Financial Data and Key Metrics Changes - Net sales for Q1 2024 were approximately $2.9 million, an increase from approximately $2.8 million in the same period last year, driven by an increase in recurring consumable net sales [6] - Gross margin decreased to approximately 25% from approximately 36% in the prior year, attributed to product mix [6] - Selling, general and administrative (SG&A) expenses were approximately $5.7 million, down from $10.1 million in the prior year, primarily due to lower employee-related expenses and non-recurring legal costs [6] - Research and development (R&D) expenses were $5.2 million, down from $7 million in the prior year, due to lower employee-related and third-party development expenses [7] - The net loss for the quarter was approximately $14.2 million, resulting in a loss per share of $0.74 [7] - Cash used for the quarter was approximately $9 million, excluding cash raised from a January equity offering [7] Business Line Data and Key Metrics Changes - The Wave program is positioned to disrupt the microbiology susceptibility testing market, which is estimated at close to $2 billion and growing at about 6% annually [8] - The PBC market represents about $800 million, while the isolate market is approximately $1 billion [8] - Wave offers a consolidated platform that can process both PBC and isolate specimens, with features such as same-shift results and high throughput workflow [8] Market Data and Key Metrics Changes - The company is focusing on expanding its market presence in both the US and EMEA regions, targeting over 500 accounts in its sales funnel [10] - The company aims to secure long-term contracts for Wave, which is expected to improve patient care and hospital economics [10] Company Strategy and Development Direction - The commercialization strategy for Wave includes extending leadership in the rapid PBC AST market, expanding the available market by launching an isolate menu, and pursuing geographic and technology expansion [12] - The company is also developing a Gram Positive PBC menu and plans to partner with pharmaceutical companies for drug discovery [12] - A global partnership to commercialize Wave is a key part of the strategy, with robust interest from multiple partners [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the team's ability to manage technical and timeline risks associated with clinical trials and FDA submissions [9] - The company is focused on reducing operating expenses and cash burn in the coming quarters [7] - Management highlighted the positive feedback and strong interest in Wave from current and prospective customers [8] Other Important Information - The company submitted a 510(k) to the FDA for the Arc system, which is the first automated PBC sample preparation method [11] - The preclinical trial for Wave is ongoing, with clinical trials targeted to start towards the end of the second quarter [9] Q&A Session Summary Question: Details on customer conversations regarding Wave - Management noted ongoing dialogues with customers, highlighting the high throughput and rapid results of Wave compared to competitors [17] Question: Transition process for customers to new products - Management explained that Wave offers optionality for customers with existing molecular platforms, allowing integration with rapid susceptibility testing [20] Question: Update on Bruker collaboration - The collaboration with Bruker is progressing positively, with the Arc system currently under FDA review [23] Question: Progression with CD collaboration and its impact - Management reported contracting 12 new Pheno instruments and bringing eight live, enhancing market penetration for rapid susceptibility testing [26]

Financial Performance - Net sales for Q1 2024 were $2.9 million, a slight increase from $2.8 million in Q1 2023, with consumable product revenues rising by 7% year-over-year[4] - Net sales for Q1 2024 were $2,921,000, an increase of 3.9% compared to $2,812,000 in Q1 2023[20] - Gross profit decreased to $723,000 in Q1 2024 from $1,011,000 in Q1 2023, representing a decline of 28.5%[20] - The net loss for the quarter was $17.0 million, resulting in a net loss per share of $0.88[5] - Net loss for Q1 2024 was $16,965,000, slightly higher than the net loss of $16,795,000 in Q1 2023[20] - Basic and diluted net loss per share improved to $0.88 in Q1 2024 from $1.71 in Q1 2023[20] Cost Management - Gross margin for the quarter was approximately 25%, down from 36% in the same quarter last year, attributed to a lower mix of capital instrument product sales[4] - SG&A costs decreased to $5.7 million from $10.1 million in the prior year, primarily due to lower employee-related expenses[4] - Total costs and expenses significantly reduced to $10,879,000 in Q1 2024 from $17,073,000 in Q1 2023, a decrease of 36.4%[20] - Research and development expenses decreased to $5,173,000 in Q1 2024 from $6,968,000 in Q1 2023, a decline of 25.7%[20] Cash Flow and Liquidity - Cash used in Q1 2024 was approximately $9.0 million, net of financing, including about $1 million in pre-paid annual expenses[5] - Cash and cash equivalents increased to $14,606,000 as of March 31, 2024, up from $12,138,000 at the end of 2023[22] - Net cash used in operating activities decreased to $8,452,000 in Q1 2024 from $13,367,000 in Q1 2023, a reduction of 36.5%[22] Strategic Developments - The company installed its first pre-clinical trial site for the Accelerate Wave system, targeting a clinical trial start by the end of Q2 2024[2] - Contract extensions with strategic customers secured approximately 70% of the U.S. Pheno® customer base for longer-term contracts ahead of the Wave commercial launch[3] - The company added 12 new contracted Pheno instruments in the U.S., totaling 348 clinically live revenue-generating instruments by the end of the quarter[3] - The company continues to develop its Gram Positive PBC menu alongside the ongoing clinical trial work for the Accelerate Wave system[2] Liabilities and Accounts Payable - Total liabilities rose to $56,502,000 as of March 31, 2024, compared to $51,254,000 at the end of 2023, an increase of 10.3%[20] - The company reported a significant increase in accounts payable, which rose to $5,108,000 in Q1 2024 from $4,796,000 in Q4 2023[20]

