Quanterix(QTRX) - 2019 Q4 - Annual Report

Part I Business Quanterix provides ultra-sensitive digital immunoassay platforms using Simoa technology for life sciences research, generating revenue from instruments, consumables, and lab services - The company's core offering is its proprietary Simoa technology, providing ultra-sensitive protein detection for research in neurology and oncology[18] - Quanterix targets a life science research market estimated at $3 billion annually, with potential growth to $8 billion, and future opportunities in diagnostics and precision health markets exceeding $30 billion[22][23] - In August 2019, Quanterix acquired UmanDiagnostics AB to secure the supply of premier neurofilament light (Nf-L) antibodies for its neurology assays[33][37] Product Portfolio Overview | Product/Service | Technology | Key Features | | :--- | :--- | :--- | | HD-X | Bead-based | Fully automated, high-throughput, multiplexing (up to 6-plex). Launched in H2 2019 | | SR-X | Bead-based | Compact benchtop, lower price point, flexible assay prep | | SP-X | Planar array | Benchtop, higher multiplexing capabilities (up to 10-plex), ideal for oncology/immunology | | Consumables | Bead & Planar | ~80 bead-based assay kits and ~100 planar array biomarkers. Homebrew kits available | | Accelerator Lab | Service | CLIA-certified lab providing sample testing, custom assay development. Completed over 800 projects | - Consumables revenue grew significantly from $7.6 million in 2017 to $25.6 million in 2019, comprising approximately 45% of total revenue in 2019[43] Risk Factors The company faces risks including historical losses, market acceptance of Simoa technology, reliance on single-source manufacturers, costly FDA approvals, intellectual property protection, and global event disruptions - The company has a history of financial losses, reporting a net loss of $40.8 million in 2019 and an accumulated deficit of $216.2 million as of December 31, 2019[227] - Revenue from Nf-L related services and consumables constituted approximately 33% of total revenue for fiscal year 2019, indicating significant concentration[250] - The company relies on single contract manufacturers, STRATEC for HD-X and Paramit for SR-X instruments, posing significant supply chain risk[278] - Future clinical diagnostic products require costly, time-consuming, and uncertain FDA clearance or approval, as current products are labeled "For Research Use Only" (RUO)[295][296][297] - The core Simoa bead-based technology is exclusively licensed from Tufts University, and losing this license would critically harm the business[342][343] - The COVID-19 pandemic is identified as a risk potentially disrupting operations, supply chains, and customer demand[251] Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - Not applicable[399] Properties The company's principal facility is a 91,600 square foot leased space in Billerica, Massachusetts, with its Uman subsidiary leasing 6,500 square feet in Umeå, Sweden - The company leases its 91,600 square foot headquarters in Billerica, MA, under an 11-year and five-month lease term starting April 1, 2019[400] - Subsidiary Uman leases approximately 6,500 square feet in Umeå, Sweden, with leases expiring between May 2020 and February 2023[401] Legal Proceedings The company is not currently a party to any material legal proceedings - As of the filing date, Quanterix is not involved in any material legal proceedings[402] Mine Safety Disclosures This item is not applicable to the company - Not applicable[403] Part II Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on Nasdaq under "QTRX", with 28.2 million shares outstanding as of March 2020, and IPO proceeds of $65.6 million fully utilized - Common stock trades on Nasdaq under the symbol QTRX[406] - As of March 1, 2020, 28,225,653 shares of common stock were outstanding[406] - Net proceeds of approximately $65.6 million from the 2017 IPO have been fully utilized for operating expenses, capital investments, debt payments, and the Aushon acquisition[409] Selected Financial Data This section summarizes five years of consolidated financial data, showing consistent revenue growth to $56.7 million in 2019, but increasing net losses reaching $40.8 million, with total assets growing to $170.0 million Consolidated Statement of Operations Data (in thousands) | | 2019 | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total revenue | $ 56,734 | $ 37,632 | $ 22,874 | $ 17,585 | $ 12,180 | | Gross profit | 26,836 | 17,948 | 9,987 | 7,748 | 5,715 | | Loss from operations | (41,600) | (31,550) | (26,005) | (21,711) | (14,523) | | Net loss | (40,796) | (31,536) | (27,019) | (23,173) | (15,943) | Consolidated Balance Sheet Data (in thousands) | | 2019 | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $109,155 | $ 44,429 | $ 79,682 | $ 29,671 | $ 2,323 | | Total assets | $169,951 | $ 67,611 | $ 91,779 | $ 37,117 | $ 7,351 | | Total stockholders' equity (deficit) | $128,658 | $ 41,065 | $ 65,866 | $(115,109) | $ (88,640) | Management's Discussion and Analysis of Financial Condition and Results of Operations In FY2019, total revenue grew 51% to $56.7 million, but net loss widened to $40.8 million due to a 55% increase in SG&A, while liquidity remains strong with $109.2 million in cash, bolstered