Accelerate Diagnostics Inc (AXDX) 2018 Q2 法說會逐字稿

Good day, and welcome to the Accelerate Diagnostics Inc. 2018 Second Quarter Results Conference Call. (Operator Instructions) Please note, this event is being recorded. I would now like to turn the conference over to Laura Pierson of Accelerate Diagnostics. Please go ahead.

Before we begin, it is important to share that information presented during this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

Forward-looking statements include statements about our future and those that are not historical facts. These statements may contain expectations regarding revenues, earnings, operations and other results, and may include statements of future performance, forward sales estimates, timing of our clinical outcome data, time lines associated with the severe bacterial pneumonia test kits for use on the Accelerate Pheno System, along with other plans and objectives.

Forward-looking statements include those pertaining to, among other things, the commercial launch and demand for the Accelerate Pheno system and Accelerate PhenoTest BC kit for positive blood cultures; the potential benefits of the Accelerate Pheno system and Accelerate PhenoTest BC kit, including Accelerate identification and susceptibility results and estimates of time reduction to results; expectations on placement, sales and product profitability; the potential of our technology generally, our belief that our expanded manufacturing capability will allow us to meet demand; our expectation of 2018 performance; and other future development plans and growth strategy, including with respect to research and development as well as product expansion.

These statements represent only our belief regarding future events, many of which are inherently uncertain. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those projected in forward-looking statements because of various factors.

Information regarding important factors, including specific risk factors that could cause actual results to differ, perhaps materially, from those in our forward-looking statements are contained in reports we file with the SEC. You should read and interpret any forward-looking statement together with the reports we file with the SEC. I will now turn the conference call over to Mr. Lawrence Mehren, President and CEO of Accelerate Diagnostics. Larry?

Thank you, Laura. It is great to have you all with us this afternoon. This has been a challenging launch for sure. But as you will see, we emerged this quarter with a ton of momentum, and while it's not yet showing in the revenue numbers, the results are encouraging.

As is usual on these calls, I will start with the report on our commercial progress for North America and then EMEA, hand it over to Steve Reichling to review our financial results, and then I'll wrap it up with updates on product and geographic development.

So to North America. We started the year with a simple but fundamental commercial plan. Bring the right team, data and marketing together and then execute with the goal to drive down the sales cycle, increase market penetration and grow revenues.

What we have accomplished this past quarter is notable. Regarding the team. We successfully completed our North American commercial team reorganization and expansion. This included promoting our strongest sales team members to regional leadership and product specialist roles and adding 19 new direct sales reps. This team and structure is specifically designed to sell the clinical benefits of Pheno, often to stakeholders beyond the lab. And while it takes time for new sales reps in new territories to become fully productive, the results this quarter were great.

They added more new evaluation contracts this past quarter than we have ever added in a quarter, increasing our North American installed base by over 30%. We believe this big jump in our sales force productivity will continue through the rest of the year and beyond. All-in-all, a really good start, and we believe a sign of good things to come from this team.

Our commercial team's effectiveness is being aided by the signing of numerous, key GPO contracts in the quarter. Over the past year, we have found that these group purchasing organizations play an increasingly important role in account access and contracting. So we established a corporate accounts team focused on an aggressive goal to close the top 4 GPOs in 2018. We signed agreements with Visiant, GSA and a third, smaller but highly compliant GPO this quarter alone, and expect the last one of the 4 to be signed in Q3.

The combination of these networks covers 1,400 hospitals and the vast majority of our current sales funnel. These contracts are already improving site access, and we believe they will reduce the length of the contracting process. We also made strong progress driving posters and papers confirming the speed, accuracy and benefits of our system.

As mentioned before, we now have over 100 of them and believe they will continue to be a catalyst for sales. And yet, we believe the most potent studies for driving adoption will be prospective, randomized outcome studies, demonstrating the clinical and economic benefits of the system, while ultimately making us the standard of care.

As such, this is a top priority of our organization. We have 4 active outcome studies on target to complete in succession over the next few quarters.

