Quanterix Q3 2023 Earnings Call Transcript

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Provided by Quartr
November 7, 2023

Key Takeaways

  • Transformation plan: Six-quarter operational overhaul is expected to be substantially complete by year-end, with assays rolling off the new scalable production platform in January.
  • Q3 financials: Revenue rose 18% year-over-year to $31.3 million, non-GAAP gross margin improved by 1,300 basis points to 48.6%, and cash burn fell to under $2 million.
  • Alzheimer’s biomarker expansion: Simoa platform pTau217 tests demonstrated >90% accuracy in large multicenter studies and Quanterix launched the Lucent AD blood-based test in partnership with Johnson & Johnson.
  • Upgraded guidance: Q4 revenue is forecast at $27–29 million, full-year revenue raised to $118–120 million, gross margin targets increased, and 2023 cash usage cut to $20–25 million.
  • Instrument sales remain pressured by ongoing capex constraints, though a 63% jump in consumables revenue and more than doubling of Accelerator Lab services partially offset this weakness.
AI Generated. May Contain Errors.
Earnings Conference Call
Quanterix Q3 2023
00:00 / 00:00

There are 7 speakers on the call.

Operator

Good day, and thank you for standing by. Welcome to the Quanterix Corporation Q3 2023 Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Ed Joyce.

Operator

Please go ahead.

Speaker 1

Thank you, Hope, and good morning. With me on today's call is Masood Talu, President and CEO of Quanterix and Vandana Sriram, our Chief Financial Officer. Donona joined us in August as Mike Doyle transitions into retirement in early 2024. Before we begin, I would like to remind you of a few things. The call will be recorded and a replay will be available on the Investor Resources section of our website.

Speaker 1

Today's call will contain forward looking statements within the meaning of the U. S. Private Securities Litigation Reform Act. These forward looking statements are based on management's beliefs and assumptions and on information available as of the date of this call. We may not actually achieve the plans, intentions or expectations disclosed in our forward looking statements.

Speaker 1

Forward looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements. The risks and uncertainties that we face are described in our most recent filings with the Securities and Exchange Commission. To supplement the company's financial statements presented on a GAAP basis, the company has provided certain non GAAP financial measures. Management uses these non GAAP measures to evaluate operating performance in a manner that allows for meaningful period to period comparison and analysis of trends in its business. The company believes that such measures are important in comparing current results with other period results and are useful in assessing the company's operating performance.

Speaker 1

The non GAAP financial information presented here should be considered in conjunction with and not as a substitute for the financial information presented in accordance with GAAP. Investors are encouraged to review the reconciliation of these non GAAP measures to their most directly comparable GAAP financial measures set forth in the appendix of the presentation posted to our website and in the earnings release issued today. I'll now turn the call over to Masood.

Speaker 2

Thanks, Ed. Good morning, everyone, and thank you for joining us on our Q3 call. We're pleased to announce the 6 quarter transformation plan we laid out last year is expected to be substantially complete by year end with assays rolling off our new scalable production platform in January. Incremental improvements made throughout this year have been positively reflected in our financial results and continue to do so in the Q3 with year over year revenue up 18% to $31,300,000 non GAAP gross margin improving 1300 basis points to 48.6 percent And disciplined cash use going from over $17,000,000 for the corresponding prior year period to under $2,000,000 this quarter. On the foundation of this new ops platform, we will continue to improve gross margins and take our research business from one that's burning cash We'll deploy capital to 1st, expand access to our platform and second, enable patient testing with new biomarker solutions we've recently developed.

Speaker 2

Simoa continues to be the leader in measuring proteins at Such that, Simoa is not limited to just specialty labs, but accessible by all labs. This means additional biomarker diversity and instrument utility that ensures broad reach. We spoke a lot this year about improving operating scale and margins. In 2024, we're going to talk a lot about increasing innovation rate, a metric we're Last month, at the clinical trial for Alzheimer's disease, CTAD meeting, Simoa based blood biomarkers testing was revealed in several neuro clinical trials for monitoring, measuring efficacy of neurotherapies and diagnostics. Symo's ultra sensitive digital immunoassay technology delivers scaled, High throughput measurement of neurodegenerative blood biomarkers, including those for Alzheimer's disease.

