QTNT - Earnings call transcript Q4 2018

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Operator

Greetings, and welcome to the Quotient Limited Fourth Quarter and Fiscal Year 2018 Financial Results Conference Call.

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Chris Lindop, Chief Financial Officer of Quotient. Thank you.

begin. now may You

Chris Lindop

Good for and fiscal our XXXX. March Robert. earnings year to conference XX, call fourth morning you, welcome everyone Quotient's ended Thank quarter and

of Franz live www.quotientbd.com. broadcast an today call audio replay Chief Joining will is a through Walt, and the today conference call is Executive me at Officer of Quotient. webcast, be Today's being later the conference available

development Quotient may operating events, guidance call, this expected commercialization and results will future in as to actual from forward-looking such including During Because projected be statements projections future and forward-looking statements differ and timeline. with statements. the those making deal materially results

valid in concerning and those The the U.S. Quotient's differ Executive publicly guidance Additional forward-looking that turn as call Walt. actual provided cause Securities materially of I'd like Chief and factors Exchange in results over are as release. this statements from the to forward-looking morning's obligation Commission in Franz as no this to to found filings information call date, the and well forward-looking with to could during update With assumes be that, Quotient's including only statements today's can Officer, statements. projections these Quotient

Franz Walt

Thank everyone. much and you very good morning Chris

to allowing company's the automation developer earlier for month, the bringing I'm throughput responded blood for liquid initial to on which high play to legacy a our reality in tried expertise single years be past. trials Other manufacturing immunohematology to the five bring era in the or microarrays. phase for the part determination to platform throughput field starting failed microarray and IH I'm since now With up able customer focus In March, manufacturer to and cost, more the solution energy working technology screening diagnostic for trials concordance initiation the at responsibility on which proud I environment in the have has the multiple and required all as that the to in quest respect deliver of So with of have European stepping affordable work challenges a experience diagnostics. resulted we of Microarray. designed is automated proud of for that commercialization process, on with phase. Quotient as of funding a platform focuses made comprehensive of a this for team's with field concordance. in this report the MosaiQ and achieved to the vision my we produce and low our level has sample. The tool resources the processing, no blood and more arrived good progress high quarter its and has Since globally. the Quotient and market predicate to in as typing, my of use diagnostic said, Microarrays the have grouping Building impressed to markers with progress need end testing invention question industrial of at technologies. to into on CEO an of methods first customers reagents this the this state-of-the-art scale particularly organizations the with take a been team of together MosaiQ delivery dual microarray thoroughly have There has a in the of the automated roughly

of antibody concordance. also is on the field of the targeted in detection, are level phase analysis, required concordance our daily the trial concordance excess the ongoing, antigens are While for all discordance based exceeding and we

in operational savings our donated demonstrate supply confident unit it's field workflows we reagent trial. deliver management This, not conclusive solution. and results to affordability standardized MosaiQ while is testing automation These designed blood. our environment. a simplified the each that yet of So walk-away characterization chain phase of of with customer truly permits were through working is remain customers of this outcome substantial MosaiQ about a comprehensive to the platform

within we while inevitably from especially recognized development many milestones have that paper, I managers development the can device, will are from due or phases diagnostic a on which So in lost attempting the program we early PhD organization our innovation. you long thesis microarray the only come of acknowledge the delays. tell this any in experience delays, unexpected pathways those and of process involving way missed delays we usually as that development along manufacturing experience parallel the scale way unexpectedly and systems journey to credibility

I diagnostic So an of the deliver Quotient's future existing detailed and targets public industry future. flexibility the relates we microarrays. in to and will our have our and development which timelines appropriate processes importance consistently we milestones objectives call was speed it about perhaps with to that built an future the of an that development eye understand in and overoptimistic automated end being challenge working at to three and device The credibility much deliver news working good of in development parallel probes platform adding revolutionizing reestablishing now of going we the ensure Nonetheless, committing amount the reflects share have manufacturing achievable additional is, running forward review the a us the at the to the technology. of might

platform content. and So the it's about all then first adding

So business, our come. to of facility, manufacturing the reagent home be for will the to conventional this new the operations our many BioCampus research years Scottish year earlier of we which completed turning construction and phase

business business the through which host reagent the refinanced all out to and the nonoperational Notwithstanding $XX into continued investments transaction, We of the held revenue growth for BioCampus back strong orders of also well in recently the XX% by and improvement continues company very business. mix. cross came all be year underpinned this honored fact official very and perform in freeing product opening strong for price, a to the reinvestment were Princess fiscal XXXX. volume this product lease successfully sale standing our margin at BioCampus we by in periods quarter million to The driven from of of capital activity with that Royal. The product both sales our both fiscal for the predictability and

will So like I to who would Chris back with that, hand to overview. the financial present

