TTOO - Earnings call transcript Q4 2019

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Operator

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

pleasure TX your Biosystems. my Investor Philip now for Relations is to host introduce Taylor, It Thank Mr. you, Taylor.

You may begin.

Philip Taylor

XXXX call. Thank you, fourth year Biosystems for the results operator. Thanks for quarter joining and us TX financial conference full

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

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

I'd turn John the CEO, to and President John? Sperzel. to that, like call over With

John Sperzel

you Thank today. joining for us

ultimately in and goal months hospital surgical cardiac a at XXXX, rare was our identification I This leading to personal. of me, is call since care about Executive U.S. disorder, is intensive Officer the being life-saving change In earnings this of also the last spent sepsis-causing month, my pathogens. care a I'm diagnosed passionate with TX two heart a in very unit Biosystems’ received standard and named a first transplant. Chief goal To

sepsis infection resistant Pseudomonas with not aeruginosa, treated that appropriately. became multi-drug in While I if the can to lead death, hospital, bacteria and infected a

therapy deserve Biosystems, sepsis-causing the staggering. faster. fortunate, sepsis At targeted innovations statistics we TX was better. and to are pathogens achieve life-saving I While on mortality deliver Patients

successfully a who have Biosystems, the differentiated TX that created product highly those Company agree trust followed I you has offering. For

to identify developed our has This blood we blood, from culture. sepsis-causing superiority. wait several without products advancement only failed, pathogens to TX on positive the and the where truly FDA-cleared companies diagnostic a Biosystems build technological need directly to is fact, successfully In for days continue will groundbreaking,

has leadership, reduction. immediately historical Company are succeeded important addressing and my weaknesses. Under the not areas: in cost we execution these Sales However, two

I I and highlight market open Company's for the John provide Sprague, the outlook and discuss results then On today's call, we call corporate the detailed our before financial our in over call an priorities turn I and XXXX, XXXX. briefly and will will achievements for conclude, of share for opportunity the questions overview will quarter who the to answers.

Biosystems Device milestone-based group TX a Administration; to X,XXX designation from U.S. received a and organization, a development government agency; Breakthrough TXResistance Panel a Breakthrough from purchasing major for contract contract Biosystems providing U.S. to The million, U.S. In year. of milestones Payment for that or XXXX NTAP of Medicare including Centers our a The technology, growth revenue a prior received Medicaid The and we facilitate New the Technology $X.X generated achieved the Services; from product in Drug TX million greater from nearly XX% $XX Biosystems Premier, number access TX of Company received product following: life-saving TXBacteria compared the funding will to Technology U.S. And Panel adoption received up key award of U.S. the hospitals. believe representing Add-On Food

than of year. from more to that people That's found sepsis study The cancer deaths million forms and previously lethal study Last published all renowned was in five than approximately die is a sepsis The serious deaths more concluded hospital prevalent is that one health globally. contributes Lancet, journal, XX reviewed medical global then, month, Sepsis And thought. sepsis significantly each a in a worldwide issue. peer combined. which

and costs, States, we have common the killing change of believe States United the I most healthcare the nearly year. XXX,XXX sepsis. an treatment paradigm is billion in to United in cause nearly each people In sepsis the in-hospital opportunity represents deaths, of the $XX in

empiric protocols broad-spectrum therapy. delayed antibiotics probability-based includes mortality a by attempt A Identifying time component rely Current of risk sepsis up successfully of in a sepsis increases empiric targeted these each to the use of most key the treatment to treatment net against treating wide as treat and to race common protocols hour infections. X%. on an cast is

also in targeted helping faster antimicrobial antibiotic antibiotics, unnecessary broad Not rapid combat exposure further only prevent does may resistance. growth of rounds reduce therapy, detection spectrum enables it to to and

rapidly the a only platform TXResistance instrument positive that pathogens to in from culture. without wait and specimen. to TXBacteria directly Panels provide blood marker TXCandida, sepsis, need identify to The bacterial and identification FDA-cleared panels blood accurately results a detection three for diagnostic includes and resistance species TXDx to hours five cause and fungal whole

Luminex Alternative that pathogen take management which providers can identify Cepheid, five days. Accelerate healthcare one And need therapy sepsis-causing provides technology improve detection blood systems for our positive Diagnostics offered GenMark and first best to Diagnostics, sepsis require well understood. for believe faster. as and we tool The such those the target pathogens, Diagnostics, by culture, is to BioFire diagnostic

address forward. performance TX’s the define With straightforward as we our path have to issues technology leading foundation, a our plan and

