Quanterix(QTRX) - 2020 Q4 - Annual Report

Preliminary Information Form 10-K Details This section details the Form 10-K's basic filing information, including registrant, jurisdiction, address, trading symbol, and SEC status - Registrant: QUANTERIX CORPORATION, incorporated in Delaware, with principal executive offices at 900 Middlesex Turnpike, Billerica, MA 01821. Telephone: (617) 301-9400[2] - The registrant is an Accelerated filer, Smaller reporting company, and Emerging growth company[4] - As of June 30, 2020, common equity held by non-affiliates was approximately $234 million; as of March 1, 2021, 36,267,609 shares of common stock were outstanding[4][5] 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 | Documents Incorporated by Reference Portions of the 2021 Annual Meeting of Stockholders' definitive proxy statement are incorporated by reference into Part III - Portions of the definitive proxy statement for the 2021 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K[7] Table of Contents The table of contents outlines the Form 10-K's structure, detailing items and page numbers across its four main parts - The report is structured into four main parts: Part I (Business, Risk Factors, Properties, Legal Proceedings), Part II (Market for Common Equity, Financial Data, MD&A, Market Risk, Financial Statements, Controls), Part III (Directors, Executive Compensation, Security Ownership, Related Transactions, Accountant Fees), and Part IV (Exhibits, Summary)[10] Special Note Regarding Forward-Looking Statements This section cautions that the report contains forward-looking statements subject to risks, particularly those in 'Risk Factors' - The Annual Report contains forward-looking statements identifiable by words like 'anticipate,' 'believe,' 'expect,' 'intend,' 'may,' 'plan,' 'potential,' 'will,' and 'would'[12] - These statements are subject to risks, uncertainties, and assumptions, including those in 'Part I, Item 1A, Risk Factors,' and actual results could differ materially[13] - The company does not guarantee future results and undertakes no obligation to publicly update forward-looking statements, except as required by law[14] - Forward-looking statements include those about business model implementation, market size for Simoa technology, product commercialization, assay development, financial estimates, Simoa's impact on diagnostics and research, and financial performance[15] Service Marks, Trademarks and Trade Names This section clarifies the company's trademarks, including 'Quanterix' and 'Simoa,' and notes other marks do not imply endorsement - Key trademarks include 'Quanterix,' 'Simoa,' 'Simoa HD-X,' 'Simoa HD-1,' 'SR-X,' 'SP-X,' 'HD-X Analyzer,' and 'HD-1 Analyzer'[19] - The use of other companies' trade names, trademarks, or service marks does not imply a relationship with, or endorsement or sponsorship by, those companies[19] PART I Item 1. Business Quanterix is a life sciences company specializing in ultra-sensitive digital immunoassay platforms based on proprietary Simoa technology Overview Quanterix develops ultra-sensitive digital immunoassay platforms using proprietary Simoa technology for research and diagnostics - Quanterix develops ultra-sensitive digital immunoassay platforms based on proprietary Simoa detection technology[21] - Simoa platforms enable reliable detection of protein biomarkers in extremely low concentrations, often undetectable by conventional methods[21] - The technology provides insights into protein biomarkers' role in human health, facilitating a shift towards earlier detection, monitoring, prognosis, and prevention[21] - Simoa technology has been cited in over 1,100 scientific publications and adopted by over 950 customers, including all 20 largest biopharmaceutical companies[24] Our Products and Services Quanterix offers three Simoa instruments, numerous assay kits, contract research services, and COVID-19 tests with EUAs - Quanterix offers three Simoa instruments: HD-X (launched H2 2019, fully automated, bead-based), SR-X (launched Dec 2017, compact benchtop, bead-based), and SP-X (launched Apr 2019, planar array, high multiplexing)[31] - The company provides approximately 86 analyte-specific single-plex and multi-plex bead-based assay kits and about 100 planar array reagent kits for neurology, infectious disease, immunology, oncology, and cardiology[28] - Contract research services are offered through the CLIA-certified Accelerator Laboratory, completing over 1,300 projects for ~360 customers[29] - Acquired UmanDiagnostics AB in August 2019, securing supply of neurofilament light (Nf-L) antibodies and Nf-L ELISA kits, recognized as best-in-class for highly sensitive Nf-L detection[30][35] - Developed SARS-CoV-2 semi-quantitative IgG and N Protein Antigen tests, receiving FDA Emergency Use Authorizations (EUAs) in December 2020 and January 2021, respectively[36] Our Market Opportunities Simoa platforms target life science research, diagnostics, and precision health screening, with a potential $55 billion diagnostic market - Simoa platforms address life science research, diagnostics, and precision health screening markets[38] - Simoa's sensitivity can improve existing diagnostics, enable new non-invasive tests, and has significant potential in companion diagnostics for drug development and monitoring[42][43] - Precision health screening applications could involve regular blood draws to monitor protein biomarker levels in asymptomatic individuals for early disease detection[44][45] Estimated Addressable Market Opportunities (Annual) | Market Segment | Estimated Potential (Billions USD) | | :-------------------------------- | :--------------------------------- | | Pre-COVID Life Science Research (Neurology, Immunology, Oncology) | $1.0 | | COVID-19 Life Science Research | $0.2 | | Expanded Life Science Research (other areas, decentralized trials) | $7.0 | | Diagnostics & Precision Health Screening (Aggregate) | $55.0 | | - Neurology Diagnostics | $18.0 | | - Proteomic Liquid Biopsy | $20.0 | | - COVID Diagnostics | $12.0 | | - Precision Health Screening | $5.0 | Our Competitive Strengths Quanterix's strengths include proprietary ultra-sensitive Simoa technology, deep scientific validation, flexible assay design, and an attractive business model - Proprietary ultra-sensitive Simoa digital immunoassay technology platforms enable less invasive procedures and smaller sample sizes, detecting proteins undetectable by conventional methods[48] - Technology platforms