Quanterix Corp (QTRX) 2020 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standby, and welcome to the Quanterix Corporation Q4 2020 Earnings Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the call over to Amol Chaubal, CFO of Quanterix. Please go ahead, sir.

Thank you, Charlie. Good afternoon, everyone, and thanks for joining us today. With me on today's call is Kevin Hrusovsky, our Chairman and CEO.

Before we begin, I would like to remind you about a few things. Today's call will be recorded and will be available on the Investor Resources section of our website. Today's call will contain forward-looking statements that are based on management's beliefs and assumptions, an 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. 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 the uncertainties that we face are described in our most recent filings with the Securities and Exchange Commission.

During today's conference call, we'll discuss some financial measures that are not presented in accordance with U.S. generally accepted accounting principles or non-GAAP financial measures. In the Q4 earnings release and in the appendix of our presentation, which are available on our website, you will find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures to comparative GAAP measures. We believe that these non-GAAP financial measures provide investors with relevant period-to-period comparisons of our operations. These financial measures are not recognized under GAAP and should not be considered in isolation or as a substitute for a measure of financial performance prepared in accordance with GAAP.

With that, I will turn the call over to Kevin.

Thank you very much, Amol, and we did do a pre-announcement, so basically going to go through the strategy charts. The numbers, we will once again go through them through Amol after I go through the higher-level presentation. But I will discuss just the advances we made in Q4 in 2020 with our focus being primarily on COVID, Alzheimer's and oncology, but most important is the payer disruption and the way we think this is going to transform our overall value creation opportunity. And we'll ensure to continue our dialogue around powering precision health, which is a phrase we coined about 6, 7 years ago, and it's actually guiding the proteomics evolution that we think can really become a revolution in the way proteins are being deployed.

Let me start on Slide 4 where we basically made some pretty significant advances. I think the whole company has probably put out at a pace of about 200% of previous years. And I think the pandemic has reached each and every one of us from an employee level at Quanterix and enabled us to really go after and help the nation as well as the world battle COVID. And it starts with us getting 2 EUAs in the last several months: one for serology, that's a semi-quantitative ability to measure the actual level of antibody, which we think is key with vaccinations, particularly in the durability questions that remain; and also an antigen test that we have also submitted for nasal swab, interior, and we've also submitted for saliva. And we expect shortly to submit for dry blood spots, which we think measuring the antigen in blood is a very significant differentiator, given the long-hauler effect, which many individuals, unfortunately, are continuing to be plagued with even months after having had COVID, which we think enables us to be able to measure small trace amounts of the antigen still in many of these long haulers' blood. And so this will be key for future therapy trials as well as trying to get health back for many of those that have suffered from COVID, even with just lack of taste and smell.

We also were given $20 million -- granted $20 million by the RADx, the subset of NIH. And that's linked and created very strategic ties with the FDA that we'll utilize not only for COVID but for neurology as we evolve our advances in the neurological diagnostic framework.

The payer adoption, we think, has been critical and UnitedHealth Group, particularly, has been doing a lot of work with us. Population trials are being run as well as future opportunities, we think, to disrupt health care by utilizing payer group adoption.

And we also believe this leading-edge long-hauler menu that we've created and capability is going to be important to allow researchers to figure out how to prevent many of the longer-term issues that we expect and many suspect will be linked to COVID.

On the right-hand side here, neuro accelerators, the pTau-181, which is a differentiator, allows us to stratify out Lewy body dementia as well as frontotemporal dementia from cohorts for Alzheimer disease drug trials. This is very important. Also, we've shown evidence of being able to see Alzheimer's disease 16 years through researchers using our biomarkers before the presentation of dementia. And this is key as well, we think, for getting an Alzheimer drug across the line with the FDA.

We also launched a neuroplex and plan to continue to evolve our neuroplexes to include Nf-L, amyloid betas as well as the pTaus. Alzheimer drug trials never been more important than they are right now. There's even beginning of links to early Alzheimer's from those who had COVID. So we think this is going to be a really important area for our growth, not only on the research side, but ultimately, longer term, on the diagnostic side once a drug is approved.

We also had 2 MS drugs approved this past year and also a major stage just came out on aging profile, measuring our Nf-L with a lot of quantitation. The higher the Nf-L level, the older you are in creating that correlation. 48% of our fleet now is the HD-X, and new sales are also tracking about that same pace. And our growth really in neuro has been unprecedented in 2020.

