Good day, and thank you for joining us. Welcome to the Quanterix Corporation Q2 2021 Earnings Call. All participants are currently in listen-only mode. After the speakers' presentations, there will be a question-and-answer session. I would now like to turn the conference over to your speaker today, Mike Doyle, CFO. Please proceed.

Thanks very much, May. Good afternoon everyone, and thanks for joining us today. With me on today's call is Kevin Hrusovsky, 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 not presented in accordance with US Generally Accepted Accounting Principles, or 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 with 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 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 welcome aboard. It’s Mike’s first call with us, and we’re excited to have Mike Doyle as our new CFO. Today, we’re going to cover three main agenda items: the significant advancements we made in Q2 and the first half of this year that are driving our growth, as well as the introduction of a new category we’re calling diagnostic therapeutics for neuro. Mike will then walk us through the financial results, after which I will outline our objectives and open the floor for questions. Let’s start on slide 4 with some media coverage you may have seen. This has been a part of our Powering Precision Health ecosystem for several years, focusing on blood-based biomarkers that are rapidly becoming the gold standard alternatives to traditional tau and Abeta PET imaging. We're transforming drug discovery in neurology by shifting from spinal taps and imaging to blood tests, which is a key area we are prioritizing and where we are making substantial progress. Additionally, we learned that Lilly has released new analyses on their candidate donanemab, highlighting how biomarkers have gained traction among competing firms since the FDA approved Biogen and Eisai’s Alzheimer’s treatment. Mike, could you share more details on this and other opportunities? Now turning to slide 5, we have some important updates. We achieved record growth and adoption, particularly in the plasma biomarker area. We were thrilled to see a new therapy approved for Alzheimer’s disease. Our pTau-181 and NeuroPlex products also saw strong growth, serving as significant catalysts for us. Notably, Lilly presented at the AAIC that Simoa plasma pTau-217 correlates well with donanemab efficacy. Our Nf-L biomarker is being recognized for its potential to indicate neurodegeneration or concussions, making its significance even more prominent. From a business strategy perspective, payer adoption remains a crucial focus area as it plays a vital role in the approval and reimbursement of drugs. We also utilized some of our technology for COVID-related studies in Anthony Fauci’s labs, examining new drugs and testing for the virus. With ongoing publications linking our Nf-L biomarker to symptoms faced by long COVID patients, there’s a growing concern about potential connections between COVID and early Alzheimer's, which is further enhancing interest in those areas. We saw around 50% of our HD fleet dedicated to sales movements primarily linked to Alzheimer's, alongside the revitalized landscape of Alzheimer's trials. As mentioned, Mike has joined us, and we also welcomed Masoud Toloue from PerkinElmer to lead our Quanterix diagnostics division. We currently maintain nearly $0.5 billion in cash after raising funds successfully in the past year. We have seen significant advancements in Nf-L and record publications regarding our biomarkers and innovative technologies. We’ve brought on Will Geist to help scale our company in line with the increased demand we’ve been experiencing, and his recruitment of top talent has been successful. Despite some stock-outs due to this unforeseen enthusiasm in Alzheimer's, we are optimistic about the future opportunities this presents. Expanding our laboratory capacity, led by Masoud, is part of our strategy, and we are working towards achieving a 100-fold increase in sensitivity to detect diseases sooner using non-invasive samples. On slide 6, we reported a robust Q2 with non-GAAP growth of 86% and GAAP growth at 93%. With a slight revenue adjustment from a one-time event involving NIH COVID solutions, we have a growth trajectory of 30-40% from our 2019 base. We see strength particularly in instruments and consumables, with expectations for higher growth in consumables than historically, especially with many customers acquiring new HD-Xs for pharmaceutical trials. Slide 8 illustrates our evolving position in Europe and Asia, with a growing balance between academia and pharma. Neurology is now at the forefront of our focus, representing 80% of our efforts and with consumables making up nearly half of our revenue. Slide 9 emphasizes the increasing volume of peer-reviewed publications validating our biomarkers, now close to 1,400, and the deployment of 621 instruments worldwide. We have run over 1,000 Phase 1, 2, and 3 trials, marking the fastest adoption cycle we’ve witnessed in pharma and biotech over five years. Our approach allows for the non-invasive detection of disease, setting a transformative standard in the industry. In summary, we believe our efforts in research and development, particularly surrounding phosphorylated taus and neuroplexes, are crucial for our growth. By launching therapies before symptoms emerge, we’re providing unprecedented value for patient outcomes. With the revitalization of the Alzheimer landscape following COVID's impacts and the approval of novel therapies, we see significant potential ahead. We continue to build infrastructure and attract top talent, enhancing our capabilities in diagnostics and expanding our Accelerator footprint, while moving forward with our long-term vision of integrating diagnostics and therapies. Lastly, I’d like to highlight the advancements surrounding Nf-L and the compelling data supporting its use as a key biomarker in neurodegenerative diseases. With increasing interest and evidence linking our biomarkers to various conditions, we aim to establish a leading position in the neurodegeneration space. Now, let’s move on to Mike for a financial summary, after which I’ll outline our strategic objectives.

