Quanterix - Earnings Call - Q3 2018

Transcript

Speaker 0

Good day, ladies and gentlemen, and welcome to the Quanterix Corporation Q3 twenty eighteen Earnings Call. Joining us today are Joe Driscoll, Chief Financial Officer and Kevin Russovsky, Chairman and CEO. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will be given at that time. As a reminder, today's conference is being recorded.

I would now like to turn the call over to Joe Driscoll. Sir, you may begin.

Speaker 1

Thank you. Before we begin, I would like to remind you that 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 uncertainties that we face are described in our most recent filings with the Securities and Exchange Commission.

This call will also include certain financial measures that were not prepared in accordance with U. S. GAAP. The information required by the SEC pursuant to Regulation G, including reconciliation of the non GAAP financial measures to the most directly comparable GAAP financial measures can be found in our earnings release issued previously today, which is on our website. With that, I will turn the call over to Kevin.

Speaker 2

Thank you very much, Joe. This has been a pretty impressive quarter for us as we continue to build out the company. I've actually created a few extra slides for this particular communication to provide a little bit more clarity around some of the dimensions of our growth as we continue to build out the franchise. So at first, I'd like to say I'm going to start off going through highlights and then I'll peel the onion back around our goals and our priorities and how we're doing opposite those. But I would like to dedicate a portion of this presentation to neurology where we are making a major inroads.

We'll then turn it back over to Joe for a financial recap and I'll say a few words about our longer term strategic direction and we'll do Q and A. So to start on our highlights. First, the instrument and kit momentum were incredibly strong for the third quarter, which is our fourth quarter after being IPO ed back in 2017. We've also had strong growth with new products. Publications continue to go at a very rapid pace.

Many studies further validating our technology across all of pharma biotech and we continue to expand our menu faster than we anticipated, primarily because of a strategic acquisition we did earlier this year. And we continue to get a lot of industry awareness around our technologies. We've been growing our share position in pharma and academic and we've also continued with this breakthrough in one of our biomarkers called neurofilament light. Our ability to see this in serum at 100 to 1,000 times greater sensitivity than most technologies in the world enables us to see this in serum, which is a big breakthrough. We actually presented to the FDA a few weeks ago, standing room only for that presentation and we went with big pharma and biotech to help further teach the FDA around this incredible new tool of being able to see in the blood semi non invasively brain health.

So the publications as a result of a lot of our activities continue to expand and they're accelerating. We had 40 publications in just Q3. Now we're up to nearly 300 publications and 150 of them, nearly over actually half of them are in neuro. We've also continued to work very hard advancing what we consider to be the next generation planar technology, which we were further able to accelerate again based on the acquisition that we did earlier in the year, brought in some important R and D resources and technologies to further advance our planar programs. We are actually anticipating launching a 10 plex in the 2019 and we're test betting it by the end of this year that technology and it's showing very solid promise.

We also had our commercial expansions continuing a major growth catalyst is the selling organization, which continues to be primed and taught new ways of selling and believe it or not many of our investors are playing a key role in helping us position our technologies throughout pharma and biotech where they also own positions. We've also very importantly, a few weeks ago regained all of our IVD rights back from BioMarieux, which was a major headwind when I joined the company four years ago that we've worked very productively with BioMarieux and feel that at this moment, we were able to get all these rights back and continue a very strong relationship with them and they continue to be a large investor in Quanterix. So those are some of the key business highlights. From a financial perspective, we grew 85%. There was a one time in there associated with the B.

O. Maryu contract that if you take that out, our growth was 61%. Our year to date growth is 64%, remove the one time, it's 56%. Importantly, our margins are continuing to accelerate because we're growing the fastest in our highest margin leveraged businesses. Consumable growth was at 100% this past quarter year over year for Q3.