Speaker 2

Of these presentations, Eli Lilly presented analytical validation and clinical performance of a p Tau217 blood based diagnostic test to identify amyloid PET positivity using the Simoa platform. Their study included over 1,000 samples and was run over multiple lots, operators and Samoa instruments. The study demonstrated high correlation of PTOW-two seventeen to Amyloid Pet with an area under the curve of 91.6%. Simoa's ultra sensitivity translates to very low limit of quantitation necessary for blood biomarkers like pitau-two seventeen. The VUMC Medical Center in Amsterdam presented Phase 1 data highlighting the potential for differential diagnosis of Alzheimer's disease and dementia.

Speaker 2

Recall, we are working with the BOMC and ADBF on a clinical trial to support the diagnosis of Alzheimer's and determine through a multimodal algorithm threshold levels of key blood based biomarkers to differentiate other forms of dementia, such as frontal lobe or Lewy bodies. Early data suggests that the combination of p Tau and NFL measurements can aid in discerning frontal temporal dementia from Alzheimer's disease with an area under the curve of 0.87. While there's much more work to be done in this study, including work at multicenter clinical trial sites, the early insights are promising. Reported in Nature Medicine in July, a 1,000 plus participant study examined why certain amyloid positive patients Our CMO platform was used to look at astrocyte reactivity by measuring GFAP levels in blood. The study led by researchers at the University of Pittsburgh found astrocyte reactivity influenced Abeta effects on topatology in preclinical Alzheimer's disease.

Speaker 2

These studies emphasize 2 critical points. First, there's a lot more work left to be done with this terrible disease, And we believe we're entering a decade where significant effort and capital will be invested in research and clinical trials for Alzheimer's. 2nd, we're in the early innings of treatment where there will be a focus on screening and diagnostics, Expanding into prognosis and disease staging, both of which will require precise blood based biomarkers at the highest As an indication of the future and based on what we're observing with the latest results, trials And research. It will be multiple neuro blood biomarkers measured together that will tell the whole story. Finally, I'm happy to report that a few weeks ago we signed a new agreement with Johnson and Johnson Innovative Medicines and launched the Lucent AD p Tau-two seventeen blood based biomarker test, combining Quanterix's ultra sensitivity SAMOA technology and J and J's p Tau-two seventeen antibodies to provide high accuracy Alzheimer's disease testing.

Speaker 2

PTAL-two seventeen levels can become elevated in very early stages of the Alzheimer's disease continuum well before symptoms rise. Our PTAL-two seventeen test achieved sensitivity, specificity and an overall accuracy each exceeding 90% meeting the criteria outlined in the revised National Institute of Aging and Alzheimer's Association, NIAAA, criteria for diagnosis and staging of the disease. These guidelines are important because the performance criteria for a diagnostic use case with a blood test was defined for the first time with p Tau217 being the only plasma biomarker appropriate for accurately diagnosing This validates the use of fluid based biomarkers and puts it on the same playing field as a historical standard of pet imaging. We believe we're in a strong position to capitalize on these opportunities From supporting clinical trials to use in diagnosis. With the simplicity of our sample to answer system and the number of new biomarker discoveries happening on our platform, we're in a great position to maintain a long term leadership role.

Speaker 2

Now, I'll turn the call over to Vandana to cover our financial results.

Speaker 3

Thank you, Masood. Good morning. First, let me start by saying that I'm thrilled to be part of the Quanterix team. It's a really exciting time to be here. And after a couple of months in the role, I'm even more impressed with our technology and its potential.

Speaker 3

Today, I'll take you through our Q3 results and an update on our guidance for 2023. Our total revenue for the Q3 2023 was $31,300,000 an increase of 18% from the Q3 of 2022. Our instrument revenue was $3,700,000 a decline of And in line with our peers, we continued to see CapEx constraints impacting the timing of instrument sales, a trend we expect will continue in the Q4. Our consumables revenue increased to $16,200,000 or 63% compared to Q3 of last year. This speaks to the strength of our installed base as well as the improvements in our manufacturing processes as we were able to catch up with demand.

Speaker 3

Revenue from our Accelerator Lab was $6,200,000 more than double over the Q3 of 2022. Our accelerator services continue to be a valuable and differentiated offering and have been especially effective in providing customers an alternative to continue their projects in the current funding environment. Now let's move on to gross margin for the quarter. Our GAAP gross profit and margin was 17,800,000 and 56.8 percent for the Q3 of 2023 compared to $10,900,000 and 41.1% in the Q3 of 2022. Non GAAP gross profit and margin was $15,200,000 48.6 percent in the quarter as compared to 9,300,000 and 34.9% in the Q3 of last year.