The first of these prospective outcome studies to publish it will likely come from a customer of ours, the University of Arkansas. Dr. Rosenbaum, the attending pathologist and lead investigator has been a strong advocate of Accelerate and the Pheno and has studied Pheno's impact on length of stay among other measures at the university.

We expect the team at you UAMS to present this data at the upcoming Infectious Disease Conference in October with publication soon thereafter.

Dr. Rosenbaum has had significant success with the Pheno. For example, in a recent publication of the College of American Pathologist, he highlighted the case of a 22-year-old kidney transplant patient, presenting with signs of sepsis, who was prescribed 2, broad-spectrum antibiotics.

With the use of the Pheno, they were able to quickly remove an unnecessary and potentially kidney-damaging antibiotic. Dr. Rosenbaum cited that toxicity associated with routine antibiotics can significantly increase the odds of acute renal injury and can prolong hospital stays from days to a week or more. And it is because of numerous cases like these, that Dr. Rosenbaum advocated for the broad adoption of Pheno in the article by saying, "There is a price difference, but the resources we spend on Pheno are captured back exponentially by the prompt clinical action this instrument enables." We believe the second of these studies to publish will be an independent, multicenter, government-sponsored, randomized prospective outcome study at Mayo Clinic, Rochester and UCLA. This study's endpoint include time-to-effective therapy, clinical improvement and cost. We have recently received word from the participating sites that they expect enrollment will conclude in early Q4. While this study is being managed independent of us, what we've heard has been great. Specifically, clinicians in these highly regarded institutions are surprised and excited to be getting actionable AST results so quickly. And the microbiology teams are pleased with the systems reliability and analytical results.

We believe this bodes well for the study's findings and the potential to add these 2 key reference accounts.

Lastly, we have 2 new multisite randomized controlled studies about to launch. These studies were designed by our scientific affairs team to evaluate 2 important endpoints. The first is designed to evaluate length of stay and readmission avoidance, associated with the use of the Pheno in specific patient populations.

The second will evaluate the same endpoints, but compare Pheno outcomes to those using molecular ID panels.

Together, we believe these studies will provide a set of outcome data that directly supports our cost justification model, conclusively confirming our customer's real-world experience of decreased length of stay, decreased mortality and significantly decreased cost.

The commercial team's performance is also being bolstered by a marketing strategy that amplifies our customers enthusiasm and results. This was on full display at our most recent Annual Congress, the American Society for Microbiology's Annual Meeting in June. This is the marquee conference in our field, and we believe we stole the show. Our booth traffic was significant, our symposia packed to overflowing and the buzz regarding our device apparent.

More importantly, we saw a clear shift in the nature of customer dialogue from curiosity to specific discussions on cost justification and acquisition timing. We attribute this shift, in part, to the impassioned advocacy of our current customers.

Their presentations confirmed our speed and accuracy and highlighted actual, clinical impact of earlier susceptibility results. (inaudible) presented by MD Anderson for instance, described how they were able to quickly move 2 patients on ineffective antibiotics to effective therapy days sooner, likely saving lives. So overall solid progress in North America on the team, data and marketing.

Now to results. And while it is still a fight, we are encouraged by what we saw this quarter. As I mentioned, we increased our North American installed base by over 30% this quarter to 259 instruments, of which 193 instruments are evaluation contracts and 66 commercial. And while revenue for the quarter was light as we expected, our sources of revenue revealed 2 important facts about the current status of commercializing the Pheno.

First our annuity is strong. We are on track to realize a consumable annuity of between $60,000 and $80,000 per instrument. We also believe this annuity is durable.

Uniformly, our experience has been that customers are seeing the clinical and financial benefits of this system as soon as it is in clinical operation. We believe as clinicians get accustomed to AST results days faster, they will never settle for slower results again. These factors contribute to a durable annuity, impervious to reimbursement pressures, and we believe add momentum for our follow-on rapid test offerings.

