Hi, everyone. Thanks for joining us at the 43rd Annual Canaccord Genuity Global Growth Conference. I'm Kyle Nixon, I cover life science and tools diagnostics for Canaccord. Pleased to have Quanterix here for a fireside chat. Quanterix offers a leading, highly sensitive protein detection platform based on the Simoa technology, digital ELISA. From the company, we have CEO, Masoud Toloue, and CFO, Michael Doyle. Thanks you guys for joining us today. Thanks for having us, Kyle. You guys reported your, your earnings, second quarter earnings, this Tuesday morning? That's right. Very, really good quarter, and there was this, you know, assay redevelopment program, almost like a, you know, a refresh, kind of a strategy going on, and you really executed well so far on that. Maybe tell us, update us on that quarter, what went well and what's kind of, the guidance and stuff, too, if you want to just go, go over that. Yeah, absolutely. You know, obviously a lot going on. Kyle, we, you know, began our assay redevelopment program about a year ago, right here, at this conference, one year. We announced about a year ago that it was gonna be a six-quarter program, and so we're entering the last two quarters of that program, and I think you can start to see some of the benefits coming through of that program in our results, both business and financial. I think the, the main thing that you're starting to see is sort of the team at Quanterix begin to put a lot of modern manufacturing and production into the assay lines. Scaling from, you know, what we were doing at a much smaller scale, but doing it at a much larger scale and getting products out to customer, both through Accelerator, and through purchases of the assays. I think that that's a big a big part, a big blocking and tackling part of what was happening in the quarter, and it's starting to reveal itself in our financials. The second big thing I would say is on the business side. We're seeing more and more demand for identifying these hard to measure markers in blood, especially in clinical cases. That was a big positive for us this quarter. Okay. Mike, what happened with gross margins? I mean, I think, like, when we spoke last quarter, that after the first quarter, you thought maybe there'd be a step down with the revenue and gross margins, that was sort of, you know, that would have been, like, a safe assumption, but you're already back to, like, high 50s, basically so. Yeah, we are. I think a year ago, you asked me a similar question, like, what happened, but for another reason, right? They had fallen. I think that, I would say, and Masoud alluded to it, the improvements we made in sort of foundational, how we manufactured the product, we've already reaped some benefits, which I honestly did not expect when we gave guidance at the beginning of the year. Now we have, we're, you know, we're two quarters into the year and we're running in the 50s, and, you know, we're in a really good place. I do expect a little bit of noise in the back half of the year because as we go into the final stages of the fix, we're still gonna run, you know, sort of the old SKU for the product and the new SKU. We're gonna have a little bit of noise, but now we're, we're well ahead, and it's, it's. The big reason is. Well, two reasons: One is the foundational fixes to how we manufacture the product have really improved our cost profile, and we're getting leverage from volume because we're actually pushing more out the door than we thought we would. We're running ahead from a revenue standpoint as well. Okay. What does it really mean to, like, you're running these different SKUs? Just, like, make that more tangible for us, and what does that actually, like, how does that tangibly impact your results? Yeah. As we looked at the operation process, let's call it, you know, 10 key things that we're making improvements on. A few of those process and component improvements already, the products, you know, on the shelf are already getting those the benefit of that. That's, that's what you're starting to see on the gross margin side, right? Less scrap, more consistency, etcetera. Now, what we're gonna do, Kyle, is we're gonna take those 10 things, and we're gonna put them all together in new product lines. It'll be another operations line or another SKU, in addition to what was existing as a product. We say, you know, version one, we'll have version two, they get all that benefit, and so we'll see further tailwind once everything's, you know, compiled together in that SKU and available to ship. That will happen at the end of the year, and we expect, you know, continued improvement. 2024 pretty clean from that perspective, none of that SKU stuff? That's right. 2024, 2024, we're gonna have, in any case, whenever you add a new product line, you always wanna keep what you have existing available on the shelf for about a year or so, and there'll be some blending of old versus new, especially as we're in the clinical space and involved in a lot of advanced clinical trials. You don't wanna mix things up sort of in the middle of someone's trial. You gotta keep your, you know, previous or older product on the shelf while you're introducing the new one. Okay. All right, so let's go, let's go back to, like, a year ago when you started the program. I think, like, there was some doubt that you could retain some of your important customers. I mean, you had I think Lilly was a, you know, important customer back then. Your biopharma was, was clearly gonna be big for you. You cared about translational back then. Obviously, it seems like, you know, retention's been solid. I'm sure our UI has been, has been fine. What's... You've probably, like, added some biopharma customers, too, as well, right? 