Record publications in new biomarkers as well as this 100x sensitivity advance that we have at a pilot level now when plan to advance that into product lines by no later than the end of 2022. The Abbott license put $10 million upfront payments and $25 million of earnouts associated with milestones as well as royalty payments as Abbott evolves Simoa inside of their technology. And we did do a raise in 2020 to another one in January, lab services expansion continues.

And you can see our growth on Slide 5, continues at really a double-the-pace level versus when we were private. Our investors are actually doing a lot of introductions to the C-suites of our biopharma customers that are trying to get drugs approved using our biomarkers. So it's a real win-win for investors to have both our growth as well as helping get drugs approved at their portfolio companies that are focused on that as being their value creator.

Our growth has really gone almost to 55% the last 3 years, and we did state that we feel very comfortable 30% to 40% research growth over the period of 2019 to 2023. And so this is key, I think, as you look at our growth projections for this year. 80% increase in our accelerated revenue, we thought was really key last year, given many of our customer labs were down. And we also now have 180 instruments installed with 93 HD-Xs. We think this is also very important in the HD landscape.

And our consumable growth recovered in Q4 to a very strong clip, and we've seen utilization rates being almost twice what we originally set out for those to be. So this has shown a lot of usage of our technologies.

This slide just gives you the breakdown of the instruments, consumables, lab services, and you can see that the growth rate continues to be really strong in Q4 recovery for the consumables, which we think is important. But we had a really strong instrument year that I think most were very excited to see. And we do expect that we'll continue with strongest growth in consumables, slowest growth in instruments, but we think services will be right in the middle. And this is great because the appreciation of gross margin is going to be greatest with our consumable growth.

Slide 7 just shows the biomarker growth as well as these publications, which validate our technology and it really -- that's what differentiates us from many of the others that have tried to revolutionize proteomics as our publications validating third-party peer-reviewed achievement with our technology. And we've democratized it with now 535 instruments around the world. And you can see our number of drug trials in red on the right, even inside of our own company. And obviously, we've got large CRO relationships with Quest and LabCorp as well as Frontage and others, rules-based medicine. But even in-house now, we're running some really important drug trials and helping rescue many drugs that couldn't get approved without the biomarkers.

And then on Slide 8, you can see the overall demographics continue to strengthen our, what we'll call it, our Asia position. We do think that 2021 will be a real strong Asia growth year now that we've hired our general manager, and we just did the WuXi contract. Customers continue to be mostly pharma-biotech, but the academics continue to be an important focus because of publications.

And while neurology represents, for the past 12 months, not the strongest growth, it's a significant portion of our overall installed base. And we know that that's recovering in Q4, given the labs reopening. And then ultimately, our instruments have been continuing to grow at a very strong pace. And you could see our accelerator growth this past year, and we think this represents a pretty good opportunity for strong growth in 2021, given our 30% to 40% CAGR for the 5-year period started in '19 through '23.

And Slide 9 just goes back through and says we've got very strong validation on the left-hand side where our TAM has been $1 billion, and we see evolution over the next 5 years to $20 billion, particularly with a lot of the new entrants that are coming in, doing drug, we'll call, protein discovery, bringing molecules into the pipeline that we then really expand TAMs with our ability to see them with a lot of sensitivity and a see them from home care samples, particularly the less invasive samples, and that's key to our evolution.

We did put a lot of cash on the balance sheet. We've gone from basically no revenue to $85 million over the 6-year period and put $450 million that's currently on the balance sheet. And our valuation continues to evolve, but we're really in the first or second inning of what we think is a very strong valid -- valuation creation strategy on the left-hand side, where there's very low regulatory and reimbursement risk.

And you can see our growth catalyst, and this menu expansion in these drug trials clearly are the area that really creates significant opportunity for growth -- low-risk growth, which creates and drives a lot of our future valuation. And these new entrants, I think, is just a real good sign, further validating the pipeline in creating what we think is a great complementary relationships upstream. I'm also the Chairman of 908 Devices, which is one of those upstream companies, gives us great intel across the proteomics pipeline.

On the right-hand side, where we think the TAMs are 10x and really got a significant opportunity. We've got validation now from the Abbott deal, the Siemens deal and all the pharma data. And NIH and RADx and FDA relationships have never been greater, and we still look for single-site LDT, ultimately, IVD in our neuro franchise, starting with MS, but we think Alzheimer's has got a shot on goal over the next couple of years, depending on what happens with drug trials. But COVID and neuro Alzheimer's continue to be our focus.

