T2 Biosystems(US:TTOO)2022-11-11 01:02Financial Data and Key Metrics Changes - Total revenue for Q3 2022 was $3.7 million, a decrease of 50% compared to the prior year period [38] - Product revenue was $2.6 million, a decrease of 39% compared to the prior year period, driven by an 88% decline in sales of COVID-19 tests [38] - Research contribution revenue was $1 million, a decrease of 67% compared to the prior year period [38] - Net loss for Q3 2022 was $17.4 million, or $2.95 per share, compared to a net loss of $14 million, or $0.21 per share for the prior year period [40] - Cash, marketable securities, and restricted cash were $21.5 million as of September 30, 2022 [40] Business Line Data and Key Metrics Changes - Sepsis-related product revenue reached $2.4 million, representing a record number for a single quarter and an increase of 24% compared to the prior year period [16] - Sepsis test panel revenue was $1.5 million, representing growth of 25% from the prior year period [17] - The installed base of T2Dx instruments increased to 170, including 101 in the U.S. and 69 internationally [16] Market Data and Key Metrics Changes - The core market opportunity for sepsis products targets hospital microbiology labs, representing a market opportunity exceeding $2 billion [20] - The Baltic region has a higher average incidence of sepsis per population than Western Europe, indicating significant market potential [23] Company Strategy and Development Direction - The company is focused on three corporate priorities: accelerating sales, enhancing operations, and advancing the product pipeline [15] - The strategy includes expanding the installed base of T2Dx instruments globally and increasing utilization of sepsis test panels [15] - The company is expanding its target markets to include Lyme disease, alongside sepsis, to address significant opportunities in the infectious disease field [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged supply chain issues impacting gross margins but expressed confidence in future margin improvements [49] - The company expects to close 50 to 55 T2Dx instrument contracts in 2022, indicating optimism for future sales [42] - Management remains focused on international expansion, recognizing the market opportunity outside the U.S. as significant [65] Other Important Information - The company regained compliance with NASDAQ minimum bid price listing requirements [8] - The product pipeline includes the T2Biothreat Panel, T2Resistance Panel, T2Lyme Panel, and enhancements to the T2Bacteria Panel, with potential commercial launches in 2023 [31] Q&A Session Summary Question: What caused the negative gross margin this quarter? - The negative gross margin was driven by supply chain issues, requiring the use of research-grade materials instead of GMP manufactured materials, along with excess COVID inventories [49][50] Question: What is the current state of the instrument backlog and sales funnel? - The company has sold or placed 38 T2Dx instruments year-to-date and expects a fair instrument quarter for Q4, aiming for a record year [53][56] Question: How does the company plan to balance international expansion with cash burn? - International expansion is crucial for long-term growth, with a focus on leveraging relationships with distributors to facilitate faster adoption [65] Question: Any updates on the next-gen instrument and pipeline prioritization? - The company completed all milestones for the next-gen instrument and is focused on products closest to FDA submission, with no updates on the product timeline [68] Question: What is the target for converting COVID-driven placements to sepsis testing? - The target remains at 80% conversion, although the process has taken longer than anticipated [71][73] Question: How is the company positioned to meet excess demand for devices? - The company feels confident in its ability to flexibly respond to increased demand, having scaled test capacity significantly during COVID [77]