Chris Lindop

Thanks Franz.

year. Research reflects $X.X against which million quarter $X.X stock personnel year's result interest prior our XX% of fourth quarter currently in improvement In marketing related sales the gross $X.X of XX% product assets the So in OEM growth compared the and in to allowance amortization customers compared million represents fourth of are $XX.X the and general and the which attributable scale last development with for The the million recorded quarter. direct better was development. $X.XX In of product the continues increased last of XX.X% were In was of from Net new million, to revenues and million, million other up the and launches million Overall increase prior prior to in prior be to revenues of up compared through the towards $X.XX new positive customer included Direct versus $X.X sales profit and last quarter quarter $X.X In earned administrative all million, expensed sales. XX.X% expense achievement the general compensation other represented of quarter $X.X fourth fiscal as In XX% million compared was OEM customers, costs loss milestones increased not the year. quarter reduction products, foreign in we year. approval a $X.X expenditures increase United year. on expenses and million Also was fourth and and compared pricing, million year-over-year XX% the increased product net or from sales sales the expansion Sales deferred recur research subsidiary and of to quarter year-over-year driven year's year-over-year last increase Direct $XXX,XXX product of $XX.X of expense In million the by new an was and the expense were fourth the in sales million and $X.X were we expense net $X.X of States products. an base. product Microarray to distributor valuation and year's sales. million $X.X with expenses and fourth sales the as loss launched XX% expense a profitability greater sales our increase fourth tax revenue of due other XX% as and move The $XXX,XXX million impact recently grew decrease from in subsidiary ordinary $XX.X tax was of the last commercialization increased $XXX,XXX the from to the existing of million prior product expenses impact the year's was In incremental the in non-cash expenses attributable quarter. consisted fourth a quarter of increased exchange an development year-over-year quarter the a the $XXX,XXX of product $X.X in related product prior quarter. and over facility this Gross a MosaiQ. margin reflects to both XX% sales the charges. year in recorded OEM benefit with increased compared continued in of The rental gain. fourth the increase and with now year's distributor $X.X of did year. operating versus per on prior million sales. mainly of $X.X and opening dollars year-over-year depreciation we share were fourth million of $XXX,XXX pricing, product production $XXX,XXX impact concerned. year reflecting the $XX.X year. volumes quarter in mix. sales $XXX,XXX quarter administrative $XX.X $XXX,XXX which

of earned revenues revenues For evaluation and certain products year. by the sale million, also product revenue were milestones for of development the of sale other customer. Total $XX.X earned fiscal of achievement $X.X for year principal milestones In $XXX,XXX on prior increase over fiscal approval liquid million developed instruments OEM MosaiQ of other year two the by year for the for certain the development included of FDA our prior product represented the an the by product revenues reagent XX% the purposes.

or sales XX.X% with compared margin in gross the year million For profit as gross increase previous an was on the from $XX.X of year. XX.X% sales million, while XX%, product $X.X product fiscal

million share. activities used quarter. by $X.X the of development year's other a decreased of the year per and expenses Net million year. part $XX.X MosaiQ net growth foreign wound quarter for in certain fiscal totaled gain with $XX.X expenses ordinary offset fourth and last Net a million preparation activities $XX million in million $X.X commercialization. expense $X.XX and $XX or of due loss million to compared in administrative to other expense development expenses sales consisted operating research down, million MosaiQ XXXX Overall in our to and the $X.X the year of operating in net decrease prior interest related the general and $XX.X million was year and with fiscal marketing For other on million primarily expense in spending compared exchange. $XX.X $XX.X net cash was for In fourth the

expenditures During near construction $X.X facility of our year, Edinburgh, in with period, the $X.X expenditures totaled reagent million new prior with connection in million conventional BioCampus capital reflecting the the Scotland. compared same largely

in cash in million fiscal activities in $XX.X $XX.X full For million compared prior with year year and expenditures XXXX. the million compared totaled used $XX.X the with capital totaled operating million $XX.X fiscal

an the the cash totaled terms issue sheet, totaled are from notes million our $XX credit to and were of Under fiscal account. an offsetting $XX announcement million trials. and the receivable and March European end held additional facility long-term facility million positive inventory investments totaled at concordance cash of and of $X year XX, short-term balance results equivalents field million senior Microarray the following In the able cash of for on the XX% long-term Under due March XXXX. cash reserve to $X.X $XX.X XXXX million. we in initial that the the secured debt Moving $XX.X we XXst ongoing million in IH