Liquid biopsy, we're partnering with companies in that landscape and feel it's a better, low-risk way for us to manage liquid biopsies. It's a very crowded market, and drug companies typically are worried about reducing the size of their markets because response levels in oncology are at very low levels compared to other areas and other disease categories.

So we think from a payer standpoint, this leapfrog where we've struck these relationships is really catalyzing the opportunity for value creation on both the left and the right, but particularly the right. As they, I think, look for trying to reinvent the diagnostics industry, basically looking for disease before symptoms when it's much more therapeutically beneficial to intervene with a patient and then ultimately prevent these diseases by having very early detection is a chance to really create a very different kind of outcome with biomarkers. And I think our right-hand side is more of an evolutionary story now instead of aspirational, given the NIH's investments and helping us build this bridge going from the left to the right.

Our overall strategy hasn't changed. Current detection levels shown in red on Slide 10 and on slide -- the second part of Slide 10 shows how we are moving them into the asymptomatic region with less invasive testing in the areas of cancer, neuro and COVID.

Protein, we think, is vitally important. It's more phenotypic given great utility. It's been attempted for really 50 years, and we know that there are some pretty big players already measuring proteins, but the proteomic landscape is still very under-discovered. And we do think that identical twin study is really the protein is what's different when one twin grows up to get cancer when the other one grows up to get diabetes, even though they have the same DNA and RNA. We think this is really indicative of the utility of the protein being that's telling you when you have the disease versus you having a probability for them.

Slide 12 does show, "Hey, there's 200 proteins that Abbott, Siemens and Roche are measuring today, creating $20 billion of revenue." And on the left side, in research, you can see Luminex and ProteinSimple and some others are playing very successfully in that 1,300 protein regime. But when you bring sensitivity on, you can see we significantly expand the landscape and also provide the less invasive opportunity for measuring these biomarkers. And this is, ultimately, we think there could be 1,000 proteins measured versus today's 20 proteins. And this is 5x the current level -- 5x $20 billion brings $100 billion to TAM just in the diagnostic side alone.

So as the computer industry and this whole revolution of technology has evolved the genomic landscape of sequencing, we believe that proteomics is now ready to be revolutionizing.

On Slide 14, we just show that ultimate opportunity that Illumina was able to create and they spun grail out and then brought grail back in. And so a lot of the current value in this overall genomic landscape is downstream with those companies on the right. I think 3x the market cap sits on the right. And so we know that the grail move was a smart move by Illumina, and we think that there's a lot of lessons here. We have the same founder of Illumina that founded Quanterix, and so we're trying to learn from those lessons and try to get some value downstream and try to make sure that we don't lose a lot of that downstream value.

So we're building -- as you can see on Slide 15, we're using greater sensitivity to enable the less invasive biomarker subtypes and multiplexing for disease specificity. And single molecule is what we're able to achieve, and that does create this new paradigm of measuring proteins and home care samples to see disease before symptoms. And this is going to be an awesome technology for disease progression monitoring across all areas, but we're prioritizing ourselves for neurology first where we don't think the landscape is crowded and there's just tremendous focus right now, particularly on Alzheimer's.

So when you look at our pipeline on Slide 16, Quanterix starts on the right-hand side where the drug trials are. We're focused today primarily on brain and COVID, but we're evolving into oncology and heart. And on the right, you can see that the TAM grows to $30 billion by just moving into COVID, Alzheimer's, MS and TBI, and here is where we are trying to create a direct presence, but we do also have relationships that we've signed with Siemens and Abbott as partners that we think can further validate our opportunity. Roche is one of our largest customers as well.

But then you can see with this -- on next slide, this final slide, liquid biopsies, we're partnering, but we do think health screens from UnitedHealth Group as well as Aetna, Cigna, we think these are great opportunities to further advance the field of medicine by seeing disease before symptoms.

And on the final slide here, when you look to the left, you can see many of these companies, we're hoping to add new companies like Moelis and OSI and others that -- QSI that have further evolved through SPACs and continue to put a lot of investment into the left-hand side. We think it's getting very crowded, but that only brings more proteins into the pipeline that we can expand TAMs with the sensitivity that we talked about earlier.