Financial Obligations and Defaults - As of December 31, 2023, the company had $67.6 million in aggregate principal amount of 5.00% Notes outstanding, maturing on December 15, 2026[102]. - The company is in default of payment obligations under the terms of its 2.50% Notes, which matured on March 15, 2023, with approximately $0.7 million remaining in default[106]. - The company's ability to repay its remaining indebtedness depends on future performance, which is subject to various uncontrollable factors[104]. - The company may need to secure additional funds to continue operations, which could result in dilution to stockholders if equity securities are issued[100]. - The company has been notified by Nasdaq that its Market Value of Listed Securities was below the required minimum of $35 million for 31 consecutive business days[222]. - The company has until September 3, 2024, to regain compliance with the Nasdaq listing requirements or face potential delisting[222]. - The company has increased the total number of authorized shares of common stock by 250 million, bringing the total to 450 million, which may cause significant dilution for existing shareholders[225]. - Future issuances of common stock or convertible debt securities may depress the market price and dilute existing stockholders[226]. - The company faces challenges in obtaining additional funds on acceptable terms, which may involve unfavorable covenants or terms for stockholders[231]. Operational Challenges and Losses - The company has experienced losses from operations for the years ended December 31, 2023, 2022, and 2021, and expects to continue incurring losses in the future[108]. - The company currently has a net loss due to insufficient sales of reagents and test cartridges to cover fixed expenses[144]. - Excess inventory write-downs were recorded during the year ended December 31, 2023, due to mismatches between supply and demand[145]. - The company is experiencing unprecedented cost increases from suppliers, impacting gross profit margins[155]. - The COVID-19 pandemic has adversely affected the company's business, limiting access to customers and impacting sales[149]. - The company may need to delay product development or reduce marketing efforts if sufficient funds are not obtained[232]. Product Development and Commercialization - The successful commercialization of the Accelerate Pheno system and associated test kits is critical for the company's future profitability and existence[111]. - The company has entered into a Sales and Marketing Agreement with BD, which will significantly impact the commercialization of its products[114]. - The company may face challenges in obtaining additional product marketing authorizations from the FDA, which could hinder revenue generation[119]. - The company is currently in discussions with the FDA regarding the commercialization of the Accelerate Arc Products, which has been put on hold in the U.S. due to regulatory challenges[123]. - The company has incurred significant expenses related to research and development, including costs for the Accelerate Pheno and Accelerate Arc systems, as well as the new Accelerate Wave system[121]. - The company has made significant investments in research and development, particularly in the Accelerate Pheno, Accelerate Arc, and Accelerate Wave systems, but there is no guarantee these will result in commercially viable products[176]. - The company relies on third-party manufacturers for key components, which poses risks related to regulatory compliance and supply chain disruptions[151]. - The company may face challenges in accurately estimating customer demand, leading to potential product shortages or excess inventory[145]. - Any modifications to cleared devices may require new 510(k) clearances, which could impact the company's ability to market its products[214]. Regulatory and Compliance Risks - The company is subject to extensive regulation by the FDA and other governing bodies, which could affect product commercialization and result in significant compliance costs[184]. - The FDA requires the company to obtain 510(k) clearance for its Accelerate Arc Products to continue marketing in the U.S.[205]. - The company submitted a pre-submission package to the FDA on October 21, 2022, seeking feedback on its 510(k) application for the Accelerate Arc Products[205]. - The FDA's proposed regulation changes for laboratory developed tests (LDTs) could complicate the clearance and approval processes for the company's products[207]. - The company may incur significant expenses to comply with various governmental laws and regulations, which could delay product commercialization[183]. - Compliance failures may lead to severe consequences, including product recalls, civil penalties, and potential criminal prosecution[186]. - The company faces significant legal risks due to potential violations of federal healthcare laws, which could result in civil monetary penalties and exclusion from federal healthcare programs[185]. Market and Competitive Environment - The company faces strong competition from established and new competitors, which may have greater resources and capabilities[134]. - Market opportunity estimates and growth forecasts are subject to significant uncertainty, which may lead to overestimation of potential market opportunities[141]. - The company generates a portion of its revenue internationally and faces various regulatory and operational risks in foreign markets[136]. - Legislative changes in the healthcare industry could adversely impact the company's revenue and research initiatives, particularly regarding reimbursement