Quanterix(QTRX) - 2022 Q1 - Quarterly Report

Front Matter SEC Filing Information This section provides the basic filing information for the Quarterly Report on Form 10-Q for Quanterix Corporation, including the reporting period, commission file number, and securities registered - The report is a Quarterly Report on Form 10-Q for the period ended March 31, 2022[2] - Quanterix Corporation's Commission File Number is 001-38319[2] Securities Registered | Title of each class: | Trading Symbol(s) | Name of each exchange on which registered: | | :-------------------------------- | :------------------ | :----------------------------------------- | | Common Stock, $0.001 par value per share | QTRX | The Nasdaq Global Market | - As of May 4, 2022, the registrant had 36,910,137 shares of common stock outstanding[4] Special Note Regarding Forward-Looking Statements This section serves as a cautionary statement, informing readers that the report contains forward-looking statements subject to risks, uncertainties, and assumptions - The report contains forward-looking statements regarding financial performance, subject to risks and uncertainties[11] - Readers should not rely on forward-looking statements as predictions of future events, as actual results may differ materially[12] - The Company undertakes no obligation to update forward-looking statements after the report date, except as legally required[12] PART I — FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Quanterix Corporation, including the balance sheets, statements of operations, comprehensive loss, cash flows, and stockholders' equity, along with detailed notes explaining accounting policies, revenue recognition, and other financial disclosures Unaudited Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (amounts in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :---------------------------------- | :--------------- | :------------------ | | Cash and cash equivalents | $374,317 | $396,465 | | Total current assets | $433,706 | $448,955 | | Total assets | $504,657 | $501,527 | | Total current liabilities | $31,773 | $36,977 | | Total stockholders' equity | $426,408 | $440,952 | | Total liabilities and stockholders' equity | $504,657 | $501,527 | - Total assets increased slightly from $501.5 million at December 31, 2021, to $504.7 million at March 31, 2022[15] - Cash and cash equivalents decreased by $22.1 million, while total current liabilities decreased by $5.2 million[15] Unaudited Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations Highlights (amounts in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Product revenue | $20,656 | $18,248 | | Service and other revenue | $8,810 | $6,409 | | Collaboration revenue | $86 | $261 | | Grant revenue | $— | $2,291 | | Total revenue | $29,552 | $27,209 | | Gross profit | $14,559 | $16,349 | | Loss from operations | $(18,187) | $(9,789) | | Net loss | $(18,153) | $(10,104) | | Net loss per share, basic and diluted | $(0.49) | $(0.29) | - Total revenue increased by 9% year-over-year to $29.6 million, driven by increases in product and service revenue, while grant revenue ceased[16] - Net loss significantly increased by 80% year-over-year to $18.2 million, and loss per share rose from $(0.29) to $(0.49)[16] Unaudited Condensed Consolidated Statements of Comprehensive Loss Condensed Consolidated Statements of Comprehensive Loss (amounts in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(18,153) | $(10,104) | | Cumulative translation adjustment | $(1,197) | $(1,251) | | Total other comprehensive loss | $(1,197) | $(1,251) | | Comprehensive loss | $(19,350) | $(11,355) | - Comprehensive loss increased from $(11.4) million in Q1 2021 to $(19.4) million in Q1 2022, primarily due to the higher net loss[19] Unaudited Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows Highlights (amounts in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(21,695) | $(14,089) | | Net cash (used in) provided by investing activities | $(874) | $2,435 | | Net cash provided by financing activities | $979 | $273,313 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(21,590) | $261,659 | | Cash, restricted cash, and cash equivalents at end of period | $376,894 | $444,072 | - Net cash used in operating activities increased to $(21.7) million in Q1 2022 from $(14.1) million in Q1 2021[21] - Net cash provided by financing activities significantly decreased from $273.3 million in Q1 2021 (due to a public offering) to $1.0 million in Q1 2022[21] Unaudited Condensed Consolidated Statements of Stockholders' Equity Condensed Consolidated Statements of Stockholders' Equity Highlights (amounts in thousands) | Metric | Balance at Dec 31, 2021 | Balance at Mar 31, 2022 | | :-------------------------- | :---------------------- | :---------------------- | | Additional paid-in capital | $745,936 | $750,742 | | Accumulated other comprehensive income (loss) | $441 | $(756) | | Accumulated deficit | $(305,462) | $(323,615) | | Total stockholders' equity | $440,952 | $426,408 | - Total stockholders' equity decreased from $441.0 million at December 31, 2021, to $426.4 million at March 31, 2022[23] - Accumulated deficit increased by $18.1 million due to the net loss incurred during the