So what we did do is build a TAM narrative that starts with today pre-COVID, about $0.4 billion in neurology and oncology and research. And then as we go post-COVID and cut across with these EUAs, it does create a $12 billion TAM. But mostly, what we're doing is a strategic Trojan Horse strategy of moving into diagnostics with neuro and then going back upstream into research for COVID, now we have the validation of EUAs and the long-hauler ability to see the virus in blood, we think we really can start to evolve the research side of COVID, which we think will be around for the next 10 years.

And then this next phase of disruption that we have with the payer groups we think really allows us to evolve downstream then into immunology and oncology, further building out this TAM. And then ultimately, we do think further bringing sensitivity upstream into the discovery side of this where most of those new players are entering. We think 2, 3 years from now, you'll be able to get many of these answers on protein pathology with less invasive samples. So we think discovery will actually benefit from the less invasive sample, but we don't feel like that's a priority. We think it's a longer-term piece of our TAM story.

So hey, when we lock and load right into Slide 18 where we are today, biomarker discovery leads to biomarker adoption by those companies that we show with a 300% increase in probability of a drug being approved when they use our technology. That's why we focus on neurology, where these drugs like Alzheimer's disease have never been approved. So it's key to get them across the goal line. And on the #2 area, demonstrating clinical validity, you can see those 6 markers right now are very important as our story continues to evolve with Lilly and with Biogen and Glaxo and Pfizer as well as Takeda and Novartis and Roche. And then you can see getting to the actual health screens, bringing many of these patients into the cohort and/or once the drug is approved, getting those therapies into patients before presentation of symptoms is what really transforms this landscape and leads to new biomarkers being discovered.

The Slide 19 just shows all the biomarkers that used to be done with $5,000 CSF spinal taps. That's cerebral spinal flood, very painful, very expensive. It's very hard to get patients and drug trials even to have a spinal tap or a $5,000 PET image. That's a lot of what -- today's world is on the left. And what we're doing is across -- informing and standing up tests across all these different diseases in research using blood, initially venous draws, but then ultimately, we think the ability to get dry blood spots like we're getting with the new EUA submission for COVID, we think it's important to demonstrate home testing for many of these different technologies. And that's where the sensitivity further enhances that ability.

Slide 20 just shows those 2 drugs that were approved in 2020. Key here, MS drugs approved secondary and primary endpoints using Nf-L, our neurofilament light, where we've locked down. We acquired Uman, as you know, 1.5 years ago. This has been key because they've got 100% of the publications. Over 200 of them now are using those antibody pairs. It's exclusively using those pairs with Simoa. So that's where we've got both ends of this. We feel, very importantly, locked up to support our customers' research in these areas.

And we really are excited about Slide 21, where we could see Alzheimer's. And the TAM for doing that, seeing it early, we thought, was more of a research play to allow cohorts to be recruited. But on the right, we can see primarily Lilly and Biogen right now, very close to driving through with the FDA towards approvals.

But this -- in the center here, this advance we made with p-Tau 181, 217, these neurological publications coming out of Europe from neurologists, allow us to create correlations with amyloid disease and pathology using our p-Taus 181 and 217. And this is key to allowing a simple blood test now to be able to reveal not only Alzheimer's early and stratified out, but we think it, someday, could become key for the diagnostics.

So on Slide 22, you can see all the drug companies that are deploying our technology. We think this is a big piece of our story and their reference selling at conferences and summits like the Powering Precision Health Summit allows other customers to see the usage of the technology across all disease categories.

In Slide 23, we do think that while we're going to have a lot of growth, no matter if an Alzheimer drug is approved this year or not, because the need for our technology to get drugs approved, once approved, we think that creates the diagnostic opportunity. And that's where we're looking at first, we'll call it, single-site LDT initially, and then evolving into single-site IVD.

In the area of COVID, this has really allowed the world to see just what's possible with sensitivity. You can see that the coronavirus is really most contagious before symptoms, unlike any other virus. And that makes it very difficult to really control because the other types of immune system responses to the antigen, the first one is the adaptive immune system where you have the cytokines. And many times, it's created cytokine storm that led to pneumonia in many of the deaths because the immune system is not really able to manage it, particularly with compromised immune systems.

And then on the right -- I'm sorry, the left is the innate immune system, on the right is the adaptive. This is where we're measuring the IGG, which we think is an important measurement, particularly for vaccines. This detection window of today's technologies, when they only look at the tops of these curves, has really led to a lot of these false positives and negatives that you've seen with Elon Musk and the Indianapolis Colts, and even the Governor from Ohio.