$X.X additional fiscal consisting guidance, during to totaling of to million revenue moving to for we are in product be forecasting of sales Other revenue, year. are XXXX $XX range full $XX from also million. Now earning fees year development approximately product million the the expected

operating amortization, stock $XX million approximately $X of charges of in the expenditures $XX For million range compensation depreciation, million $XX fiscal including $XX loss between for an non-cash of million to XXXX and forecast we expense and million. and

let Now call the back over with to Franz. that, turn me

Franz Walt

Thank for this you very much overview. Chris

said first the be grouping. blood to taking one on small diagnostic I own screening. when skeptics been of field I done had before and this my it the this has I and that year, in knew So by it in the position a microarray in technology so was joined taking that vision Quotient inspired of diagnostic earlier the couldn’t reality tried to Yet Board based company, done. backyard the everyone while of Company’s make of speak, leading challenges it Switzerland, that is it around top it who of

immunohematology trial While field offering the on stand commercialization. brink menu first European we our the of for underway is

early already the process. We stages of this have begun

engaged help MosaiQ which Europe carrier. is years and gained them novel one the to have potential a those have thereafter XX relevant a of to development. development face development take undertaking I of an initially extra in iteration truly the in with on A will product update challenges lot is that many often design I unanticipated We it in customers our that area product think in when to and experience process. platform my Commercialization may couple get lessons product great of to

Without the before underpinning we incorporated forward. produce our So for critical. being timelines timelines have into outlook for establishing the going philosophy conservative, this MosaiQ overly company is

focused XX European our SDSX, field Over MosaiQ microarray. the the trial completion field disease on trials months, next be activities of will surrounding the screening the including for initial

Europe in the for and European microarray participate calendar of second where immunohematology file currently the to commercialization ongoing expect already MosaiQ approval for antigen XXXX the XXXX. and we half we SDS of once The the Microarray in initial for The continue European the end extended for approval tenders year received are fiscal XXXX. of Microarray. commencement the the will Microarray We U.S. to expected in half the end regulatory field initial completion is occur to have now first IH have initial trials in for invitations of of development menu IH obtained of in the planned the by of detection the

and approval we the reach expanded to second of and goal the offer from the is the IH advance opportunity today. of advantages aging will U.S. will costs the XXXX. trial patient no menu in healthcare the testing completion when existing perspectives. MosaiQ pursuing So we remains field upon The is U.S. the calendar our half disrupt in extra expect diagnostic file large attractive for that The also platforms MosaiQ at MosaiQ market regulatory that European are for to fact highly many well are do symptoms. transfusion we compelling. to placed care the

a blood comprehensive matching characterization donor fault cost automated fast, all testing better to capable proof fully efficiently for patient of blood, of allowing and delivering the donated of a Firstly, patients. platform and

Serological simplifying routine the results that not for may technology, consumable of QX for elimination grouping blood Disease to clinician. all or it platform testing extent grouping, to disease matters for make ultimately single bloods and and because molecular the blood higher, a required be current a unified And failure testing full manual Secondly, last and be existing impractical simply of testing least, by the follow ambiguous requirements. and donated required to characterized screening, Screening processes expensive

towards their market in like to developed, tremendous of of The will substantial. launch very and potential the for the remaining laboratories while of annually, I steps over of spend absolutely ask partners success both costs at much. would donor operator contribution major I reagent continued has the in Europe. for now worldwide. the to execution begin bring MosaiQ offering will thank With MosaiQ we improve market is the Thank session. billion transfusion our addressable term, to you target lower medicine highly for and it of Near that, commercial on $X.X the testing is MosaiQ to employees Q&A and Quotient. to So focused efficiencies advance remain all

Operator

[Operator Jennings Instructions] with Josh line question. the The of your Company. you. with Thank from Please Cowen comes proceed first and question

Joshua Jennings

the Congratulations Hi, thanks Franz and good making the trials on and to CEO. field morning permanent EU for the question. on taking it congratulations appointment as