policies[182]. - Changes in healthcare policy and reimbursement structures could adversely affect the sales and profit margins of the company's products[196]. - The Protecting Access to Medicare Act of 2014 has tied Medicare's clinical laboratory reimbursement to private market rates, affecting pricing and utilization[198]. - The company may be impacted by healthcare reform initiatives that aim to shift payment models from quantity to quality, potentially increasing costs[197]. Intellectual Property and Legal Risks - The company faces risks related to intellectual property, including potential infringement claims from third parties, which could result in substantial legal expenses and divert management's focus[170][172]. - The lifespan of patents is limited, generally expiring 20 years after filing, which could affect the company's competitive position if patents are challenged or not adequately enforced[166]. - The company may face claims regarding the misappropriation of intellectual property by former employees, which could lead to costly litigation[174][175]. - The company carries a nominal amount of business interruption insurance, which may not cover all potential losses from operational disruptions[180]. Management and Operational Dependencies - The company relies heavily on its information technology systems, which are vulnerable to cyber-attacks that could compromise sensitive data and disrupt operations[130]. - The company is dependent on key personnel for its success, and challenges in recruiting and retaining qualified employees could hinder its operational goals[132]. - The company operates a single research and development facility in Tucson, Arizona, and any disruption to this facility could materially harm its ability to conduct research and development activities[177][178]. - Manufacturing processes are complex and any unforeseen issues, such as contamination or equipment malfunction, could lead to delays in product production, impacting revenue growth and market acceptance[179]. - A recall of products could significantly impact the company's operations and reputation, diverting resources and potentially leading to regulatory penalties[219]. Stock Market and Ownership - The stock price has been highly volatile, ranging from $4.17 to $10.30 per share in 2023, and from $5.10 to $51.50 per share in 2022, reflecting a one-for-ten reverse stock split on July 11, 2023[236]. - Approximately 48% of the outstanding common stock is beneficially owned by directors and executive officers, including 40% by a single director, Jack Schuler, which may influence stockholder decisions and market price[238]. - The concentration of stock ownership contributes to low trading volume and volatility, potentially affecting the market price of common stock[238]. - Current macroeconomic conditions, including inflation and global health crises, may impact customer spending on the company's products, potentially delaying sales cycles[244].

Financial Data and Key Metrics Changes - In Q3 2023, net sales were approximately $3.3 million, compared to $3 million in Q3 2022, while year-to-date sales were $9 million, down from $9.8 million in the prior year [10] - Gross margin for the quarter was approximately 40%, up from 20% in the prior year, and year-to-date gross margin was 34%, compared to 25% previously [11] - GAAP net income for the quarter was approximately $910,000, with a year-to-date net loss of approximately $48.6 million, resulting in a net income per share of $0.06 for the quarter and a net loss of $4.13 per share year-to-date [13] Business Line Data and Key Metrics Changes - The company contracted 6 new Pheno instruments in Q3, ending the quarter with a total of 339 revenue-generating Pheno instruments and a backlog of 70 instruments pending implementation [10] - More than 20 existing customers secured multiyear contract extensions for rapid positive blood cultures susceptibility testing during the quarter [10] Market Data and Key Metrics Changes - The Wave platform is designed to address both the 130 million tests performed from isolated colonies and over 7 million tests from positive blood culture samples globally [6] - The company is actively exploring commercialization options for the Wave system, with plans for pre-marketing activities next year [8] Company Strategy and Development Direction - The company is focused on advancing the ARC system and the Wave platform, with clinical trials for ARC already initiated and progress made in the development of Wave [4][5] - The partnership with Becton Dickinson (BD) is seen as a key strategy to enhance market penetration and sales effectiveness, with ongoing training and alignment of sales processes [21][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the progress of the Wave program and the potential for FDA submission in mid-2024, with a commercial launch expected in early 2025 [8][41] - The company is addressing challenges in the EMEA market by signing new agreements with BD to facilitate tender responses [22] Other Important Information - Non-operating income for the quarter was $15.7 million, primarily due to a fair value adjustment related to convertible notes [13] - The company ended the quarter with cash and investments totaling $21.2 million [13] Q&A Session Summary Question: Can you discuss the Wave system compared to the current standard of care? - Management highlighted that the Wave system aims to provide results in under 4.5 hours, significantly faster than the current market leader, Fino, which has an 8-hour turnaround time [16][17] Question: What is the status of the BD partnership and its impact on sales? - Management acknowledged a disappointing quarter for new contracted placements but noted ongoing progress in the sales funnel and training of BD sales representatives [21][22] Question: What is the latest on ARC enrollment and FDA approval timing? - Management confirmed that clinical trials for ARC are progressing well, with one site completing enrollment and plans for FDA submission in the coming months [30] Question: How does the company view the competitive environment for rapid microbiology systems? - Management stated that competition is beneficial as it highlights the need for improved diagnostic methods, asserting that Pheno remains a competitive solution despite emerging players [36] Question: When can we expect the BD partnership to materially boost the installed base? - Management indicated that while this quarter was less successful than the previous one, they expect continued improvement in new opportunities as BD's sales team becomes more familiar with the products [39]