That's great. Thanks very much, Kevin. I'm going to provide some additional financial details about our second quarter 2021 performance, and for your reference, I'll be referring to Slide 28. As Kevin noted, GAAP revenue in the second quarter of 2021 was $25.4 million and included $900,000 of revenue from our RADx awards. Excluding this non-recurring item, our non-GAAP second quarter 2021 revenue was $24.4 million an 86% increase versus the prior year. We had record product revenue in the second quarter of 2021 with $18.7 million in revenue, an increase of 175% versus prior year. Within product revenue, consumables revenue grew 219% in the second quarter of 2021, compared to the second quarter of prior year to a record $12.8 million, driven by extraordinary demand for pTau-181 and neuro multiplex assays. Like the first quarter, our revenue performance for the second quarter may include some recovery of previously deferred demand due to the pandemic as customers return to more normal operations. Service revenue decreased 11% in the second quarter to $5.6 million and was somewhat limited as compared to the second quarter of 2020, due to customer labs opening back up from COVID-related shutdowns, resources and supply diverted to support our strong consumable demand. Year-to-date, total revenues were $52.6 million. Excluding revenue from our non-recurring RADx awards, non-GAAP year-to-date total revenues are $49.3 million, a 71% increase from year-to-date 2020. On a GAAP basis, our second quarter gross margin was 54.7% and was favorably impacted by RADx grant revenue versus the prior year gross margin of 39.7%. Our non-GAAP gross margin was 55.1% in the second quarter, which is an approximate 1100 basis point improvement, compared to 44.1% in the same quarter of 2020. Non-GAAP gross margin was 56.8% for the year-to-date period 2021, an approximate 1000 basis point improvement from the same period in 2020. Our non-GAAP gross margin excludes the impact of our RADx awards, as well as non-cash acquisition-related purchase accounting adjustments relating to our 2019 acquisition of Uman, thus providing investors with 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 $27.5 million in the second quarter of 2021. Non-GAAP operating expenses, which primarily exclude non-recurring expenses associated with RADx grant revenue, totaled $26.4 million for the second quarter of 2021. During the second quarter of 2021, our cash balance decreased by $11.9 million, driven by our scaling efforts. And the unrestricted cash balance was $430.8 million, as of June 30, 2021. Basic weighted average shares outstanding for EPS totaled 36.3 million for the second quarter of 2021. Overall, we're pleased with our second quarter 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 curious 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 that looks – continues 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 Kyle Mikson of Canaccord Genuity. Please go ahead.

Great, thanks. Hi everyone. Thanks 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 a number of proteomics research projects accelerating faster than the projects based on genomics and nucleic acids? Thank you.

