin business. But the Accelerator is a pretty powerful service for clients either during COVID or post COVID. You mentioned The folks that are potentially using it for the 100x at some point, but how are you thinking about investing in the accelerator? Obviously, you're committing Suits time to it. But how do you think about it as a priority for Quanterix moving forward? Yes. It's interesting. We had A board meeting earlier this week and I got one of the best boards in the landscape. These guys and men and women, we've put Laurie Olson on recently, Who ran a lot of strategy work for Pfizer for many years under Ian Reed. And so we got some real talented Board members and they themselves Also see the real significant opportunity in the accelerator. So bringing Masood in, We wanted to make sure that we looked at the accelerator with a pair of eyes from the diagnostic industry because you look at what Exact Sciences, Guardian, Natera, Foundation Medicine, There's numerous companies that have used LDT Labs to get a quick entry into the diagnostic landscape with MAKS And then they would evolve that and VITA is another, they would evolve that with potentially national coverage by making it a single site LDT. And so because of the advances with COVID, we actually see the opportunity to run COVID tests In an LDT framework, even before the end of this year by bringing Masood and his team in and Masood has already hired 4 or 5 The individuals in the accelerator to help us really expand not only the ability to CRO work, Phase twothree trials using CLIA, but also this advance over onto the diagnostic side. And while that's all strategic, as you point out, Matt, it also each time we run a trial, it leads to someone buying an instrument because They love to see the data and they come to our facility, which is also amazing and they get a chance to see this biomarker innovation. It's almost magical when they See it firsthand and then they want to have it in their lab, right? And that leads them to drilling instrument and consumable sales. So we actually Feel like this is an area that we're putting a lot of investment in. The benefits though, I think you start to really see them in 2022 Because we had nearly 100% growth last year in the accelerator because of those one time events, we think we can maintain that this year, But most of the growth this year will probably come in consumables and instruments. And I think maybe by Q4, we might start Accelerator picking up again based on the impact. And I say, Masood, it's the team of people and Masood is one of those cultural leaders That we are very focused on. Our people have been amazing through this whole COVID crisis pivoting, never missing work, Trying to find ways to help the nation and the world. And now what we have is a team focused on this accelerator to bring what we'll call neuro trials, Advanced them very quickly and then advance potentially across into some regional LBTs. So we'll see how that goes, but I feel real good that This is an area of our top priority and focus. Great. Thanks, Kevin. Thanks, Mike. Very helpful. Appreciate it. Our pleasure. There are no further questions at this time. I will now turn the call over to Kevin Rosovsky for closing remarks. Thank you very much. Hey, Mike's literally been with us for 2 weeks and Masood has been with us for 2 weeks. And I really want to thank Our employees who have just weathered so much progress over the last 18 months and it really is all about people and More so than any time in my career, I'm surrounded by the quality people that have a chance to Truly impact the world and bringing Alzheimer Diagnostics into the world with therapy. And so, this is a big moment, I think, for the world and for United States, not only because of COVID, but because of The research going on in neurology. So I want to thank the investors who've taught us so much over the last 5, 7 years since I've been involved for all of your keen insights and we'll continue to give you updates and thank you very much for listening today.