leverage and improve upon industry-standard ELISA technology by adding digital capability, making them easily integrated into existing customer workflows[48] - Deep and expanding scientific validation with over 1,100 scientific publications and a customer base of over 950, including all 20 largest biopharmaceutical companies[48] - Leading market position solidified by robust customization capabilities, assay design flexibility, and the full automation of the HD-X instrument, providing high R&D productivity[48] - Highly experienced senior management team with over 20 years of relevant industry experience[50] Consumables Revenue Growth | Year | Consumables Revenue (Millions USD) | % of Total Revenue | | :--- | :--------------------------------- | :----------------- | | 2020 | $27.4 | 32% | | 2019 | $25.6 | - | | 2018 | $13.8 | - | Our Strategy Quanterix's strategy focuses on expanding protein detection, leveraging Nf-L, and growing through collaborations and acquisitions - Focus on the expanding market for protein detection and analysis, recognizing proteins as more relevant than nucleic acids for understanding health and disease in real-time[52] - Drive adoption of Simoa technology in life science research (near-term) and diagnostics/precision health screening (long-term), leveraging its sensitivity for new, less-invasive diagnostic tests and early disease detection[52] - Leverage the growing importance of Nf-L as a biomarker for neurodegenerative conditions, solidified by the acquisition of Uman and its best-in-class Nf-L antibodies[52] - Grow into new markets organically with customers and through strategic collaborations, such as licensing Nf-L antibodies to Siemens Healthineers and bead-based single molecule detection patents to Abbott Laboratories for IVD[54] - Grow through strategic acquisitions, exemplified by Aushon BioSystems (planar array technology, SP-X instrument) and UmanDiagnostics (Nf-L antibodies)[54] Industry Background The industry highlights proteins' critical role in health, with Simoa technology enabling detection of previously undetectable proteins - Proteins are critical for nearly all biological processes, providing a powerful window into an organism's health that genomic research alone cannot offer[56] - Of over 100,000 different proteins, approximately 10,500 are secreted in blood, but fewer than 1,300 are consistently detectable by conventional immunoassay technologies in healthy individuals[57] - Simoa technology, by enabling the study of more of the proteome, is expected to have a profound impact on proteomic research, similar to the Human Genome Project's impact on genomic research[61] - This enhanced detection capability is central to earlier detection, monitoring, prognosis, and prevention of diseases and injuries[61] Existing Technologies and Their Limitations Existing protein analysis technologies like ELISA and mass spectrometry have limitations in sensitivity and dynamic range - Conventional protein analysis technologies (ELISA, Western blotting, mass spectrometry, etc.) have limitations such as dilution of product molecules, narrow dynamic range, low detection limits, and procedural complexity, restricting sensitivity[63][68] - These technologies can only detect a fraction of the estimated 10,500 secreted proteins in human blood[63] - PCR, a widely used genomic analysis method, amplifies DNA sequences but can introduce distortion and bias into data, especially at low concentrations, due to repeated enzyme use and heating/cooling cycles[65] Our Simoa Technology Simoa technology advances ELISA with ultra-sensitive bead-based digital immunoassays and high-multiplex planar array technology - Simoa bead-based digital immunoassays trap single molecules in tiny microwells (40 trillionths of a milliliter), 2.5 billion times smaller than traditional ELISA wells, allowing digital readout of individual molecules for unprecedented sensitivity[67] - Simoa bead-based technology enables multiplexing by using beads labeled with different fluorescent dyes, maintaining single-plex precision, and has launched 4-plex neurology and 6-plex human cytokine assays[76][78] - Simoa planar array immunoassays use spatially segregated micro-spots within microtiter plate wells, concentrating the signal to a surface area 1,000 times smaller than traditional ELISA, enabling multiplexing up to 12 different assays per well[79] - Simoa bead-based technology can detect nucleic acids (e.g., microRNA-122 for liver toxicity) with PCR-like sensitivity but without amplification distortion and bias, and with reduced cross-contamination[88][90][91] Our Market Opportunities (Detailed) Simoa expands life science research, improves diagnostics, and enables precision health screening for early disease detection - Simoa platforms are well-positioned to capture a significant share of the life science research market due to superior sensitivity, automated workflow, multiplexing, and broader sample compatibility[94] - Simoa technology is being integrated into drug development protocols by pharmaceutical and biotechnology companies to efficiently monitor drug impact on biomarkers and predict side effects, utilized in over 800 clinical trials[96] - Simoa's sensitivity can enable earlier detection of diseases and injuries, develop new non-invasive diagnostic tests (e.g., blood tests for TBI, replacing CT scans), and advance companion diagnostics for patient stratification and treatment monitoring[99][100][101] - Precision health screening could involve regular blood draws to monitor low-abundance protein biomarkers in asymptomatic individuals for early disease onset detection, facilitating a shift towards prevention[103][104] Estimated Addressable Market Potential (Annual) | Market Segment | Estimated Potential (Billions USD) | | :-------------------------------- | :--------------------------------- | | Pre-COVID Life Science Research (Neurology, Immunology, Oncology) | $1.0 | | COVID-19 Life Science Research | $0.2 | | Expanded Life Science Research | $7.0 | | Diagnostics & Precision Health Screening (Aggregate) | $55.0 | | - Neurology Diagnostics | $18.0 | | - Proteomic Liquid Biopsy | $20.0 | | - COVID Diagnostics | $12.0 | | - Precision Health Screening | $5.0 | Our Key Focus Areas Quanterix focuses on neurology, oncology, COVID-19, inflammation, cardiology, and infectious disease with ultra-sensitive biomarker detection - Neurology: Simoa detects neurological biomarkers (Nf-L, tau, GFAP, UCH-L1) in blood at