In previous calls, I have presented slides that illustrate the development of DNA and RNA in our pipeline compared to proteomics. We've shown that if a protein with good clinical validity is identified, its value can significantly increase. Additionally, we indicated that only about 5% of the proteome has been discovered. Therefore, there are two factors at work here. One is the rapidly increasing value of specific proteins as we improve our ability to detect them in blood, which traditionally required imaging or spinal taps. The second is the substantial long-term opportunity to discover the remaining 95% of proteins that are more connected to disease processes and phenotypes. We believe both paths present significant opportunity. While protein research has historically led the market, moving onto DNA and RNA excited some interest, the priority is now identifying the actual proteins involved in disease rather than solely understanding predispositions that might not lead to disease. This is why we believe that protein research is the future. Over the years, we've focused on the proteomics landscape, investing where we see the greatest value. We estimate that 90% of the total addressable market will emerge once we integrate protein utility into diagnostics. Therefore, engaging in drug development with our pharmaceutical partners and enhancing the value of protein solutions to detect diseases earlier is likely to yield the most significant value creation over time. We are enthusiastic about the ongoing discovery work regarding proteins and aim to ensure that when we identify a protein of interest, we effectively translate its utility into the diagnostic landscape in collaboration with pharma, where diagnostics and therapy can be combined.

Okay. Perfect. That was fantastic Kevin. Thanks a lot. I also was wondering about obviously the COVID testing opportunity I guess. And 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 the antibodies, losing their anti-pathogenic properties or maybe fixating, maybe you thought that would give you an uptick in demand 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 phasing in the second half of the year?

Yes. We strongly believe in serology and recognize that individuals have unique responses to COVID and the vaccine, which can sometimes lead to different side effects. We see significant potential in serology testing for each person. Although we have invested in this area to meet national needs and believe we can measure various antibody aspects, we do not view it as our top business priority. We are working to expand our capabilities and expect to generate some revenue in the second half of the year. However, we do not anticipate explosive growth, as we want to focus on the Alzheimer field, which we expect to see substantial growth. We prefer to engage with COVID research that has lasting relevance beyond the current epidemic, as additional COVID variants are likely to emerge. For instance, our technology is being used in laboratories associated with Anthony Fauci to study how treatments are effective for both acute patients and long-haulers. We believe these represent key opportunities, including our work on cytokines. A major webinar is planned in the coming weeks to highlight how our cytokines can contribute to assessing long-hauler patients and managing acute cases. We think that research may be overlooked due to the current focus on generating immediate revenue from COVID, but we are committed to a long-term perspective and feel optimistic about future opportunities in infectious diseases.

If I could just ask one more question. It's great to see that consumables have performed well recently. I was curious if utilization increased throughout the quarter and perhaps reached a high rate in June or July, indicating that customers are operating their projects at full scale or even beyond.

Thank you for your questions, Kyle. They were all insightful, and I appreciate it. The utilization of consumables has exceeded our initial estimates significantly. Three to four years ago, we anticipated that 33% of our equipment revenue would come from consumables, but we are now seeing over 50% of our total installed base revenue coming from consumables annually. We have certainly improved utilization, and we expect to continue doing so. As we engage in larger trials, it is possible for a single account to achieve over 100% utilization on some instruments, and in the contract research organization landscape, this could even reach 150% to 200%.

Great. Okay. Thanks very much.

Sure.

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 expand 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?