But this next slide, you can see that -- when you can see the entire range, it allows you to see a broader detection window, and that's where we believe our technology, ultimately, will be very valuable for asymptomatic COVID testing, which is what's key for screening students and workers to get them back to work. And across all these categories now, we've got technology, even in the Nf-L for loss of taste and smell, we can measure it. And there's 3 publications now supporting this from neurologists. And this is that key linkage to early Alzheimer's as well that we think for long-hauler studies, this is a key measurement that we think will help us not only with the Alzheimer approvals but -- Alzheimer's drug approvals, but also with the long hauler of the COVID itself.

And looking at the entire kinetic spectrum of COVID, we think is key for this long-hauler assessment. And right now, the NIH is running a 10-arm trial using our technology with some of the therapies like the antibodies from Lilly and Glaxo as well as remdesivir from Gilead. These are important to be able to see the blood in -- see the virus in blood for those trials.

And Slide 26 just shows a full menu of different types of biomarkers that allow us to assess the symptoms of COVID and to see if, in fact, the technologies and the therapies being deployed are going to eradicate the virus and those symptoms associated with the virus, which sometimes kill, and we know about a lot of follow-on cardiac issues, respiratory issues, stroke as well as brain fog and we think someday, neurodegeneration.

So our company really, unlike many that is technology-driven and they try to find a killer app, we're market-driven, and we actually use a process. And many of us have been associated with Powering Precision Health for some time. It allows us to see a lot of where the industry is going to be with respect to many of the critical diseases that are most lethal like cancer and like brain neurodegeneration and COVID. Quanterix is key to this with their sensitivity.

Slide 28 basically shows how this PPH ecosystem tries to bring innovation very quickly to patients, and all those constituencies down below are the most senior levels from all of those areas, whether it be investors, whether it be scientists, whether it be hospital groups, even the advocacy groups and the various research groups and CROs. We have them all attend, even the agencies, and that allows us then, on Slide 30, to get information from these various constituencies into Quanterix to allow us to stay ahead of the game and guide where the proteomics opportunity is going to be.

And we can see how we also interconnect with Leroy Hood's group as well as Michael Milken, and many of the top thought leader groups to try to advance our own thinking. And Slide 32 just shows some of the key C-suite relationships that we think has what's allowed us to uniquely bring Precision Health collaborations into connectivity with each other, and that allows us to catalyze the proteomic revolution by connecting these dots.

And so I'll end with just the payer group's disruption. We think that there's ultimately 3 ways that they create better outcomes. Initially, there's already, today, biomarkers and therapies for MS, diabetes and COVID, where they could deploy now, create better outcomes by seeing a disease before symptoms. B is where they're trying to get a therapy approved. And we think that the payer groups can be incredibly effective in recruiting patients with our biomarkers for those drug trials, which then would give them an advantage to move very rapidly into getting approved drugs into their membership group. And then finally, in the category C, we think that there's an awesome opportunity with large payer groups to do large-scale trials to identify biomarkers for some of the more serious illnesses, like pancreatic cancer, and many of the long-term surveillance of their membership could lead to the next breakthrough biomarker.

So what I'm going to do now is turn it over to Amol for some financial updates, and then we'll close out with a Q&A. Thanks a lot.

Thanks, Kevin. I'm going to provide some additional financial details about our Q4 and full year 2020 performance. We'll be referring to Slide 34 or webcast Page 55.

As Kevin noted, GAAP revenue in Q4 of 2020 was $26.1 million, had included $4.5 million of revenue from our RADx awards. Excluding these nonrecurring items, our non-GAAP Q4 2020 revenue was $21.6 million, a 36% increase versus prior year Q4. Consumables revenue increased by 49% in Q4 and instrument revenue increased by 21%. Service revenues increased 28% in Q4, driven by a 46% increase in Accelerator services revenue.

GAAP revenue for full year 2020 was $86.4 million and included $11.2 million revenue in connection with our nonexclusive license agreement with Abbott in Q3 and $6.4 million in revenue from our RADx awards across Q3 and Q4. Excluding these non-recurring items, our non-GAAP full year 2020 revenue was $68.8 million, a 21% increase versus prior year, despite challenges in accessing customer sites for installations and customers facing interruptions in their operations due to COVID-19.

As previously discussed, we had proactively expanded our Accelerator services capacity to support our customers sustain their research and clinical trials. This resulted in a 50% increase in our service revenue, driven by a 80% increase in full year Accelerator services revenue.