Accelerating work move advancing three our and priorities: operations; of lot our with improving a and to will our do urgency, we focusing sales; pipeline. on have We

one on with of leadership, the Tony our team will U.S. sales. we to commercial first focus resources commercial execution. accelerate Officer, market. plan making Under January, functions, and sales changes Starting mission he In our as game direct Tony's Chief veteran all our to XX% we We're industry improve our Commercial priority, leads appointed Pare one sales. accelerating in with significant commercial

hospital oncology, focus targeting intensive to departments with will change our care. like patients We and high-risk on transplants,

place our are a less our We we of our these metrics in incidents number will focus quarter. as on absolute of the technology and on for the business of increasing adoption tests more better given utilization and the

on messaging integrate to they’re essential greater into We utilization. TX to within as sepsis test clinicians expand adoption and testing drive which our will will the protocols, emphasis place hospital increase

organization group in to purchasing We to accounts hospital market. agreements will continue expand U.S. through access

mentioned, we previously expand contract contracts U.S. discussions further U.S. hospitals breakthrough with in other XXXX. and nearly purchasing To in organizations in to X,XXX hospitals, Premier through we're technology group contracted As anticipate the new with access access during pricing a XXXX. adding and gained

the Previous TXDx the installed of were the base by commercial XXXX, aim in utilization. plans on The annually, XX market. market United of units, incentive of TXDx utilization active base among low approximately $XX,XXX worldwide an we XX active in U.S. end increase test was to and end instruments installed the States were focused placements, in of installed approximately test sales plans the base instrument to At which was of our which instruments resulting TXDx in instrument XXXX. with $XXX,XXX

utilization is to Our instrument, To strategy emphasize test top annual customers long-term support $XXX,XXX exceeding have test this which our utilization. we aligned achieved target. incentive sales our per test adoption U.S. have and target, utilization plans sales and

first we partners by We're more during are the the a in agreement of support partners. U.S., discussion several will business potential opportunities and We one strategic XXXX. believe to with our small maintain team international the or of commercial such there strengthen first a partnering distributors. Outside entering network to into with half anticipate distribution commercial

key Given sales sales closing our and expect our personally to team and marketing my support effort commercial experience, in targeting I will involved and partnerships. in be

in discipline our investments operations. short must success, reflect We spending to only structure Moving must be best the long-term our reality. our how strategy, and reduce improving our applying manage to today's priority, areas. in in second must greater smart make but expenses all we that other support our achieve in also not while cost aspirations, To grounded areas

of and reflect of of In the be $XX.X million. revenue figures TX do must of current product XXXX, size business, $XX.X occurred These operating reduced. Biosystems annual not scope and and cost our million, expenses

product structure, cost anticipate including and TX be and a will to aggressively we will XXXX. We our during a revenue, as reducing of stronger attack believe in expenses Biosystems structure result. cost be plan and change We bold company significant cost operating our

government build $XX mentioned our superiority. our focused advancing the milestone-based our expanding TXResistance our biothreat intent by Early, Panel. to million we're to current on advancing XXXX, third September on XXXX, Moving on funded programs maintaining our technological with panel, while priority, also contract the instrument focus a generation and panel expanded offering next I novel portfolio and including on awarded pipeline. In in

currently TXResistance approval. Our and study Mark in CE XX antibiotic detects TXResistance, conducting resistance Drug a is with and U.S. are the gram-positive of design as FDA genes Food Panel, the recently pathogens, test. which the on and to in dialogue studies secure sites and Multiple received pivotal in a regarding Administration research-only available we're gram-negative

and Disease most cultures resistance antibiotic bacterial be results. cover results of than pan infections to the threats Control potential performed in all another and instrument transformative pan comprehensive We're replace Prevention. addition XX% about excited and with management for development species next of in species, by blood-borne for sepsis the and blood panels greater for susceptibility to than This the identified the all gram-positive identification blood-borne gram-negative designed XXX Centers greater to generation including would

is but developing be ever sepsis, patents we're detection panel. multiple for panel the expected beyond ultra-high direct biothreat Going first and under also a genes. sensitivity the toxin to blood contract, novel of from biothreat the This government

and on fourth quarter it guidance. our for details on John to the I'll XXXX turn Sprague Now, over update results an financial additional

John Sprague

Thank you, John.