Congratulations, Max, on your new position. I'm truly excited for you. Over the years, you've proven to be one of the most impressive analysts, and I'm looking forward to your new opportunity. You've gained a deep understanding of our company, and as we mentioned in a slide about a year ago, if an Alzheimer's drug gets approved, it will truly be a tipping point. We didn't expect this to happen in 2021; we believed it would likely be in 2022, at the earliest. The reason this is significant is that it creates a positive ripple effect for all customers who have hopes and commendable agents aimed at combating Alzheimer's. We've learned that identifying disease pathology before symptoms emerge provides a substantial opportunity that wasn't available before. This means that drugs previously deemed unsuccessful might now be salvageable. We are witnessing the beginning of a drug rescue situation, alongside new drugs targeting unique biomarkers. Utilizing a non-invasive, high-throughput, low-cost biomarker design allows us to tailor our programs more effectively. We anticipate excitement in recruitment through these biomarkers, optimizing cohorts for better chances of approval in two ways: firstly, by addressing the disease earlier when it’s more amenable to treatment, and secondly, by stratifying cohorts to differentiate between confusing types of pathology that historically were lumped together due to the absence of biomarkers. For instance, our pTau-181 shows that Lewy body dementia and frontotemporal dementia, although included in Alzheimer’s cohorts, are not suitable for Alzheimer’s treatments. By acquiring a more precise Alzheimer cohort and targeting it earlier, we introduce disruption. This disruption in research translates into the approval process and commercialization of drugs, ensuring that payers view coverage positively and contribute to improved outcomes with lower investments. We believe this emerging diagnostic opportunity in research will transition to clinical applications. Our technologies can aid pharmaceutical companies in achieving reimbursement using cost-effective means for monitoring diseases and screening individuals for drugs. The progress we make with payers is likely to generate further excitement on the research side concerning other biomarkers. We see a positive ripple effect on both research and diagnostics in neurology, and we are observing supporting evidence. Initially, we projected that at most, 60% of our new HD-Xs would be new placements with 40% being trade-ins. However, as enthusiasm has surged, many customers are requesting new HD-Xs, often unable to take their HD-1 offline due to the need for capacity. This has changed the proportion of our HD-X sales, which currently stand about 70% as new sales rather than trade-ins. Originally, we anticipated this would be around 60%. This shift is evidence of growing demand, further highlighted by stock-outs of recently launched biomarkers as customers pivot their priorities towards unexpected drug trials. Overall, this situation is positively influencing our five-year compound annual growth rate projection for research products, moving it closer to our goal of derisking by 30% to 40% since 2019.

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 tests can become the standard for neuro-focused drugs?

I believe that whenever I observe payers, they tend to be quite conservative, especially in a medical industry largely led by doctors. At our Powering Precision Health conferences, we are discovering how next-generation technologies can disrupt conventional practices, including both diagnosis and prescribing by doctors. I am beginning to notice increasing evidence that payers will likely be the driving force behind implementing coverage with evidence, meaning they are willing to cover but require proof of performance. The fact that UnitedHealth Group is purchasing their first HD-X this year suggests we're making strides with payers, promoting the idea that our biomarkers can help detect diseases earlier when they are more treatable. Additionally, they allow for monitoring the effectiveness of therapies. We believe this combination is something payers should embrace, and we are working to educate them on the potential benefits of early detection using proteins and understanding how these proteins react to therapy. If a therapy isn't effective, we can quickly switch patients to alternatives. Multiple sclerosis is a prime example, with 16 or 17 approved drugs generating $16 billion. Currently, using MRI, it takes two years to determine if a patient is on the right drug. However, emerging evidence shows that a blood test can reveal within months whether the Nf-L level is decreasing. If it's not, we can promptly adjust the treatment. This quicker cycle time for getting patients on the right drug is expected to yield far better outcomes in a more efficient manner for payers. Ultimately, we believe payers will play a significant role in transforming the traditional healthcare landscape.

Great. Thanks for taking the questions. Congrats on the continued momentum.

Thank you, Max.

Hey, Kevin and Mike. Thanks for taking my questions. Appreciate it.

Absolutely, Matt. How are you doing?

Doing well. I wanted to start on the 100x sensitivity pilot. It looks like it was a success, so congratulations on that. In one of your last slides, you discussed the potential pathway for that. Can you help us understand the potential timeline and pathway for getting that to commercial, considering the advantage it would have in the market and your current status on that?