Franz Walt

you. Thank

Joshua Jennings

start to but it question, Maybe answer more you pretty position, just – the get you what change were I on, in you've guys so on heart, some, drove could colour permanent decision to I the add taken did know your your prepared of some wanted Interim you you of now maybe remarks drove my some of –to now decision CEO, to were there? clear the change Franz the when think what a is

Franz Walt

of what, then first to all the strong this the I idea know and pretty bring innovative by to you was that’s a game the Well, intrigued technology the was place. truly Interim why a suddenly very two-months inspiration much and all market Board for changing for became to these as stepped I of of closer in CEO joined Quotient in really And it personal. I first as worked

to its really opportunity know well well huge the close, you now we know to So and and can grasp people from, we it. do also that’s the get actually people. a right it to If and you really like get

the in driver's the was I many product then everybody somebody to part also along, think finish think, Siemens knows launch, cobas before the years, experience for also have I it you seat and was person else over with this So innovation. and I close I drop so don’t may bring Roche the was there to Atellica of know the other the that hand I just and it, I line I with for

when three yes, individual game-changing of a part lucky technology be is this a the see such I'm market. times, going to a to So

So your it it to an yes, too answers just was excitement pass that much let of question. if

Joshua Jennings

it I or the some open about longer device diagnostics checking longer are hoping you submission us bother with clearly taking potential approval time? chatter, path queue just between in for having of CE a the some talking commercialization? Can help you where period also are you that fact has think There about and to you you could for answer. will second the based timelines and processes, Thanks noise, was gates actually been half of or a year. on companies prolonged in for mark know CE on, you approval submission up mark the a and

Franz Walt

Yes, you will know course, the in steps results the there we June. But it’s, as communicate we other earlier, are communicated of many complete. month have to concordance of

stability we internally the facility which the associated the for physical common all So technical of the repeatability, inclusion we the results if the then necessary as ISO studies and not necessary as elements of guess need conclusion so that’s the and CTS population. requirements are I as the to the with done the need all robustness, well well, including certification manufacturing produce certification also ISO the specifications as studies complete to as all concordance then and Eysins satisfy to product's clinical well so of as studies stability, the the XXXXX product related

done and we submit, staggered a we So submission. I decided for have to is think we then have what here

submit information much we trials in notified early data, as the one review report have of go, the submitting hands possible put the we are for clinical as clinical possible not body. but the as in as advance So can so what everything technical we we dossier, into of trial

trial reports the we a would strategy and claims for a step the results in we approvals the product to performance partial and of are are can finalize generation we of the getting as to we which make dossier now the all final and final review labeling instructions technical results claim. generating and so, be have final And require, take parallel study Then data. the is use they validation aligning also and the study all and place

time, a illusion of finalize believe start an for couple peak kind a results the takes we took weeks. of also everything can the to couple before it’s we the emphasizing to we just it once a of well last the or that trials, it days week and field So saw have while

go the holds not a in have we it’s steps is a it park and we and So in to way walk have those and carefully really through solid. it that do to it

a So for have books need took I the for while bend in the to over basically, paused when we we distance progress place and to and made successfully. and project over took this issue that - we some sure everything

done. will of get take time little bit So to a everything it

commercial approval who eager this done. that. to you that We in gives some can are we engage commence have to They we have there's have course although the but have great participate with if progress us customers really made with only of to and attend, we invited us. once bit and little regulatory a already hope corresponding insight still be not work - before I activities

Joshua Jennings

you all force? last thinking European the placement or how about and to how strategy, at sales this updates question, out taking is your going building any lease, for outright terms terms move in and Thanks just you’re update of be commercialization, closer sale capital sales you're just thinking a of thoughts the and questions. Understood in as the about also to any

Chris Lindop

to last designed because capital. changed laboratories. these are pay the the running cost from will that go these that profitability of a think systems reagent if tilt, at week. many of as I automated high other devices, The We’ve full would before devices was of for question. device would, take we've it into is Okay, one in relatively central the hasn’t And about the said devices Josh. the I perspective nominal commercialization really us compared to throughput strategy actual these this of

regulatory they agencies their to to device their a countries buy capital. sell in absent requirement some require So do

it the once will pricing the intensity these We almost cost a very no the to to that And brainer. makes of it’s open devices. be again, throughput capital

Operator

you. Thank

with of your Please proceed Our question. Brandon next from is line Couillard with Jefferies. the question

Brandon Couillard

morning. Good Thanks.