'Cause, like, given all the news flow and then kind of positive, just, you know, attraction, I guess, to something like a Quanterix. What's going on in that market segment for you, the customer segment, in terms of, you know, adding and retaining customers, as well as how much they're spending with Quanterix with the platform? Yeah. No, great question. The number of biopharma customers that we have now are probably the most in the history of Quanterix. We have a lot of biotech and early pharma customers that are signing up and then want to get NfL measurements and p-tau measurements. They're sort of at the early stage. You hear a little bit less about them, but they're preclinical or about to begin on a Phase I trial with all the, you know, positive news happening in Alzheimer's. You see a lot of work happening outside of Alzheimer's in MS and ALS that we're beginning to see. I think, you know, a few months ago when the FDA approved the Tofersen therapy when there wasn't clinical efficacy. When you saw NfL levels decrease, but there wasn't, you know, sort of that clinical benefit, but, you know, they got expedited approval, that was a big shift. Now, I think a lot of other smaller companies and pharma companies said, "Hey, look, we need NfL, as a blood test to be able to, you know, put something, you know, to the agency." That, that was a big tailwind for us. The ALS SOD1 market is very small, but I think the larger tailwind and larger signal was that these blood biomarkers are gonna be critical to get, you know, approvals and eventually reimbursement. To answer your question, yeah, a lot more, tailwind from both on the research and, on the pharma side. Then on the larger opportunities, we continue to do work, and I think you could see, especially with regards to p-tau 217, a lot of folks are coming to us. Yeah. With, with, with Tofersen and, and the basically using NfL as like a, as like a marker, I mean, what are the read-throughs for that, like from that to p-tau 181? I feel like that's well. I think a lot more people are excited about Alzheimer's, and that's where p-tau 181 for now is the marker of choice. Maybe p-tau 217, we'll talk about that maybe later. Yeah, is, are there, like, clear read-throughs to your other markers from Tofersen? Yeah. Yeah, you know, NfL is a check engine light for the brain, right? It's a very ear- it's an early marker, it's a very generalized marker. If you have, let's say, any sort of neurotherapy and you want a proxy for brain health, you want to measure it in blood, and NfL is, you know, the premier marker. We were the premier provider of the NfL marker. Whether it's Huntington's or Alzheimer's or MS, we can detect whether, you know, the situation is becoming more positive in the brain or it's getting, getting worse with that blood biomarker, and that's why it's so dynamic across many different disease categories in neurology. The tau proteins tend to be a little bit more specific to a proxy for amyloid pathology, and that's why it's a little bit more used in Alzheimer's indications. Okay, then now on p-Tau 217, seems like it's gonna be really important going forward. What's the history that you have with p-Tau 217? I think licensed it from Lilly, like close to maybe like early in 2022, I think, possibly so. That's right. What's that been like? What's the future of that, and why is it so important? Yeah, so, so the relationship continues, very positive, doing a lot of work, since we announced the, the press release. That's been positive. We announced as well, some work with a couple of other companies. We announced at the AAIC meeting, a Jhonson, a J&J deal, where we'll be able to offer a p-tau 217 assay through our Accelerator program. That was, that was a positive. I think the more and more you look at the p-tau 217 marker, and if you look and listen to, what's happening at these, advanced neuro conferences, we're starting to see that, the therapies are a lot more effective when you identify somebody early in the cascade. If you can identify someone early, you have a better chance of improving the, patient's outcome. I think, you know, p-tau 181 is a great marker. I think p-tau 217 looks, at that much more earlier stage, and that's why there's a lot of excitement in the field, around p-tau 217. Perfect. I think you mentioned on the earnings call that you could launch an LDT for p-tau 217. I think, was it this year? This year. Yes. Okay, so that's, that's good, but it's, it's being used for research use only right now, and maybe that would be for research too, probably, I guess. Your thoughts on that. Yeah, you know, our view is, on p-tau 217 today, people can purchase it and get services through our Accelerator as a service. Our intention is that it's available as an LDT and becomes part of our menu, our diagnostic menu, as an LDT, and that we would make that available for patients and providers. Yeah, the p-tau 181 assay got Breakthrough Device designation, I think in like late 2021, October. You know, why hasn't p-tau 217 gotten that yet? Yeah, I would, I would, say that's probably going to follow. p-tau 217 is an incredible marker, and the signs of what you can do with p-tau 217 is pretty remarkable. In fact, I would say, if you look at sort of the guidelines at AAIC, big breakthrough, which was, you know, in the past, blood biomarkers have always been looked at as a screen or a rule out. you know, I would tell you maybe a few months ago that maybe in two or three years it would be a PET replacement. Now, I would say, you