revenues. signed new fourth XXXX contracts of $X.X total instrument million, were the panel to year. product new test bringing quarter XX% increase quarter Product Total the prior XXXX increase an of Growing revenues the instruments the for an to fourth TXDx of the XX% are during to increase period. were year period. instruments compared Company driving XX million, for The for for quarter, revenues full fourth in the of prior year compared XX sales the TXDx $X.X

prior and contribution last the quarter year revenues were year decreased due $X.X XXX% expenses quarter million, fourth million, the million compared and revenues year's of in spending. for quarter to period. million during fourth fourth compared increase the $X.X $XX.X XXXX were XXXX to lower $X.X to to Cost and Cost of compared flat Research product overhead period. an of grant were of the prior

Research compared the quarter in government million $X.X fourth expenditures in of and $X.X last million were quarter year's expenses XXXX. fourth $X.X development million contract include of under incurred to the and

include transition administrative onetime fourth the Selling, related and year's million general approximately expenses to $X.X expenses CEO last million $X.X $X for quarter, and billion. to compared in were

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

shares million the in facility the in fourth million cash and million equity Our equivalents under at line. cash We and XXXX. our net quarter were December sold shares ATM through XX, $X.X for $XX X.X credit proceeds no

CRG our average periods. shares debt and of outstanding. We line we may Stock terms exercises equity we compliant option facility are ATM currently comply at shares to continue the weighted under affect future expect in with the will credit and sold

as Guidance full We of $XX for grant $X $X full and million, year of total million is $X $XX revenues the and to million revenues follows: million. product year million, research to including XXXX million to $XX of expect revenues XXXX contribution

We the XX% in half expect of approximately of be the year year. XX% of in first remaining the to second the half revenue and

close expect We aligning along placement the base customer driving strategic XXXX, our TXDx on contracts to in focus placements. with instrument with current test new XX installed utilization in

for back And John? you. Thank John remarks. Sperzel closing to

John Sperzel

are were many to talented, During found they're must things first What The with we understands to met passionate I fight committed ready as possible. and CEO, week ready team win. to TX’s that do change. people and differently, my I who as people as

game advancing opening progress and our improving building the throughout these in I As around look stated sales; providing our our plan we're priorities: year. forward on my our our to operations; accelerating pipeline. three updates We towards remarks,

it We'll Operator? now to up open questions.

Operator

Paul comes Thank of from with Scott. Montgomery Janney Knight Instructions] question first you. [Operator Our line the

Mike Gokay

This guys. Paul. is Gokay Hi, for Mike on

Is is technology funnel so, the to kind market NTAP that in and this Add-On down there? driving committees? On -- but only the if how correct the volume room ICU? to patients wrong, then another validation I'm emergency testing the approval, just for to there if the me to is does And Payments stewardship admitted of

Tony Pare

any of is this to Tony DRG. applies sepsis Pare, Chief So, Commercial The the Officer. the NTAP payment

to may And apply the of test. our that whole hospital terms laboratory payment or they the in keep the flow when may for it so, but down utilize test. does It not they

Mike Gokay

of track selection on then, on And on partner, to are you timing any that and line, the the update a the in launch spring still commercialization sometime?

Tony Pare

first will as actual that we half somebody have anticipate in of the on commercialization update selection No lined but up the of the partner, the that we John indicated -- year.

Mike Gokay

guys. Thanks, Perfect.

Tony Pare

We’re the be to talking international just about business, clear.

Operator

Puneet Our SVB with of Leerink. from next comes question line Souda the

Scott Mafale

Mafale on is This guys. for Puneet. Scott Hi,

to John, have aboard. you. So welcome Great

can you touched has powerful -- think, all execution we it's and of it that of lagged kind despite remarks I in a your I very TX think FDA on approval that having commercial the technology agree prepared products. here,

you So, what to commercial the sales the the that steps technology? see near-term the promise kind are line force of of with up

John Sperzel

very commercial has wakes that The and effort up thinks thing, Chief all Officer. experienced commercial was day wanted It position and every where lacking someone did week Commercial first is work month. leading a of Company. appoint in and is that we that day, many instances, commercial And Tony who throughout responsibilities Previously, CEO the one functions can I executive. thing the frankly CEO. commercial reported the to And execution as was in some And Tony the and was success. about our

first did the Tony. thing appoint was we So,

second thing with that lay adoption utilization. to out did drive was plan sit he and we're and team how on the The going a

it in As point going opening metric our a mentioned less this would to at more the the basis. are time. important, on place. are the larger in adopted have I that of the instruments utilizing and we that we not absolute measure it system demonstrate on that remarks, to simply best to It's time, but become number need regular focus success to a Over we're fully number we accounts of

to his and enough We on drive focus are not that big and that. have Tony a that it's and going are, team number but a number,

Scott Mafale

it. wondering, outcomes products I on help the were clinical would the studies the you just to more in clinical for drive for XXXX. of national Got want touch priorities highlighting study a market. And We TX’s adoption kind key as of in the