Speaker 3

Our corporate transformation has enabled us to reduce inventory losses and drive efficiencies in our processes and this is evident in our gross margin performance. Our 3rd quarter GAAP operating expenses were $31,600,000 compared to $47,500,000 in the Q3 of 2020 to. Excluding the impact of one time impairment charges of $20,300,000 In the Q3 of 2022, GAAP operating expenses increased 16% and non GAAP operating expenses were up 13%, primarily due to higher consulting fees and personnel costs. Our net loss declined from $35,100,000 in the Q3 of 2022 to $7,800,000 in the Q3 of 2023 due to improved margins from our redevelopment program, the absence of the impairments from 2022, as well as higher interest and other income. Moving on to liquidity, we ended the 3rd quarter with $330,400,000 in total cash and equivalents, a net usage of $1,900,000 during the quarter as compared to cash burn of $17,600,000 in the Q3 of 2022.

Speaker 3

Our efficiency gains have translated to significantly reduced year over year cash burn. Turning to guidance now. For the Q4 and full year of 2023, as Masood mentioned, We've made great progress with our redevelopment efforts and are in the last of the 6 quarter transformation process. For the Q4, we will be focused on upgrades and readiness of our production lines as we introduce new assays in 2024 and in executing on the final steps of our transformation. With these objectives in mind, We expect our 4th quarter revenue to be between $27,000,000 $29,000,000 This increases our revenue guidance for the year to be in the range of $118,000,000 to $120,000,000 compared to our previous range of $110,000,000 to $116,000,000 We are also increasing our gross margin expectations for the year and now anticipate GAAP gross margin percent to be in the high 50s and non GAAP gross margin percent to be approximately 50%.

Speaker 3

As we implement the upgrades to our production processes, we expect non GAAP gross margins to be in the mid-40s for the 4th quarter, slightly lower than past quarters to account for potential higher costs from these transitional changes. Lastly, we now expect our cash usage for the full year to be in the range of $20,000,000 to 25,000,000 an improvement from our prior estimate range of $30,000,000 to $35,000,000 We expect higher cash outflow in the 4th quarter due to the timing of certain initiatives and payments. For the year, this reflects a significant improvement in cash burn over 2022. Our increased guidance across all our key metrics reflects the continued strong demand for our SIMOAR technology and our execution against our transformation goals. Our balance sheet remains strong and we are well positioned to support our growth and strategic initiatives.

Speaker 3

I will now turn it back over to Masood before we take your questions. Vasu?

Speaker 2

Thanks, Wanda. I want to copiously thank the entire Quanterix team for their hard work and focused effort. Dan, our COO and Darren, our CCO have been relentless in this pursuit. And as a result, there's been remarkable progress in building a solid and scaled operations platform for our existing products and developing the engine for new product releases to come. If you can't tell, we're super excited about next year.

Speaker 2

Let's take some questions now.

Operator

Thank you. At this time, we will conduct a question and answer session. Our first question comes from Kyle Mixon with Canaccord Gentry. Please go ahead.

Speaker 4

Yes. Hey, guys. Thanks for taking the questions. Congrats on the progress here. Just starting off with the new PTOW-two seventeen agreement with Janssen, Had a few questions about that.

Speaker 4

First, Nasiv, could you talk about deal economics? I think we've clearly, a year and a half ago, that was about $11,000,000 in accelerated revenue For like about a full year or so, curious if there's a comparison here. And then this agreement, like was it brought on by any change And the relationship with Lilly and does Lilly remain an important partner for you going forward? And then maybe just one clarification, Will Lilly be using Simo for its own Alzheimer's test because the company is working with other like analyzer and assay vendors as well? So I'm just

Speaker 2

Thanks, Kyle. So the answer to your first question, we haven't announced any sort of deal economics on the J and J agreement that we signed. However, I would say that Quanterix expects majority of the economics to come from Our LDT and our kit sales and what we're doing in the market and trying to get 217 into a lot of folks' hands. To your second question, I think it was on the broad use of 217. Our view on 2017 is that we want to try to get it into as many hands as possible.

Speaker 2

We think that our collaboration with Lilly continues and it's a very strong collaboration. They presented some great data At CTAD on the similar platform and so we expect that relationship to continue. And then on our LDT, it is using the J and J Solution, but we want to make both solutions available to this market. And I think you had a third question, I might have missed it there, Carl. Yes.