Second, 2 of our contracts for capital this quarter were from our original clinical trial sites. These were in process for well over a year and are 2 of the oldest prospects in our sales funnel. Both were held up due to a lack of budgeted capital funds. What does this mean? It speaks to the tenacity of our customers and their relentless advocacy for patients that even our oldest eval prospects, we believe, will close. This is great.

It also highlights the difficulty of securing capital off budget. It is important to remember that when we launched in 2017, our customers had already locked their 2017 budget. And in most cases, based on the timing of these capital budgets, their 2018 budgets as well. This has left us fighting for discretionary and off-budget emergency funds, which has greatly slowed down our eval conversions. Not so great.

Still, given the productivity gains from the reorganized sales force, good data and enhanced marketing, we expect more and more customers will want the instrument, but won't immediately have capital budget.

Accordingly, we will meet this demand by removing our requirement from select customers and offering an expanded reagent rental program.

Last week, we tested this change with 5 prospective customers, where capital budgets wasn't available this year, and in 2 of the cases, we have already received signed contracts back with the remaining 3 giving us verbal commitments. All 5 of these at strong, consumable prices.

Now as we planned this year for the majority of contracts in North America to be for capital, the change in mix will lead to lower revenues in 2018. The scale of which will be determined over the next quarter.

Conversely, we are confident that this change will result in an even higher number of contracts this year, greatly increasing our market penetration and setting us up for a strong future.

Shifting now to EMEA, we made solid progress there, increasing our installed base by nearly 20% this quarter to 171 instruments, of which 119 are under evaluation and another 52 under commercial contract.

A standout in the region is Italy, where we already have contracts representing 16% of the Italian market. This is a great success story for a market struggling with rampant antimicrobial resistance, and one that should only grow faster, especially when AMCLI, the Italian Association for Microbiology's clinical care working group, includes our solution in guidelines for the treatment of critically ill patients.

In France, we are on the verge of receiving news on the list of acts outside nomenclature, commonly referred to as RIHN, a government-sponsored program to feed important new medical technologies. Should we be selected, the award will fund installation of Phenos across the country, and we believe greatly increased adoption.

In the U.K., Germany, and Nordics, a number of key opinion leaders are evaluating the system, the drivers in these markets are similar to those in the United States. Clinical outcomes and first-hand experience with the system's benefits will drive adoption. And with that, I will turn it over to Steve to review our financial performance. Steve?

Thank you, Larry. Good afternoon. Revenue for the second quarter was $1.7 million and year-to-date was $2.5 million. As compared to $699,000 and $1.2 million, respectively, from the same period in the prior year. These increases were driven by Pheno system and PhenoTest BC kit sales in the U.S., Europe and the Middle East.

Cost of goods sold was $717,000 in the quarter and $1.2 million resulting in gross margins of 58% and 51%, respectively. Selling, general and administrative expenses for the quarter were $15.3 million and $29.7 million to date, as compared to $11.5 million and $22 million, respectively, from the same periods in the prior year.

These year-over-year increases were driven by higher personnel and customer-evaluation-related costs in the U.S. and EMEA.

Research and development costs for the quarter were $6.1 million and $12.8 million year-to-date, as compared to $5.5 million and $9.8 million respectively, from the same periods in the prior year.

These year-over-year increases are the result of additional investments in preparing for respiratory clinical trials and expanded scientific affairs activity. Our net loss for the second quarter was $23.2 million and $44 million year-to-date, resulting in a net loss per share of $0.43 and $0.80 on weighted-average basic shares outstanding of 54 million shares and 54.8 million shares, respectively.

These net loses contain $3.4 million and $9 million in noncash stock-based compensation expense, respectively. Net cash used in the quarter was $17.1 million and $33.2 million year-to-date, and the company ended the quarter with cash and investments of $197.4 million.

We anticipate filing the 10-Q for the quarter ended June 30, 2018, on August 7. I will now hand it back to Larry to review our development updates for the second quarter.