Coming to RADx, we are accounting for our RADx awards under IAS 20 accounting for government grants and disclosure of government assistance. Under IAS 20, we expect that approximately half of the total RADx were packaged to milestone payments of approximately $9 million will be recognized as grant revenue, of which approximately half was recognized as grant revenue in 2020. We expect the remainder, approximately $4 million to $5 million, will be recognized as grant revenue in 2021. The remaining approximately $9 million of contract milestone payments that relate to reimbursement for the purchase of property and equipment will be recorded as a reduction in the carrying value of these assets and will have no grant revenue associated with them in our profit and loss statement.

As previously stated, we are not providing revenue guidance. We have recently seen customer activity return to pre-COVID levels. However, a potential spread of new coronavirus strain may force renewed lockdowns resulting in challenges, such as limitations in accessing customer sites or drop in consumables utilization due to interruptions in certain customer laboratories in U.S. and Europe.

On a non-GAAP basis, Q4 gross margin was 50.8% versus prior year Q4 gross margin of 47.3%, an increase of approximately 350 basis points. Our non-GAAP gross margin excludes the impact of our RADx awards as well as noncash acquisition-related purchase accounting adjustments relating to our 2019 acquisition of Uman, thus providing investors with relevant period-to-period comparison of our operations. We believe we have a significant opportunity for gross margin expansion in the future as we evolve our mix towards high-margin consumables and Accelerator services, scale our overall business and reduce product costs.

On a GAAP basis, our Q4 gross margin was 57.6% and was favorably impacted by our RADx grant revenue versus prior year Q4 gross margin of 43.1%. Our GAAP operating expenses totaled $25 million in Q4 2020 and non-GAAP operating expenses, which primarily exclude nonrecurring expenses associated with our RADx grant revenue, totaled $22.6 million.

During Q4 2020, our cash balance increased by $8.4 million, driven by $10 million milestone payment received in Q4 from Abbott, timing of RADx payments and proactive working capital measures. We closed the year with $181.6 million unrestricted cash balance. And during Q1 2021, we raised approximately $270 million in net proceeds through our public offering. Basic weighted average shares outstanding for EPS totaled 31.7 million for Q4 2020 period.

Overall, we are pleased with our Q4 and full year 2020 performance and progress made on our strategic priorities and remain committed to delivering a solid 2021 result, in line with expectations.

With that, I will pass back to Kevin.

Thank you, Amol. We'll open it up for Q&A.

(Operator Instructions) Your first question comes from the line of Puneet Souda with SVB Leerink.

Kevin, the first one is on proteomics. I mean, obviously, there's significant interest here in proteomics and more investment is flowing into early-stage technologies. Obviously, proteins, and more importantly the detection of proteins in a most sensitive way, is something you do very well with Simoa. So just trying to understand how is Quanterix positioned in the continuum of the overall research from the early stage sort of screening research, where you're looking at large panels and large number of proteins to more targeted side of things and then into the diagnostics. Where do you sit into that continuum? And what should we be looking out for as signpost for Quanterix to be positioned even more in proteomics?

Very good question, Puneet. And it's interesting. I get more questions in all of our one-on-ones with investors about where they should be making their investments upstream, given all of these new entrants, then I do sometimes even about us because I think there's a lot of confidence and belief. They understand that we are executors that have been doing this for really 20 years with a lot of execution prowess. And we've spent a lot of time studying this landscape before even entering it.

As you know, I came out of retirement 7 years ago, brought most of the 100 people we have in the company now from some of the former companies. And they're very experienced about driving execution in a landscape like this. And so we've been very measured in the way we've approached it. And what we've been finding is that there's a lot of misinformation around those -- there's a lot of people that can say things like, we can see these markers. And what we find out is that when they can see these markers, these would be some of the upstream companies, they're seeing them in less -- they're seeing them in very invasive samples and/or they're basically saying that they can see them. But the challenge is being able to see them through the continuum of health to disease. And when you're healthy, you're at the lowest level of concentration of these proteins.

And what really is the magic around where we sit, which is downstream of much of the discovery, where the mass spec and many of these new entrants are trying to play a role in discovery and some of them call themselves unbiased. And I think to a great extent, many of them are unbiased, but they're not really totally unbiased because if a marker -- a biomarker or a protein is at a really low concentration in, let's say, a less invasive sample and the patient is healthy, as an example, what you will find is that their technology won't be able to see it in that condition, which makes it actually biased against sensitivity.