Speaker 4

And so far so good. The it was the is Lilly Lilly has its own Alzheimer's Assay, right? Is that going to be based on Sunelo or some other analyzer assay vendor?

Speaker 2

Yes. So I think there was some clarity At the CTAD meeting, there was a strong analytical and early clinical validation of the SOMO platform in 2017. And as I View this, there's a lot of different types of solutions and platforms in the market for Alzheimer's detection. We're one of the more sensitive ones around 2017 and I expect our efforts in cooperation to continue.

Speaker 4

Okay. That was perfect. Thanks for that. And it was good to see the NIAAA guidelines, I guess, like the new recommendations recently. I Was curious how influential those are to clinicians in terms of going against the grain and kind of ordering with these novel products, sort of like these tests that we're talking about here.

Speaker 4

And then how could those guidelines, if finalized, impact CMS decisions regarding reimbursement as well? Like is that a key question, given the size of tests still pretty early days?

Speaker 2

Yes. We agree with that, Kyle. I think it was Nice to see the NIAAA guidelines and criterion. And I think the while it's not a direct A clinical recommendation, I think it has a big influence, and to your point, could affect further decisions down the road. And I really totally agree with what came up from the guidelines.

Speaker 2

1, in terms of a blood test To if it's going to be a blood test that's on the same playing field as PET, 2/17 was a clear answer there. And we've been working on this obviously With our partners for years and the data has been pretty strong through the clinical trials. And then 2, if you look at the Accuracy that's required in blood, it was high and the sensitivity required is high. And so I Applaud the organization for really picking and a great test and great marker for diagnosis.

Speaker 4

Perfect. One more before I hop off. Just on the P and L, I guess, as you kind of break out revenue, you guys have a lot of one time items. If you parse those out, product revenue was a little bit softer than service. Service was quite strong.

Speaker 4

Product has the macro headwinds in there, but instruments It is down I think 37% year to date. So that's not just due to the recent CapEx constraints. Maybe I guess why I mean recognizing that overall revenue has been solid and you have this program going, why has product revenue been relatively soft and particularly instruments Recently and then for how much longer would you rely on kind of the service and accelerator revenue to drive growth?

Speaker 2

Yes. Maybe I'll Start with that and then Vandana, if you have additional color. Well, first, I would say that we do think that some of the instrument softness, At least more recently, it's been CapEx constrained, CapEx related, and that has transferred to our accelerator program where People can do services. I'd say that what you saw this year with our redevelopment program was really building a platform. I think you think back how say 4 or 5 quarters, when we announced the program and we built that quality wall, we added Make sure things going out the door, we're going to be things are going to be scalable at the highest level of quality.

Speaker 2

And so throughout the year, there's always going to be a year of Focus on our products and getting them at the highest level to customers. So some back and forth. But overall, the consumables Going out the doors of our customers, the utility and usage on a per platform basis is good. And as you could see, a lot of folks want to come and use our program, our accelerator program to run these trials. So we don't see any Softening on demand and desire using the SIMO platform and nor do we see it in the area that we're in.

Speaker 3

Yes. I'd just add, within product revenue, if you're combining instruments and consumables, consumables are actually up 63% year over year and up 7% sequentially. So we're very pleased with the momentum we're seeing on consumables. Some of this was a catch up on demand as we streamlined our processes. Instruments, as you pointed out, we continue to struggle with the overhang of the macro.

Speaker 3

We saw a little bit of sequential improvement this quarter. We were up about 5%, But we do expect as this overhang on instruments continues, we do expect to continue to see volume come through the accelerator, which is helping to soften and balance that out for us. Okay.

Speaker 4

And Vandana, what was the catch up for consumables? That was like super helpful. Just the catch up, If you can quantify that, we're getting questions about that too. Thanks.

Speaker 3

Yes. I'm not sure we can quantify it in dollar terms, but if you just look at our sequential improvement, we've $15,200,000 last quarter. We went up about $1,000,000 this quarter. All of these have a little bit of just catching up on pent up demand. Our team is now at a point where we are mostly caught up with orders that we couldn't fulfill and we're now kind of back on a steady state.

Speaker 4

Awesome. Okay. Well, thanks a lot guys. Appreciate the time.

Speaker 1

Thanks, Bill.

Operator

Thank you. One moment for our next question. Our next question comes from Matthew Sykes with Goldman Sachs. Please go ahead.

