Release Date: July 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Record quarterly and first half sepsis test revenue, with growth of 27% and 25% respectively compared to the prior-year periods.
- Significant progress in international markets, including new distribution agreements in Qatar, Hong Kong, Macau, Malaysia, and Indonesia.
- Potential upside from the launch of the T2Lyme Panel and T2Biothreat Panel, which are not included in the current 2024 revenue guidance.
- Reduction of debt by approximately 80%, significantly strengthening the balance sheet and reducing annual interest payments by $3.2 million.
- Clinical data presented at the ASM Microbe 2024 Conference demonstrated the effectiveness of the T2Candida Panel, leading to improved patient outcomes.
Negative Points
- Second quarter 2024 net loss of $9.2 million, compared to a net loss of $6.3 million in the prior year's second quarter.
- Cash and cash equivalents were only $4.2 million as of June 30, 2024, raising concerns about liquidity.
- Lower international instrument sales in the second quarter, which impacted overall revenue growth.
- Delays in internal verification and validation studies for the T2Resistance Panel, pushing the planned FDA submission to Q4 2024.
- Reduction in US sales force, which may impact domestic market penetration and sales growth.
Q & A Highlights
Q: What are your expectations for the second half of the year, particularly regarding international deals and orders?
A: We expect a strong second half of 2024, with product revenue guidance between $10 million and $11 million, reflecting mid-40% to mid-50% growth year-over-year. The first half was weighted at 40% and the second half at 60%. International business remains strong, with new distribution agreements in several countries and six instruments already sold in Q3, generating about $400,000.
Q: Can you provide details on the potential partnership with a multibillion-dollar healthcare company?
A: Our objective is to find a partner with a strong presence in US hospitals and commercial scale. We are confident in the partner we are negotiating with, but cannot share specific details yet. Once finalized, we will share the information with the market.
Q: Are there any risks of further delays in your clinical studies or submissions?
A: The T2Lyme studies are on track and completed. The T2Resistance studies were delayed due to a manufacturing issue, but we have resumed internal verification and validation studies. This delay pushed our planned FDA submission from Q3 to Q4 of this year.
Q: Will you be increasing your sales force anytime soon?
A: No, we have reduced our US sales force in anticipation of a US commercial partner. Our current team is capable of effectively working with the partners we are engaged with.
Q: What steps are you taking to strengthen your balance sheet in the second half of the year?
A: We have filed an S-3 and put an ATM in place to have the necessary tools available. We plan to strengthen our balance sheet around the upcoming catalysts we have in front of us.
Q: How do you see the BD blood culture media bottle shortage impacting your business?
A: The shortage represents an opportunity for T2 Biosystems to increase adoption of our direct-from-blood diagnostics. We are proactively contacting hospital microbiology departments to leverage this opportunity.
Q: Can you elaborate on the clinical data presented at the ASM Microbe 2024 Conference?
A: The data demonstrated that the T2Candida Panel led to improved patient care, with results available 38 hours faster than beta-D-glucan tests and detecting over three times as many infections as blood culture. The use of the T2Candida Panel was associated with better clinical outcomes compared to conventional blood culture testing.
Q: What are your plans for the T2Lyme Panel and T2Biothreat Panel?
A: We plan to launch the T2Lyme Panel as a laboratory-developed test in Q3 2024 through a partnership with ECO Laboratory. The T2Biothreat Panel represents a strong market opportunity, and we are fielding interest from potential government targets for procurement.
Q: How are you enhancing your operations to improve cost structure?
A: We have reduced our debt by 80%, consolidated real estate space, partnered with ADP TotalSource for HR benefits, and reduced headcount by 30%. We also expanded the use of our Oracle ERP system to improve inventory planning and material management.
Q: What progress have you made on your three corporate priorities?
A: We achieved record sepsis test revenue, expanded our international distribution network, and made significant advancements in our pipeline, including the T2Resistance Panel, T2Lyme Panel, and expanded T2Candida Panel. We also improved our balance sheet and cost structure.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