Our gross margins have continued to expand 52.8% in Q3, which is an eight twenty bps improvement, 140 bps adjusting for that one time event that occurred with the revenue from B. O. Maryu. But year to date, it's continued to expand as well at 400 bps and 130 adjusted for the one time event. Record level of instrument utilization is key.

We went into the year saying that we would achieve $50,000 per instrument on the HD-1s and that would have been up from mid-40s, low-40s last year. But we've been able to actually get year to date all the way to $60,000 So we're way ahead of schedule. Again, of these neuro markers in the panels for neuro is really helping us accelerate that growth. So overall product revenue grew 83% in pharma and 79% in academics. And our instrument growth accelerated in the second half of this year actually starting in Q3 and that's following three years of flat growth.

And so we've been expanding our installed base very systematically with our instrument sales, but they've been fairly flat on a revenue basis. This is the first time we're now seeing acceleration of our instrument installations. So that's going to further enhance future growth prospects for our consumables. The next slide is a high level slide that you've seen in the past, but it shows our growth and how consistent it's been for the last four years. And you can see our year to date 2018 bar already looks like a full year bar, but that's just the three quarters bar.

And you can see that the four quarters post IPO, which I think are pretty important, I've highlighted in red. And we were minus 1% the first quarter out of the gate and back in 2017 and then we grew 41%, 66 in this year or this quarter Q3 85%. So we like the acceleration. And on the right hand side top, you can see we're showing the breakdown of instruments, consumables, services and other. And you can see our growth in consumables at 92% and that's now 37% of our company.

And instruments grew at 23% year to date number, which is actually 23% of our business. But if you look at Q4 at the bottom of the slide, you'll see our instrument growth was even more robust at 58% and our consumable growth was at 100%. So we're continuing to move the needle very productively around the installs and the pull through, giving us a lot of visibility for the future. I think it's key and we've said this for the last four years as we've raised a lot of money through private rounds and through the IPO, there are some key driver metrics that we really have put a lot of emphasis and investment on and these are the three publications, markers and the accelerator, which is our services business. And you can see the evolution of our publications, we're almost up to 300 at this point, but most importantly, it was 156 currently in place for neurology.

And you can see that we've almost doubled the number of publications over last year's accumulated in just the first three quarters of this year. That is the feeder for a lot of the scientists around the world to utilize our technologies because they learn about it through these third party peer reviewed publications validating the technology. And that's led to biomarkers, the ultra sensitive biomarkers, which is our consumable. We're now up to two zero seven different biomarkers have been run. Most of them in neurology, 99, but you can see 63 now in oncology and that's the next wave for us is moving into oncology.

We'll speak about that in a moment. Then the accelerator, all the studies that we've been running, you can see all those studies about a third to a fourth of the studies lead to customers buying instruments following the studies, but it's actually the highest gross margin segment of our company as well. So we see this as a pretty important indicator. And you can see that we also now in red are running third part we're running drug trials in our own facilities and we're up to 38 and you can see it accelerating. That's the CRO of CLIA Labs that we bought from Auchan and the acquisition back in January has enabled us to further expand into these drug trials.

And on the right hand side, you can see that those key drivers have led to the results of our instruments continuing to increase the installed base. When And you look at the red, you can see that the actual growth of the revenue of instruments is also expanding very nicely. And on the right hand side, you can see that that translates into this very consistent consumable growth expansion that's occurred. And on the red line, can see that our growth has gone from about 30% up to more like 70% to 100% the last four or five quarters. And so that's that consumable growth that we're very excited about.

This slide just shows the breakdown from a geography, the customers and the disease states. And you can see that our growth has been strongest in North America and Europe, but we will be building out Asia as we continue to build our distribution channels there and there's a lot of opportunity particularly in China. And on our customer groups, we're still growing the fastest in pharma biotech because of our FDA linkages to getting drugs approved. And then on the disease states, it's primarily neurology, but you can see there's a lot of growth now occurring in oncology. But 93% of our business is now oncology and neurology and that combined sector is growing at about 94.