Financial Performance - For the three months ended September 30, 2023, net sales increased to $3,299,000, an 11% increase compared to $2,960,000 for the same period in 2022[260] - For the nine months ended September 30, 2023, net sales decreased to $9,032,000, an 8% decrease from $9,780,000 in the same period in 2022[261] - Gross profit for the three months ended September 30, 2023, was $1,349 thousand, a decrease of 81% compared to $746 thousand in the same period in 2022[266] - Gross margin for the three months ended September 30, 2023, was 3%, down from 20% in the same period in 2022, primarily driven by excess inventory write-downs[266] - The company reported other income of $15,691 thousand for the three months ended September 30, 2023, compared to other expense of $(935) thousand in the same period in 2022, primarily due to a fair-value adjustment of the derivative liability related to convertible notes[276] - The company had a net loss of $48.6 million and negative cash flows from operations of $32.4 million for the nine months ended September 30, 2023[280] - Loss from operations for the three months ended September 30, 2023, was $(14,650) thousand, a decrease of 2% compared to $(14,961) thousand in the same period in 2022[274] Cost of Sales and Expenses - Total cost of sales for the three months ended September 30, 2023, increased to $3,192,000, a 34% increase from $2,381,000 in the same period in 2022[262] - An inventory write-down of $1,184,000 was recorded for the three months ended September 30, 2023, representing a 100% increase as it was not present in the same period in 2022[262] - Non-cash equity-based compensation as a component of cost of sales decreased to $58,000 for the three months ended September 30, 2023, a 65% decrease from $167,000 in the same period in 2022[262] - Total cost of sales for the three months ended September 30, 2023, decreased compared to the same period in 2022, primarily due to lower service contract-related costs and lower net book values of instruments sold[265] - Research and development expenses for the three months ended September 30, 2023, decreased by 4% to $6,996 thousand compared to $7,285 thousand in the same period in 2022[268] - Sales, general and administrative expenses for the three months ended September 30, 2023, decreased by 6% to $7,761 thousand compared to $8,255 thousand in the same period in 2022[271] Cash Flow and Financial Position - As of September 30, 2023, the Company had $21.2 million in cash and cash equivalents, a decrease of $24.4 million from $45.6 million at December 31, 2022[284] - Net cash used in operating activities for the nine months ended September 30, 2023, was $32.4 million, an improvement of $6.7 million compared to $39.2 million in the same period of 2022[296] - Net cash provided by investing activities was $8.8 million for the nine months ended September 30, 2023, primarily from maturities of marketable securities[298] - The Company has substantial doubt about its ability to continue as a going concern due to inadequate financial resources to fund forecasted operating costs for at least twelve months from the filing date[290] - The Company’s total material cash requirements as of September 30, 2023, amounted to $95.3 million, with significant obligations due in 2026[291] Debt and Financing Activities - The Company entered into a forbearance agreement with holders of approximately 85% of its outstanding 2.50% Convertible Senior Notes due 2023 on March 9, 2023[281] - The Company completed restructuring transactions on June 9, 2023, exchanging approximately $55.9 million of 2.50% Notes for approximately $56.9 million of newly issued 5.00% Senior Secured Convertible Notes due 2026[283] - The Company issued $66.9 million aggregate principal amount of 5.00% Notes, which mature on December 15, 2026, and bear interest at a rate of 5% per annum, payable in kind[300] - The Company is exploring additional funding through potential equity and/or debt financing arrangements, but there is no assurance that necessary financing will be available[286] - The Company has a non-cancellable purchase obligation with a supplier to acquire raw materials for a total commitment of $11.9 million, with delivery due by March 15, 2027[291] - As of September 30, 2023, approximately $0.7 million aggregate principal amount of 2.50% Notes remains outstanding and in default, accruing interest at 2.5% per annum[305] - The Company has $66.2 million aggregate principal amount of 5.00% Notes outstanding as of September 30, 2023[305] Product Development and Market Activities - The Accelerate PhenoTest BC Kit was launched in July 2021, enhancing the company's product offerings for rapid antibiotic susceptibility testing[250] - The Accelerate Arc system and BC Kit were commercialized in March and May 2022, automating the clean-up and concentration of microbial cells from positive blood culture samples[251] - The company is in discussions with the FDA regarding the regulatory pathway for the Accelerate Arc Products, which has temporarily halted U.S. sales and marketing efforts[253] - A sales and marketing agreement with Becton Dickinson was entered into in August 2022 to leverage their global sales team and reduce marketing expenses[254] - The company