know, that's probably a year and a half to two years away, and, and more and more, if you look at some of the guidance by the Alzheimer's Association, NIH, that's becoming, you know, pulled in a bit, and the view is that blood biomarkers could replace PET, and that the data and the associations to PET are close enough, that could be a rule in, as opposed to just a rule out. I mean, it sounds like p-tau 217 really picks up disease really early on at these low detection levels, low, low abundance. Would that be like a CDX, like a companion diagnostic, or is this or even for stratification trials, or how is it really being used, I guess? Yeah, right, right now, it's being absolutely used in stratification for clinical trials. It's actively being used there in all sorts of stages of the clinical trial. In terms of a CDX, you know, I think it's more a complementary diagnostics. I view these blood tests as one critical tool to any primary care physician or neurologist. Today, someone knocks on the door, there's an approved therapy that's reimbursed. They knock on the physician's door, and the physician has to make a determination of: What, what do I do with this patient? I do a cognitive workup. Do I really send them to radioactive, you know, tracer and a PET scan, or do I, you know, try to rule them out through a blood test? I think that's the current mode of action, and that's where LucentAD is gonna be very effective, in helping neurologists make that decision in that triage. Tomorrow, you know, in the future, I think it's going to be, "Hey, let's remove PET from the equation, and it's no longer necessary. Okay, we talked about, like, three markers right now. 181, we I think referenced in NFL and now p-tau 217. What's your thoughts on the multi-marker panel this year, maybe, possibly? Yeah. Yeah, we're in advanced clinical trials. We have two clinical trials that are ongoing. One is the Bio-Hermes trial, which we announced some positive readout and some positive correlation on p-tau 181. We're also doing an advanced trial with ADDF, where you know, we're looking at patients in memory clinics and primary care physician offices. It's one thing to do something and see things in a publication. It's another thing to measure patients in the field, you know, right? Let's say, Kyle, you go to the physician's office, and you say, "Hey, you know, give me a test for Alzheimer's." Your physician might say, "Hey, like, no way. Why are you in the office?" Now, there's actually something that you can get tested for and, and, and measured and, and as opposed to, you know, deciding whether you need a PET scan. You know, I, I, I think that's a, that's a big shift that's gonna be critical. Okay. I guess what I was getting at was like, you know, multiple markers, more proteins, like, more complex. I mean, I think, like, a lot of Quanterix, like, you know, historically, has been, like, the low plex, and that makes sense for clinical and, and maybe some of these translational projects where it's past the discovery stage. You, you already you've identified your targets that are necessary for drug development, et cetera. Once you add more markers, I mean, that's, like, more... It's It's obviously more protein. Are these, like, contradictory? I mean, how do you think about them? Yeah, no, I think the... We're looking at a four or five-marker test in this clinical trial that I was just talking to you about with the memory care clinic, and I think that could add additional information. You have a, you know. Say, you get ruled out of a test, but you still have memory concern. Well, if it's not amyloid pathology, what is it? You know, is it frontotemporal dementia or some other affliction? Our multi-marker will be able to provide that answer. Kind of in the scheme of things, in neurology, you know, four, five markers is probably, you know, a good range in neurology specifically, and we don't see it requiring many more markers than, you know, say, four or five. Okay, you know, there are a few other vendors that are developing tests, maybe have launched tests, including many big names, reference labs, for example. as well as other labs that have access to p-Tau 217. I think there's a lab in Washington, University of St. Louis. You know, why, why is Quanterix gonna win, I guess? Like- Yeah, I, I think it comes down to what we talked about a little bit earlier in the day, which was, in order to get this platform and, and enable more access to therapy, you're gonna need more access and global infrastructure for, for testing. To enable that global infrastructure, there's not a single platform out there that is versatile, robust, and has a high sensitivity than the Simoa HD-X platform. We can take a sample-to-answer platform, blood in, result, result out, and put it into any reference lab today around the world for that broad-based access. I think if you're doing things on a single site or a single location, you'll be able to help build that local infrastructure. I think if you're thinking more globally, it's gonna need to be sample-to-answer, high sensitivity and versatility in diagnostics, and I think that's where we're gonna win. We were talking earlier on our panel about the turnkey solution, end-to-end, so I, I definitely think that you're unique in this protein measurement space, where you have your own instrument baseline, which is unique. Maybe just, we have a few minutes left. Let's talk about Lucent Diagnostics. What is Lucent Diagnostics? This was announced, I think, like July 6, like early July. You also announced the launch of LucentAD, which is a kind of like a test that's an aid for the, in the