Thank you, Steve, and now onto development progress. In Q2, we made progress on our second focus area for 2018, the completion and trial of our severe bacterial pneumonia test kit for use on the Pheno system.

First, our discussions with the FDA on this trial and analytical studies are coming to a close. And they agree that our endpoints can be achieved with 33% less external testing than was required in the blood trial. This is great. When you combine this with the decision that the pneumonia kit will follow a 510(k) regulatory path, we expect a considerably shorter and simpler trial and FDA review process than we experienced with our blood kit.

We have also made substantial progress on our severe pneumonia sample preparation device and are now configuring the instruments for registration and clinical outcome trials. We have selected our trial sites and contracted many of them, and we decided to build out our own reference lab for all comparative testing during the trial, which we estimate will save us $2 million over the external reference lab we used in our blood trial.

Given this progress, we still expect to announce the initiation of the U.S. regulatory trial on or before our Q3 conference call. Needless to say, we are excited about this new test. Not only will it increase over current TAM from North America and EU from atop approximately 4 million patients to over 6 million, it will demonstrate the platform potential of the Pheno and its ability to replace significant portions of the current, micro workflow.

Finally, we promised an update on our exploration of the Chinese market opportunity. We conducted an extensive multi-month evaluation of the market and what we found was very encouraging. First, China has very high rates of antibiotic resistance and adverse antibiotic-related events. The market is substantial, rivaling that of the United States with 1,400 Class 1 and 6,000 Class 2 hospitals, currently conducting ID AST microbiology testing. The next important question was what price per test the market will support? And here there is great news. Existing reimbursement codes provide for a higher price per kit than what we are currently getting in the U.S.

Based on this and other information, we have already started the process for local trials, registration and commercialization to enter the Chinese market. We will keep you posted on our progress over the coming quarters. And with that, we would be happy to answer any questions.

(Operator Instructions) Our first question comes from Brian Weinstein of William Blair.

Can we just start with guidance? Did you reiterate guidance? Where should we be thinking about -- or how should we be thinking about numbers for the back half of the year?

Brian, we just don't know yet. As we said in the scripts, we'll know more as the quarter unfolds, and we will report out guidance sometime in the coming quarter.

So just to be fair, you are -- then you are suspending the guidance until, probably, sometime in -- until your Q3 call? Is that correct?

Brian, honestly, I don't know how to answer that question. So I don't know what suspending guidance means. I would just simply suggest that as we suggested earlier, I do believe that we will see a revenue impact. Although, we just don't know enough yet. So...

And -- okay. And the reason that we're -- that you guys are not reiterating the guidance right now it's because of (inaudible) -- I'm sorry, it's because of how you are going to market with more reagent rentals, expecting a higher number of contracts and increased penetration, but the revenues, at least in the near term, are uncertain. Is that correct, am I thinking about that right?

I think that's right, Brian. Look, I got to be completely candid. Our ability or rather our record of forecasting has not been great. And I do know that this program has tremendous legs, and I am confident that we will see a significantly increased number of conversions. How many of those conversions come from customers that we've already expected to get capital from is unknown. And given that the majority of our revenue in North America this year were from capital conversions, it's difficult for us to state right now, given we've been at this program for literally a couple of weeks, what is going to happen to revenue. We will know, and the scope and scale of it. I do know that it's going to be extraordinarily beneficial for the long-term success of the business. How much revenue we'll have to sacrifice in 2018 is, frankly, unknowable right now.

Of the systems that are in evaluation, what -- any idea, how we should think about what percentage of those would actually be under reagent revenue going forward? Is this essentially the new model where you really kind of expect everything to go into reagent rental out of those ones in eval?

No, Brian. I definitely do not. The percentage of those under eval that will continue to a capital contract are actually quite high. I think it's -- it would be perhaps the majority, period. I think some of the new ones that -- we have been talking to them about beginning an evaluation will likely go directly to a reagent rental agreement as opposed to going through evaluation with the idea of eventually converting for capital. So I think it's quite complicated. I think in some cases, it's unknowable. The impact is difficult to ascertain right now. Is it going to be material? I don't know. I think it will be material for the long-term health of our business, but what will happen to revenue in 2018? I won't know until we get a better sense of how many people will avail themselves of this program.