continues to invest in new product development, focusing on enhancing existing products and developing a next-generation AST platform[255] Equity and Share Transactions - The Company completed a public offering of approximately 1.8 million shares at a price of $20.00 per share on August 23, 2022, resulting in net proceeds of approximately $32.9 million[305] - The Company entered into a securities purchase agreement on June 9, 2023, with the Schuler Trust for the potential purchase of approximately 1.4 million shares valued at $7.20 per share for an aggregate of $10.0 million[307] - During the nine months ended September 30, 2023, no shares were sold under the at-the-market equity offering program, leaving $39.1 million available for future sales[309] - Approximately $55.9 million aggregate principal amount of 2.50% Notes were exchanged for approximately $56.9 million aggregate principal amount of 5.00% Notes in connection with Restructuring Transactions[304] - The Company issued approximately 3.4 million shares of common stock to repurchase the Secured Note, plus accrued interest, during the Restructuring Transactions[304] - As of September 30, 2023, the Company had no off-balance sheet arrangements[310] - The Company has historically completed multiple equity raises through sales of its common stock and Series A Preferred Stock in both public and private offerings[305]

Financial Performance - For the three and six months ended June 30, 2023, net sales decreased to $2,921,000, a 24% decline compared to $3,861,000 in the same period of 2022[248]. - Total revenues for the six months ended June 30, 2023, were $5,733,000, down 16% from $6,820,000 in the prior year[250]. - Gross profit for the three months ended June 30, 2023, was $799,000, a decrease of 26% compared to $1,080,000 for the same period in 2022[254]. - Gross margin for the three months ended June 30, 2023, was 27%, consistent with the same period in 2022, while the six-month gross margin increased to 32% from 28% in 2022 due to lower non-cash equity-based compensation[255]. - The company recorded a net loss of $49.5 million and negative cash flows from operations of $24.2 million for the six months ended June 30, 2023[270]. - The company's accumulated deficit totaled $656.8 million as of June 30, 2023[270]. Cost Management - Cost of sales for the three months ended June 30, 2023, was $2,122,000, a decrease of 24% from $2,781,000 in 2022[251]. - Non-cash equity-based compensation as a component of cost of sales decreased to $98,000 for the three months ended June 30, 2023, down 57% from $228,000 in 2022[252]. - Research and development expenses for the three months ended June 30, 2023, decreased by 23% to $5,820,000 from $7,576,000 in 2022, primarily due to reduced contracted service costs[257]. - Sales, general and administrative expenses for the three months ended June 30, 2023, decreased by 34% to $7,564,000 from $11,493,000 in 2022, mainly due to lower non-cash equity-based compensation[260]. Restructuring and Financial Strategy - The company entered into a restructuring support agreement on April 21, 2023, to negotiate the restructuring of its capital structure[271]. - The Company completed Restructuring Transactions on June 9, 2023, exchanging approximately $55.9 million of 2.50% Notes for $56.9 million of newly issued 5.00% Senior Secured Convertible Notes due 2026[272]. - The Company has a total contractual cash requirement of $97.2 million, with significant obligations including $67.6 million related to 5.00% Notes and $11.9 million in purchase obligations[281]. - The Company issued $66.9 million aggregate principal amount of 5.00% Notes in connection with the Restructuring Transactions, maturing on December 15, 2026[289]. - The Company exchanged $49.9 million of 2.50% Notes for a Secured Note of $34.9 million and a warrant for approximately 0.2 million shares at an exercise price of $21.2 per share[293]. Cash Flow and Liquidity - As of June 30, 2023, the Company had $30.7 million in cash and cash equivalents, a decrease of $14.9 million from $45.6 million at December 31, 2022, primarily due to cash used in operations[273]. - The Company reported net cash used in operating activities of $24.2 million for the six months ended June 30, 2023, compared to $25.6 million for the same period in 2022, reflecting a $1.4 million improvement[284]. - The net cash provided by financing activities was $9.7 million for the six months ended June 30, 2023, driven by proceeds from the issuance of common stock and 5.00% Notes[288]. - The Company has determined there is substantial doubt about its ability to continue as a going concern due to inadequate financial resources to fund forecasted operating costs for at least twelve months[278]. - The Company is actively exploring additional funding options, including equity and debt financing, but there is no assurance that necessary financing will be available[275]. Inventory and Product Development - The company continues to invest in new product development, focusing on enhancing existing products and developing a next-generation AST platform[245]. - The Accelerate Arc Products are currently on hold in the U.S. due to ongoing discussions with the FDA regarding their regulatory pathway[243]. - The company has sufficient inventory of Accelerate Pheno system instruments to mitigate the impact of rising costs on these devices[247]. - The Company has not taken material delivery of any inventory under a non-cancellable purchase obligation totaling $11.9 million, which must be fulfilled by March 15, 2027[281]. Other Financial Information - The Company has an available aggregate of $39.1 million for future sales under its at-the-market equity offering program[298]. - There were no off-balance sheet arrangements as of June 30, 2023[299]. - The Company’s financial statements are prepared in accordance with U.S. GAAP, requiring estimates and judgments affecting reported amounts[300].

