TTOO - Earnings call transcript Q2 2019

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Operator

Greetings and welcome to the T2 Biosystems' 2019 Second Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to our host Matt Clawson of W2O Group. begin. may you you, Thank

Matt Clawson

Thank you, us financial Thanks joining afternoon conference and the TX good for XXXX everyone. Biosystems' call. for Diego second results quarter

the results On and President McDonough; Officer, operational discuss call Financial John June the Chief Sprague. the highlights XXXX to CEO, of John quarter and are ended XXth and

prepared a We are Vice Tom open of period. Affairs. Medical by call President team the Scientific will by Chief also Lowery, joined remarks with some The question-and-answer today Estrada Officer; followed executive Sandy

I'd statements. made and answers developing results like Biosystems' by management to questions operating remind everyone for to comments statements marketing TX today new will Those to and plans and include related products. financial forward-looking future and include

today cause March the obligation subject that uncertainties Biosystems' to Annual Report implied SEC risks Forward-looking by and except uncertainties no described to risks required The undertakes on or on results by and with company the TX are makes those statements the on those as from Form and with are law. based expressed may to and as time-to-time. the in materially publicly XX-K estimates differ from and including or statements SEC filings of company other any XXth, statements forward-looking revise filed update XXXX assumptions

I'd that, call over McDonough. to turn with like And the John to President and John? CEO,

John McDonough

second that began of expectation outlook strong first the thank or during momentum joining be as us building TXBacteria And following the test of we continues are for above terms results, everyone are our you and Thank that for half you, utilization. Good tracking TXCandida TXBacteria and year the and pleased in afternoon Matt. we discuss market. patients XXXX. in interest customers progress, at new testing to quarter There in of the the

this, TXBacteria. position several and execute adoption TX build strong of drive To today a growth to updates our we announced put in to on strategy on

two level. subject at into to and to at provide company volume. with have of us pleased capital that flexibility provide us timing access are agreements report to financing First, certain the selling market agreements possibility These we option the limitations capital entered the of of on to shares are we up million access with to that $XX

these With markets be of agreements. plan the the limitations, these vehicles the allow certain solely including accessing to at through capital to and raised opportunistic capital company in option be we

financing We will to remain potential perspective through both sources open development business additional traditional from of other capital opportunities. a and

to quarterly strategy have fourth $X initiated the quarter Second, reducing plan up cash reduce to efforts and behind expected potentially without by program. our to a commercial we less burn get year of cash this by XX% to or than quarter burn the our scope per million

TXBacteria and XX worked TXCandida business, achieved new terms $X.X In of contracts continued to customers delivered product quarter, second evaluation new revenue the of and with secure we Combined growth second contracts. million through steady with the processes. validation and new we from our quarter

group. In customers patients live accounts expected. we the new than less testing Most from June, importantly, TXBacteria contract grew we growth as XX% revenue went from U.S. over of in was in QX saw pace testing and the new slightly live from

instead and of customers markets the expected, and months six the six proving United the complete tracking to be to was in than In takes of addition to States to longer validation months. also average three nine it time international period to evaluation an

year. half of and contract for the the are slower Together revenue slower our these factors; impacting new second ramp-up periods outlook adds

XXXX revenue will into delay addition closing to a shift expected year of In anticipated portion we that contract, an from due in XXXX. now of research the a anticipate the this

we pushed back deliver our is on only changed but months. If unchanged signed in the activities, agreed-upon will full still year. having being to that to revenue, roll timing is has over contracted confidence it receive news next our agreement we been will good four The the this three

to the open In market continue technology on partnership of addition to grow further expand applications and we new other our opportunities. could work potentially revenue research opportunities that

continue TXBacteria products excitement that patients see patient that at and by experience sales also those More confidence are risk strong importantly, the and opportunity interest to and by we who a have and growing. our This TXBacteria hospitals remains realized being is sepsis. impact to long-term evidenced test in for live us gives using is the dynamic funnel and

In the to evolve wins the XXXX first dynamics, light drivers sales the and of focus on of more analysis continue contract we to market of progress customer our on key further these of half our strategy rapid based utilization.

activity provide validation process. seeing now where our the sales slower we and is a and sales forward are new in lab, on saw contracts driving go- systems detail coming situations will that strategy. field some is pace online feedback hospital measured and and the with In our a we of primarily the I interaction

sell pharmacy the in is different stewardship situations directly and is selling onto into process. this on a lab. members in are the disease interaction earlier While are process committee of a of faster placing hospital committees, specialist in where honing on and sales our team's specialist and infectious inclusive we reaching pharmacy we stewardship and the this skills infectious Accordingly, seeing than the group, capabilities the focus disease the the to greater which

the new in working President XX drive who's In Scott experience, to April, over hospitals building process. of sales, antibiotic teams, has Isacksen, sales, helping including experience into Vice space. we of this brought significant Scott selling years healthcare and U.S. on in a the

and have well has process evolve background serve and hospital as as impact the can the committees a We extent. are we can for members he lesser disease our on products as that stewardship advocate sales TX in sales the strategy as and sold more believe as educate who lab, infectious lab needed. on specialists, place pharmacy our focused focus and appreciate the and Importantly, be an will his to of helpful, although, the experience same to we

Scott, organization. In also a addition integrated and focused program added on national large accounts the we group delivery network to purchasing

helping on validation and focused existing in customers as utilization accounts as the and Our is fast possible. accelerating through refined also evaluation process move strategy