You've seen the majority of the bump post conferences and at Acumen and ASM, in other words, did you convert a lot of what you saw is near-term prospects? Or is there still kind of another bolus to come here in the third and fourth quarter from that?

No. I would -- I mean, in terms our momentum, I think it's quite strong, and I would expect a continually increasing number of conversions, and in certain situations, an increasing number of evaluations. Although, we are seeing more and more customers skip the eval. And my sense is that, given the kind of success we saw in the small-pilot program of allowing our salespeople to offer reagent rentals, my sense is we'll see a number of people skipping evals entirely and going directly into a reagent rental, which is good for us and for a number of reasons: one, it increases our penetration rapidly; it ensures that we own that site; and it ensures that if there is any eventual competition, they'll have to unseat us; I think thirdly, it gives us reference sites geographically around the country. I could go on and on but you understand. I think it makes a hell of a lot of sense for us to do this and the amount of revenue that we'll have to sacrifice this year, if any, will be, I think, relatively de minimis.

Okay. And then last question for me. Can you talk about the competitive environment, obviously, T2 is now in the market, have you seen an impact from them as well as any of the other competitors? How does that competitive environment look today? And is it delaying or causing you guys any kind of a headache right now?

Yes. You bet. Thanks, Brain. No, the answer is no. our biggest competition right now continues to be the capital committees in the hospitals. So we don't see competition from any other players. It's really us working like crazy to provide the evidence necessary to get through these capital committees. And I think by allowing our salespeople the opportunity to provide reagent rental contracts as opposed to strictly focusing on capital in North America will unstick a lot of those.

Our next question comes from Tycho Peterson of JPMorgan.

Larry, do you -- were you able to say how many placements this quarter were direct acquisitions versus conversions from the eval program? I may have missed it, if you did break that down.

I think I'll let Steve answer that. I'm not sure, Tycho.

Yes, if you're just talking about the conversions in the quarter, the vast majority were capital and, that's the case in Europe and in the U.S. for the quarter. But certainly, as Larry mentioned, we're anticipating a lot more conversions that will be aided by this new program.

And are you able to put any general guidance on how -- what percentage do you think end up reagent rentals, if we go forward, a couple of quarters? I mean, back to Brain's question, I think that's one of the key variables that everyone's going to be grappling with. I think it's the right strategy to move to reagent rentals, but how do we think about the range of outcomes there?

Tycho, I think it's a great question, and I want to give you an answer, but I'm telling you right now, it is just too early. I think that we'll know relatively soon what the scope and scale of it looks like. Certainly, in time for our Q3 conference call if not before, and if we -- and as soon as we understand that, we'll absolutely report that out to the market. We think, like you do, that it's material information, and we want people to understand where we are but certainly, we're not going to let this go on longer than a quarter. And perhaps we'll be able to report out even sooner.

Okay. And then a couple of other quick ones. On utilization, I think you've previously mentioned the need to build out the LIS interface to kind of close the gap between placements and going live, is that still a bottleneck? Or any update on progress there?

Tycho, I'll tell you, one of the things that I did not mention in the script, because it was just getting a bit too long, but I think is important to know is that all of our efforts in terms of sales-cycle compression have been quite successful. So whether it be the time to eval or the time under eval or the time to connect to LIS, all of those have seen a material reduction. For example, the time under eval, we typically thought of it as 6 to 7 months, we're now down to 3 months. The same thing goes for the connection to the LIS. We're seeing that trend now to about half of what we originally saw. And the time to eval is also being compressed significantly down to weeks. So we've seen great reduction across all of the sale cycle in terms of compression. Now it's really a matter of unsticking the evals and those customers that just do not have capital budgeted in 2018. And they've been fighting for emergency capital, they've been trying to steal capital from the MRI machine, or what have you that's already been budgeted. And we're getting a little bit along in the year, and I think it makes sense for us to open that up. And when we do, I think the entire sales cycle will then be compressed to where we want it to be. So in general, I think good news there.