Speaker 4

Hi. This is Jake Allen on for Matt Sykes. Thank you for taking our questions. I'll ask both my questions upfront. First, could you give us an update into the timing of FDA filing and approval for Lucent AD and the IVD pathway for a broader menu of biomarker And then additionally, how should we be thinking about the longer term gross margin profile for the business given the progress that you have made on margin Expansion, which has trended ahead of expectations.

Speaker 4

Thank you.

Speaker 2

Hey, Jake. So I'll take your first question. The FDA I mean, we've always said our strategy as an organization is to ensure that we're getting these tests out there As early and as fast as we can. And so that mechanism has been through our CLIA CAP certified laboratory here in Boston. And so that's the start.

Speaker 2

We also believe that these tests should also go through FDA approval and our plan is to do that within next several quarters to make sure we have a submission on our 217 to the FDA. And then in terms of timing, that can take some time, of course, depends on the agency. But in the meantime, we think Getting testing done through the CABPLEA lab is going to be important.

Speaker 3

Yes. And on gross margins, let me address So near term expectations and then I'll talk a little bit about the longer term as well. Near term, I'd say our gross margin Performance this quarter exceeded where we expected we would be. We had signals to an early mid-40s number for the quarter, and we did much better than that, partly because of volume, partly because of our improvements. We see a similar trend going into the Q4, but we do expect some amount of margin headwind as we implement all of our production changes.

Speaker 3

Longer term, however, we still we've previously guided to Wanting to accomplish margins in the 60s in the early 60s, we continue to work towards that. There's obviously a lot of factors that will impact that, Product mix being a significant part of that as well as timing of how quickly some of our production processes start to spin out the new assays.

Speaker 4

Thank you guys and congrats on the continued progress.

Speaker 2

Thanks, Jake.

Operator

Thank you. One moment for our next question. Our next question is from Dan Brennan with Cowen. Your line is now open.

Speaker 5

Hey, good morning. Thank you for taking the questions. Maybe the first one just on the guidance. Just you've had some really good success here year to date. Just wondering on the 4th Quarter kind of implied guide.

Speaker 5

It looks like kind of looks very conservative in light of kind of what you've done year to date compared to What you did in 2022. So I'm just wondering, can you give us a little color on how should we be thinking about that 4th quarter guide? And then If we cycle past the Q4, are we still thinking double digit growth expectation for 2024 or just any early read there?

Speaker 3

Yes. Thanks for the question, Dan. So for the Q4, as Masood and I mentioned earlier, we are going to be hyper focused on implementing the last stages of our transformation, standing up our second production line and having assays on the shelf for 2024. So with that in mind, that's going to impact the velocity at which our consumables go out. On the other hand, for instruments, You still have the macro overhang that others have talked about, which is unpredictable and hard for us to get good line of sight on.

Speaker 3

So keeping those in mind, also keeping in fact that the 4th quarter has less working days, which impacts the services businesses, We basically try to balance out our guide to a reasonable number. With that said, We continue to work towards the double digit number for next year. As we get into the February quarter, we'll start to size that up more and define that a little bit more. But for now, definitely expecting the 4th quarter to have some of these headwinds and planning for that.

Speaker 5

Got it. And then maybe just one on kind of Alzheimer's. How should we be thinking about the sensitivity and specificity of a blood based test as compared When we think about both rule out and rule in and then B, how should we think about timing for Medicare coverage On the various tests that you're looking to implement?

Speaker 2

Yes, Dan. So on the Alzheimer's side, I think what we saw in the guidelines, I would sort of direct folks to the NIAAA guidelines. And there, It was very clear. A test would need an accuracy that's above 90%. And when we did this, we did Two studies, one was the Amsterdam dementia cohort, around 500 individuals were tested.

Speaker 2

And then we also looked at the BioHermes trial, which was a multicenter site, 17 U. S. Clinical sites. And in both large studies, We were able to achieve accuracies that are above 90%, which is the guideline or the criterion in the draft NIAAA. So Very happy about that.

Speaker 2

And I think that's going to be the case for any sort of test that wants to try to be on the same playing field as Pet. And then your second question was on timing of reimbursement. Was that the question?

Speaker 5

Yes. Yes. It was on Medicare. How do we think the pathway

Speaker 2

Yes. So I expect the Medicare path maybe initially will be laid out either by local coverage determination or maybe in the next year or so as this becomes more And more important and in the hands of neurologists and people performing testing that it becomes potentially NCD in the future. Hard to say from timing perspective, but we hope that it gets the attention it deserves.

