After reaching dizzying heights during the beginning of the Covid pandemic (which is still on-going if anyone noticed!), Quanterix Corp. (QTRX, Financial) has now dropped to all-time lows. This is a great example of a bubble and bust, demonstrating Mr. Market's Dr. Jekyll and Mr. Hyde personality.
About Quanterix
Quanterix is developing an ultra-sensitive digital immunoassay platform that advances precision health for life sciences research and diagnostics. The bead-based and planar array platforms (trademarked Simoa®) designed by the company enable customers to reliably detect protein biomarkers in low concentrations in blood, serum and other fluids which are undetectable using conventional, analog immunoassay technologies. The company has Simoa technology with the capability of analyzing nearly six biomarkers per test, with anticipated expansion capability. Quanterix’s technology is designed to enable much earlier disease detection, better prognosis and precise treatment methods.
The technology is currently being used for research applications in several therapeutic areas, including oncology, neurology, cardiology, inflammation and infectious diseases. For example, it has a colloboration with Eli Lilly (LLY, Financial) on developing new tools to diagnose, monitor and treat Alzheimer's disease.
Source: Company Presentation
The company was established in 2007 and is located in Billerica, Massachusetts. It sells both instruments and consumables built on its technology, so it has a razor (instrument) and blade (consumables) business model. Once a lab adopts its technology and instruments, it gets locked into buying consumables.
Insider trading
Qunaterix caught my attention because of multiple and substantial stock purchases by key insiders as the stock went down:
As can be seen in the above chart, insider trading has been mostly selling in the past but now has suddenly shifted to buying. When insiders start buying shares like this, it is a sign for investors to pay attention, as insiders are in the best position to understand their company and its prospects.
The insiders buying Quanterix recently include the chief financial officer and the CEO as well as several directors. The size of the trades are substantial, so this is likely not just window dressing to suck in gullible investors. The CEO recently bought $1.095 million worth of stock and the chief financial officer spent $305,000. Four separate directors including the co-founder and chairman loaded up as well. Below is a chart detailing the recent insider buys:
| Insider | Position | Insider Trade Date | Shares Change | Buy/Sell | Price |
| DOYLE MICHAEL A | CFO and Treasurer | 2022-08-15 | 30,000 | Buy | 10.30 |
| Toloue Masoud | President & CEO | 2022-08-12 | 105,000 | Buy | 10.43 |
| Hlavinka Sarah E. | Director | 2022-08-11 | 10,160 | Buy | 9.89 |
| WALT DAVID R | Director/Cofouncer | 2022-08-10 | 150,000 | Buy | 8.62 |
| MEISTER PAUL M | Director | 2022-08-10 | 234,304 | Buy | 8.53 |
| Madaus Martin D | Director | 2022-08-10 | 89,667 | Buy | 8.43 |
Fundamentals
The company was smart to raise a lot of cash while the stock was flying high on Covid tailwinds. The balance sheet is in great shape with $360 million in cash and few liabilities.
The cash flow diagram below shows that the company is burning cash as it develops its technology. However, the company has several years of available cash runway to be able to fund operations. Hopefully by then, the company will be able to attain takeoff velocity to profitability.
Another encouraging sign is revenue continues to increase:
Guru investor Baillie Gifford has invested in this company and appears to be holding steady with its investment. Another guru investor in the stock is Chuck Royce (Trades, Portfolio), who appears to retreating.
Conclusion
Overall, Quanterix appears to be interesting as a long term speculation. This is a development stage company still in cash-burning mode, so it is risky. On the other hand, the company is growing revenues rapidly and has plenty of cash to fund its development. In my expereince, investments like Quanterix are a bit like lottery tickets - either they become multi-baggers or go bust, so investors should never go all-in.
Insiders are buying heavily, which could mean they see the stock as undervalued. Management was smart to have raised equity capital when the stock was flying high and Mr. Market was in a bubble state. The company is also small enough that it may get acquired by a larger player in the biomedical diagnostics and research industry.