All right. And then, I guess, lastly on -- just on the sales channel overall. You mentioned hiring the 19 reps, can you just give us any more color on just geographically where they're focused? And I guess, have you adjusted their comp structure to reflect the reagent rental initiative? And then could we also get an update on Germany and France reimbursement in the back half of the year. I know you mentioned France in your prepared comments, so just curious if those are going to be capitalized through the back half of the year?

Yes. Sure okay, so in terms of the 19 -- Steve, refresh my memory on Tycho's question. I'm sorry. I...

The first question was on the sales force and how we've organized ourself geographically.

Yes, thank you, Tycho. So we, in general, split territories to allow for more focus. So we -- and we did that across the United States. Of course, there are some territories that we did not split, but in areas where we have a lot of traction, whether that be on the West Coast or the south, we've made those territories a bit smaller to allow for more focus.

The salespeople that we hired all have really solid experience in selling outside of the lab and have come to us from other successful organizations. And I think they've been very impactful to how we're doing here. Yes, in terms of France, I do think that if we get [ariation] which is what they call it in France, that could be a significant catalyst. It would allow for placements of Phenos across the entire country, along with government support for reagents, and it's many millions of dollars programs, so significant. Germany, reimbursement is also going along quite well. And although, I don't expect that this year, I do expect it to happen next.

Our next question comes from Bill Quirk of Piper Jaffray.

So I guess, Steve, first the housekeeping question. The systems versus reagents number in the quarter? Maybe you said it, I -- earlier, I apologize, I missed it.

No. We didn't say it. But the regents revenue is tracking with our expected annuity at around $60,000 to $80,000 per box. The one thing you have to consider though is that we do have this lag. So once the system is contracted commercially, we have a 3- to 4-month lag, and then we have that consumable turning on. And so I'd say the rough mix for the quarter, globally, is still a majority capital with just a slight minority in the consumable revenue, but still tracking very consistent with our overall expectations.

Okay, that's helpful. The -- glad to hear the moving forward with respect to sample prep device for lower respiratory. So I guess a 2 part question. One, is there anything left in the sample prep device that you guys are still working through? Or is that for all intents and purposes ready to go? And then with respect to the timing of the clinical trial, it certainly sounds like it's -- that's going to be shorter in duration. Should we be thinking that it should be finished by, call it, 1Q of '19 with some sort of filing by, roughly, middle of the year? Is that roughly the way to think about that?

So as it relates to the sample prep device, we're building them over the course of the next month. And I think, we're -- our initial build is 32 for the clinical trial. And that's in process right now and we feel good about that, number 1. Number 2, I think your expectations for how this plays out could be right. We'll provide more details in our next quarter. Certainly, we'll have completed the trial and have submitted in 2019, that's without a doubt. I think we'll be able to tighten that up significantly in time for our next call.

All right, sounds good. And then lastly for me is just the timing of the UCLA Mayo study. I appreciate the comment about when they should finish enrollment for that. How should we think about the -- I guess the results being reported out, Larry? Is this something where we could see a press release coming? As just kind of top line results with them to be presented sometime presumably in the first half of '19? At ASM or something to that effect with publication to follow? I'm just trying to get a better handle on how we should think about the news flow relating to that study.

Yes. Look, thank you, Bill. There's nobody who wants those results out more than me. And we're super enthusiastic and optimistic about what they'll be. Although, I think they will be in the midst of lots of other good data, whether they be data from University of Arkansas or these other studies that these other studies that Romney, our Chief Scientific Officer, and her team has commissioned. I think they all should come out about the same time, while we will finish enrollment at Mayo in Q4. How long it takes for the ARLG and the principal investigator to get comfortable enough till they're willing to release data, I can't say. And given that it's a completely independent study, it is quite difficult for us to impact the timing of that in any way. And because of that, we've gone ahead and really pushed other studies ahead. And they perhaps could readout before the Mayo UCLA study.