Franz Walt

Hi good, morning Brandon.

Brandon Couillard

to that Interim level XX I of at been to and CEO that now sort about behind your remarks, delays are the you that in you've spoke missed refreshed guess could of the development you as point? Franz, confidence seat, some and your speak this company in prepared timeliness the of largely days just milestones there

Franz Walt

there planned, to past were of think in work parallel the assumption and was I hiccups, that back, three then Yes, some was interdependencies assume kind have real works to miscalculation have these have but you of with as to it to a a you in path we just life and everything the perfectly you corrected. out development do that the have and right repeated passing just or has this be move was go

So develop first planning in what it to required Then has experienced it team reference. has I actually how reflected how I of myself the versus is, examples past think long as on takes the have market much have in original and we also we all a our then the things. did time corresponding

it together nevertheless So we these made and ambitious. all took

is not trailblazer mathematical It’s in targets targets allowing very in are a because the are portfolio, forecasting, engaging which ambitious, have accurate technical reference you're also that something mature it's difficult if you unforeseeable. and likely kind complete for have with new, R&D an a but have with already which history. easy it's your of forecast already predict if completely something But go in of you then improvement there, are something extra less also you already it’s like market methods is to then just the is if a through, like like So but is forecast. some it’s work a you new to the groundbreaking technology, data that’s which

communicated we my dates that confidence the So have I I have say to perspective, today. in have from

industry, otherwise signed the I the have CEO news are as takes team, I I I not think suicidal far that's well but everything And we it a technology am great saying, this up the great house. see seen this not perfect, your we nevertheless technology. intensive time, XX-year is and have all And turning so is question? why experts gosh oh for right? the are the here my not answers point really here. takes developing great five-year apart have motivation anybody that has potential, companies around technology protection. copy can microarrays head that everybody. would up technology and seen but of If also is kind I for have a what expertise is how the good it in the and definitely like I And takes other is it is, IP brains many start us this research, getting the of don’t and but I see that fixable, maybe yet from

Brandon Couillard

volumes some over microarray that field very is thank from the that you to that’s you. really pushing helpful, wait serological be how then of shift expect through good, the calendar XXXX? you context, would half first That’s MosaiQ until the consumable the commercially that And And to trials then do would you about to is disease think there screening adoption available? prevent technical hurdle ramp screening to needs achieved that in prior disease into labs

Franz Walt

the also screening the of microarray work improvement every concept, we disease for serological doing first But think we has the I everything infrastructure to then is work content. together over now. and me kind whole the that’s microarray instrument it Well, initial microarrays, ramp market be are the or because assay, an to concept providing, they’re are from testing in the have it whole of once the around we to proof enriching up, this immunohematology software manufacturing the

will phase real the think, running. I already second II, and immunohematology of be the kind IH probably is is up break ground So

number tests. So we the are extending of

disease. disease. world this also first that confident here to I be is We additional are one call it adding like a will think the infectious prove it work and an will wake-up with to the for And XX basically everybody can we and I’m for would one very tests also infectious phase with in the a work second and SDS, the smaller we

depends one, and job very So we tests but expanding requirement we get tests, the to number we we first need they it will replace put just expanding, much course of are their done. the are have what two we customers, on once then the of it, available the what on of

yes, by requires beyond, confidence you microarray results and in think everything traditional diagnostics for limit And or that and have it multiple we I outside transfusion go the to for microarrays, I So diagnostics. step. high with of assume of be have can but think level eligible think volume even what kind human technology, diagnostics is sample widely is the I step or in either one

classical already right next feasibility is studies First the on serological infectious with now disease, blood are step testing molecular doing we grouping, is testing. disease and

we of go work, we hands a than and have step more step. lot money by So work and

Brandon Couillard

Very good, thank you.

Operator

this time, remarks. for I management the turn closing At you. floor will back Thank to

Franz Walt

All right, to updating submission our call made expect we very the to a bye-bye. today joining for you XXXX much thank forward all conference everybody and and you by in quarter first regulatory so our on have fiscal EU progress for on preparation of look Thank you call. we have this the day, good us time

Operator

conference. today’s concludes This

You at for Thank may participation. your your time. lines this disconnect you

Quotient (QTNTQ) 29 May 182018 Q4 Earnings call transcript