quarter[23] Notes to Condensed Consolidated Financial Statements 1. Organization and operations - Quanterix Corporation is a life sciences company developing ultra-sensitive digital immunoassay platforms based on its proprietary Simoa detection technology[26] - The company's platforms enable reliable detection of protein biomarkers in extremely low concentrations, advancing precision health for research and diagnostics[26] - Key immunoassay platforms include Simoa HD-1 (launched 2014), SR-X (2017), SP-X (2019), and the upgraded Simoa HD-X (2019)[27] 2. Significant accounting policies - There have been no material changes in the Company's significant accounting policies during the three months ended March 31, 2022[31] 3. Revenue recognition - Revenue is recognized when a customer obtains control of a promised good or service, reflecting the consideration expected in exchange[32] - The Company entered into a Master Collaboration Agreement with Eli Lilly and Company (Lilly) in Q1 2022, including a $5.0 million upfront payment and quarterly payments for assay R&D services in Alzheimer's disease[36][38] - Approximately $2.7 million of revenue from the Lilly Collaboration Agreement was recognized as service revenue during the three months ended March 31, 2022[41] Disaggregated Revenue by Type and Geography (amounts in thousands) | Revenue Type | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Product revenues - Instruments | $6,222 | $6,961 | | Product revenues - Consumable and other products | $14,434 | $11,287 | | Total Product revenues | $20,656 | $18,248 | | Service and other revenues - Service-type warranties | $2,034 | $1,471 | | Service and other revenues - Research services | $6,240 | $4,298 | | Service and other revenues - Other services | $536 | $640 | | Total Service and other revenues | $8,810 | $6,409 | | Collaboration and license revenue | $86 | $261 | - The aggregate amount of transaction price allocated to unsatisfied or partially satisfied performance obligations was $10.4 million as of March 31, 2022, with $9.2 million expected to be recognized in the next 12 months[49] - No grant revenue was recognized during the three months ended March 31, 2022, compared to $2.3 million in the prior year, related to the NIH RADx program[61] 4. Net loss per share Anti-Dilutive Common Share Equivalents | Type | As of March 31, 2022 | As of March 31, 2021 | | :-------------------------- | :------------------- | :------------------- | | Stock options | 2,185,706 | 2,428,268 | | Unvested restricted stock and stock units | 587,939 | 563,810 | - Common share equivalents, including stock options and unvested restricted stock units, were excluded from diluted net loss per share calculation as their effect would be anti-dilutive[63] 5. Fair value of financial instruments Fair Value Measurements of Financial Assets (amounts in thousands) | Financial Asset | March 31, 2022 (Total) | December 31, 2021 (Total) | | :-------------------------- | :----------------------- | :------------------------ | | Cash equivalents - money market funds | $332,112 | $332,093 | - Cash equivalents in money market funds, classified as Level 1, remained stable at approximately $332.1 million at both March 31, 2022, and December 31, 2021[64] 6. Inventory Inventory Composition (amounts in thousands) | Inventory Component | March 31, 2022 | December 31, 2021 | | :-------------------------- | :--------------- | :------------------ | | Raw materials | $9,199 | $7,892 | | Work in process | $4,068 | $4,923 | | Finished goods | $9,402 | $9,375 | | Total net inventory | $22,669 | $22,190 | - Total net inventory increased slightly from $22.19 million at December 31, 2021, to $22.67 million at March 31, 2022, primarily due to an increase in raw materials[65] 7. Allowance for Credit Losses Allowance for Credit Losses Roll-Forward (amounts in thousands) | Metric | Amount | | :-------------------------- | :----- | | Balance at January 1, 2022 | $419 | | Credit loss gain | $(171) | | Write-offs charged against allowances | $— | | Balance at March 31, 2022 | $248 | - The allowance for credit losses decreased from $419 thousand at January 1, 2022, to $248 thousand at March 31, 2022, primarily due to a credit loss gain of $171 thousand[68] 8. Other accrued expenses Other Accrued Expenses (amounts in thousands) | Expense Type | March 31, 2022 | December 31, 2021 | | :-------------------------- | :--------------- | :------------------ | | Inventory purchases | $558 | $568 | | Property and equipment purchases | $202 | $229 | | Royalties | $1,096 | $1,250 | | Professional services | $1,861 | $2,126 | | Leasehold improvements | $1,081 | $— | | Development costs | $977 | $566 | | Tax liabilities | $806 | $430 | | Other | $1,443 | $1,317 | | Total accrued expenses | $8,024 | $6,486 | - Total accrued expenses increased from $6.49 million at December 31, 2021, to $8.02 million at March 31, 2022, driven by new leasehold improvements and higher development costs[69] 9. Stock-based compensation Stock-Based Compensation Expense (amounts in thousands) | Expense Category | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Cost of product revenue | $88 | $90 | | Cost of service and other revenue | $166 | $110 | | Research and development | $398 | $399 | | Selling, general, and administrative | $3,175 | $2,787 | | Total | $3,827 | $3,386 | - Total stock-based compensation expense increased by $0.44 million (13%) to $3.83 million in Q1 2022, with the majority attributed to selling, general, and administrative expenses[70] - As of March 31, 2022, unrecognized compensation cost related to unvested RSUs and stock options totaled $42.8 million, expected to be recognized over 2.9 years[70] 10. Leases - On January 28, 2022, the Company executed a new lease for 85,800 square feet of office and laboratory space in Bedford, Massachusetts, to serve as its principal office and headquarters[72] - The initial term of the new lease is eight years and nine months, with options to extend for two additional five-year periods[72] Operating Lease Costs and Commitments (amounts in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Operating lease costs | $663 | $671 | | Weighted average remaining lease term | 8.7 years | 9.6 years | | Weighted average discount rate | 7.4% | 9.7% | | Operating cash flows used for operating leases | $862 | $846 | Future Minimum Commitments (as of March 31, 2022): | Period | Amount | | :-------------------------- | :----- | | Total lease payments | $62,649 | | Less: imputed interest | $17,200 | | Total operating lease liabilities | $45,449 | 11. Commitments and contingencies - The Company pays low single-digit royalties to Tufts University under an exclusive license agreement for certain intellectual property[76] - Royalty expense to Tufts University was $0.3 million in Q1 2022, down from $0.5 million in Q1 2021[76] - The Company is not currently a party to any pending or threatened litigation that would have a material adverse effect on its financial condition or operations[77] 12. Collaboration and license arrangements - Collaboration and license revenue was $0.1 million in Q1 2022, compared to $0.3 million in Q1 2021[78] - The Company had $0.5 million of deferred revenue related to ongoing negotiations with a diagnostics company at both March 31, 2022, and December 31, 2021[79] - Under the Abbott License Agreement (September 2020), the Company granted Abbott a non-exclusive, royalty-bearing license for bead-based single molecule detection patents in in vitro diagnostics[80] - No revenue was recognized under the Abbott License Agreement during the three months ended March 31, 2022, or 2021[84] 13. Related party transactions - Royalty expense to Tufts University (a related party) was $0.3 million in Q1 2022 and $0.5 million in Q1 2021[85] - Revenue from Harvard University and its affiliates and Mass General Brigham and its affiliates totaled $0.2 million in Q1 2022, up from less than $0.1 million in Q1 2021[86] 14. Accumulated other comprehensive loss Changes in Accumulated Other Comprehensive Loss (amounts in thousands) | Metric | Balance - December 31, 2021 | Current period accumulated other comprehensive loss | Balance - March 31, 2022 | | :-------------------------- | :-------------------------- | :------------------------------------------------ | :----------------------- | | Cumulative translation adjustment | $441 | $(1,197) | $(756) | | Accumulated Other Comprehensive Income (Loss) | $441 | $(1,197) | $(756) | - Accumulated other comprehensive income shifted to a loss of $(756) thousand at March 31, 2022, from an income of $441 thousand at December 31, 2021, primarily due to a cumulative translation adjustment of $(1.2) million[88] 15. Subsequent Event - Effective April 25, 2022, E. Kevin Hrusovsky transitioned from CEO to Executive Chairman of the Board[89] - Masoud Toloue, Ph.D., President of Quanterix and Diagnostics, was appointed Chief Executive Officer and a Class II director, effective April 25, 2022[89] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations for the three months ended March 31, 2022, compared to the prior year, highlighting key trends and strategic initiatives Overview - Quanterix develops ultra-sensitive digital immunoassay platforms (Simoa technology) for precision health research and diagnostics, focusing on protein biomarkers[92] - The installed base of Simoa instruments generates recurring revenue from consumables, which is expected to be an increasingly important contributor[93] - The company entered into a Master Collaboration Agreement with Eli Lilly and Company in Q1 2022, including a $5.0 million upfront payment, for Simoa immunoassay development in Alzheimer's disease[99] - In May 2022, the company voluntarily withdrew the EUA for its SARS-CoV-2 antibody and antigen tests due to changing market dynamics, but continues to commercialize RUO-labeled versions[104] - As of March 31, 2022, cash and cash equivalents were $376.9 million, with an accumulated deficit of $323.6 million[110] - The company expects significant expense increases due to expanding sales and marketing, R&D, potential acquisitions, and public company operating costs[112] Results of Operations Key Financial Results (amounts in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Increase (Decrease) | % Change | | :---------------------------------- | :-------------------------------- | :-------------------------------- | :------------------ | :--------- | | Product revenue | $20,656 | $18,248 | $2,408 | 13% | | Service and other revenue | $8,810 | $6,409 | $2,401 | 37% | | Collaboration and license revenue | $86 | $261 | $(175) | (67)% | | Grant revenue | $— | $2,291 | $(2,291) | (100)% | | Total revenue | $29,552 | $27,209 | $2,343 | 9% | | Cost of goods sold and services | $14,993 | $10,860 | $4,133 | 38% | | Gross profit | $14,559 | $16,349 | $(1,790) | (11)% | | Research and development | $7,034 | $6,683 | $351 | 5% | | Selling, general, and administrative | $25,712 | $19,455 | $6,257 | 32% | | Loss from operations | $(18,187) | $(9,789) | $(8,398) | (86)% | | Net loss | $(18,153) | $(10,104) | $(8,049) | (80)% | - Total revenue increased by 9% to $29.6 million, primarily driven by a 13% increase in product revenue and a 37% increase in service and other revenue, partially offset by the absence of grant revenue[114] - Cost of product revenue increased by 44% due to manufacturing inefficiencies and higher excess/obsolete product, leading to a decrease in gross profit by 11%[115] - Selling, general, and administrative expenses increased by 32% due to additional headcount and increased discretionary spending[118] - Net loss increased by 80% to $18.2 million, primarily due to higher operating expenses and reduced gross profit[113] Liquidity and Capital Resources Cash Flow Summary (amounts in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(21,695) | $(14,089) | | Net cash (used in) provided by investing activities | $(874) | $2,435 | | Net cash provided by financing activities | $979 | $273,313 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(21,590) | $261,659 | - Net cash used in operating activities increased to $21.7 million in Q1 2022, driven by the net loss and changes in operating assets and liabilities[125] - Net cash provided by financing activities significantly decreased from $273.3 million in Q1 2021 (due to a public offering) to $1.0 million in Q1 2022[130] - The company believes current cash and cash equivalents ($376.9 million at March 31, 2022) and commercial sales will be sufficient to meet anticipated operating cash requirements for at least the next 12 months[132] - No material changes to contractual obligations and commitments since the 2021 Annual Report on Form 10-K, except for the new Bedford, Massachusetts lease[135] - The company did not have any off-balance sheet arrangements during the periods presented[136] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there have been no material changes to the company's market risk information since its Annual Report on Form 10-K for the year ended December 31, 2021 - No material changes to market risk information have occurred since the Annual Report on Form 10-K for the year ended December 31, 2021[142] Item 4. Controls and Procedures This section details the management's evaluation of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2022[144] - There were no material changes in internal control over financial reporting during the three months ended March 31, 2022[145] PART II — OTHER INFORMATION Item 1. Legal Proceedings This section confirms that the company is not currently involved in any material legal proceedings - The Company is not currently a party to any material legal proceedings[147] Item 1A. Risk Factors This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - There have been no material changes to the risk factors described in the Annual Report on Form 10-K for the year ended December 31, 2021[148] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section indicates that there is no applicable information to report regarding unregistered sales of equity securities and use of proceeds - This item is not applicable for the reporting period[149] Item 3. Defaults Upon Senior Securities This section states that there is no applicable information to report regarding defaults upon senior securities - This item is not applicable for the reporting period[150] Item 4. Mine Safety Disclosures This section indicates that there is no applicable information to report regarding mine safety disclosures - This item is not applicable for the reporting period[151] Item 5. Other Information This section states that there is no other information to report for the period - This item is not applicable for the reporting period[152] Item 6. Exhibits This section provides a comprehensive list of exhibits filed as part of the Quarterly Report on Form 10-Q, including various agreements, certifications, and XBRL documents - The exhibits include a Lease Agreement dated January 28, 2022, for the new Bedford, Massachusetts office and laboratory space[154] - Certifications from the Principal Executive Officer and Principal Financial Officer (pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002) are included[154] - XBRL Instance Document and Taxonomy Extension Documents are filed as part of the report[154] SIGNATURES Signatures This section contains the official signatures of the company's principal executive officer and principal financial officer, certifying the accuracy and completeness of the Quarterly Report on Form 10-Q - The report was signed by Masoud Toloue, President and Chief Executive Officer, and Michael A. Doyle, Chief Financial Officer, on May 10, 2022[160]