The adding is accounts period three process in more initially to time test their beyond a line though and seen which fine-tune on our are on six-month extending they expected, completed to had as the with patients we products. mini-evaluation the for this process have previously phase, will they as order algorithm

period we is through major replacing can important up supporting process, therefore a confidence the been clinical on similar startup once focus because that see the go live, gives and customers new specialists. by opportunity, the them us Shortening ramp, other our results which encouraged accounts we've an driven commercial with by

contracts have from our is more can well, and this of with though customers, United we international will similar time as we terms performing implementation we drive of utilization Outside help to trends running, patients. and utilization As live new other testing business are in share the data seeing States, and new customers up frames of experiences. extended

is high in their distribution are excited the our Interest and partners respective by very territories. market opportunities

five first Saudi distribution half Estonia, Africa. agreements covering and Greece, new Arabia of markets: During international XXXX, South entered Ireland, we into the

this expanding in and now plans are continue XX to year. countries We have

in will portion expanded deliver together, of international fourth mode. new XX opportunity greater each Taken into the us XXXX, in a customers to while allow States our quarters TXBacteria new and we United of least to and moving believe also full market at contracts third strategy commercial of the XX U.S.

to $XX to For believe million if ramp global we context, existing on were generate basis. we able full utilization, base could product our annually in installed $XX we up revenue alone recurring to a million

opportunity annual this grows, base grows installed the with as So it.

said being based TXBacteria. patients excited I realized we're earlier, the clinical on about As benefits and by hospitals

Sandy will over a I update of clinical on for TXBacteria the Vice now Affairs an President our Medical turn perspective. to call Estrada, from

Sandy Estrada

you, first have TX been began half to Through and we I that afternoon. Thank patients to have received of am and that several customers of beginning TXBacteria significant care. we a on see year, patient number the specific a encouraged testing impact excited the John, U.S.-based having reports the scale effort. report to good of first

ER comes a TXBacteria emergency were I A started all to on also hospital was to case in on negative first TXBacteria the vancomycin, was customer highlight and cover suspected and home the nursing effectively want to with antibiotic cultures pneumoniae. ceftazidime institution's other protocol, the The positive department. patient clindamycin. for came from the ordered. for targets. therapy Klebsiella Klebsiella to meropenem pneumoniae and Based blood and changed was pneumonia

patient's declined staph rapidly complete to white days blood nursing to was In transfer being addition, of count and the were therapy. to vancomycin The improved. discontinued patient due seven and home to meropenem cell The clindamycin negative. to aureus the able normal back patient

impacting and antibiotics antimicrobial Without case have they TXBacteria, culture therapy three were blood care, would the ineffective antibiotic not on initial In negative. likely costs the patient receive and remained blood negative, this because remain patient effective culture resistance.

the An treatment. was the and disease patient becoming during in second piperacillin-tazobactam. unresponsive presented suspected ER dialysis The after the emergency the on comes from vancomycin case and hospital was Sepsis department. end-stage also started patient to renal

test blood So the and TXBacteria obtained. were culture

for staph test negative and was for TXBacteria as other And targets. aureus a piperacillin-tazobactam The was positive discontinued. all result

one allows Importantly, immediate the almost de-escalation kidneys. toxic have could for unnecessary this therapy in the of dose the been TXBacteria potentially after that scenario utilization to of

hospital was history and the weakness The improved had of admitted with and tract blood initial the ceftriaxone was coli patient. fever, and patient urine critically E. comes grew discharge. on an urine The the case from and XX-year-old provided and took cultures blood She for cultures IV and female with An hospital third admitted infection urinary a eligible confusion. antibiotics. and

confirm wanted to physician treating that for the culture to However, XX a blood negative wait hours. follow-up was

aware longer of the requested member be patient in the was The so ordered coli and test one TXBacteria. E. patient's the was blood, confirm could the be to enough discharged. safely no hospital TXBacteria not family have Interestingly, did patient's the present of

system run their able to in for was hospital another However, them. TXBacteria

patient able discharged and infections, The E. costs additional as coli be for to hospital-associated well patient, to the resulted preventing a risks negative TXBacteria earlier as such as and confusion the falls. day was test

entering now their to hospital are with discussions We TXDx obtain Instrument. this own

value of demonstrate blood clinical the just three culture-based pathogen of testing limitations were and out These identification rapid and importance the cases method that of TXBacteria, of the treatment. many

use. seeing We are categories of benefit TXBacteria four clinical the of across

TX a negative de-escalation. results premature one, discharge. help that positive earlier Number TX to three, result TX positive discharge the emergency yield therapy. could time TX to avoid faster And that negative in antibiotic number department. and Number that support earlier helps results lead results four, two, patient Number readmission effective

closing are our be cases can week and We clinical website. more every found on

I to Scientific our Tom and Officer Chief for Tom? will turn Lowery, a update. call pipeline now technology the over

Tom Lowery

last medical meetings several showcase Those in us has TXBacteria, studies. patient Sandy. opportunity and certainly participated case call are to Since Thanks, in to continue this fall, such in-booth our at exciting potential May, providing October, TX to TXResistance presentation plan future including early on presentation applications We activity conferences clinical of XXXX in to our cases technology. highlighting TXResistance. as IDWeek the this approach and

At recent drive cases highlighted TXBacteria of customer experiences, patient and new we as meetings, to an adoption. interest and strategy new important our these part

you you our on to videos available not, If encourage view have the presentation I website.