So that's a big piece of our future franchise. We've taken our goals and priorities for 2018, broke them into revenue and the various components below it, gross margin, new products, commercialization and validation. And across the board in almost every category, we're ahead of schedule on the goals that we set for the beginning of the year. And you can see in the category of revenue, our growth is occurring much faster and we got a lot more utilization of the instruments, which is a key to the expansion. And we are also on the gross margins improving primarily because of the leverage of higher consumable sales, but we also continue to work for cost efficiencies in the way we evolve our product lines, particularly as we move to multiplex.

And new products, we launched the SRX at the beginning of the year and we've done extremely well selling that 50 SRXs and there we're primarily providing one plex, two plex and four plex. We are working towards a six plex offering on the SRX as well. We're looking to launch this new, we'll call it bench top planar technology for oncology next year, the first half of next year test bed starts by year end. That will allow us to do 10 plex and you can see that that's moving nicely and we're very excited about the acceleration that we've been able to put on that technology. And from an assay standpoint, we were able to get ahead of the game because of the acquisition of Oshon and also the CLIA lab has enabled our services.

The commercialization and expansion is primarily benefited by us getting all of our rights back that significantly increases our TAM and our ability to address that TAM to create value. And validation is a key area for our success and you can see the number of publications, the number of pharma that are using our technologies, the number of Phase one, two, three trials and the number of CROs using our technologies across the board were either on target or ahead allowing us to ramp up our accelerated growth. I'd like to close this section of the conference call describing our neurology franchise. I've shown before this slide around all of the publications that have occurred and how we got a lot of exposure on Good Morning America, won the head health challenge with the NFL a couple of times, but that led then to the movie Concussions gave us a lot more exposure to a new biomarker Nf L, which is a coincidence and that's led to a lot of pharma biotech across the board in neuro. If they're trying to stop neurodegeneration with a drug, seeing the ability to do that in blood non invasively is what's creating a lot of the exciting growth opportunity.

And these publications are the underpinning of a lot of that growth. And you can see on this next slide just how rapidly there's been an acceleration of Nf L publications. And the next slide basically describes our value proposition and that is that most drugs have a lot of toxicity associated with them. It's a high reason for deaths in The United States or adverse events to drugs. And on average, they only work about 50% of the time and in some categories like cancer, they only work 25% of the time.

And in the center, you can see that if a company gets a Phase one drug approved, which shows those bars, after they get that approval, it shows the percent chance that they can translate that into a Phase three approval. And for cancer, it's a very low percent, nearly only five percent of drugs make it once they've got Phase one approval through Phase three. But if they use biomarkers, there is a 300% acceleration of the probability that they're going to get these drugs through because of improved safety and efficacy. And so going from eight point four percent on average to twenty five percent has led to all the drug trials on the right hand side where you can see that there's now 32 CRO Samoas in place. 10 of those by the way are inside of our company And you can see that we've now run 38 trials, but just rules based medicine alone has run six fifty Phase one, two, three trials and you can see the summation at the bottom right corner.

So another key macro trend that's really further fueling our business is that the FDA is very much now getting behind biomarkers. They have a major initiative to be able to see diseases earlier when you can use a drug at a much lower dose to keep the drug much safer because it's at a lower dose to actually treat the disease. If you can get to the disease long before symptoms, it makes the drug much more easy to get approved, to be effective and to be safe. And so because of those reasons, the FDA has continued to put out guidance supporting the use of biomarkers. If we now narrow into where we're really creating a lot of our value, it's Nf L serum non filament light is the biomarker and this left hand side of the slide shows multiple sclerosis.

There's currently 62 trials underway to stop the neurodegeneration of multiple sclerosis and measuring Nf L in blood determines based on a lot of publications that level of damage and whether or not the drug is having the desired effect. And so right now there's 10 we estimate there's 10 different trials of the 62 that are using our serum Nf L markers. And on the right hand side, you can see there's already been $22,000,000,000 worth of drugs approved by those companies. Those are their ticker symbols. And those companies are also very interested to make sure those drugs are already approved or being applied to patients in a way that it's working for patients and they can figure that out much earlier in blood than finding out later in brain atrophy imaging.

