Quanterix Corporation — FY 2019 Form 10-K
Reporting period: Fiscal year ended December 31, 2019. This annual filing also reports fourth-quarter results. Quanterix develops and sells Simoa ultra-sensitive protein detection platforms, assay kits, consumables, and research services. Products were marketed for research use only; the company had not applied for or received regulatory approval for diagnostic or precision-health products.
Financial results and liquidity
Amounts are in U.S. dollars; figures below are in millions unless stated otherwise.
| Metric | FY 2019 | FY 2018 |
|---|---|---|
| Revenue | $56.7 | $37.6 |
| Product revenue | $40.5 | $23.4 |
| Consumables and other product revenue | $25.6 | $13.8 |
| Gross profit / gross margin | $26.8 / 47% | $17.9 / 48% |
| Operating expenses | $68.4 | $49.5 |
| Operating loss | $(41.6) | $(31.6) |
| Net loss | $(40.8) | $(31.5) |
| Net cash used in operating activities | $(26.2) | $(28.7) |
- Revenue increased 51% year over year, driven by higher instrument and consumables sales and increased Accelerator Laboratory services. Consumables were approximately 45% of total revenue.
- Cost of revenue rose 52% to $29.9 million. Gross margin declined one percentage point, to 47%, with acquisition-related charges and the prior-year collaboration revenue mix among the factors cited.
- SG&A increased 55% to $52.2 million, reflecting added personnel and public-company costs, the new headquarters lease, stock compensation, and $1.9 million of Uman acquisition costs. R&D was $16.2 million, up 2%.
- Cash and cash equivalents were $109.2 million at year-end; current assets were $132.7 million and current liabilities $19.8 million. Operating cash use was $26.2 million, while investing activities used $25.4 million, including the Uman acquisition and headquarters improvements.
- Long-term debt was $7.6 million, with $7.7 million of principal and end-of-term fees scheduled for 2021. The secured Hercules facility has restrictive covenants; no further borrowing was available.
- Quanterix raised $48.0 million net through an at-the-market offering and $64.5 million net through an underwritten offering in 2019. Shares outstanding increased from 22.4 million to 28.1 million during the year.
Fourth-quarter snapshot
Q4 2019 revenue was $15.9 million, versus $10.9 million in Q4 2018. Q4 2019 net loss was $11.0 million, versus $9.3 million in Q4 2018.
Material changes and business developments
- The HD-X next-generation instrument and SP-X planar-array instrument were commercially launched in 2019. In the second half, 56 HD-X instruments were sold: 26 new units and 30 through HD-1 trade-ins.
- Quanterix acquired UmanDiagnostics in 2019 for approximately $21.2 million in cash and stock, adding Nf-L antibodies and ELISA kits. Uman contributed $1.1 million of revenue after acquisition through year-end; purchase-price allocations and acquired intangibles were provisional.
- Consumables revenue rose from $13.8 million to $25.6 million as the installed instrument base grew. Nf-L-related services and consumables represented approximately 33% of 2019 total revenue, creating exposure to changes in demand or competing technologies.
- Collaboration and license revenue fell to $0.2 million from $2.2 million, which primarily reflected revenue recognized in 2018 following termination of the bioMérieux collaboration.
Outlook, risks, and contingencies
- Management expected continued operating losses and significant expenses for at least the next 24 months, while stating that year-end cash and expected commercial cash generation were expected to fund operating and capital needs for at least 24 months. The filing also states cash was expected to fund operations for at least one year from issuance of the financial statements.
- Key risks include achieving customer adoption, long and variable instrument sales cycles, competition, dependence on research budgets, and reliance on single or limited-source suppliers and contract manufacturers.
- Diagnostic and precision-health opportunities remain prospective: clinical products would require regulatory clearance or approval, and reimbursement and regulatory pathways are uncertain. The company had not begun seeking approvals for Simoa products.
- The filing identifies the COVID-19 outbreak as a potential risk to employees, suppliers, customers, distribution, and demand; at filing time, management could not reliably predict its 2020 financial effects.
- The company reported no material legal proceedings. Operating lease commitments totaled $38.0 million, principally for the new Billerica headquarters. Under the STRATEC minimum-purchase commitment, the potential fee would be $9.6 million if no further qualifying instruments were purchased before May 2021; management expected to meet the commitment and had not accrued the fee.
- Quanterix had a $216.2 million accumulated deficit and disclosed federal NOL carryforwards of approximately $174.8 million, subject to possible ownership-change limitations. A full valuation allowance was maintained against worldwide net deferred tax assets.
Important facts for investors to verify
- Whether recurring consumables growth and instrument adoption continue, and whether reported growth translates into improving gross margins and reduced cash burn.
- The extent of Nf-L-related revenue concentration and the commercial impact of the Uman acquisition, including final purchase accounting and intangible-asset assumptions.
- Cash runway under updated operating plans and the timing of any additional financing, including potential dilution.
- Progress against STRATEC purchase minimums and the remaining potential fee, alongside the 2021 debt repayment schedule and lease obligations.
- COVID-19 effects on customer activity, suppliers, sales, and 2020 results; the filing provides no clear quantified estimate.
- Regulatory, clinical, and reimbursement milestones before assigning value to diagnostic or precision-health opportunities.