Financial Data and Key Metrics Changes - In Q2 2023, net sales were approximately $2.9 million, down from $3.9 million in Q2 2022, with year-to-date sales of $5.7 million compared to $6.8 million in the prior year [4][6] - Gross margin for the quarter was 27%, slightly improved from 28% in the prior period, while year-to-date gross margin was 32% compared to 28% [5][6] - GAAP net loss was $26 million for the quarter, resulting in a net loss per share of $2.36, with a year-to-date net loss of $42.8 million and a loss per share of $4.11 [7][8] Business Line Data and Key Metrics Changes - The U.S. contracted 13 new Pheno instruments in Q2 2023, marking the strongest quarter since 2021, with a total installed base of 339 instruments and a backlog of 70 pending implementation [4][15] - Selling, general and administrative (SG&A) expenses decreased to $7.6 million for the quarter from $11.5 million in the prior period, while year-to-date SG&A expenses were $17.7 million compared to $22.2 million [5][6] Market Data and Key Metrics Changes - The partnership with Becton Dickinson (BD) is showing positive results, with increased commercial reach and sales effectiveness, leading to quicker sales closures [14][15] - The EMEA market is experiencing complexities due to tender-driven markets, which has delayed progress, but efforts are ongoing to simplify contracts [15][16] Company Strategy and Development Direction - The company is focusing on three strategic priorities: advancing innovation with the Wave platform, growing market share through the BD partnership, and building financial strength [3][9] - The Wave platform aims to perform antibiotic susceptibility testing on both positive blood cultures and isolated colonies, addressing a significant market opportunity [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the Wave platform's potential to capture a larger market share in microbiology, with plans for preclinical studies and subsequent clinical trials [21][22] - The company anticipates a reduction in cash burn in the upcoming quarters following the completion of debt restructuring [8][17] Other Important Information - The company completed a 10-for-1 reverse stock split, retroactively adjusting all shares and per share amounts for all periods presented [7] - The company ended the quarter with cash and equivalents of $30.7 million, with expectations for improved cash flow management moving forward [8] Q&A Session Summary Question: Update on the pathway for Arc approval - The company is planning a clinical trial for Arc in the U.S. and is in the process of identifying sites and managing the trial [19] Question: Pathway for Wave approval and timeline - A preclinical study for Wave is expected to be completed by year-end, with a clinical study likely starting in Q1 2024 [21][22] Question: Competitive environment for rapid microbiology systems - The company acknowledges emerging competitors but remains confident in its product offerings and the strength of its partnership with BD [26][27] Question: Status of BD partnership and sales team training - The U.S. sales team has been fully trained, while training in Europe is ongoing, with positive activity noted in sales opportunities [29][30] Question: Impact of staffing turnover in labs and hospitals - The company is experiencing challenges due to turnover in healthcare staffing, which can delay implementation but also create new opportunities [36][37] Question: Potential impact of Arc reintroduction on BD momentum - The company is optimistic about Arc's value proposition and its potential to drive momentum once reintroduced to the U.S. market [39][41]

Business Operations and Market Focus - The company reported a significant focus on addressing antibiotic resistance through rapid diagnostics, which is a major healthcare threat according to the CDC[195] - The Accelerate Pheno system and the Accelerate PhenoTest BC Kit have been marketed since 2017, generating revenue primarily from instrument sales and consumable test kits[197] - In 2022, the company launched the Accelerate Arc system and BC Kit, which automates microbial cell concentration from blood culture samples, receiving CE IVDR registration in June 2022[199] - A sales and marketing agreement with BD was established in August 2022 to leverage BD's global sales team and reduce marketing expenses[200] - The company is investing in new product development, including enhancements to the Accelerate Pheno system and a next-generation AST platform aimed at lower costs and higher throughput[201] Financial Performance - For the three months ended March 31, 2023, net sales were $2,812,000, a decrease of $146,000 or 5% compared to $2,958,000 in the same period of 2022[209] - Total revenues decreased due to lower sales of Accelerate PhenoTest instruments, partially offset by increased revenue from Accelerate PhenoTest BC Kits[210] - Cost of sales for the three months ended March 31, 2023 was $1,801,000, a decrease of $355,000 or 16% from $2,156,000 in 2022[211] - Gross profit increased to $1,011,000 for the three months ended March 31, 2023, up $209,000 or 26% from $802,000 in 2022, resulting in a gross margin of 36%[214] - Research and development expenses rose to $6,968,000, an increase of $944,000 or 16% compared to $6,024,000 in the same period of 2022[216] - Sales, general and administrative expenses decreased to $10,105,000, down $568,000 or 5% from $10,673,000 in 2022[218] - The loss from operations for the three months ended March 31, 2023 was $16,062,000, an increase of $167,000 or 1% compared to $15,895,000 in 2022[221] - The company reported total other expense of $733,000 for the three months ended March 31, 2023, a decrease of $3,163,000 compared to other income of $2,430,000 in 2022[223] - As of March 31, 2023, the company had an accumulated deficit of $624.0 million and a net loss of $16.8 million for the period[225] Cash Flow and Financial Position - Cash and cash equivalents decreased to $31.9 million as of March 31, 2023, down $13.7 million from $45.6 million at December 31, 2022[227] - The Company has substantial doubt about its ability to continue as a going concern due to inadequate financial resources to pay outstanding debt obligations and fund forecasted operating costs for at least twelve months from the filing date[229] - As of March 31, 2023, the Company's total contractual material cash requirements amount to $119.4 million, with $58.97 million due in 2023[235] - The Company reported net cash used in operating activities of $13.37 million for the three months ended March 