diagnosis of Alzheimer's, but it is for clinical use finally, which is a good milestone. Walk through that and why it's important, and what, what it means, I guess, for the next couple of years. Yeah. It, you know, it was, I guess I would start three years ago. Three years ago, when we did a lot of work with the company that now, you know, has a therapy on the market in their clinical trials, and around p-tau 181. At that time, p-tau 181 is the best marker for detecting Alzheimer's. We had that sense that p-tau 181 was gonna be a critical marker. Ended up being on the label for the Leqembi therapy as a biomarker. We began the LDT a year and a half ago, and we launched an LDT, but it was mainly for pharma customers, and for clinical trial customers so that you could get results in a clinical trial back to a patient. You would need that LDT. We submitted something to the FDA, and so we were building that momentum up, and we didn't have anything patient or provider-facing because the therapy wasn't reimbursed. There wasn't a therapy on the market that patients had access to. Day one of the therapy, having that reimbursement and the accessibility, we launched LucentAD, Lucent Diagnostics, which would now be a more provider- and patient-facing portal, where we're having physicians and neurologists sign up today on our portal for access to the test. The test is basically our p-tau 181 test. It has clinical trial data, and we set a cut point. If a patient has, you know, a result that's above a certain cut point, we recommend that that's an aid to a diagnostic. With a cognitive study, would inform, provide information for the physician to make a decision whether they progress that patient to a PET scan. That's the use and, and use case of that test. It's an additional tool for that neurologist to make a decision for that patient going into a further test. In the IVD PMA, like, like submission, is it does the label going to be the A to a diagnostic, or could you expand that and be an actual diagnostic test, a screening test? Yeah. Step one for us is a rule-out, right? Get folks who are coming in, knocking on the door and saying, "Hey, you know, I have something in my family. You know, can you please test me?" In order to enable that testing, and to bring people in who are, you know, early in the, in this Alzheimer's stage, you need to have something that will be able to efficiently rule people out. A high sensitivity test is going to be required for a rule-out, and that's where we are today. Where we think, the holy grail is, is in another, you know, year and a half, two years, where we'll be able to rule people in and completely replace that PET. We think that's, you know, probably another marker, you know, it could be p-tau 217, maybe a couple of other markers in addition to that, and that'll be the evolution of where we are. Rule-out today with LucentAD, and then, you know, additional markers, additional tests that would rule in, and then multi-panel tests that would not just, rule in or rule out, but tell a patient, "Okay, maybe it's not amyloid pathology, but it's this, and you should get, you know, this other, exam. Okay. I don't love this like, question, but I feel like I get this sometimes. The, the revenue contribution from LucentAD, for example, is that going to be material the next couple of years, or do you need like, you know, reimbursement from CMS, I guess? Then going back to Lucent Diagnostics, the portal, as... I mean, I'm sure that the NFL, MS tests eventually will get launched clinically as well. You'll want Do you kind of like run that through that portal as well? Is that how you're thinking about it? Yep. Yep, absolutely. Anything that... One big shift in our business, 50% of our revenues are from research, 50% are clinical trials and pharma. Today, very little or non-material revenues come from the clinic, but we just launched the test a couple months ago. We're signing up, I would say, tens and tens of neurologists onto the portal. I think the way to think about diagnostic ramp is look to see, you know, how patients are getting on the therapy. It's gonna be a slow ramp. It's still an infusion, there's still time, people have to get onto the drug. I think with that ramp, we'll start to see, you know, incremental revenue growing, probably not material for 2023, but, you know, growing in 2024. Then you add on other tests, and so I mean, that's going to just keep like, multiplicative. That's right. This will be the first, this is the first menu test that was launched when the therapy was available, and then we'll add, you know, additional tests that would open up the, the market. Everything that we're talking about now, Kyle, has been screening. There's also a critical reason why you'd want to monitor, and that could be even a larger market, for patients as we learn more about how these therapies react. Is that a similar, similar test, the same test? I mean, in theory, it's similar. Yeah, it's the same test. If you look at the Leqembi label, our p-tau 181 was actually used for therapeutic monitoring over the 80-week course, so we believe it's also a p-tau test. Okay, so like I was saying, it basically took, two years from breakthrough to till now to get LucentAD, like, totally launched clinically. I mean, is that what's going to happen with p-tau 217? It's not even, yeah, it's like... 217 will happen a lot faster. Why is that? Yeah. I, I think the idea is now we have a strong platform. We're building a commercial team specifically, that are speaking a lot to neurologists. We have infrastructure, we have a strong CLIA lab that's busy running clinical samples, for