by $112.5 million from equity offerings Financial Performance Comparison (FY 2019 vs. FY 2018) | Metric | FY 2019 (in thousands) | FY 2018 (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $56,734 | $37,632 | 51% | | Product Revenue | $40,491 | $23,365 | 73% | | Service & Other Revenue | $16,059 | $12,117 | 33% | | Gross Profit | $26,836 | $17,948 | 50% | | Gross Margin | 47% | 48% | -1 ppt | | R&D Expense | $16,190 | $15,805 | 2% | | SG&A Expense | $52,246 | $33,693 | 55% | | Net Loss | $(40,796) | $(31,536) | 29% | - The 55% increase in SG&A expense in 2019 was driven by headcount additions, public company costs, a new headquarters lease, and approximately $1.9 million in Uman acquisition costs[469] - The company significantly improved its cash position in 2019, ending the year with $109.2 million in cash and cash equivalents, up from $44.4 million in 2018, primarily due to $48.0 million from an "at-the-market" offering and $64.5 million from an underwritten public offering[425][486][488] - The company has a minimum purchase commitment with its HD-X manufacturer, STRATEC, through May 2021, with potential fees up to $9.6 million for non-compliance based on 2019 year-end purchases[522] Quantitative and Qualitative Disclosures about Market Risk The company's primary market risks are foreign currency exchange rates and interest rates, impacting investment income and variable-rate debt, with no current hedging instruments - The company is exposed to foreign currency exchange risk with growing international operations, though a 10% adverse change would not have been material as of December 31, 2019[528] - Interest rate risk exists for $109.2 million in cash and cash equivalents and $7.7 million in outstanding variable-rate debt, with a 10% change in rates not expected to materially affect income or expense[530][531] Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements for 2017-2019, including the independent auditor's report and detailed notes on accounting policies and business combinations - The report includes the Independent Registered Public Accounting Firm's Report, Consolidated Balance Sheets, Statements of Operations, Comprehensive Loss, Cash Flows, and Stockholders' Equity[533][570] - The company adopted ASC 606 on January 1, 2019, using the modified retrospective method, resulting in a $0.4 million cumulative adjustment to the opening accumulated deficit[573][664] - Note 15 details purchase price allocation for the Aushon (January 2018) and Uman (August 2019) acquisitions, including acquired assets, assumed liabilities, goodwill, and intangible assets[767][773] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure This item is not applicable, indicating no changes in or disagreements with the company's accountants - Not applicable[534] Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2019, excluding the Uman acquisition as permitted - Management concluded that disclosure controls and procedures were effective as of December 31, 2019[535] - Management concluded that internal control over financial reporting was effective as of December 31, 2019[540] - The assessment of internal controls excluded the Uman acquisition, which occurred in August 2019[538] - As an emerging growth company, the report does not include an attestation report from the independent registered public accounting firm on internal control over financial reporting[541] Other Information This item is not applicable - Not applicable[542] Part III Directors, Executive Officers and Corporate Governance Information for this item is incorporated by reference from the company's definitive proxy statement for its 2020 Annual Meeting of Stockholders - Information is incorporated by reference from the 2020 proxy statement[544] Executive Compensation Information for this item is incorporated by reference from the company's definitive proxy statement for its 2020 Annual Meeting of Stockholders - Information is incorporated by reference from the 2020 proxy statement[545] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information for this item is incorporated by reference from the company's definitive proxy statement for its 2020 Annual Meeting of Stockholders - Information is incorporated by reference from the 2020 proxy statement[546] Certain Relationships and Related Transactions, and Director Independence Information for this item is incorporated by reference from the company's definitive proxy statement for its 2020 Annual Meeting of Stockholders - Information is incorporated by reference from the 2020 proxy statement[547] Principal Accountant Fees and Services Information for this item is incorporated by reference from the company's definitive proxy statement for its 2020 Annual Meeting of Stockholders - Information is incorporated by reference from the 2020 proxy statement[548] Part IV Exhibits, Financial Statement Schedules This section lists financial statements and exhibits filed with the 10-K, including the Uman acquisition agreement, corporate governance documents, financing agreements, and key manufacturing and license contracts - This section provides a list of all exhibits filed with the 10-K, including material contracts and corporate governance documents[553] Form 10-K Summary This item is not applicable - Not applicable[562]