And so longer term, we think that these abilities to CNFL is going to play a role even in today's already approved drugs and ensuring that the right drug for the right patient is benefiting them the most and trying to keep MS patients out of wheelchairs. So this next slide is a recent serum Nf L research slide that basically shows the European Committee for Treating and Research in Multiple Sclerosis. It just happened in October and we were we had a small booth, but we were just completely jammed. And you can see the acceleration of all the publications from these companies over that three year period 2016, 2017 and 2018. And now with ECTRIMS having so much interest in Nf L, it's further allowing us to talk with the FDA and further build it out as a clinically validated disease progression marker.

And that's our goal over the next couple of years is to get that approval. And you can see that when you look at MS on the next slide, this is a disease that there's about two point five million people today and they're getting one to two MRIs per year at a cost of $3,000 And so there's a large expense today at looking at brain atrophy through imaging, which typically will take maybe three to four times longer to see than what you could see in the blood and that's the key opportunity area that this slide is trying to unlock. More importantly, Nf L is being looked across almost every disease category as well as other biomarkers, which you can see on the right hand side. And our franchise of neurology biomarkers now expands this complete list on the right and all the diseases in the middle that there's now publications linking. And the reason this slide is significant is because of this next slide where you can see that MS has got this rapid first mover advantage for using Nf L, but these other diseases already have publications coming and these are future waves within neurology and those diseases are significantly larger than MS.

MS is actually a very small disease. So that's why we're viewing this as a very early stage of our build out of Nf L, neurofilament light to support the pharmaceutical industry to get drugs approved. This next slide just shows you we have five different categories of growth catalysts that we're trying to apply as we move into 2019. It starts with new products that are listed here, we've mentioned them already. In the world of commercial, we're expanding our TAM through getting the rights back.

The FDA work is advancing the role of sensitive biomarkers, the trials, the pharma services that we've entered, even having investors helping us sell. We feel we're capturing the leadership role in this landscape. And strategically, we've actually got the rights back. We've done a deal on blood screening with Abbott further validating the technology and we're working now with several LDT CROs that have expressed a lot of interest in further building out LDT rights. The Auchan acquisition has been very productive in accelerating our move into oncology and planar, which is our next wave.

And then awareness has been key and we're also continuing to sponsor PPH and the next PPH will be held in The Netherlands in December on December 12. And so if there's any interest, please let us know. We'd like to have we're going have a lot of keynote speakers around neurology and oncology further evidencing precisely through publications, third party peer reviewed publications, how we're advancing that field. And so that's the summary of what I'll call the current operations and strategy. What I'd like to do now is turn over

Speaker 1

to Joe for a peel back of our actual financials. Joe? Thanks, Kevin. As Kevin noted, revenue in 2018 was $10,600,000 compared to $5,700,000 in the prior year, which represents 85% revenue growth. Excluding the onetime revenue item of $1,300,000 revenue growth was still very strong at 61%.

Product revenue, which includes instruments and consumables, grew from 3,300,000 to $6,000,000 an increase of 81%. The main driver was the 100% increase in consumables. Instrument growth was also strong at 58% plus there's a solid backlog of orders, which will ship in Q4. Service revenue increased 39% and this continues to be a major focus area of our business going forward, including utilization of the CLIA lab, which we acquired with the Auchan transaction. Collaboration revenue was $1,600,000 which includes the one time item of $1,300,000 Note that there will be no more collaboration revenue going forward unless we sign a new deal since we have recognized all revenue from the BioMerieux agreement as of the end of Q3.