31, 2023, compared to $12.61 million for the same period in 2022, reflecting a change of $761,000[239] - The net cash provided by investing activities was $8.21 million for the three months ended March 31, 2023, primarily due to maturities of marketable securities[241] Debt and Financing Activities - The Company issued $150 million in Convertible Senior Notes with a 2.50% interest rate, and as of March 31, 2023, the outstanding principal amount was $56.6 million[243] - The Company has a non-cancellable purchase obligation of $11.9 million for raw materials, with a delivery deadline of March 15, 2027[235] - The Company may repay secured notes in cash or common stock, with a limit of 19.99% of outstanding shares for stock repayment[236] - The Company entered into a Restructuring Support Agreement to negotiate the restructuring of its capital structure, including the Convertible Notes and Secured Note[244] - As of March 31, 2023, the Company had $39.1 million available for future sales under its at-the-market equity offering program[252] - The Company is exploring additional funding through potential equity and/or debt financing arrangements to support its operations[230] Stock Issuance and Agreements - In 2021, the Company issued 3,954,546 shares of Series A Preferred Stock, generating total proceeds of approximately $30.5 million[254] - The Company completed a public offering of 17,500,000 shares of common stock at a price of $2.00 per share, resulting in net proceeds of approximately $32.9 million after expenses[257] - The Schuler Trust agreed to purchase 2,439,024 shares of common stock at a price of $1.64 per share, totaling an aggregate purchase price of $4.0 million[256] - The Secured Note has a maturity date of August 15, 2027, with an interest rate of 5.0% per annum, and can be repaid in cash or common stock at a price of $2.12 per share[258] - The Company received approximately $1.5 million from the issuance of 201,820 shares of common stock under the December 2020 Securities Purchase Agreement[253] - The Company extended the closing date of the Private Placement with the Schuler Trust from March 24, 2023, to April 20, 2023[256] Accounting and Reporting - The Company’s financial statements are prepared in accordance with U.S. GAAP, requiring estimates and judgments that may affect reported amounts[261] - The Company does not have any restrictions on incurring future indebtedness related to the Secured Note[258] - There have been no material changes to the Company's critical accounting policies and estimates since the last report[261]

Financial Data and Key Metrics Changes - In Q1 2023, net sales were approximately $2.8 million, a slight decrease from approximately $3 million in Q1 2022, attributed to a lack of new Pheno contracting [5][6] - Cost of goods sold was $1.8 million, resulting in a gross margin of 36%, compared to a gross margin of 27% in the same period in 2022 [6][7] - The net loss was $16.2 million excluding non-cash stock-based compensation, with a GAAP net loss of $16.8 million, resulting in a net loss per share of $0.17 [7] Business Line Data and Key Metrics Changes - The company contracted three new Pheno instruments and brought another 10 live, ending the quarter with a revenue-generating install base of 338 Pheno instruments and a backlog of 62 instruments pending implementation [5] - Selling, general and administrative expenses (SG&A) were $10.2 million, up from $8.2 million in Q1 2022, primarily due to debt restructuring expenses [6] - Research and development costs were $6.4 million, an increase from $5.7 million in the prior year, reflecting further investment in the next generation susceptibility instrument, Wave [7] Market Data and Key Metrics Changes - The partnership with Becton Dickinson (BD) has improved commercial reach, with nearly as many new Pheno opportunities added in Q1 2023 as in all of 2022 [10][11] - The global bloodstream infection campaign was launched in EMEA, generating customer enthusiasm for end-to-end workflow solutions [12] Company Strategy and Development Direction - The company is focused on three strategic priorities: building financial strength, growing market share through the BD partnership, and delivering innovation with the Wave platform [4][8] - The restructuring support agreement (RSA) aims to lower overall debt and simplify the capital structure, with $24 million in new capital secured for development efforts [9][16] - The Wave platform is expected to provide rapid susceptibility test results and significantly improve platform economics, expanding revenue opportunities [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the remainder of 2023, highlighting the positive momentum from the BD partnership and ongoing innovation efforts [16][46] - The company is focused on reducing cash burn and improving operational efficiency while navigating the debt restructuring process [9][38] Other Important Information - The company ended Q1 2023 with cash and investments of $31.9 million [7] - The RSA is pending finalization, with ongoing dialogues with note holders and a shareholder meeting scheduled to facilitate the transaction [30] Q&A Session Summary Question: Momentum with BD on commercialization - Management noted good activity and momentum with BD, particularly in accounts where BD has strong relationships, leading to rapid progression through the sales funnel [20][21] Question: Critical steps for Wave development - The Wave platform is progressing well, with over 25 systems live in clinical labs, and plans for beta units and pre-clinical studies are on track [25][26] Question: Confidence in RSA completion - Management highlighted ongoing documentation and agreements with note holders, with productive dialogues and a shareholder meeting to facilitate the transaction [30] Question: OpEx increase and future outlook - Management acknowledged higher operational expenses due to debt restructuring but anticipates streamlining in subsequent quarters as the company focuses on cash burn and operational efficiency [34][36] Question: Customer base in the sales funnel - The sales funnel includes a mix of existing BD customers and new opportunities, with significant tenders and upgrades occurring in both EMEA and the U.S. [41][42]

