Quanterix(US:QTRX)2020-11-06 19:05PART I — FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for Quanterix Corporation for the period ended September 30, 2020 Condensed Consolidated Balance Sheets The balance sheet as of September 30, 2020, shows a significant increase in total assets to $264.1 million from $170.0 million at year-end 2019, driven by a rise in cash and cash equivalents Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | Sep 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $173,162 | $109,155 | | Accounts receivable, net | $26,262 | $10,906 | | Total current assets | $214,928 | $132,661 | | Total assets | $264,105 | $169,951 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $28,092 | $19,833 | | Total liabilities | $55,064 | $41,293 | | Total stockholders' equity | $209,041 | $128,658 | | Total liabilities and stockholders' equity | $264,105 | $169,951 | Condensed Consolidated Statements of Operations For Q3 2020, Quanterix reported a net income of $2.2 million, a significant turnaround from a $9.9 million net loss in Q3 2019, driven by a 110% increase in total revenue Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2020 | Q3 2019 | Nine Months 2020 | Nine Months 2019 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $31,389 | $14,944 | $60,246 | $40,816 | | Gross profit | $21,106 | $7,033 | $33,132 | $19,969 | | Income (loss) from operations | $2,278 | $(10,243) | $(21,651) | $(30,116) | | Net income (loss) | $2,203 | $(9,870) | $(21,709) | $(29,838) | | Net income (loss) per share, diluted | $0.07 | $(0.37) | $(0.75) | $(1.24) | Condensed Consolidated Statements of Cash Flows For the nine months ended September 30, 2020, net cash provided by financing activities was a substantial $94.2 million, mainly from a public offering, resulting in a $64.0 million net increase in cash Cash Flow Summary for the Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(28,019) | $(21,652) | | Net cash used in investing activities | $(2,149) | $(24,832) | | Net cash provided by financing activities | $94,160 | $115,473 | | Net increase in cash and cash equivalents | $63,992 | $68,989 | Notes to Condensed Consolidated Financial Statements The notes provide critical context, detailing a $91.4 million net proceed from a public offering, a $10.0 million initial license fee from Abbott, and $1.9 million in NIH grant revenue - In August 2020, the company completed an underwritten public offering of approximately 3.0 million shares, resulting in net proceeds of $91.4 million36150 - On September 29, 2020, Quanterix entered into a non-exclusive license agreement with Abbott Laboratories, granting Abbott a license to its bead-based single molecule detection patents. This agreement resulted in an initial license fee of $10.0 million recognized in Q3 2020136138 - The company entered into a contract with the National Institutes of Health (NIH) under the RADx program to develop a SARS-CoV-2 antigen test. In Q3 2020, $1.9 million of grant revenue was recognized from this program8485 Disaggregated Revenue by Type - Nine Months Ended Sep 30, 2020 (in thousands) | Revenue Type | Amount | | :--- | :--- | | Product revenues | $28,285 | | Service and other revenues | $18,631 | | Collaboration and license revenue | $11,401 | | Total Revenue (excluding Grant) | $58,317 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses significant revenue growth in Q3 2020, the impact of COVID-19, and a strong liquidity position with $173.2 million in cash, bolstered by a recent public offering Overview The overview describes Quanterix's Simoa technology, the impact of COVID-19 on operations and new opportunities, and the strategic license agreement with Abbott Laboratories - The company is developing a novel SARS-CoV-2 antigen test, supported by an NIH RADx program contract with a total award value of $18.2 million. The company recognized $1.9 million of grant revenue from this program in Q3 2020169 - A non-exclusive license agreement was signed with Abbott Laboratories on September 29, 2020, which included an initial license fee of $10.0 million167 - The COVID-19 pandemic has caused interruptions in customer laboratories and limited access for instrument installations, impacting revenues. However, the company has expanded its Accelerator Laboratory capacity to support affected customers168169 Results of Operations This section details a 110% surge in Q3 2020 total revenue to $31.4 million, driven by collaboration and grant revenues, and an improved gross margin of 67% Comparison of Three Months Ended September 30 (in thousands) | Metric | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | Total revenue | $31,389 | $14,944 | 110% | | Gross profit | $21,106 | $7,033 | 200% | | Gross Margin | 67% | 47% | N/A | | Income (loss) from operations | $2,278 | $(10,243) | 122% | Comparison of Nine Months Ended September 30 (in thousands) | Metric | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | Total revenue | $60,246 | $40,816 | 48% | | Gross profit | $33,132 | $19,969 | 66% | | Gross Margin | 55% | 49% | N/A | | Income (loss) from operations | $(21,651) | $(30,116) | 28% | - The increase in Q3 2020 revenue was primarily driven by $11.2 million in collaboration and license revenue from the Abbott agreement and $1.9 million in grant revenue from the RADx award176177 Liquidity and Capital Resources The company's liquidity is strong with $173.2 million in cash, significantly bolstered by a $91.4 million public offering, deemed sufficient for at least the next 12 months - As of September 30, 2020, the company had cash and cash equivalents of $173.2 million173 - In August 2020, an underwritten public offering generated net proceeds of $91.4 million200221 - Net cash used in operating activities for the nine months ended September 30, 2020 was $28.0 million, an increase from $21.7 million in the prior year period, primarily due to increases in accounts receivable and inventory214216 - Management believes that current cash and cash equivalents will be sufficient to meet anticipated operating cash requirements for at least the next 12 months225 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes to its market risk disclosures since its Annual Report on Form 10-K for the year ended December 31, 2019 - There have been no material changes to the market risk information previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2019234 Item 4. Controls and Procedures The company's disclosure controls and procedures were effective as of September 30, 2020, with no material changes in internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report235 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls236 PART II — OTHER INFORMATION Item 1. Legal Proceedings The company reports that it is not currently a party to any material legal proceedings - The company is not currently a party to any material legal proceedings238 Item 1A. Risk Factors A new risk factor highlights that the $18.2 million NIH RADx funding is milestone-based and subject to government's right to unilaterally terminate or modify the contract - A new risk factor was added concerning the WP2 contract with NIH under the RADx program for the development of a SARS-CoV-2 antigen test239 - The contract's total award value of $18.2 million is contingent on achieving certain milestones, and there is no assurance the company can meet them to access the full funding239 - The government contract contains provisions that are not typical in commercial agreements, such as the U.S. government's right to unilaterally terminate or modify the contract at its convenience, which could adversely affect revenue241 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including the Non-Exclusive License Agreement with Abbott Laboratories and officer certifications - Key exhibits filed include the Non-Exclusive License Agreement with Abbott Laboratories, dated September 29, 2020, and certifications by the CEO and CFO249