Year to date total revenues are $26,800,000 a 64% increase. Adjusting for the onetime revenue item, year to date growth is 56%. Gross margin percent in Q3 was approximately 53%. If you exclude the onetime item, normalized Q3 twenty eighteen margin would have been 46% versus 45% in the prior year. The increase over prior year was due to a positive mix of consumables revenue during the quarter.

For Q4, we estimate that despite a slightly unfavorable mix from the loss of collaboration revenue, gross margin will be in the same range as the normalized 46% recorded in Q3 due to improvements in other areas. This compares to 44% gross margin in Q4 twenty seventeen. We believe we have a significant opportunity for gross margin expansion in the future as we scale our overall business, reduce product costs and continue to drive the mix to more consumables revenue. Operating expenses before stock compensation expense totaled $11,400,000 in Q3 versus $8,400,000 in the prior year. We are attempting to accelerate the growth trajectory of the business by making significant investments in the commercial team and the infrastructure required to support our growth.

The main drivers of the Q3 twenty eighteen increase include increased headcount in sales and marketing plus additions in other key areas of the business, payroll and other costs related to the Auchan transaction, new product development costs and public company costs. We will look to continue to add to our commercial organization and other key areas of the business over the balance of 2018 and into 2019. Stock comp expense, which is a non cash expense was $1,800,000 in Q3 versus $600,000 in the prior year due to additional grants made in 2018. The growth of the business and the employee base has created the need for more space. In early October, we signed a lease for a new corporate headquarters with the approximate commencement date targeted for 04/01/2019.

On a cash basis, there will not be a significant impact in 2019 because we will pay reduced rent for the first eighteen months. However, on a P and L basis, there will be incremental non cash occupancy costs for fiscal twenty nineteen of approximately $2,000,000 since the accounting rules require that we straight line the expense for the total rent payments over the life of the lease. The balance sheet is in good shape as of September 30 with approximately $52,400,000 in cash, of which $1,000,000 is collateral for the letter of credit we issued to the new building owner as a security deposit. There was a final payment of $800,000 related to the Auchan acquisition made in Q3, which was initially held back at the close of the deal. Weighted average shares outstanding for EPS totaled $22,000,000 We project the weighted average shares to be in the range of 22,000,000 to $22,500,000 for full year 2018.

Overall, we are pleased with our Q3 performance and are committed to delivering solid 2018 results in line with expectations. I will now turn it back over to Kevin. Thanks, Joe. Before we take questions,

Speaker 2

just want to summarize on the slide that we do feel we have an unrivaled sensitivity, which we're committed to continue to invest in and continue to expand. We see great opportunities for even the next generation of post translational modifications of proteins that will even be smaller subgroups and smaller abundance levels. So this is an opportunity for us to grab the leadership and continue the leadership. We also are being very methodical in the way we're approaching this market and going after the initial research organizations first where there's no regulatory reimbursement risk and we're doing it very systematically. And we're working carefully to evolve across in the longer term into diagnostics, but we're using drug development as a very strategic way to look for companion diagnostic opportunities to make that advance.

And finally, and most importantly for market, we're validating our technology with 23 of the top 25 pharmas now using it, utilizing Powering Precision Health Summit as a way to sponsor from a Quanterix standpoint, those actual innovators that are using the technologies with the investment groups that are investing in it. And all of the trials that have been run over 800 of them and the publications are now nearly 300, given a strong validation that we have a technology that's got a lot of stickiness in this marketplace. It's also got a very strong razor blade or KK cup type of opportunity here because of the pull through of the consumables. And we've made a lot of investments that we think create a lot of barriers to entry to kind of perfecting the democratization of this technology through around the world. And we're continuing to work hard bringing in some of the top leaders around the world to support an incredible board, some of the strongest investors and one of the some of the more prolific founders in the life science landscape.

And so in closing, I would say that the Quanterix team, we just had our commercial meetings this past week. We had all of our people in from around the world. We are very forward looking around the opportunity and we're very aligned. But most importantly, we're very inspired on the impact we can make for the world, not just in neurological disorders, but also in oncology. So we're very driven by the opportunity ahead of us.