ultra-low levels, traditionally only detectable in CSF, advancing research in MS, Alzheimer's, dementia, Parkinson's, and TBI. Simoa Nf-L assay is 840-fold more sensitive than conventional ELISA[108][109][114] - Oncology: Simoa's ultra-sensitivity enables early detection of oncology biomarkers, potential liquid biopsy alternatives to mammograms and biopsies, and monitoring of immunotherapy responses (e.g., IFN-gamma, IL-6). An ultra-sensitive PSA assay is >1,000-fold more sensitive than conventional ELISA for prostate cancer recurrence prediction[119][120][121][122] - COVID-19: Developed Simoa Semi-Quantitative SARS-CoV-2 IgG Antibody Test (EUA Dec 2020) and Simoa SARS-CoV-2 N Protein Antigen Test (EUA Jan 2021) for HD-X instrument, targeting vaccine response and early infection detection[124][125][126] - Inflammation: Simoa assays measure inflammatory and anti-inflammatory molecules (cytokines, chemokines) in serum/plasma with unprecedented sensitivity, enabling new discoveries and drug monitoring for diseases like Crohn's disease, asthma, and rheumatoid arthritis[127][128][129] - Cardiology: Simoa's high sensitivity has the potential for early prediction of heart attacks and other cardiac events[130] - Infectious Disease: Simoa enables early-stage detection of infectious disease antigens (e.g., HIV p24, C. difficile toxins) with sensitivity comparable to nucleic acid testing but with higher specificity and without amplification biases[131][132][133][134] Our Products and Services (Detailed) Quanterix's portfolio includes RUO instruments, assay kits, homebrew kits, Nf-L antibodies, and CLIA-certified Accelerator Lab services - Simoa assays and consumables include ~87 bead-based kits (neurology, infectious disease, immunology, oncology), two EUA-approved SARS-CoV-2 assays, ~120 planar array reagent kits (immunology, oncology), and homebrew kits for custom assay development[142][150] - Nf-L antibodies and ELISA kits are sold through Uman (acquired 2019), recognized for unparalleled sensitivity and specificity, with a licensing and supply arrangement with Siemens Healthineers[142][154] - Services include contract research through the CLIA-certified Accelerator Laboratory (over 1,300 projects for ~360 customers), supporting sample testing, homebrew, and custom assay development, and extended warranty/service contracts[142][155][158] Quanterix Product Key Attributes | Product | Key Attributes | | :------ | :------------- | | HD-X | Next-generation (launched H2 2019), Simoa bead-based, ultra-sensitive multiplex immunoassay, fully automated, up to 400 samples/8-hour shift, homebrew capabilities. | | SR-X | Launched Dec 2017, Simoa bead-based, benchtop, lower price, same sensitivity/dynamic range/homebrew as HD-X, up to 6-plex, flexible assay prep. | | SP-X | Launched Apr 2019, Simoa planar array, benchtop, lower price, similar sensitivity/dynamic range/homebrew as HD-X, up to 10-plex, flexible assay prep. | Research and Development Quanterix continuously invests in R&D to enhance Simoa platform sensitivity, expand its assay menu, and develop new instruments - Continuous R&D efforts focus on improving platform sensitivity, examining new assay formats, and enhancing instrumentation performance[157] - Assay menu expansion is guided by key opinion leaders, customer feedback, homebrew projects, Accelerator Laboratory projects, and new publications on industry-relevant biomarkers[159] - The company intends to develop and market new instruments with different and/or improved capabilities to broaden its market reach[160] Sales and Marketing Quanterix distributes products via direct sales and distributors, targeting key opinion leaders, with a lengthy sales cycle - Distribution channels include direct field sales in North America and Europe, and third-party distributors/agents in other markets (e.g., Australia, Brazil, China, Japan)[161] - Sales and marketing target key opinion leaders, laboratory directors, and principal investigators at leading biotechnology, pharmaceutical, and governmental research institutions[163] - Awareness is increased through trade shows, academic conferences, webinars, and sponsoring the annual Powering Precision Health (PPH) Summit[164][165] - The sales cycle for Simoa systems is typically 6 to 12 months or longer, involving numerous interactions, in-depth evaluations, and adherence to customer budget cycles[166] Manufacturing and Supply Quanterix outsources bead-based instrument manufacturing, produces planar array instruments and kits internally, and manages supply risks - Manufacturing strategy: outsource bead-based instrument development/manufacturing (HD-X by STRATEC, SR-X by Paramit) and internally develop/manufacture planar array instruments (SP-X) and all assay kits[167][168][170] - Relies on a limited number of suppliers, including single-source suppliers, for instrument components and assay kit reagents[170][171][173] - Mitigates supply risk by carrying significant inventory of critical components and increasing assay shelf life (e.g., bead-based assays from 6 to 12+ months)[170][171] - Uman's Nf-L antibody production is outsourced to a contract manufacturer, with bulk material processed and kits assembled in-house at Umeå, Sweden[174][175] Key Agreements Quanterix has key agreements with STRATEC, Paramit, Abbott Laboratories (license), and NIH (RADx program funding) - Development Agreement and Supply Agreement with STRATEC: STRATEC developed the Simoa HD instrument (now HD-X) and is the exclusive supplier. The development fee and warrant obligations have been met, and the minimum purchase commitment under the supply agreement has been satisfied[176][177] - Paramit Manufacturing Services Agreement: Paramit produces and tests the SR-X instrument on an as-ordered basis. The agreement has an initial three-year term with automatic one-year extensions[181][182] - Non-Exclusive License Agreement with Abbott Laboratories (Sept 2020): Granted Abbott a non-exclusive, worldwide, royalty-bearing license for bead-based single molecule detection patents in IVD. Received an initial $10.0 million license fee and is eligible for milestone fees and low single-digit royalties[183][184] - Contracts with the NIH under RADx (Sept 2020): Awarded $18.2 million (WP2) to accelerate development, scale-up, and deployment of SARS-CoV-2 antigen test, building on initial WP1 funding. Funding is milestone-based and subject to Federal Acquisition Regulations (FAR)[185] Competition Quanterix competes in life science