customer presenting of pipeline those new to we now. highlights addition our also use a future data recap potential of highlighted TXBacteria In and and few data technology. product I'll supporting on TXCandida, a

term, the with it growing that quarter. there's two-day available at We presentations hours method to TXResistance third result. TXResistance our panel. time and advantage a XX for by the near culture excitement blood the end plan for a to demonstrated Panel provides up the and baseline Data make research from anticipation take conventional the a compared least In of to use-only

data feedback panel. on and been has increasing is believe and we for demand The this an positive this capability there

remain version test this RUO of end for patients the the by outside for commercial version, we to and allow the addition a year clinical United Mark for of States. on field the launch use track CE In prepare to in with

and we're the enthusiasm Europe other TXResistance. regions of the about world for excited are We in seeing

We on our an juncture have reached development exciting program. TXLyme

of detects CLIA clearly exceeds clinical inside Our methods. the Laboratories, sensitivity which tests than studies current by of available far is TXLyme completed hospital. many clinical now conventional PCR PCR more head-to-head We've that these positives data offered demonstrate TXLyme two the direct-from-blood showing on-the-market

and the showed agreement PCR with tests data that and percent that blood blood infection of other exceeds overall TXLyme clinical two-tier confirmed seroconversion, culture tissue methods. initial biopsy The of CDC-recommended

Additionally, is XXX%. our specificity

asked scope our review study expand include bank with those panel to data, blood to use Based disease. early XXX and rash Lyme frozen pivotal with late-stage include patients. patients have other those FDA intended now EM on an clinical We confirmed EM with and and symptomatic an rash. without probable from a patients of Lyme samples without the our of and early us These disease

proposed a on FDA with the intended working use data are in our approach samples. We preferred analyzing for from a clinical more

application is TXLyme much label extended. will when we our time have study to our a important we result, TXCandida market. be technology clinical prioritize the address will this the Candida if which area auris, But go line if approved hospitals superbug. This of auris. An Candida of the a auris it's recently help can As broader emergent panel, increasingly continued relevant with is of elimination RUO superbug the highly

a and their for this panel. hospitals. monitoring in had in been awareness outbreak of growing using panel recently customer interest We it's in who Europe We our controlling believe indicative and had

samples recently tests. in Outside shows with other biothreat enabling of that can whole new presented future the pre-culture environmental that other panel with unprecedented we TXMR to detect detect blood samples traditional biothreat swab of north health care data biofluids sector, no required sensitivity pathogens and technology pathogens,

the data greater Lastly, equal than new to blood we than more providing pathogen of potential has coverage for presented to or detect stream infections. technology XXX species, TXMR that XX% showing

ability Our markers also threats that all allow to by comprehensive demonstrated provides resistance capabilities detect the diagnostic technology us all borne potentially has antibiotic a identified of could coverage infections. bloodstream These panel for blood the to develop CDC. resistance

upfront to product potential especially culture, the will an of blood next-generation the replace for use have infections. as Our screen

now I'll results. our on call CFO, to John update Sprague over for the financial our an turn

John Sprague

and These on Tom. that an line may you, combined equity of laser-focused then an of today $XX overview new to development Thank the provide opportunities. established a ATM begin guidance. we enable allow with to us Today and second to up key be results announced the possibly of updated launch facility TXBacteria an have of limitations. to financing advancement quarter our and our million raise subject we execution agreements will which I'll us credit the the and review

and and anticipate agreement sold the each law accessing with we under opportunistically judiciously. limitations can to option these shares agreements at capital be Subject under our and

agreements source our financing. agreements option at these rates have our sell these to commercially in Canaccord place market features potential prevailing stock The pleased as up we ATM, a best to of to and the opportunistically Through are We key common of direct leasable additional $XX follow: raise at use to efforts can million.

to equal closing lowest of of line XX of our sell million. $XX at credit raise during the option Pricing consecutive our average business of Through we the days equity at days. market past day stock common is can each shares three to rates price and the the up share

we partner of a of are line XX% Park the of we common is to share. shares total $X.XX purchase Capital our Our draw of choose equal or below Lincoln equity the is to cap obligated at price to the shares subject a to our stock, common outstanding shares if credit, on stock selling when number on

low accessing of which and sales conditions. fees are only subject the each enhancements. agreement of and options enjoy warrants other company strategy sources attractive commitments limitations our Both or to facilities financing structures opportunistically relative on of potential yield common issue straight include with not without to stock shares to by the capital market capital Both based with consistent terms on simple

growing revenues were Second X% second total TXDX of last $X.X TXBacteria second quarter quarter XXXX Product revenues Panel second year's and million, to XXXX Instrument million. $X.X last by quarter $X.X million million product quarter were TXBacteria revenues and year's driven financial TXCandida and higher results, of primarily compared sales Instrument were TXCandida Panel sales. TXDX than Panel, revenues $X.X Panel,

half XXXX. we XX% the in quarter first increased panel up delivered this over of contracts year. the We of pleased TXBacteria first system in new that the ramping are quarter to and report XXXX second are XX sales in and XX of revenue