So with that, we'll open it up for questions.

Speaker 0

Thank And our first question comes from the line of Puneet Souda of Leerink Partners. Your line is now open.

Speaker 3

Yes. Hi, Kevin and Joe. Thanks for taking the question. First of all, just wanted to clarify in terms of the product, service and collaboration revenue. The collaboration revenue seemed outsized this quarter.

Just wanted to clarify that won't be the case going forward. If I look at that, the beat was maybe $500,000 and I just wanted to clarify that point. Then if Kevin, if you could provide any backlog numbers for SRX or HD-1s from this quarter, that'd be helpful.

Speaker 2

Yes. So Puneet, I think you hit the numbers right regarding the one time effect to remove it, then there was a beat of about 500,000 maybe a little higher than that, when you remove that. But in addition to that, your question around backlog, we don't disclose backlog as you know Puneet, but I would say that the place that we probably have the most potential to manage with a lot of backlog visibility would be in our services business. When we get instrument orders as well as consumer orders, especially with the kind of insatiable demand there is for getting some of these neurodegenerative markers and drugs approved, we really don't have as much opportunity to really drive backlog in those categories without impacting the timelines of our customers. So we do have backlog in those categories, but I would say the services where we can really see the biggest backlog levels.

Speaker 3

Okay. And then just on terms of BioMaruda, just wanted to understand longer term, what does that do for you? And I just wanted to get a better view of what you could not do before and what you're able to do now going forward? And then my second question is just around the planar technology. Is that in terms of expansion of a market, like how are you thinking about that?

Just if you could provide details on both of those answers.

Speaker 2

Absolutely. First on the BioMarieux, basically the company probably six years ago, seven years ago entered into an exclusive relationship for IVD diagnostics, which includes LDT and point of care, all aspects. And so basically BioMarieux had a lot of the commercialization rights for the technology. And that limited our ability to get to market, particularly when you consider that their company is primarily infectious disease with some immunology. We're doing a lot of work in neurology and oncology.

And so the fit wasn't perfect. And so we felt that it was important to get our strategic degrees of freedom. So there's nothing at this point limiting any pathway into diagnostics, which that had hampered us. And so even with LDTs, we've got 22 to 24, Samoas now in CROLDT companies. These would be large reference labs, etcetera, that would like to utilize and further evolve the technologies.

It gives us a lot more freedom now to sign licensing agreements with them. Also gives us the freedom ourselves to run these trials into be limitless as it relates to running LDTs as well as even someday IVDs. So it's more strategic degrees of freedom at this point as a key to the future value creation that a lot of investors felt was a major headwind when I joined four years ago and we were fairly committed to finding ways to unleash and unlock some of that value creation opportunity. The TAM for diagnostics is about 10 times the size of the TAM for research and that's why it's important. It's more like $30,000,000,000 for diagnostics and probably there's some estimates could be as high as $50,000,000,000 versus maybe 3,000,000,000 to 5,000,000,000 to maybe 8,000,000,000 at max for research markets.

And so that's the criticality for being able to have that strategic freedom. Now moving into oncology versus neurology, we think neurology has been an incredible place for us to show our value. But with the amazing size of the oncology market, which we estimate to be three to five times the size of neurology and the number of cancer drugs that are attempting to get to market. And with all these new immunotherapies that you really do want to look at these cytokines and you want to understand whether the drug is creating a cytokine storm or is it actually having the proper effect. And given that many of these drugs only have 20% response levels, it's an incredibly ripe area for ultra sensitive digital biomarkers.

The challenge is that you need to do multiplexing to be successful in that segment. And so we were investing heavily in planar technology to enable what we would consider to be 10 plex plus. It's an important way to do research and ultimately diagnostics, we think in oncology. And so buying Aushon in January allowed us to further accelerate those developments and bring a lot of the sensitivity to that multiplexing. And that's a lot of what we've made the advance.