instrumentation and lab services, facing rivals in protein detection and diagnostics - Competes with established and development-stage life science companies in protein and nucleic acid detection (e.g., Bio-Techne, Luminex, MesoScale Discovery, Gyros, Nanostring)[186][188] - Accelerator Laboratory competes with other research laboratories (e.g., Covance, Q2 Solutions, Myriad RBM, Monogram Biosciences, PPD Laboratories)[188] - In diagnostics and precision health screening, expects to compete with large companies like Siemens, Abbott, Roche, Ortho Clinical Diagnostics, and Thermo Fisher Scientific[188] - Principal competitive factors include sensitivity, cost of instruments/consumables, assay menu, reputation, innovation, accuracy/reproducibility, and customer support infrastructure[189][192] Intellectual Property Quanterix protects its Simoa technology through exclusive licenses, patents, trademarks, and trade secrets, aiming for broad coverage - Core Simoa bead-based technology is exclusively licensed from Tufts University, including 18 patents and 2 patent applications[190][195] - Owns 24 issued U.S. patents and 22 pending U.S. patent applications, along with numerous international patents, covering methods for single molecule detection, analyte capture, concentration determination, instruments, and specific analyte measurements (e.g., PSA, Nf-L, tau)[201][202][203][205][206][207][208][209][210][211] - Acquired Aushon's patent portfolio for planar array technology, including 9 issued U.S. patents and international equivalents[212] - Patent strategy is multilayered, protecting fundamental detection methods, specific analyte detection, novel instrumentation/consumables, and specific uses (e.g., biomarkers, diagnostics)[191][194] - Protects intellectual property through patents, trademarks, trade secrets, copyrights, and contractual restrictions (confidentiality, IP assignment agreements)[213][385] Government Regulation Quanterix's RUO products are generally not FDA-regulated, but diagnostic products require costly clearances and compliance - Most products are 'Research Use Only' (RUO) and not subject to FDA clearance, but are monitored for clinical intent under RUO/IUO Guidance[218] - COVID assays received Emergency Use Authorizations (EUAs) from FDA, allowing marketing during the public health emergency under lower evidence standards than traditional pathways[226][227][347] - Future clinical diagnostic products will be regulated as medical devices by FDA, requiring 510(k) clearance, De Novo classification, or Premarket Approval (PMA), which are expensive and time-consuming processes[220][221][222][223][225][338][339] - Operates a CLIA-certified laboratory, subject to federal (CLIA) and state regulations, including biennial inspections and proficiency testing. Potential changes in FDA regulation of Laboratory Developed Tests (LDTs) could increase regulatory burden[235][236][237][238][239][240] - International markets (e.g., EU) have stringent medical device regulations, such as the new IVD Regulation (effective May 2022), which increases requirements for conformity assessment and classification (Uman's Nf-L ELISA kit is Class B)[244][245] - Subject to environmental, health, and safety laws (e.g., OSHA) for hazardous materials, waste disposal, and employee safety[246] Employees and Human Capital Quanterix had 314 employees in 2020, focusing on attracting diverse talent through competitive compensation and an inclusive culture - As of December 31, 2020, Quanterix had 314 full-time employees (273 in US, 41 international), with 118 in sales/support/marketing, 74 in engineering/R&D, 72 in manufacturing/operations, and 50 in G&A[247] - Success depends on attracting and retaining highly qualified management and technical employees, with a turnover rate lower than the industry average[247] - Committed to a diverse, inclusive, and safe work environment, sponsoring a Diversity, Equity and Inclusion Committee, providing respectful workplace training, and recruiting diverse talent (45% women, 30% non-white as of Dec 31, 2020)[248][249] - Provides competitive compensation (salaries, bonuses, 401(k) match, healthcare, PTO, family leave) and equity-based grants to facilitate retention[251] - Maintains an 'open door' policy and strictly prohibits retaliation, emphasizing foundational values: Accountability, Trust, Teamwork, and Transparency (AT&T3)[250][252] - Prioritizes employee health, safety, and wellness, implementing remote work and significant safety measures in response to COVID-19[253] Corporate Information Quanterix Corporation was incorporated in Delaware in 2007 and provides SEC filings free of charge on its website - Incorporated in Delaware in April 2007 as 'Digital Genomics, Inc.', later changed to 'Quanterix Corporation' in August 2007[254] - Principal executive offices are at 900 Middlesex Turnpike, Billerica, Massachusetts 01821[254] - Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments are available free of charge on the company's website (www.quanterix.com) under 'Investors—Financial Information—SEC Filings'[255] Item 1A. Risk Factors This section outlines numerous risks that could materially and adversely affect Quanterix's business and future growth Risk Factor Summary Key risks include ongoing losses, market acceptance, regulatory compliance, operational challenges, and intellectual property issues - Key risks include: incurring annual losses, fluctuating operating results, limited commercial history, and dependence on market acceptance of products[259] - Significant decrease in sales of the neurological biomarker Nf-L assay could materially adversely affect the business[259] - Subject to extensive regulatory requirements for COVID-19 EUAs; failure to comply or termination of EUAs could harm the business[259] - Epidemic diseases like COVID-19 could negatively affect business operations, customer obligations, and demand[259] - Release of NIH RADx funding is milestone-based, with no assurance of timely achievement[259] - Long-term results depend on improving existing products and successfully introducing new ones; undetected errors or defects could harm reputation[259][300] - Challenges in establishing or maintaining strategic collaborations and licensing arrangements[263][302] - International activities expose the company to various risks, including manufacturing problems, reliance on single contract manufacturers, and intellectual property infringement claims[263] Risks Related to Our