Research million of Costs year's low and and to revenues to were last quarter. in second $XX.X compared compared contribution last of revenue million $X.X and guidance. expenses year's at excluding the are $XXX,XXX we $XX.X cost second end grant product in quarter were million

second $X.X to the a $X Total decrease to primarily year's last costs of non-cash quarter, compensation and million compared in second and RSUs. million of stock include vesting year's expenses depreciation last performance-based in due quarter

a $XX.X a other to in million million compared were of last $X.X $XX.X year's expense $X.X Net year's loss second last to quarter. income second million quarter. and margins in was compared loss interest of million Operating

Our per second net to in year's $XX.X compared second share to million loss in per shares a share. million XX.X loss Weighted net were was $X.XX outstanding quarter quarter. $XX.X $X.XX last million, of year's average compared million XX.X last

and July based of are XXXX to XXXX following statements outlook, on estimates forward-looking subject uncertainty. XX, reflect the as information

$X.X For be For full XXXX range of million total expect expected guidance the to XXXX, to revenues $X.X the revenue million. full product $X.X follows: year year revising financial $X.X to in and million are we we our million as is the

This for placement, are offset and are our the collaboration. expected with grant growth contingent be year system TXBacteria that range million on million international in to the business. by considers lower-than-previously $X a research continued Research to partially TXCandida customers anticipated and $X.X of online TXBacteria growth possible in revenues full contribution

As to a John later have that is months noted, than we expected anticipated. previously three contract pending close

quarter, to For be expect product range third million. the revenue to of in $X.X we $X.X the million

XXXX, the to to For the placement XX contracts and the year TXDX fourth contracts third close or XX XX in to second and XX half to XX expect in XX of Instrument quarters. we

the consider go three it of live an Historically product you revenue patient have took As to outlined guidelines begin testing. prior mind and that keep six average instruments following new growth, please to in on calls. months we

has today, averaging closer John months. many nine to extended for TXBacteria is time customers the outlined this months As beyond six

the United States nominal which During have instruments occurs period, the once the about hospital typically the company purchased been revenue of XX% the time. this in receives by

list instrument. a instruments XX% of price typically discount $XXX,XXX International distributors per off the at purchase

TXBacteria per TXCandida test $XXX of typically and expect discount sales continuation for panel. about test per receive the $XXX We test distributors for XX% prices Panel per Panel. International average a of the a

is about per tests We estimate TXDX that year. of Instrument X,XXX a single running capable

We of range utilization about $XXX,XXX be Therefore, over expect after instrument to testing run hospitals we went average time. experience ramping of these is in average customers an to X,XXX on terms the with TXBacteria or TXDX TXCandida our during expectations from each ramp first as expect X,XXX half of live test confirmed in This customers are panel of by to to up annual combination and track ramps when testing this the TXBacteria that up revenue the testing patients. in fully generate ahead rate. early

We actions strategy, million under fourth revenue product $X the to our be expect year, million be of to collaboration and this our of to cash take to expectations. rate to quarters per to continue quarter in growth on reduce updated the while $X $X are in expenses expected reducing fourth will research $XX.X line fourth burn quarter. executing the our closing million XXXX on excluding cost million by in third of expenses allow us quarter to to Operating million $XX.X research collaboration which and absent the contingent revenue with

expenses approximately of of RSU Total compensation $X.X stock vesting. Non-cash performance-based million compensation be stock quarter. per by costs include impacted is and timing and depreciation non-cash may the expenses

quarter Our cash million us any or will expect were XXXX, June we take from the additional and XX, our ATM capital equity second $XX.X at which cash equivalents XXXX credit line. without of through

CRG terms complying debt are facility. our currently with We of the

may equity and of XX.X sold option line. million and stock exercises Our credit shares ATM by be under the outstanding average impacted weighted shares

Thank back McDonough John you, for closing remarks. to and

John McDonough

Thank you, John.

briefly appointed excited leadership CEO. CEO working to a that will this our to new founding call, Before second the quarter Biosystems, as process nearly the I role lead transition look results. delighted closing Board to in we with a process XX begin to a serving of our into to with the a TX that and plan move conjunction the we After CEO I will of beyond. been new report and I've Chairman announced and I'm I years address want company. succession to this am new forward ultimately through

created a market to approach technology with a and new new We have diagnostics. fact in whole breakthrough a

was clearance not for possible. told FDA that products XX We three we were have years received ago

team products in and had totally build our have outside the time, privilege just with have seen only is patient begun. the patient of to care United At the that care. United on same We best and States committed utilization worked States I've I have and the benefits management to these the commercial ever a efforts the team

We it as sepsis. the to are relates reshaping of medicine treatment

believed a that reason CEO after least person the the I process And right transition always to the the a this I've for he we company begin working with person to as through this look while transition me CEO be our XX taking growth. comes personal working to the years. onboard. Board that lead I'll is role. And time closely on for to phase find this with after should the she for at next new right for forward transition, or of role and smooth

luminary initiated be sparing succession, from successor a belief responsible a of predict identification markers, just while firm of transition. to is the many TXMR the a one national as of until resistance and ensure countless line for of lives my that the of that samples and have in breakthroughs We identified patient to search time on such will the the CEO for it's my It seminal the seamless in to position and current pathogens time. directly is new onboarded Technology over remain human is I the and difficult plan industry

and establishing It a new as has and been it my pleasure current role market a bring my of Board to to at colleagues all sepsis TX standard forward and I hard goal meetings. all work diagnostics. you look dedication past to of take thank our want Chairman to for pursuing continue seeing play of to upcoming and this conferences rapid mission as I our look and also moment in and Directors. forward their I our to to

up With the call for now will that, open questions. we Operator?