And so now we'll be entering into the oncology field with a much more robust offering. So that field is three to five times the size of neurology. And we think with sensitivity, it's actually as suited as neurology for our sensitivity. So we're pretty excited about the promise of bringing out a very simple platform into that landscape, which we project we'll do in the 2019 assuming that our test bed, which we're just starting and we committed to have by year end continues to evolve. And I think I showed in the last webinar, we had three customers that are already deploying this planar technology with us in a very productive way with incredible pull through with really good economics.

So we're pretty excited about the possibilities there. Still there, Puneet? Uh-oh, did we lose everybody?

Speaker 0

No. I'll go ahead and clear him out. I believe he's done asking his question.

Speaker 2

Okay, great.

Speaker 0

Our next question comes from the line of Mark Massaro of Canaccord Genuity. Your line is now open.

Speaker 4

Hey, guys. Thanks for taking the questions and nice quarter.

Speaker 1

Thanks, Mark.

Speaker 4

I guess my first question is, can you give us a sense I appreciate all the color on the SP X development. But can you give us a little bit of context as to the collaboration with Oncogenesis? Maybe give us a sense for how far away the IPAP collection kit might be from potentially hitting the market?

Speaker 2

Yes. Mark, I would say that we've tried to stay steadfast and not making any commitments around our diagnostic franchise, but we said that we would continue to make smart investments into that landscape to try to bridge across into diagnostics. But there's plenty of value creation in the landscape of no regulatory or reimbursement risk research. So let me start the answer by saying that we remain committed to that. But the oncogenesis represents an opportunity for us to look at cervical cancer in a very new way using biomarkers and to do that with a company that's got some level of extraction FDA approval already established.

And basically, it's given us a chance to see if our technologies can be deployed productively in that landscape. They're primarily focused on third world opportunities for cervical cancer. And so it's a place for us to learn because what they really want to do is get FDA regulatory understanding of the technology as well as the efficacy for these biomarkers. And so I would not put any emphasis on short term returns from our move with this, but we did want to make sure investors were aware that we were making investments into diagnostics. It's a very minor investment at this point, trying to do it through partnership.

Speaker 4

Great. And your pull through on the HT1 is certainly tracking ahead of expectations now at $60,000 per box per year. Can you give us a sense, as we think about our model, should we be thinking of potentially a, I don't know, 10,000 lift per year? Just how should we be thinking about the opportunity long term? And do you have any particular goal as we look out?

Speaker 2

So Mark, as you know, we've tried we're trying very hard to protect our credibility for never misleading or creating expectations that can't be achieved. And what we said was we would go from the 40,000,000 to $50,000,000 this year and basically we've outperformed that. We don't at this point project that there's a significant increase beyond this 50,000,000 that we're willing to make any levels of commitment to even though we are currently performing at a level much higher than that. And I would say that we have several customers and installations that are probably tracking two to three times that. So we do know that our instruments, the HD-1s are capable to pull through as much as a couple of 100,000 per instrument.

But how far we go really depends on the mix of the buyers and the way they're utilizing it. So what we're always trying to come up with is a way to say on average and now that we're accelerating our installed base of the HD-1s and the SR Xs, we want to make sure that we don't get ahead of ourselves in any kind of growth projections that we can't hit or exceed. So 50 feels very, very comfortable now. We would never at this point suggest going anything beyond that. We do think, however, that there's promise and it's definitely ahead of schedule.

So I would keep it where it is, but understand that the risk profile now is pretty much gone way down as a result of our performance. And the menu expansion, it's a combination of customers getting used to the technology plus us having more menu that they're interested in.

Speaker 4

Great. And I know that you acquired a number of assays, I believe, the Auchan acquisition. Can you give us a sense on how many of those you expect to kind of go live and maybe start contributing to revenue into 2019?