Speaker 5

Great. Thank you, Mr.

Operator

Thanks, Dan. Thank you. One moment for our next question. Our next question comes from Puneet Souda with Leerink Partners. Your line is open.

Speaker 6

Hey, Vasud. Yes, thanks for taking the question. So the first one maybe and I don't know if this is covered, but There was a discussion of 2 cut assay to drive performance improvement at CTAD. Can you maybe just talk about that if the p Tau assay is structured that way? And sort of what's the performance level that we should There was also quite a bit of discussion on the performance that would be needed To deliver on PTAU-two seventeen where obviously Simoa has done well historically.

Speaker 6

So maybe can you just talk about how similar is positioned

Speaker 2

Hey, Puneet. Can you hear me? You got cut off there at the end, but I got the first Part of the question.

Speaker 6

Yes. Just if you could also talk about Reference Labs competition too. I mean, how do you what do you think about that? Thank you.

Speaker 2

Yes. So the so as I said, we did the we looked at 2 different sample cohorts, 2 large sample cohorts. And I think when you start to look at a blood test that's going to be on the same playing field or could be The diagnostic test, meaning something that the rule in or rule out, you're obviously Doing it some comparator, either CSF or Pet. And there, the 2 cutoff approach is Incredibly important. So we use the 2 cutoff approach.

Speaker 2

It was recommended by the draft NIA guidelines And it basically establishes a 3 zone test and reflects low intermediate and high risk of amyloid pathology. So samples reading below the cutoff Are unlikely to have the pathology and then samples reading above the upper cutoff are likely to have that pathology. And so, I think that As we move forward, that becomes more and more the type of test that would be used if you're not going to be doing imaging or CSF. And then in terms of the sensitivity required, the guidelines, the requirement is above 90% accuracy. Our assay had the sense and spec and accuracy in both cohorts.

Speaker 2

So that was incredibly promising. And I just want to remind folks that It's measuring the p Tau217 effectively in blood, getting the femtogram per milliliter sensitivity And then doing it in clinical samples where you're looking at patients that are early stage Subjective cognitive decline, mild cognitive decline, Alzheimer's dementia, that's a broad range. And if you want to test that's Going to be able to effectively measure folks in the early stages of cognitive decline or in the future pre symptoms, You want a test that has the highest sensitivity and it's going to be broad based for patients at all ends of the spectrum. And so I think Based on these guidelines and some of the things that data that we're seeing, not all tests and not all platforms are going to be able to do that. And we're happy that the Simoa and the 217 platform will be able to cover the broadest range of patients.

Speaker 6

Got it. Super helpful. And then just wanted to clarify, obviously, you had the launch of 2017, but Just sort of the timing for the multiplex and sort of how do you think additions To that, 2.17 additional biomarkers with that 2.17 are required? Or do you think 2.17, given the significance of this biomarker is now sort of adequate enough for the field?

Speaker 2

Good question. We there was some of that discussion at the CTAD meeting. And I think One thing I just want to make very clear is that 2/17 is very important for diagnosis and that has been well established Based on what I said earlier, but also want to make clear that this is an evolving field where prognosis, staging, Differential diagnosis are all going to be important. It's not one patient comes in, they're diagnosed and that's it. There's treatment monitoring, there's following on the patient and what we're seeing, if you look at the latest clinical trials and the research, That's going to likely be several multi marker tests and the sensitivity Required for each of those biomarkers is going to be high.

Speaker 2

And so having a platform where you have wide bandwidth, Wide sensitivity bandwidth to be able to measure a tau at the same time as you're measuring A beta or a GFAP or NFL On the same run, same patient sample, it's going to be incredibly important. And so I think you're right, 217 is The single marker for diagnosis, I think it can be enhanced with multi markers and then staging Measurement of a patient over a period of time and the prognosis is likely to be, multi marker based.

Speaker 1

Got it. Okay. Thank you. Thanks, Benite.

Operator

Thank you. One moment for our next question. Our next question comes from Kyle Mixon with Canaccord Genuity. Please go ahead.

Speaker 4

Yes. Thanks for the follow-up guys. So on 2024, if you analyze this Q4 guidance like the full year revenue for next year, which is in line with this year's levels. Obviously, if the macro improves in the like this 4th quarter run rate could be kind of conservative. But it sounds like the rollout of these new Use of assays could create some noise and possibly growing pains next year as well.