(Operator Instructions) Our next question comes from Alex Nowak of Craig-Hallum Capital Group.

Larry, this is a longer-term question. But as you look at the business plan, how big do you forecast the Accelerate business could be in 2020? The reason I ask is, when I look at 2020 street estimates, the range from the highest and the lowest is just over $100 million. So I'm curious, what do you think are fair revenue numbers for Accelerate in 2020? So we can all start to narrow our estimates to a fair target.

Well, Alex, that's a big question to ask right now. And I got to tell you, given the fact that we are in the midst of understanding the impact of our reagent rental program on this next quarter, it's difficult for me to stand here with any confidence and provide you with something that I can stand by for 2020. Absolutely, that will come and what I can say with confidence is that we've got a lot of momentum in our business. And I feel more confident than ever and I think we all do here that we're on track and that we've got a great business, a business that has legs, that's relevant and that's going to change the practice of medicine. And I think that'll turn into very nice numbers in '19 and '20. The specifics of that, frankly, you're going to have to wait for. We're just not ready to talk about that yet. And when we can talk about it with confidence, believe me, we will.

I appreciate that, Larry. Just a question on lower respiratory trial, does the sample prep device, does that need to get FDA approved separately than the lower respiratory assay?

It does not, actually. The sample prep device, we're fortunate, does not require FDA approval.

Okay, perfect. And then just on the 4 outcome studies you mentioned that we're going to be reading out over the next couple of quarters, you said these are going to be randomized, so is it safe to say that these studies will have multiple arms on them? Allowing for some sort of comparison of Pheno versus standard of care? Or is that just going to be the Mayo UCLA study that will have multiple arms?

No, all of them will have multiple arms. And in particular, I think this might have been missed in my remarks. I stumbled a bit there. The -- one of those studies is going to be us versus a molecular panel from BioFire. So I think it should be quite interesting to see the clinical outcome of the Pheno versus a molecular panel such as BioFire. And see who ultimately creates more clinical impact. I think we will. I'm confident we will and so we're eager to get that study out and demonstrate how much clinical impact we can create over the "newest standard of care," let alone the -- kind of the standard of care that many people are using.

Absolutely, looking forward to seeing that readout. And then just a last question for me, what's a rough ballpark estimate for when you can enter the Chinese market with a CFDA approved product?

Yes. Too early to tell, Alex. My -- I'll tell you the -- one of the challenges that we have experienced is that the CFDA is in the process of revising all kinds of guidelines right now. We're going ahead with the clinical trial. We're going to head with securing reimbursement and all of those things, but the timing of it is ultimately going to be dependent on where the regulatory authorities in China come out. So I feel like I'm repeating myself to you and others. Please wait. As soon as we have confidence and know and -- we'll be able to tell something durable, we will. Right now, it's just a bit too early.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Lawrence Mehren for any closing remarks.

Thank you, and I wanted to mention -- I mentioned on a call a few quarters ago that this is a fight. And it's a fight we're going to win. And I'll tell you winning we are. Our team has responded by reorganizing the entire sales force, working with our investigators to create a compelling body of data. And our marketing team and customers are spreading the word and that word is, the word is that Accelerate Pheno saves lives, saves money and preserves our vital stock of antibiotics and this is having a positive impact. Our sales cycle has decreased materially. Our contracts are increasing significantly. And now by unshackling our sales, people and customers, I am confident, we will see significant conversions. And while it's frustrating for sure that we will have to give up or forgo a bit of revenue this year, it is with thoughtful intent. We believe we'll be driving a tremendous future. So thanks to all who are assisting us in this effort to improve the way that patients with infectious diseases are treated. Thanks to our dynamic and incredible team whose driving every day, our measured and thoughtful board and our steadfast shareholders. Thanks to you all. We are on our way. Appreciate it.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.