Speaker 2

Yes. It's an interesting question because we bought a lot of assays and we also built a whole new organization under Dawn Mattoon, who is this amazing woman that joined us about nine months ago running a lot of our, we call it our strategic marketing, but also our assay technologies. And she came from cell signaling where she has a lot of antibody research experience, led their research organizations. And so the whole area of continuing to expand our menu required us to validate what we bought first and to really take a strong look at all the antibody pairs that was being used by Auchan in the different ways in which they were using it. And I can only tell you that the speed our company is so fired up right now on so many different fronts that the speed of everything we're doing is more like dog years versus people years.

And I can say that we've already found probably 23 to 25 assays that customers are already using very productively as part of our test bed. So that is a real exciting first move that we could disclose today. Moving forward, I would like to think that there's going to be hundreds of combinations of assays opportunities that we're going to be able to roll out as we move into the SP X type of planar technology, because it has given us this breadth of menu, which we've really not had before. And that we think is exciting, particularly for oncology where cancer cells mutate and a certain drug might work for a while, but then the cancer patient goes out of remission and the cancer returns because it mutates around the drug. And so we really know that the field of cancer requires a very broad suite of biomarkers to really knock it down.

And we're committed to knock it down and that means we got to be really strong with planar. And so when we roll out SPX4 oncology, it's really rolling out our planar strategy for oncology.

Speaker 4

Great. And if I can sneak one last one. It seems to me that Simoa could have some interesting applications in point of care in vitro diagnostics. Can you give us a sense for maybe the appetite or maybe some of momentum you might be having as you think about incorporating Simoa to the point of care?

Speaker 2

Yes, it is interesting that when I first joined Quanterix, anyone I talked to about point of care, particularly from an investor standpoint, became very alarmed because there hasn't been a lot of point of care success. But I would say that Abbott has been particularly successful with iStat in building a franchise and we've continued to nurture a very strong relationship with Abbott and believe in them very much. Now, would we use partnerships to get into point of care versus going it alone? My view is that we would probably put a lot of emphasis on making sure we research out those partnership opportunities first, because there's already a lot of ideas where sensitivity, which is the earliest form of the disease, the earliest form of anything that happens can see it earlier with sensitivity that's best suited to be out by the patient. So at the highest level, we know that getting the sensitivity in a point of care setting makes a lot of sense and there have been a lot of attempts to do it.

I think it's important for us to do it very credibly. So I think there is a lot of opportunity for point of care to democratize sensitivity further. Even if you look in the neuro landscape around concussions, we have a lot of players today that they get pulled out of a game or even soccer players that they think they've got a concussion, but they're not sure. And so there's a lot of protocols been implemented. There were six kids actually killed on the football fields last year, high school level that were put back in the game because they thought that they didn't actually experience experienced it, they had what's called second impact syndrome and they died on the field.

So we know that a point of care device for concussions, as an example, could have a lot of promise. But that promise is not what we're about with investors. We want to make sure we systematically translate that market opportunity into some kind of methodical way to bring the right risk investment return profile to that opportunity. And partnerships could be a way to accelerate a good path. So I would say we're not ruling out any kind of pathway.

The getting the rights back have given us freedom to go any path we want. But I would say we do think partnerships can play a pretty important role here.

Speaker 4

Great. That's it for me. Thanks guys.

Speaker 2

Thanks Mark.

Speaker 0

I'm showing no further questions at this time. I would now like to turn the call back to Kevin Ursovsky for closing remarks.

Speaker 2

Great. Thank you very much. We remain very excited about the opportunity and we continue to want to manage it with what we call diligent conservatism. So please, if you want to learn more about our technology and or our company, feel free to look at our website. We also will be sponsoring the PPH over in The Netherlands to kind of further advance the overall proposition of third party peer reviewed science.

And so we do appreciate all your support and look forward to talking to you at the end of Q4. Thank you.

Speaker 0

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a

Speaker 4

great day.