Going Concern and Financial Stability - The company has substantial doubt about its ability to continue as a going concern due to inadequate financial resources to pay outstanding debt obligations and fund forecasted operating costs for at least twelve months [96]. - The company is currently in default of payment obligations under the terms of its Notes, which matured on March 15, 2023 [98]. - A Forbearance Agreement was entered into with holders of approximately 85% of the company's outstanding Notes, effective from March 13, 2023, to April 5, 2023, to avoid immediate enforcement of rights under the Indenture [99]. - The company may seek protection under the Bankruptcy Court, which could significantly harm its business and result in a loss of value for stockholders [102]. - The company is actively exploring strategic alternatives to address liquidity and capital structure issues, but there is no assurance of success [101]. - The company may face challenges in obtaining additional funds on acceptable terms, which could impact its ability to continue as a going concern [231]. Revenue and Profitability - The company has limited revenues from its products, specifically from the Accelerate Pheno system and the Accelerate PhenoTest BC Kit, and has experienced losses from operations in the past three years [104]. - The company expects to continue incurring losses in the future and cannot guarantee achieving or sustaining profitability [105]. - Future profitability is heavily dependent on the successful commercialization of the Accelerate Pheno system and associated test kits [106]. - The company is currently experiencing a net loss due to insufficient sales of reagents and test cartridges to cover fixed expenses [142]. - The cancellation or deferral of customer purchase orders could lead to excess inventory, adversely affecting gross margins [144]. Product Development and Regulatory Challenges - The process of obtaining regulatory clearance for future product candidates is expensive and time-consuming, with no guarantee of success [113]. - The company is in active dialogue with the FDA regarding the Accelerate Arc Products, which has led to a hold on sales and marketing efforts in the U.S. [115]. - The FDA requires a 510(k) clearance for the marketing and distribution of the Accelerate Arc Products, which were previously listed as Class I devices exempt from such requirements [206]. - The regulatory processes for the company's products are expensive, time-consuming, and uncertain, potentially hindering required approvals for commercialization [202]. - The company submitted a pre-submission package to the FDA to obtain feedback on its 510(k) application for the Accelerate Arc Products [206]. Competition and Market Risks - The company faces significant competition from established and new competitors, which may have greater resources and capabilities [129]. - Estimates of market opportunity and growth forecasts may prove to be inaccurate, which could negatively impact the company's business growth [137]. - The ongoing war between Russia and Ukraine could disrupt European business operations and negatively impact product demand [133]. - Global economic conditions remain challenging due to the ongoing COVID-19 pandemic, the war between Russia and Ukraine, and recent banking system disruptions, leading to market volatility [244]. Operational Risks - The company relies on information technology systems for operations, which are vulnerable to cyber-attacks that could result in significant operational disruptions [124]. - The company is dependent on key employees, and high attrition rates could negatively impact its ability to develop and sell products [127]. - Manufacturing processes involve complex procedures, and any unforeseen issues could lead to production delays, impacting revenue growth [180]. - The company carries a nominal amount of business interruption insurance, which may not cover all potential losses from operational disruptions [181]. Financial Reporting and Internal Controls - There is a material weakness in the company's internal control over financial reporting, which could affect the accuracy and timeliness of financial reporting [159]. - The identified material weakness led to misclassification of debt instruments in interim financial statements for multiple reporting periods [160]. Intellectual Property and Research & Development - The company owns 22 issued U.S. patents and five pending U.S. patent applications, along with 30 non-U.S. patents and four pending applications [164]. - The company may face significant challenges in protecting its intellectual property, including potential litigation costs and competition from third parties [165]. - The company plans to make significant additional investments in research and development, particularly in the Accelerate Pheno system and the Accelerate Arc system, with no guarantee of generating commercial products or revenues [183]. - The company anticipates needing to spend additional funds on research and development for its next-generation instrument platform and technologies [183]. Regulatory and Compliance Risks - The company is subject to extensive regulation by the FDA and other governmental agencies, which may impact product commercialization and compliance costs [186]. - Legislative changes, such as the Budget Control Act of 2011, have resulted in a 2% cut to Medicare payments, which could adversely affect the company's revenue from products [196]. - The company faces risks from third-party payers reducing reimbursement for medical products and services, which could limit net revenue and results [197]. - Regulatory compliance failures can lead to severe consequences, including product recalls, sanctions, and loss of market clearance [210]. Stock and Market Conditions - The market price of the company's common stock ranged from $0.51 to $5.15 per share in 2022, compared to $4.27 to $15.00 per share in 2021, indicating significant volatility [221]. - High short interest in the company's common stock may lead to further volatility in stock price [223]. - Any future issuances of common stock may dilute existing stockholders and adversely affect the market price of the shares [230]. - The company received a deficiency letter from Nasdaq on January 5, 2023, for not meeting the minimum bid price requirement of $1.00 per share for 30 consecutive business days [236]. Customer and Market Demand - Customers may face budget constraints and challenges in accessing credit, potentially resulting in decreased purchases of the company's products [245]. - The availability of government research grants for customers may decline, impacting their ability to purchase technologies from the company [245]. - The company may need to increase its allowance for doubtful accounts if customers do not make timely payments, affecting days sales outstanding [245].