Financial Condition Quanterix has a history of net losses, expects continued losses, and faces capital needs and NOL limitations - Expects losses to continue for at least the next 24 months due to investments in commercial expansion and technology development[262] - Quarterly and annual operating results and cash flows have fluctuated and may continue to do so, influenced by factors like customer adoption, order timing, consumable utilization, new product introductions, and collaboration revenues[265][266] - Future growth requires significant capital expenditures and may divert financial resources; failure to manage growth effectively could harm business and reputation[268][271] - Future capital needs are uncertain, and additional funds may be required for sales/marketing, acquisitions, R&D, regulatory clearances, hiring, and public company costs. Inability to obtain funds could lead to delays or cessation of operations[272][274] - Federal net operating loss (NOLs) carryforwards of approximately $199.3 million as of December 31, 2020, may be subject to limitations under Section 382 of the Internal Revenue Code due to past or future ownership changes[275] Net Losses and Accumulated Deficit | Metric | 2020 (Millions USD) | 2019 (Millions USD) | 2018 (Millions USD) | | :----- | :------------------ | :------------------ | :------------------ | | Net Loss | $(31.5) | $(40.8) | $(31.5) | | Accumulated Deficit (as of Dec 31, 2020) | $(247.8) | - | - | Risks Related to Our Business Quanterix faces risks from market acceptance, NIH funding, epidemic disruptions, lengthy sales cycles, and manufacturing issues - Failure of products to achieve and sustain sufficient market acceptance, especially against competing technologies, could adversely affect revenue[277] - Future success depends on penetrating existing customer base and attracting new customers, which is time-consuming and expensive[278][280] - Sales of the neurological biomarker Nf-L assay are increasingly important (8% of total revenue in 2020); a significant decrease could materially affect the business[281] - NIH RADx program funding ($18.2 million for SARS-CoV-2 antigen test) is milestone-based and subject to U.S. government budgetary constraints, policy changes, and FAR provisions, including unilateral termination[282][284][287] - Epidemic diseases like COVID-19 can disrupt operations, supply chains, customer access, and demand, negatively impacting financial results[289] - Sales cycle for Simoa instruments is lengthy and variable (6-12+ months), making revenue forecasting difficult[291] - Long-term results depend on continuous improvement of existing products and successful introduction of new products/assays, requiring significant R&D investment and facing risks of market acceptance and obsolescence[292][293][298] - Manufacturing problems, delays, or reliance on single contract manufacturers (STRATEC for HD-X, Paramit for SR-X) and limited suppliers for consumables could limit revenue growth or increase losses[315][317][318][321] - Inability to attract, recruit, train, retain, and integrate key personnel, especially highly-trained sales and technical support staff, could harm operating results and growth[313][322] - International operations (48% of 2020 product revenue from outside North America) expose the company to foreign regulatory requirements, currency fluctuations, political instability, and anti-bribery laws (e.g., FCPA)[306][309][310] - Integrating acquired businesses (e.g., Aushon, Uman) can be expensive, time-consuming, and disruptive, potentially affecting product sales and management focus[328][330][333] Risks Related to Government Regulation and Diagnostic Product Reimbursement Quanterix faces significant regulatory risks for diagnostic products, including FDA clearances, EUA revocations, and reimbursement policies - Marketing products for clinical diagnostic or health screening use will require costly and time-consuming FDA clearances (510(k), De Novo, PMA) or approvals, which may not be obtained timely or at all[336][338][339] - COVID-19 EUAs are temporary and based on lower evidence standards; they can be revised or revoked if emergency conditions cease or problems are identified, impacting the ability to market these products[347][349][351] - Failure to comply with governmental regulations applicable to its CLIA-certified laboratory could lead to suspension, limitation, or revocation of certification, severely impacting operations[360][362] - Reliance on third parties for future diagnostic product studies (e.g., clinical trials) introduces risks if they do not perform satisfactorily[363] - Unfavorable pricing regulations or third-party coverage and reimbursement policies for diagnostic procedures could harm business, as payors often follow CMS decisions[364] - Current and future legislation (e.g., ACA) and global regulatory reforms (e.g., EU MDR) may increase the difficulty and cost of obtaining marketing approval and commercializing products, potentially reducing prices and profitability[353][357][365][366] - Products may be subject to recalls by FDA or foreign authorities due to deficiencies, diverting resources and harming reputation and financial results[352] Risks Related to Our Operations Quanterix's operations are vulnerable to IT system failures, data breaches, and compliance with data privacy laws like GDPR - Dependence on information technology systems (HR, accounting, manufacturing, sales, etc.) makes the business vulnerable to failures, downtime, physical/electronic break-ins, and viruses[370][371] - Security breaches, data loss, or inappropriate disclosure of sensitive information could compromise intellectual property, lead to enforcement actions (e.g., GDPR fines up to €20 million or 4% of global revenue), litigation, and reputational damage[372][373][375][376][377] - Operations are subject to complex environmental, health, and safety laws (e.g., EPA, OSHA) regarding hazardous materials and waste, with risks of accidental contamination or injury and potential liability[378] Risks Related to Intellectual Property Quanterix's competitive advantage relies on protecting IP, facing risks from patent validity challenges and costly litigation - Inability to protect intellectual property (patents, trademarks, trade secrets) could reduce competitive advantage, lead to infringement by third parties, and incur substantial litigation costs[379][380][382][383][385][386] - Some owned and in-licensed IP is from government-funded