Operator

Donnelly Sachs. comes you. state Thank your with [Operator Goldman question question. Patrick Instructions] first from Our Please

Patrick Donnelly

in maybe just move this this talk and why starting the of sense one went you makes Can the Thanks, terms why the the from avenue decision the us the for is financing. structure into guys. just just best what through most Maybe off company?

John McDonough

Patrick. bet you Yes,

that. So current capital access Obviously, there's now. cash next right why There's year. we our no of to of for couple through us takes reason reasons need QX a

at two that option Although, vehicles shares in sell that rates. we to we our exercise market at place can essentially put have we

Now that to we ATMs approach that's commitment a it not the Lincoln these or not say has requirement good we whether are governance is to the can options. one in utilize or but days. provides us limitations gives we unusual at did run, pursue offer. without just fact commitment these an that one be at short will market raise certain and that if financing better but in with Park that more optionality secondary firm rates probably capital that optionality volume, any is firm extraordinary and a an options might And on the traditional the deal absolute rates even really it

Patrick Donnelly

you the can on helpful. cycle. with And as accounts just the catalyst that. then you can the What guys Trying get maybe up view how sales key speed tightened cycle up? think sales and implementation That's process that shorten Okay. to through that do

John Sprague

implementation through sales our -- the based mind and process the never or of team. Yeah. clinical marketing in I growing up, even sales market that mean on go team, team, the early is the of there process work phase. speeding excitement of truly our And market the tremendous our as these post The to there's the sales accounts key excitement

start The is big testing patients going question which you first. to are

an XX in where call And ideally sometimes or cycle length do and they're sites. period sometimes XX with account the patient experimenting mini a sale, maybe close days a in follows mini-validation that we'll down length what after a than we different more sales days we --

of they're X,XXX typical We've the with get number to ramp, months a testing population go to they're ramp that said, the cycles a after hospital and we on starting certain that expand patients these and average number, be ramp take test they and patients. hospital then to TXBacteria today. live Now all don't patient before to could XX starts expect testing of value we half seize product. experience, and patient different get the with will that segment with it expect that probably gets the about a And the -- the always about

it's So that test causes that this of XX-day to first process identifying who window.

the change started identify Now because and that helping they that more itself process ultimately live the stories real and us that who will and is biggest ramped earlier sales follow to accounts what's play going out difference with is going others they will in make how customers that more with hospital that's to go about on.

Patrick Donnelly

in one, XXXX. we just guidance about we off maybe a as talked just Okay. push-out? that base XXXX you of? And one should the last entirely be build entirely, that on think some reduction. to lower Should know to I of think Or push-out of Should we assuming some

John McDonough

mini-validation push-out, just we look the the you when the push-out primarily months. a that's nine being period six research a revenue pushing months to probably product driven revenue that's by there's about way XXXX. talk sure, to if XXX% is into so Well, or quarter it in think the at right about When ramp for revenue delay the

of the less ramp. in of catch-up XXXX that's into a a more delay So and

a said Having I pleased very is point of just really with QX, revenue QX solid grew that, want very, to which couple things. we're XX% number that. and from out TXBacteria a to One,

In fact own that our exceeded expectations. internal even

$XX in question capital estimate to your flow It's important roughly terms that need we to breakeven. capital. get million last out have should we accessing And added point that cash of on to in I

to in of sources these entirety building we cash more that extent pursue its that bridge So, breakeven. were financing flow obviously, potentially part bridge a use vehicles if likely having as could in place can that to to that other help financing to fill

Patrick Donnelly

Thank you.

John McDonough

bet. You

Operator

comes state Leerink. with SVB question your Puneet next from Our question. Souda Please

Puneet Souda

lowering -- think the question of significant guidance. a first All this right, on thanks. I Guys, is

was trying understand and we of of about TXBacteria largest most your Just is opportunity. product, launch are to confidence here. FDA-approved you're the an the level which into excited what I mean one-year

is conservative and your further just down trying couple So the the a over of And of potential any at there overall just here potential to guide I'm is in had -- you've given step further a for point. this that get process? months sense sales how for challenges last a the

John McDonough

Yes answer and we one say it's we because going that's that. do a if increased question very to our not difficult just obviously Puneet, fair and guidance, so conservative we're to

all are the of probability we We a at feel that's in thorough than can And the guidance and we any on I provided very, guidance doing lifting impacting guidance this than comfortable all we factors sure. we've with point. guidance that provided. would think that very just about see is better the it. vetting. we We've I say more looked for guidance confident than the done higher that We think

Puneet Souda

any later overall just not changes areas Maybe and you're is that the reduction the just organization? rate to where something the expecting talking understand would that Or burn I'm cutting other just there those. if spend you're you're there there And in that be the Are understand sales help sales process you're are around that implemented commercial on reduction us too. contemplating? about. maybe then on? potentially reductions actual in here. is So the process trying to And maybe

John McDonough

bet. you Yes

second all the take of half question question I'll second your second first first your let So, the answer and John half Sprague your of of question.