us, it's going to be an additional menu validation. We're doing this through a clinical trial, then we'll make it available as a laboratory developed test through, through that platform. I would expect that to happen this year. Yeah, I, I feel like the, so the diagnostic potential Quanterix has been talking about for years, it's, it's pretty tangible now. It seems like it's happening. It's like we literally have this portal and everything and, and the business to support that. You don't have like a commercial, you know, sales force to do this with, that's used to like kind of this neurology call, call point, I guess. From that perspective, I'm sure there's a lot of heavy lifting that needs to be done in the future, as well as your relationship with, like, payers as well. I mean, getting in there because they know, like, neurology is a big pain point from that perspective. You have a ton of... You have like almost $400 million, you know, $340 million in cash. Is that, a lot of that going to be spent for the next two years i n like this area, like Salesforce and commercial team or R&D, or like, how do you, how do you allocate all that and, and balance all this stuff, the RUO and then the, the diagnostic and the biopharma? Yeah, that, that's a, that's a great question. The, the way we think about it is, over the last year, year and a half, quietly, but we've been laying the groundwork for regulatory infrastructure, funding for a strong CLIA laboratory. They'll be able to do thousands of samples on a weekly basis, building the test, undergoing two clinical trials. We've been building the foundation for LucentAD, I would say, for, you know, a couple of years now. Now that, but waiting, but waiting for a therapy. It's been decades, and there hasn't been an Alzheimer's therapy on the market. The one area that we haven't invested a lot in, because it wouldn't have made sense, is the commercial team. Now, that flip has switched, and we're going to be bringing on, commercial resources, commercial team, to be having that discussion with neurologists and, and at those call points. I think when you look at sort of our cash situation and our balance sheet, you can see that, we certainly have, dry powder to make investments there. I think you're seeing, for the first time, in probably the history of Quanterix, the capability of the company to take the RUO business and get it to a stage where it could generate cash for other investments or other initiatives in the company. I think diagnostics is a, you know, solid area to invest. What is the pathway to get, you know, so this is gonna be a test for probably people-- I mean, how old would, is someone gonna be that takes LucentAD? Likely, 55 and above. Okay, so Medicare isn't a good amount of that portion, I suppose, but not the entire piece of the pie. How do you think about getting, you know, like CMS to cover this and then private commercial payers? Yeah. You know, right now, it's a out-of-pocket test. If you're looking at the therapy, the out-of-pocket for the therapy is still around $6,000. A PET scan is around $5,000 to $7,000 to get onto the therapy. Our test is under $300, and we're looking at patients that have economic need as well and making concessions there. We're trying to make the test as accessible as possible, with as much global scale as possible. The second important point, Kyle, I want to make is that while we're running the test out of Boston today, our goal is to really enable all other reference labs to be able to run that test, and we'll be able to supply them and support them. That's how we're building the global infrastructure. On the reimbursement question, I agree. Once we have reimbursement, then you can, you know, get much more scale across the U.S. and make the test available to a broader swath or a broader population. We're, we're going after that. I think re-reimbursement is a key component of the test, and, we expect that that'll be coming. Okay. Well, finally, I guess, you know, in a year from today, when we're doing this next year, fireside chat, like, what are the goals? What do you want to have accomplished by that point in the next year from now? You know, in a year from now, I, it's our hope that, from a, both talk about research and diagnostic, from a research, perspective, that, we have one of the fastest-growing, menus in the market, especially in relation to, pharma, and, the research area. I would say that what we're building right now in terms of operations infrastructure, we've been talking a lot about operations and, and gross margin. I think the real, product development engine that's coming out of this is a platform that'll generate, a lot of assays, in neurology, in immunology over the next year. Next year, you'll see, you know, I think a strong pipeline there, just on the research side and for pharma and clinical. On the diagnostic side, I would expect, the initial groundwork that we've done, and others as well, in building the global infrastructure to get testing available to a lot more patients and a lot broader reach to the population. So a lot more uptick, probably in a larger menu as well. Okay. Then I want to say, you know, Mike, you're leaving the company, I guess, well, you'll be you'll stick around as like an advisor, but new CFO is announced, you'll be leaving at the end of August, I believe, kind of in the switch will take place. You've done an awesome job, like, you know, getting this, getting the financials up to snuff in the past year or so with this whole program. So congrats to you. Yeah, thanks so much, guys, for joining us. This was great. Really appreciate it. Thanks, Kyle.