John Sperzel

just we is So, that about far going I'm have our Tom here what have him Scientific me, with so plans are. the Officer. and talk Lowery to Chief studies

Tom Lowery

Yes.

on, abroad, we particularly As are TXBacteria. we've several single have spoken and going it here some studies the multi-center, about last some interventional in year on are our of both calls, center, U.S. for it

and are And so, as TXBacteria the that These of particularly patient these patient high infections. on. those for populations, risk studies utilization are the populations priority carry across bacterial of going ICU we that are at to find variety patients

build. we’re with data So, to year and data and our the is at be in lot has out. ECCMID a more bit share very interventional of NTAP that year manner; in that be And about upcoming to There what we come of quite will used last continues April. this excited data compelling. showing early we’ll TXBacteria Actually, performance with it’s CMS a discussions it

Scott Mafale

Thank marketing that factors utilization behind like, for just helpful. investments, into guidance, going talked just me. one driving $XXX,XXX one an the driving what overall you that? are from of what sales last you. that In the I to to growth? end put factors by utilization driving rep, a the there for Is it. then investments inside are are you Got Very XXXX. about your was curious, And $XXX,XXX

John Sperzel

Sperzel. This is John

of key clarify, was in drive $XX,XXX, active the is is by hospitals, in of we've selling more the market. patient. We're In end. And too of is the when the year than front that the in our of to to much impact the sales have going focus to clinician X,XXX utilization the said targeting. We in to part. our is to standing we're what a to about in we an today sales base point-of-care a downstream. process, in process. That's installed the which part the decision to evolve $XXX,XXX the of drivers microbiology more maybe important that U.S. our we’re U.S. and the far the If most sales effort past, are focused lab, the at need terms average Just trying effort. to the important clinicians goal the We're been going in

sort be accounts, call And going where they're compensation that going all a have in and around to susceptible, we lower to And so, adoption historically. are the identified patients, of right to few focused them more guided be to high-risk we're his strategy why and we transplant, going patients oncology, Tony team the the on right the targeting number ICU and guide, to the focused on places. a saw focus That's going utilization. because might generally. That's And test you instruments test utilization. adoption are plans, are driven on of

Operator

your Our next question line question. from Haynor the comes Please proceed Alliance with Global. Ben of with

Ben Haynor

TXCanada account it new thinking the like front? this in terms of for Maybe is and just is XX account this what area the But, like something this U.S.? you'll year, adoption about specialty, what seems able a certain looking both that Tony. that do on utilization for envision Is drive and new account the you be to the goal a in TXBacteria,

Tony Pare

Yes.

high-risk almost specifically that right? focus So, and be the a that have ICU hospitals patient as hospitals the is all oncology populations, hospitals So, hospitals, many serve populations there on patient transplant number focus but the for then and patient populations ICU an those those on hospitals. the will And are serve of XX a well. them,

so committees, We folks is or that is those place are laying that very for Obviously, the target will But it that those well, and decision-making also of primary have especially in of process those as if largest forth. when described the identifying in gets game versus in ICUs. front a the what central of beds for fungal that accounts involved makers, the be these the important targets them risk but target ones those plan have just bacterial in have populations the in ICU patient infections Canada, the laying particular in with out implants, are decision sepsis out to a plan we have that front us, hospitals infections of and those are I that the to you And XXX lines that at instruments. will Bacteria more of usage. routine are terms they're

Ben Haynor

maybe about just first the Are the you could be of envisioned. there helpful. on we in of then, quarter-to-quarter? would versus you that for should any Any the of half or provide second think year for there contribution revenue that And cadence half the tracking the XXXX grant things terms color

John Sprague

quarter-by-quarter. We revenue to be linear look at that, grant the contribution

Operator

your Our next of with WBB question proceed comes with Please from line Brozak the Steve question. Securities.

Steve Brozak

that utilization looking two Around the focus like adoption and that streamlining at. got, there's events you're seems specific you've it

too one around product. specifically with makers deal The has of insight to decision on Because the one seems like focused the makers us first decision, you get involves What it streamlining that? other in to had that decision? are some the clinician the that there. in into And you adoption to? bringing and of on you the give curious, many kind I'm Can past have decision down are the

Tony Pare

Yes.

different at So, decision hospitals. unfortunately different makers the are

in for folks solution use. with game game plan the is to key hospital play. and champions is and your with committees can get regional and I disease infectious spend plan hospital who's task hospital. Pharm have single TX identify don't on routine plan, project Ds. a that hospital as the But side to implement say the to a and need that actually the clinicians, the it hospital. build sepsis really a the managers the it's it decision So, they for big well business director that by In that build makers some has there and who particular case, the to the be business to that side champions, plan our is cases, particular the account where are time build within a that The we obviously role every is folks want That that build to on laboratory the work primary when visit committees