thoroughly. confused hopefully I've you So

to lot with. we're Vice our in So President sales Sales, who there including intend the of are made organization new on expanding commercial a fact staffing. fully delighted putting staff the organization. We've no We to changes of reductions planned on and a

who members I much as selling are of and to selling changing specialist absolutely to on very I disease We sales more and pharmacy putting in in substantive much, the committee. way think the my stewardship are focus infectious mentioned process remarks

many Cubist in President Sales, market, was he hugely our Isacksen, strategy. their of at drug following Scott In new to successful very, ways, Vice a bringing similar antibiotic very sales

ways, New need committees that in and drugs and antibiotic be many disease. sold stewardship product pharmacy includes to to our the very similar. is And infectious

clinical changing are We decision.

would overhead we're the in the way decision same a all doesn't that to require therapeutic market. doing of bringing changing are diagnostic We of new a drug new a only drug with

much disease more a significant on putting strategy, significant similar focus a the more focus infectious deploying pharmacy. we're so, much on And

of make have also selling we that we're the top-down had real strategy. is are we one on strategy and sometime regard here Additionally, GPOs, that will in in some half focused place hired that to noise have bottom-up so not second and to it's of IDNs the where a a people And in a both that we've think the we XXXX. couple

I'll let one. As Sprague John that from, the -- take from, are coming reductions let John for are where coming I'll Sprague cost reductions

John Sprague

Sure.

looked G&A pretty John has in to. guided reorganized. our expense look could our rolled pace all to But research which we XX% it's substantially over fine. however -- operations, that scenario, as major lowering science So as partnership under at the made we've With lesser and the at that collaboration by well. commercial burn still of smaller and a R&D also all hard said, we've should XX% reduce a contingent at we said But trimmed that burn we looking we're the but as decided our cuts cuts But functioning area. be off took area, in will on

Puneet Souda

from couple questions Okay. around Thanks. getting I'm investors. And of a

this. wanted just I to clarify So

covenant new with in financing intact? you and bit of place, was Do around those was new place. does a stay change potential there there With a have place? structure that in in earlier the Or this -- debt that a noise financing a

John McDonough

but noise. just been noise around Puneet, that it's There's Yes.

that covenant, would have missed of covenant, very exists we in revenue if back not -- are times And and miss. We only two if very, only -- really the is a low, the to that violation which is a pay we covenant covenants. revenue

if So owe wouldn't would million, $X million. CRG they that's assuming, the waive like we the covenant. And revenue $X number missed by we

John Sprague

no off with right principal penalty. comes the Which

John McDonough

principal access right the have pay are right. paying the There off we back we also even comes course, capital and to advantages way of the capital some is penalty, no to debt A a up. with a good point. And Which by that which have

to on So put that's generated in price pressure the share have obviously trying by lot -- that's people a there's of been view. our been noise who

John McDonough

Thanks. Okay.

Operator

next your Our Mark from state Massaro comes Genuity. with question question. Please Canaccord

Mark Massaro

for to going start the you VP of thanks new the wanted team, know to Sales. and I with brought in I John sales Hey questions. a that back organization.

in folks one have the the the can get just for specialists You're level the in stability Committee. territory-carrying of on last the But in and the Stewardship more now a I'm reps today? you number focusing Was you to or Pharma the two of turnover just set field any sense organization. in ID quarters? trying field there commercial

John McDonough

There's -- the this one-third approach. turned reorient over probably to we've organization new sales or bit a little of more to

in having back on on addition on three three that top to with are that that IDS. would the focused of territories all of people be to We be sales the XX to would rebuild two reps track it

Mark Massaro

systems. why to you then, isn't are in you larger And as little a can maybe as particulars basis case-by-case first validation helpful. the on about period six in suspect diagnose taking this the why know the the we the of be have us bit think I more I might especially But validation a periods detail some periods clinical three has elongating, it diagnostics shed That's longer? seen months taken sepsis. longer? on help can that guess Okay. as just the I hospital periods to a little to validation company

John McDonough

Yes.

taking still it's system with months. to on with nothing about all has to process three running. That and it and do the six months it getting three has whole -- about do taking longer to is – up So average

and We they're in and because they determine So Mark are collecting all. and testing when a area of an they'll test, what to to that know we've where live different to initially grow and of many there. mini-validation, from they never samples different not expected going start patients, going accounts But will types doing, these which they're them they're they're is patient running patients go that. test

the start room. Some in emergency

start then the EV, Most presenting patient they'll in pick of them EV. but the certain in types

the is that pick intensive ultimately right and decisions should care for they roll so more to unit. place to Once those disappear these analyze they to samples. directive a patients. made, Some have logical period would start ultimately the clinical collect try what most to of can it the start where do patients It's to been expect that be. in patients with is be try They see to XX what And among they test in accounts. out. they we where roughly when positivity this during what They rate day

Mark Massaro

question it. the not I number? And the if constraints guess Do or on in million commercial the of whatsoever $XX cash Got think prior to my do were present going balance so XX you have And sheet. you organization. back territory-carrying is right capital managers,

to think do opportunity the maximize commercial run you appropriate how the near-term? your about guess I in rate So

John McDonough

Yeah.

to taken we're a this sales pleased in know of sales and new that in this time. formula, I in number. XX grow couple the have on bringing a fully really sepsis out more. to near-term We'll approach of opportunities part on – us clearly XX, we think just basis, even to to it ramped, cycle States and maybe new we United the technology. think whole size when closing remember mean, XX an kept smaller is and management, the we expect to think sell I the new XX, the is are reps side market only right be definitely We – and the could I we're that XX because has sales annual we force how over technology figure a

those it really a changes has blood it have already that out. bit sales patients us tweak the you're products point doing. This the within lab across does just hand keeping where it treatment are took not force algorithm been like at by to product believe of do where a we culture, we've product what We little that approach market now. to Nobody six while this eight that is selling never hours. first that is the to post now. smaller, has time. we're This the and displacing the before. this done like some so is little to able sales taken But and other in There's some been of And figure a

And what Now we'll it we've as grow you going that. we date. go end year. we do before But beyond will the seeing on want based quarterly progress the more than numbers, I I But into we may on ultimately seen a of anticipate over this do gave basis just progress it. a and little to potentially, time to wouldn't assess XXXX

Mark Massaro

Okay. any That's placed way the split between helpful. OUS? the And could there capital? and new Of is of any us U.S. give you them were XX contracts

John McDonough

John?