So one of the big areas that I think that's important for everyone to understand is we are not trying right now to be a discovery house. There are a lot of really good companies entering that we think an invasive samples are going to be really good at discovery. Where we really bring our value to it is when you start to then say, "what you can see in CSF, let's now see it in blood or see it in saliva or even see them breath condensate. That's when we think the utility of that protein goes way up, and you can see it in a noninvasive sample. And then you can see -- if you can also see it from health to disease, even in the youngest population where, once again, the younger you are, many times the protein levels for like an Nf-L or even lower.

So it's that complete continuum that brings greatness into the discovery opportunities. And most of our customers understand that, ultimately, they're going to want to have that sensitivity to allow you to see that very low abundance in that less invasive sample. Many times through cleaning up the sample with dilution and getting around false negatives and false positives is another use of the sensitivity. And then being able to quantitate and be able to say how much there is, particularly in COVID when there's a real question around people getting antibodies, well, what's the quantitative level of those antibodies? And ultimately, is it neutralizing the actual virus, which it seems to be very personalized.

The virus is very -- a lot of diversity we're learning from the NIH between different people, but even within the same person for different weeks that they have the virus, there's so much diversity that you just need to be able to quantitate what you're seeing in order to unravel this mystery of COVID. So this is where, I think, we play fairly uniquely with a lot of the drug trials. And getting those drugs approved ultimately then opens up the opportunity to screen people into the drugs that get approved. And that's really where we sit. And right now, we sit fairly uniquely there, and this is where the body of evidence is really in these third-party, peer reviewed, validated studies that validate our ability. Nf-L has been a key franchise, and now we're evolving it into the p-Taus and looking at subtypes.

It used to be that many of the competitors will look at total Tau and invasive samples, both seen the subtypes and noninvasive samples, dried blood spots, is really when you create the utility for that p-Tau franchise to allow you to differentiate amongst those that have dementia to only those who have Alzheimer's.

So anyway, those are some of the pieces of this puzzle, and I think it's a real important question because there's a lot of money flowing now in the proteomics. You just want to make sure that it's flowing with long-term value creation or we could end up in a scenario where people would not be happy with the long-term investment.

That's great. That's very helpful, Kevin. I want to touch briefly on the neurology trials. You have done well here throughout 2020. We saw major uptick in trials as Alzheimer's and multiple sclerosis and Parkinson's and other neurology indication trials have ramped up. Any measure you can provide us in terms of the number of trials that you can potentially get involved in as a result of more data and more confidence on Alzheimer's? And just broadly in terms of neurology trials, what's your level of confidence for further growth in 2021, given the sort of base you saw -- we saw in 2022, which was still a bit of a pandemic-impacted year?

We feel very confident about 2021 and 2022 relative to the neurological drug trials and the current level of our very embryonic penetration. That penetration is actually embryonic in a field that you needed to start in because in order to conform to the FDA guidelines for biomarkers to be used in a drug trial, you have to have approved drugs to validate and quantitate the clinical validity of that biomarker for showing drug efficacy.

And so MS has 16 approved drugs that allowed companies like Novartis and Roche to look at previously approved drugs to validate in retrospective trials biomarkers like Nf-L and then deploy them in downstream prospective trials for new drugs. And that's why MS really is where it started. And even there, we feel like we're only 10% penetrated, but that's where we see a lot more Phase III trials and Phase II trials because we've been at that for several years.

Alzheimer's is an area where there's no approved drugs. And so it's been harder for the Alzheimer companies to prove out these biomarkers. And many times, they're proving them out with existing technologies like imaging and like cerebral spinal fluid, spinal tap samples. And those are so invasive and so expensive that they don't translate into longer-term utility.

And so there is where we enter is by being able to ultimately see this in a blood sample and then someday in saliva samples. We are unearthing the utility of those biomarkers for longer-term diagnostic and health screening purposes as opposed to just to get the drug approved. And so many of the Alzheimer's trials to date have not utilized our technology for those trials.

Like, if you look at the Biogen data, it's really based on CSF, highly concentrated samples. But we know that they're one of our largest customers, as is Lilly. We know longer term, there's a lot more opportunity for the less invasive samples to get recruitment for patients to actually run these trials. And that's where we're bridging up and teaming up now with some of the payer groups to actually enable leading edge drug trials, utilizing what we would consider to be the payer group's membership as a great place for the biomarkers to be deployed.