Steve Brozak

you. That for me care. is give at and next on in be the queue. utilization with and how of then, a hop Thank to Okay. to because care looking standard you Can obviously quicker an front? get exists quicker you're the I'll leads going that now us to And appreciation standard able compared you streamlining that adoption question clinician as to back of culture,

Tony Pare

Yes.

upon adoption to or test when right? to that to in with on in ordering adoption So, we is the routine your it the use decision has board in in it’s TX that protocol, that it is sepsis to really, have we population it quicker to comes times some means clinician Once been the many because that need cases, laboratory, post where be And test involved So, the good clinicians. automatic be a order run. involved on now position are culture the in then the we that test utilized, becomes routine program, director folks we makes culture which need that be clinicians test, post have use, the part educated. are whereas it more the And good in TX for lot becomes the have once hospitals, request it of ramp. touch

Steve Brozak

a on just that. a And quick follow-up

the they're better response What's Is benefit, And I'll reinforce they do as tools. in Thank So, that? the you're again, you. provided direct how terms getting quicker is virtuous I hope that? on reinforcement seeing of or that back. outcomes what guess or decision-making

Tony Pare

to appropriate Time Yes. therapy.

they this up apply take is harder drive appropriate back the their the evaluations to the and time now result in the can we'll -- that and therapy. setting through which it's time we So, try and between And get when primary even the sample the the account, time by they endpoint the future.

Operator

Please the of next proceed JonesTrading. Soumit question your with line from Our Roy with comes question.

Soumit Roy

the on mentioned hear Panel. about and question A didn't I it. Lyme you

the outcome? still from is thoughts clinical that. around Is just to in are If there your it? it control complexity going that So, to around you is data the compare arm, of -- XXXX? So, are any the see with we going cards

keep XXXX? trimming on if you. for and can guidance the provide think and the Thank trimming -- is XXXX of cost about us similar cost we to should of second on some SG&A you The structure, R&D the goods kind

John Sperzel

ask us short then I'll Let Tom comment color give the cost. to on me more I'll on on Lowery Lyme, make Lyme. and a start

commercial never cost before. to cost going to spent, plan a reduce We're is prepared for of sitting in cost operating opportunity growth. several comprehensive and is And for that. both as goods six at strategic we're commercial an here then, consolidate business. been estate initiated We're the We buildings and look also I control on a We've the the I've certainly savings way cost costs opportunity doesn't footprint. there every reducing today concerned, weeks. at to today our of in near us Europe. mentioned, our as we'll our like partners current to working you mentioned far a scope And expense. structure structure, plan, that our remarks, reflect the attack with operating and We're in to size our overall and as As including partner in the going we're And dollar a look to including future. and real fuel going share

moment, operating expense. So, on other providing not any the guidance at we're

we're so be that the there working opportunity place But, a and we're is that that's on. said, say going work what heard sepsis-causing And not one with probably not focus. enormous concerned, the have that to opportunity not to done do terms is theme focused, does we've of the to in throughout have be focused. you've line as us we That of Lyme with far anything is else. identification monetize to lose going the conversation underlying FDA we if going to pathogens. That as So, front far today of and about mean we’re an we're in

more So, let I'll color to a just Tom you on little that. give

Tom Lowery

term last And the line the the LDT. talked to basically terms on doesn't any do This for we've call, proceed external select in with pursue studies term the is. a commercial focus you earnings don't As term near has we outcome testing. to about the pathway in of of work be channel and continue clearance. a access able near is laboratories in capabilities news good that lab there. trust to able longer with And to type to our the line being of existing what partner commercialize to the on as already certainly an to that our preclude That’s put FDA your opportunity kind need validation

Operator

in further I'd to the hand call like There queue. are no remarks. Sperzel closing over to back questions for Mr. the

John Sperzel

for made Thanks our to for the entire results. to the us to Look forward continued fourth changing TX Sepsis. excited also We're I'd about and joining like Biosystems commitment. future. review your the Progress you. XXXX in XXXX. hard work in team our for Thank the treatment quarter of today plans and to thank teams paradigm

Operator

Ladies you today's and gentlemen, this teleconference. does Thank participation. for your conclude

You lines and at wonderful this a your day. have time may disconnect

T2 Biosystems (TTOO) 24 Feb 202019 Q4 Earnings call transcript