John Sprague

It three U.S. Sure. nine was OUS.

the international eight One and capital. of of the were U.S. was capital

Mark Massaro

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

John McDonough

Thank you.

John Sprague

Thank you.

Operator

you. Thank

Please state comes question next question. with your Our WBB. from Steve Brozak

Steve Brozak

taking answered. gentlemen. and been Most Thanks the afternoon, asked good Hey, have question. for questions

one. just So got I've

of On here on what on for the you. build that's will going expect sales in mean thoughts what and terms should your that both Thank overseas? that TXResistance, you for to us we interest can mean future what and

John McDonough

world response benefit want shot Yeah, treating I patients do Steve's you and bet. to Sandy, You've at take in that you would a to lived your think a one? question. from of hearing everyone good

Sandy Estrada

Sure.

understood products patient on So question care. the TXResistance the was as and I our of on impact it around

coming the which that soon. patient impact see obvious I'm to on truly the of get impacting antibiotic dose or in this And before next where the not the right the have is I is the is so resistance that right we for our antimicrobial that whether so the stewardship to the information is we care. having company TXResistance And today. standpoint happy right patient second we where is to a it at world And product many from as super or present amazing. really be bacteria and can have And now a add goal for patient potential clinical know able for not antibiotic gene has to time,

hone to we're most can obvious therapy than even right the is now. antibiotic bit we able the little a that one So, further

potentially do XX% a are of know an mortality on what data to species able identification, on the being there get decisions can patients which now. there about able hours to and made will those organism by is we have so can who patients definitely resistant have within are a impact have And sooner. be that antibiotic because right antibiotic few be some But that

as or that not infections geared antibiotic the patient. patient On needs there being able if considerations will are lot infection a the and on new are market a to benefit of the hugely flip drug-resistant then side the control. towards that, other know that hospitals antibiotics of And and there such are

have And placed ability on. hours they if and hospital that multidrug-resistant protect good well infections antibiotic your the and isolate that other of within be providers on can't the appropriately treatment not a as to really comes dollar patients as a is something that one into options, might patient these and day figure patient so, first even have know healthcare

Tom Lowery

In I precursor a Europe think Tom the -- antimicrobial from that TXResistance a had to see add we've just to this resistance running Lowery. panel is have to Panel, that I what line all sites be been few they're quick identify than to live able KPC-resistant very patients because they're to time to waiting recommended matter go enthusiastic within genes clinically and of and rather able very days. hours

here that what the surprised panel. an able be the the the in the customer will to pay us interest panel U.S. available is United run RUO of be level this And of the for a September RUO just We version even had States. to instrument in upgrade in

of enthusiasm. the a a that and lot detection So direct-from-blood interest inbound lot really in it of there's like gene resistance people

Steve Brozak

one – how the it its we’re obviously difference people that the quickly of on that. for things you. – you will you Thank pick of question Thank up description. I it. on a make Got know

Operator

Abrams question next Our Cantor comes state question. your with from Please Jordan Fitzgerald.

Jordan Abrams

questions. the taking for Thanks

touch of on to can from ago, could a you're market the perspective back just significant sales from months that what's XX from you months reduction three still expectations just XX why half instruments in year? ago? in expectations instrument So different just to the confident Thanks. the you placement in on pipeline the comment three And place

John McDonough

for organization. But reason of the in half the bet. with U.S. the the the consistent half has in saw changes really change pretty in what to in of with you we guidance year. first is sales -- Certainly change do of the second the the the some year expectation Yes, the

well. we've have performing new regard. don't bringing it business. impact has organization new been these in We closing the expectation our short-term negative has But as any on changes people International to in sales including made that a in changes

Jordan Abrams

early are in the now individual with live cases Okay. highlighted TXBacteria are metrics that have a few on the prepared you patient while do customers And times utilization? you helpful And any remarks testing.

John Sprague

do. We

live about bacteria the For is. are they're that their what to think we accounts potential halfway at

And So year already that XX% are of expectation. if these accounts is which our halfway at and about that mark bacteria. $XXX,XXX of referenced bacteria the per you Candida surpassed

Jordan Abrams

can those Is there some live you frame with TXBacteria? you place customers a ago can way long timing? or of did So come how

John Sprague

Sure.

end January, first of So even through live the account They the quarter. the went -- go can the live in obviously February, at March. second

And increasing. so to four consistent pace, that, months and fairly it it's took that them but now about reach

Jordan Abrams

you. the take one thank helpful. step me, That's Okay, Last a for time to role? right from CEO this is back John, the why

John McDonough

a There's lot for Yeah. of that. reasons

truly it than honest in for really to role is with so should that that no Some XX I you. of personal, leave believe stay be one CEO years I'll But XX more aside. a and it's been

it me absolutely time. it's think would be too. for I So good the for thing personally, company, a the right And

in kind of voices of like in terms super best the aligned And personal. of it's on But Chairman new new ideas, what's individual. particular I'm and all. And case New work company in TX stay this board the I think I'll with excited. of as interest a

Jordan Abrams

That’s it Okay, thanks. for me.