programs, subject to federal regulations like 'march-in' rights, reporting requirements, and a preference for U.S. industry, which could limit exclusive rights[387][388][389] - Exclusive license for Simoa bead-based technology from Tufts University is critical; breach of obligations (royalty payments, diligence) could lead to termination or loss of rights[390][391] - May need or choose to obtain licenses from third parties for future products; failure to do so on reasonable terms could prevent commercialization or lead to injunctions/royalties[393] - Risk of being sued for infringing third-party IP rights, leading to costly and time-consuming litigation, potential injunctive relief, damages, or cross-licensing requirements[398][399][406] - Patent litigation to protect or enforce patents can be expensive, time-consuming, and unsuccessful, risking invalidation or narrow interpretation of patents[402][403][404][405] - Inability to protect IP rights globally due to prohibitive costs or weaker foreign laws, allowing competitors to use technologies or export infringing products[411][412][413] - Changes in patent laws (e.g., America Invents Act, Supreme Court rulings) or patent jurisprudence could diminish the value of patents, weakening the ability to obtain or enforce them[415][416][417] - Non-compliance with procedural requirements for patent agencies can lead to abandonment or lapse of patent rights[418][419] - Inadequate protection of trademarks and trade names could hinder brand recognition and competitive positioning[421] - Potential use of third-party open source software in future products carries risks of license non-compliance, requiring source code release or product re-engineering[422][423] - Reliance on third-party software that may be difficult to replace or cause errors/failures, leading to lost customers or reputational harm[424][425] Risks Related to Our Common Stock and Being a Public Company Quanterix's stock price is volatile, principal stockholders have influence, no dividends are anticipated, and anti-takeover provisions exist - Stock price may fluctuate significantly due to factors like financial results, new product announcements, competition, regulatory news, litigation, market conditions, and financing efforts[429][430][433] - Principal stockholders and management own approximately 17.4% of outstanding common stock (as of Dec 31, 2020), allowing significant influence over stockholder approval matters and potentially delaying or preventing takeovers[435] - No dividends have been paid, and none are anticipated in the foreseeable future; investment gains depend solely on stock price increases[436] - Anti-takeover provisions in corporate documents (e.g., authorized preferred stock, special meeting rules, staggered board) and Delaware law (Section 203) could impair takeover attempts[437][439][441][442] - As an 'emerging growth company' (JOBS Act), benefits from reduced disclosure requirements (e.g., auditor attestation exemption for Section 404(b)) and an extended transition period for new accounting standards, which may affect comparability for investors[443] - Incurs increased costs and devotes substantial management time to operating as a public company, including compliance with SEC rules, Sarbanes-Oxley Act, and Dodd-Frank Act, which increases net loss[444][445][446] Item 1B. Unresolved Staff Comments This item indicates that there are no unresolved staff comments from the SEC - Not applicable, indicating no unresolved staff comments[447] Item 2. Properties Quanterix leases 91,600 sq ft for its Billerica headquarters and 6,500 sq ft for its Uman subsidiary in Sweden - Leases approximately 91,600 square feet for headquarters in Billerica, Massachusetts, for office, laboratory, and manufacturing space[448] - The Billerica lease term is 11 years and five months, starting April 1, 2019, with two five-year extension options[448] - Subsidiary Uman leases approximately 6,500 square feet in Umeå, Sweden, for office, laboratory, manufacturing, and storage, with leases expiring between May 2020 and February 2023[449] Item 3. Legal Proceedings Quanterix is not currently a party to any material legal proceedings - The company is not currently a party to any material legal proceedings[450] Item 4. Mine Safety Disclosures This item is not applicable to Quanterix Corporation - Not applicable[451] PART II Item 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Quanterix common stock trades on Nasdaq (QTRX); as of March 2021, 36.3 million shares were outstanding - Common stock is traded on The Nasdaq Global Market under the symbol "QTRX"[453] - As of March 1, 2021, there were approximately 39 stockholders of record and 36,267,609 shares of common stock outstanding[453] - No unregistered sales of equity securities or issuer purchases of equity securities occurred during the fourth quarter ended December 31, 2020[454][455] Item 6. Selected Financial Data This section presents selected consolidated financial data for Quanterix, including statements of operations and balance sheet data Consolidated Statement of Operations Data (in thousands, except per share data) | Metric | 2020 | 2019 | 2018 | | :------------------------------------------ | :----- | :----- | :----- | | Total revenue | $86,377 | $56,734 | $37,632 | | Cost of revenue | 38,195 | 29,898 | 19,684 | | Gross profit | 48,182 | 26,836 | 17,948 | | Research and development | 20,174 | 16,190 | 15,805 | | Selling, general and administrative | 59,592 | 52,246 | 33,693 | | Total operating expenses | 79,766 | 68,436 | 49,498 | | Loss from operations | (31,584) | (41,600) | (31,550) | | Interest income (expense), net | (273) | 627 | 46 | | Other expense, net | (49) | (10) | (7) | | Loss before income taxes | (31,906) | (40,983) | (31,511) | | Income tax benefit (provision) | 376 | 187 | (25) | | Net loss | (31,530) | (40,796) | (31,536) | | Net loss per share, basic and diluted | $(1.07) | $(1.63) | $(1.43) | | Weighted-average common shares outstanding | 29,589 | 25,091 | 21,994 | Consolidated Balance Sheet Data (in thousands) | Metric | As of Dec 31, 2020 | As of Dec 31, 2019 | As of Dec 31, 2018 | | :-------------------------- | :----------------- | :----------------- | :----------------- | | Cash and cash equivalents | $181,584 | $109,155 | $44,429 | | Total assets | $271,045 | $169,951 | $67,611 | | Total long term debt | $7,673 | $7,587 | $7,623 | | Total stockholders' deficit | $206,125 | $128,658 | $41,065 | Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Quanterix's