We've initiated a pilot program using our SR-X technology. This pilot, which is still in the alpha stage, is being conducted with a leading key opinion leader in Sweden who played a significant role in developing our biomarker for Nf-L and has been influential in our work on phosphorylated tau-181. His initial observations have been very promising. We're discovering that each antibody pair for different proteins responds uniquely when we use magnetic methods to enhance the loading of our arrays. By employing magnets to attract the magnetic beads that carry the antibodies and bind to the proteins, we are increasing the density of these beads, and each assay shows varied results. Some assays are exceeding 100x sensitivity, while others are achieving around 100x or less. We are now focused on understanding which antibody technologies are yielding improvements and identifying the reasons behind these differences. It's important to note that achieving 100x innovation across all assays involves challenges in both instrumentation and assay development. We've onboarded Will Geist and Masoud, and Dawn Mattoon, who previously led R&D and product development at one of the top antibody companies, Cell Signaling, is also part of our team. With this expertise in tandem with our advancements in instrumentation, we believe we'll have the capability to innovate effectively. We previously mentioned that by the end of 2022, we expect the concepts we're currently developing to be transformed into actual instruments, and I still feel that timeline is feasible. We are seeing strong interest from pharmaceutical companies wanting to implement the 100x capabilities for specific markers due to the surge in diagnostic therapeutics that combine treatment with early intervention. This could facilitate the deployment of the 100x in our Accelerator lab as we pursue larger partnerships for biomarker research. Several pharmaceutical companies are expressing interest in negotiating larger Accelerator deals, potentially accelerating access to 100x capabilities from an alpha perspective, as they aim to advance biomarkers for key therapies seeking approval. Looking ahead, I anticipate that the earliest global product launch will be at the end of 2022, with potential deployment in our Accelerator lab possibly occurring later this year, depending on the progression of specific biomarkers.

Got it. That's really helpful, Kevin, and actually leads to my second question about the Accelerator. There's a noticeable impact from people transitioning in a post-COVID environment to their own instrumentation and consumables. As the consumables grow, it's a great high-margin business. However, the Accelerator is a very effective service for clients during or after COVID. You mentioned that some are potentially using it for the 100x at some point. How are you considering investing in the Accelerator? Clearly, you're allocating Masoud's time to it, but how do you view it as a priority for Quanterix moving forward?

We recently held a Board meeting and I'm proud to have a great team. We've added Laurie Olson, who has extensive experience in strategy from her time at Pfizer. Our talented Board members recognize the significant potential in the Accelerator. By bringing Masoud onboard, we aimed to incorporate insights from the diagnostic industry into the Accelerator. Companies like Exact Sciences, Guardant, Natera, and Foundation Medicine have successfully used LDT labs to quickly enter the diagnostic market, often evolving into national coverage with single-site LDTs. Given the advances due to COVID, we see the potential to conduct COVID tests within an LDT framework before the year ends, thanks to Masoud and his team. He has already brought on several key individuals to help us enhance our capabilities in conducting Phase II/III trials and progressing into diagnostics. Each trial we run prompts interest in our instruments, as clients are eager to see the data and experience our biomarker innovations firsthand, leading to sales in instruments and consumables. We are investing heavily in this area, with the benefits expected to become evident in 2022. Last year, we saw nearly 100% growth in the Accelerator due to special events, and we believe we can sustain that this year, primarily through consumables and instruments. By the fourth quarter, we anticipate the Accelerator will begin to see renewed growth. It's important to note that while Masoud is a leader in this effort, it's truly the entire team that has excelled during the COVID crisis, consistently working to assist our community and the world. Now we are focused on advancing neuro trials quickly and potentially expanding into regional LDTs. I am confident that this remains a top priority for us.

Great. Thanks, Kevin. Thanks, Mike that’s really helpful. Appreciate it.

Our pleasure.

There are no further questions at this time. I will now turn the call over to Kevin Hrusovsky, for closing remarks.

Thank you very much. Hey Mike's literally been with us for two weeks and Masoud has been with us for two 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 at any time in my career I'm surrounded by the quality people that have a chance to truly impact the world in bringing Alzheimer diagnostics into the world with therapies. And so this is a big moment, I think for the world and for the United States not only because of COVID but because of the research going on in neurology. So I want to thank the investors who taught us so much over the last five seven 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.

This concludes today's conference call. Thank you for participating. You may now disconnect.