Operator

question state comes next Our from H.C. Please Wainwright with Yi & Chen your question. Co.

Yi Chen

for taking question. my Thank you

instrument are the what that place is typically patients? once utilization and how it not reach reach panels And first are have TX -- full in currently the using long So question reasons my on hospital the eligible would they to take rate? a to they panel

John McDonough

-- we how months we XX full But XX believe of say assessing -- see and to there We utilization or patients, Yi in months with haven't that's ramps the about and facts out accounts. the expect being it's to behind don't than it can't model. from get our other built it so we we've live for will we type market that question. the great Yeah. a data the that been

is ramp with on kind it thorough than and with faster the it they've consistent things real doing off on you're it's the The been why approach. way our turning totally expectations ramping while a a again of average, fact just want this little to and bit reason in up People it's takes shutting we engine go it, today. little technology, new a are to the new but the expected

So it's new of to a I progression adopting natural a think anything. approach

institutions. see that time, online be they've respective utilization doing we'll in can that I get talk already there out will But think and about the there's successes customers quicker. had once their full that come over that enough customers the

Yi Chen

burn cash you you're that reduce to Got be XXXX it, get you. is next that breakeven to cash to question additional and to says, breakeven. early need million my or going $XX below the cash in mean press late million XXXX? $X thank quarterly to you flow And achieve the Does flow expect release

John McDonough

math quarterly straight million, Because see you necessarily, the But get go that right? Not I -- $X growing. -- into burn you a on basis should the how XXXX rate as did there. as on if is you declining revenue is

that we bit rate as get into it rate So first it half because of but might take XXXX. will doesn't the a half little longer that million burn maintain second than of be $X XXXX,

Yi Chen

you Thank Okay.

John McDonough

You bet.

Operator

question. Our with state Ben next Partners. your question Please comes Global Alliance Haynor from

Ben Haynor

Thanks afternoon questions. Good taking the guys. for

so? Or about to putting is First off you a that missed reduction just substantially? $X be think required talking on to down that pretty that? $XX the or What's in Does that good this the to me were it going breakeven place. $XX you for million, previously. I sorry are I guys rate? I'm What do does that and expense run million million bring if way think

John Sprague

we the think achieve there about We get to being these to that point. so. just about quicker revenue we although same to do at breakeven can I think level have continue think still targets

John McDonough

we're expenses as add same which get Yeah. that revenue breakeven would that is to close There reducing back the in to would point ramping certain back line. are potentially we the

Ben Haynor

I had questions. then And just housekeeping quick Okay. few a real

last units the gave international of terms – to as on break can figures you off, the First units U.S. also something for versus have year in we earlier? well compare out and capital you so

John Sprague

me. with Bear Sure.

Ben Haynor

– you exited believe I of the many apologize this, it I at I And then the are maybe you Are XXX XX with? was last how dozen quarter. you have or is? missed the in quarter end that accounts also with meantime the to if whatever

John Sprague

a accounts had need. where It's greater XXX. reagent two with the took We back redeploy actually them accounts to we rentals to underutilizing

Ben Haynor

Okay.

John Sprague

U.S./international year international or correct excuse me we total we for XX XX U.S. So – had excuse that's – and had XX placements, yes me last of international a XX. contracts

Ben Haynor

any have have Sorry QX that. chance I specified have the you do you And numbers? should

John Sprague

XXXX? QX of

Ben Haynor

Yes.

John Sprague

U.S. Yeah. six three It international. was

Ben Haynor

breakdown there if could. And the capital you

John Sprague

Six rentals. international were U.S. were all capital. The three all reagent

Ben Haynor

need that Lincoln Got lastly it. the much you sold I cognizant the be there And me things. And then you How me, can in can of and remind be for – day? But any the on that have distribution agreement? would aftermarket for we to equity mechanics on Park restrictions restrictions various understand transaction theoretically there the of? a

John Sprague

Sure.

volume. So sell XX% for ATM up average can to the we our of daily

Ben Haynor

you XXX,XXX sell a day shares restriction to can in – one XX there's if a But Okay. do million that there's day of no you million. and terms can shares the up

John Sprague

Correct.

John McDonough

Sure. that. to be And we're you sell no than selling again, But guarantee more able level either. may opportunistically even that to going at be

Ben Haynor

understood Appreciate enough. guys. Thanks taking That's to fair the No. mechanics just I sure, the of for question that. I make it. wanted

John McDonough

you. Thank

Operator

this Ladies you. time. McDonough to questions and gentlemen, remarks. closing there are no now further for turn at back John I'll Thank it

John McDonough

look that – We're excited occur half for we of significant back that business. underway the much and appreciate bet. believe We're this will you are to that You of developments believe the very We point about reporting in listening a on cusp we through are in forward Thanks inflection and dialing breaking all hitting second XXXX in next a commercial truly quarter. evening. in.

Operator

today's day. disconnect. parties concludes This you. Have Thank conference. a All great may

T2 Biosystems (TTOO) 31 Jul 192019 Q2 Earnings call transcript