financial condition and results of operations, highlighting its platforms and strategic focus Overview Quanterix develops ultra-sensitive digital immunoassay platforms, generates recurring revenue, and expanded through acquisitions - Quanterix develops next-generation, ultra-sensitive digital immunoassay platforms (Simoa HD-X, SR-X, SP-X) for life sciences research and diagnostics, based on proprietary Simoa detection technology[462][465] - Revenue streams include instruments, assay kits, consumables, and contract research services through the Accelerator Laboratory, with consumables expected to be an increasingly important recurring revenue contributor[464][465] - Acquired Aushon BioSystems in January 2018 for $4.0 million (cash), gaining a CLIA-certified laboratory and planar array detection technology (leading to SP-X instrument)[467][844][845] - Acquired UmanDiagnostics AB in August 2019 for $21.2 million (cash and stock), securing neurofilament light (Nf-L) antibodies and ELISA kits[468][850] - Entered Non-Exclusive License Agreement with Abbott Laboratories in September 2020, granting a royalty-bearing license for bead-based single molecule detection patents in IVD, receiving an initial $10.0 million license fee[469] - COVID-19 pandemic impacted instrument revenue (installation limitations) and consumables, but led to development of SARS-CoV-2 IgG antibody and N Protein Antigen tests (EUAs Dec 2020/Jan 2021) and $18.2 million NIH RADx funding for antigen test development[470][471][472] - Expects significant expenses and operating losses to continue for at least the next 24 months due to expansion of sales/marketing, R&D, potential acquisitions, regulatory clearances, and public company costs[475][476] Net Losses and Accumulated Deficit | Metric | 2020 (Millions USD) | 2019 (Millions USD) | 2018 (Millions USD) | | :----- | :------------------ | :------------------ | :------------------ | | Net Loss | $(31.5) | $(40.8) | $(31.5) | | Accumulated Deficit (as of Dec 31, 2020) | $(247.8) | - | - | Financial Operations Overview Quanterix recognizes revenue under ASC 606, accounts for grants by IAS 20, and manages various cost and expense categories - Revenue is recognized under ASC 606 when customers obtain control of promised goods or services, reflecting expected consideration[477] - Product revenue from instruments is recognized upon installation for direct customers or shipping for distributors; consumables revenue is based on shipping terms[480] - Service and other revenue includes contract research services (recognized upon report delivery or over time) and service-type warranties (recognized ratably)[481] - Collaboration and license revenue includes license fees (recognized at point in time for functional IP) and sales- or usage-based royalties (recognized when underlying transaction occurs)[481] - Cost of product revenue includes instrument costs, raw materials, freight, personnel, and royalties. Cost of service revenue includes personnel and facility costs for Accelerator Laboratory and instrument servicing. Cost of collaboration revenue includes royalties to third parties[484][485][486] - Research and Development (R&D) expenses include personnel, supplies, third-party development, and allocated overhead, expected to increase[487] - Selling, General and Administrative (SG&A) expenses include sales/marketing, finance, legal, HR personnel, professional services, and public company costs, also expected to increase[488] - Grant revenue, not under ASC 606, is accounted for by analogy to IAS 20, recognized as services are performed, with asset-related grants reducing asset carrying value and income-related grants recognized separately as revenue[482][509][510][511][512][514][515] Critical Accounting Policies, Significant Judgments and Estimates Quanterix's critical accounting policies involve significant judgments for revenue, grant revenue, and stock-based compensation - Critical accounting policies involve significant judgment and complexity, including revenue recognition, fair value of acquired assets/liabilities, valuation allowances for deferred tax assets, and inventory valuation[489][490] - Revenue recognition (ASC 606, adopted Jan 1, 2019): Requires judgment in identifying performance obligations, determining transaction price, and allocating to standalone selling prices (SSPs)[477][478][479][493][494][501] - Grant revenue (e.g., NIH RADx program) is recognized by analogy to IAS 20; $6.4 million recognized in 2020, with $4.4 million from WP2 and $2.0 million from WP1[509][516][517] - Stock-based compensation (ASC 718): Fair value estimated using Black-Scholes model; expense recognized over vesting period. Adopted ASU 2018-07 in 2020, aligning non-employee awards with employee awards[519][520][521][744][745][746] - Adopted ASC 842 (Leases) on January 1, 2020, recognizing operating lease ROU assets ($12.2 million) and liabilities ($22.8 million) on the balance sheet[591][596][749][753] Disaggregated Revenue by Geography and Type (2020, in thousands) | Revenue Type | NA | EMEA | Asia Pacific | Total | | :------------------------ | :----- | :----- | :----------- | :------ | | Product revenues | | | | | | Instruments | $8,680 | $4,332 | $3,594 | $16,606 | | Consumable and other products | $14,305 | $10,854 | $2,252 | $27,411 | | Service and other revenues | | | | | | Service-type warranties | $3,171 | $1,543 | $207 | $4,921 | | Research services | $15,011 | $2,225 | $737 | $17,973 | | Other services | $700 | $435 | $100 | $1,235 | | Collaboration and license revenue | | | | | | Collaboration and license revenue | $11,685 | $124 | $— | $11,809 | Disaggregated Revenue by Geography and Type (2019, in thousands) | Revenue Type | NA | EMEA | Asia Pacific | Total | | :------------------------ | :----- | :----- | :----------- | :------ | | Product revenues | | | | | | Instruments | $6,250 | $5,243 | $3,393 | $14,886 | | Consumable and other products | $14,148 | $9,674 | $1,783 | $25,605 | | Service and other revenues | | | | | | Service-type warranties | $3,139 | $1,323 | $171 | $4,633 | | Research services | $8,845 | $704 | $456 | $10,005 | | Other services | $825 | $565 | $31 | $1,421 | | Collaboration and license revenue | | | | | | Collaboration and license revenue | $167 | $17 | $— | $184 | WP2 Grant Activity as of Dec 31, 2020 (in thousands) | Metric | Amount | | :------------------------------------------ | :----- | | Total grant revenue from R&D activities | $4,362 | | Total proceeds used for assets | $826 | | Total deferred proceeds for assets | $2,478 | | Total deferred grant revenue | $304 | | Total recognized | $7,970 | | Total amount accrued | $(2,968) | | Total cash received | $5,002 | | Total proceeds reasonably assured | $13,198 | | Total WP2 grant amount | $18,200 | Stock-Based Compensation Expense by Classification (in thousands) | Classification | 2020 | 2019 | 2018 | | :-------------------------------- | :----- | :----- | :----- | | Cost of product revenue | $189 | $86 | $55 | | Cost of service and other revenue | $311 | $238 | $173 | | Research and development | $1,129 | $718 | $513 | | General and administrative | $8,470 | $5,346 | $4,143 | | Total | $10,099 | $6,388 | $4,884 | Results of Operations Quanterix's total revenue increased by 52% in 2020 to $86.4 million, driven by collaboration and service revenue - Revenue increased by $29.6 million (52%) in 2020, primarily due to $11.8 million in collaboration and license revenue (Abbott agreement) and $6.4 million in grant revenue (NIH RADx), alongside increased service revenue[529][531] - Cost of product revenue increased by 24% in 2020 due to higher sales and a full year of Uman acquisition-related inventory/intangible amortization[532] - R&D expense increased by 25% in 2020, mainly due to COVID-19 related work under NIH RADx grants[533] - SG&A expense increased by 14% in 2020 due to headcount additions to support growth[534] - Revenue increased by $19.1 million (51%) in 2019, primarily from increased instrument and consumables sales, and higher Accelerator Laboratory services. Collaboration and license revenue decreased due to the termination of a bioMérieux arrangement in 2018[539] - Cost of product revenue increased by 64% in 2019 due to higher sales and Uman acquisition-related amortization[540] - SG&A expense increased by 55% in 2019 due to headcount, public company costs, new headquarters lease, and Uman acquisition costs ($1.9 million)[544] Comparison of Years Ended December 31, 2020 and 2019 (dollars in thousands) | Metric | 2020 | % of revenue | 2019 | % of revenue | $ change | % change | | :-------------------------------- | :----- | :----------- | :----- | :----------- | :------- | :------- | | Total revenue | $86,377 | 100% | $56,734 | 100% | $29,643 | 52% | | Product revenue | $44,017 | 52% | $40,491 | 72% | $3,526 | 9% | | Service and other revenue | $24,129 | 28% | $16,059 | 28% | $8,070 | 50% | | Collaboration and license revenue | $11,809 | 14% | $184 | 0% | $11,625 | 6,318% | | Grant revenue | $6,422 | 6% | $— | 0% | $6,422 | 100% | | Gross profit | $48,182 | 56% | $26,836 | 47% | $21,346 | 80% | | Research and development | $20,174 | 23% | $16,190 | 29% | $3,984 | 25% | | Selling, general, and administrative | $59,592 | 69% | $52,246 | 92% | $7,346 | 14% | | Loss from operations | $(31,584) | (37)% | $(41,600) | (73)% | $10,016 | 24% | | Net loss | $(31,530) | (37)% | $(40,796) | (72)% | $9,266 | 23% | Comparison of Years Ended December 31, 2019 and 2018 (dollars in thousands) | Metric | 2019 | % of revenue | 2018 | % of revenue | $ change | % change | | :-------------------------------- | :----- | :----------- | :----- | :----------- | :------- | :------- | | Total revenue | $56,734 | 100% | $37,632 | 100% | $19,102 | 51% | | Product revenue | $40,491 | 72% | $23,365 | 62% | $17,126 | 73% | | Service and other revenue | $16,059 | 28% | $12,117 | 32% | $3,942 | 33% | | Collaboration and license revenue | $184 | 0% | $2,150 | 6% | $(1,966) | (91)% | | Gross profit | $26,836 | 47% | $17,948 | 48% | $8,888 | 50% | | Research and development | $16,190 | 29% | $15,805 | 42% | $385 | 2% | | Selling, general, and administrative | $52,246 | 92% | $33,693 | 90% | $18,553 | 55% | | Loss from operations | $(41,600) | (73)% | $(31,550) | (84)% | $(10,050) | (32)% | | Net loss | $(40,796) | (72)% | $(31,536) | (84)% | $(9,260) | (29)% | Liquidity and Capital Resources Quanterix has incurred net losses, financed operations through equity offerings, and expects existing cash to fund operations - Historically incurred annual net losses and negative cash flows from operations; net loss of $31.5 million in 2020, $40.8 million in 2019, and $31.5 million in 2018[547] - As of December 31, 2020, cash and cash equivalents were $181.6 million, with an accumulated deficit of $247.8 million[548][475] - Expects existing cash and cash generated from commercial sales to fund operating expenses and capital expenditure requirements for at least the next 24 months[272] - Sources of liquidity include equity offerings (IPO in 2017, at-the-market offering in 2019, underwritten public offerings in 2019 and 2020, and $269.6 million net proceeds from a Feb 2021 offering) and borrowings from credit facilities[549][550][553][554][555][556] - Maintains a $10.0 million loan facility with Hercules, most recently amended in April 2019, extending interest-only payments through July 2021 and maturity to October 2021. Principal repayments of $7.7 million are due in 2021[557][560][562][565] - Net cash used in operating activities was $23.4 million in 2020, primarily from net loss offset by non-cash charges and changes in operating assets/liabilities[569] - Net cash used in investing activities was $0.6 million in 2020, consisting of property/equipment additions offset by grant proceeds[574] - Net cash provided by financing activities was $96.2 million in 2020, mainly from public offerings[578] Net Cash Flows (in thousands) | Activity | 2020 | 2019 | 2018 | | :-------------------------------------- | :------- | :------- | :------- | | Net cash used in operating activities | $(23,365) | $(26,187) | $(28,721) | | Net cash used in investing activities | $(626) | $(25,376) | $(5,454) | | Net cash provided by (used in) financing activities | $96,236 | $116,197 | $(78) | | Net increase (decrease) in cash and cash equivalents | $72,245 | $64,634 | $(34,253) | Off-Balance Sheet Arrangements Quanterix did not have any significant off-balance sheet arrangements during the reported periods - The company did not have any off-balance sheet arrangements during the periods presented and does not currently have any[586] Contractual Obligations, Commitments and Contingencies Quanterix's contractual obligations include operating lease liabilities and term loan principal payments due by 2021 - Ongoing obligations related to license agreements with immaterial minimum annual payments[588] - Loan Agreement with Hercules: $10.0 million debt facility, with