Speaker 4

So it's kind of there's a kind of a lot going on. So can you just kind of walk through the main swing factors that could get you to like a buffer below the Double digit growth target for next year. And then maybe any thoughts on cash usage in 2024 as well would be helpful too. Thanks.

Speaker 2

I'll give a broad stroke there, Carl, on sort of the operational efforts and then Vandana can comment On some of the margin and cash. So what we're doing right now in Q3 and Q4 is really Focusing a lot of our resources on upgrades of the product line in preparation for the new assay deployments. We believe and as you can see in the last several quarters that these new asset deployments are going to be gross margin accretive. Now while we're putting them into the line in Q3 and Q4, that's a lot of effort and a lot of focus from the team. But we expect Those new product lines as we've been investing in the last 6 quarters will be positive for the business and we'll be Able to get those products to our customers in an efficient way and a lot faster.

Speaker 2

So we're bullish on that aspect Of getting this there and as I said in the very beginning of the prepared remarks, we have substantially Completed a lot of the heavy lifting and we're going to be now doing implementation in the last couple of quarters. So that's that. And then on the guidance for next year, I think just similar to what Vandana said, we're going to talk about that in February and we'll have a better sense. But we still have a strong view that Our research business continues to be strong and that we're seeing that continued Samoa demand For sensitivity and for our platforms and solutions.

Speaker 3

Yes. I'd say very consistent with everything Masood We do expect 2024 to come in with a position of strength and for us to be able to keep building off that. On the cash side, the only other thing that I would add As Masood mentioned in his prepared remarks, the way we think about the business is we will continue to drive the RUO business to more and more efficiency, Better performance, working better with our customers. So we'll continue to focus on that. And we'll continue to drive it towards getting to cash flow breakeven.

Speaker 3

We've previously guided to that $170,000,000 to $190,000,000 number for cash flow breakeven, and we'll continue to work towards that. At the same time, we will deploy Some capital into diagnostics. Right now, it's really small and right now, it's really more focused on building out our infrastructure. But you will see us be very focused in where we deploy our capital and making sure that aligns to our strategy.

Speaker 4

Okay. That was great. And then just one last one. Masoud, as we stack up all these options in Alzheimer's Diagnostics, Glonterix clearly has the most sensitive tests. 2017 kind of helped out with specificity, which I think is what will ultimately lead to that kind of rule in type test for maybe screening.

Speaker 4

But How do you think about like what's the clinically meaningful sensitivity level for neurology biomarkers? And then on that note, Like what type of tests would be best positioned as a monitoring test in AD? Like with the number of markers or the levels of some of these metrics matter For that type of product rather than the one you've already announced to loosen AD?

Speaker 2

Yes, great question, Kyle. The sensitivity, I would expect A good test to have a sensitivity of 90% and above. So that's the I think a threshold, Greater than 90% accuracy, and to your point, strong specificity if it's going to be a real in test. So I think that's important for diagnostic. And then in terms of monitoring, staging, monitoring, first, I believe that A tile marker is in that multiplex for monitoring and staging, But we also are seeing the importance of NFL, GFAP and a few sort of new types of tau variance That we've been doing a lot of work on in our pipeline.

Speaker 2

So from a monitoring perspective, I could see it being multi marker. And then differential diagnosis. Let's also consider that there are folks coming in to the neurologist office And there are the signs of dementia, but we're not seeing the amyloid pathology. Then what is that? And there I think the Need for differential diagnosis is important and there you'll for sure need additional markers beyond tau to be able to provide that differential diagnosis.

Speaker 2

So we're working with several partners. We're in a few clinical trials that are looking at this, including our own, where we're looking at a broad based patient set in a multi marker setting. And I think the point of all of this is 2017 is great and we believe the best marker for the diagnosis, but there's still a lot of work to do Kyle, in research, in discovery, Additional clinical work and testing for what's a much larger picture. And if you sort of look and squint at what we're seeing in the field and what's coming out from industry publications, It's going to be a multi marker test that's going to require sensitivity for all the markers to be able to tell a whole picture.

Speaker 4

Got it. Okay. That's perfect. Thanks, Vasud. Thanks, guys.

Speaker 1

Thanks, Kyle.

Operator

Thank you. This does conclude the question and answer session.

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