It allows the payer group to really showcase their leading edge capability that almost anybody when they start to see this, are going to want to be part of a payer group because of what they're going to bring as the next generation of medicine for deploying presymptoms or asymptomatically.

So I do think that we're on the first inning for Alzheimer's, and we see tremendous upsurge for the next several years, utilizing our biomarker technology for those trials. And we see it for 2 reasons: one is early recruitment before presentation of dementia when it's easier for a drug to be efficacious; and secondly, to enrich the cohort by removing Lewy body dementia and removing frontotemporal dementia using the stratification capability of the technology. Again, once the drug gets approved, then we look downstream at triaging and health screens to move patients more efficiently than imaging and/or spinal taps into the drug.

If I could ask a more near-term question, first of all, I mean, that's great to have thoughts on the longer term as you're seeing these trials ramp up. But I think you pointed out 30% to 40% research CAGR here in the -- in 2019 to 2023, I believe. But you have a number of growth drivers here. You have easy comparables for 2020 as well. So just tell us, like why should we expect a meaningfully higher growth in 2021 versus that CAGR that you pointed out?

Well, first of all, I've warned you, Puneet, and I tried to say this to all the analysts. I think 30% to 40% CAGR is plenty to create a lot of value. And trying to model things that go beyond that, I think, just represents risk that's not really justified for our investors.

And so I almost criticize anyone that starts to throw CAGRs much higher than that. And we feel very comfortable that, that's a CAGR we can manage and execute against. Because a lot of the value creation of our company is in the narrative of what we're really evolving to on diagnostics. And you really can see the beginnings of many new investors, and we did a raise back a few weeks ago. I think we had $1 billion of demand in the 24-hour period because there's a lot of interest of new investors into this category because of the longer-term opportunity.

In the short term, I do agree that we've got some good comps because 2020 was some -- we had headwinds more than we had tailwinds for COVID. And as a result, when you look at the CAGR or you look at the growth rate in 2021 versus 2020, it probably will be greater than the CAGR because our growth in 2020 was less than the CAGR because it was headwinds from COVID.

But again, I wouldn't buy our stock based on that. I think that's trying to time it in the short term. And I think that we're going to try to remove any tailwinds we get from COVID on the diagnostics side just because we don't -- we're going to remove it from and make it a non-GAAP measure so we don't create hard comps for 2022. So we don't want people to see the tailwinds of what we do in diagnostics for COVID.

That might be short-lived. We don't want that to be a reason for people to surge into our stock. It's going to give us the pathway to get into these institutions, these research institutions, with the EUAs for really screening students in those research institutions. It's going to then give those installations an opportunity for the long-hauler effect of COVID, which is more of a 5-year play. That's where we see the sustainability of COVID value for our investor base.

Your next question comes from the line of Sung Ji Nam with BTIG.

Kevin, thank you so much for all the color around how Quanterix fits into the overall proteomics landscape. I was curious about just your multiplexing capabilities. You guys have obviously made a lot of progress in terms of sensitivity -- attaining greater sensitivity, but we haven't talked about multiplexing capabilities in a while, in my view.

Kind of curious, as you think about -- if Quanterix sits kind of in the downstream area compared to maybe some of these early discovery players, is multiplexing not as critical in your view? And kind of what is the right multiplexing capability, I guess, that we should think about going forward?

Perfect question, Sung Ji. And I think that this is a slide that I'm working on -- we're working on for future presentations because it's really interesting in the research phase of things, particularly in discovery, where you're trying to identify a linkage between pathology of the disease and protein signatures. You really want to have a very broad multiplex capability. The mass spec has, like, been an example of this. It's a very broad-based shotgun, looking at a lot of different proteins.

And I see evidence of these new entrants like Seer and Simoa. Simoa is not a new entrant, but they're also very capable. I look at (inaudible). There's a lot of companies that I think will bring a lot of value to the multiplex shotgun to kind of identify the pathology that's rich for evolving utility of the biomarker into drug trials and then ultimately into diagnostics.

And there is where you want the less invasive sample, and you want to be able to quantitate and you want to be able to dilute samples. And that's when the sensitivity becomes really important. And so someday, I'm going to have a slide that shows the role of the multiplex for the different stages of the pipeline. And what you see is to the upstream side where you're doing discovery, you want to have a lot of plex. But the overall TAM and the value creation is probably not going to be as significant there. It's going to be -- as it goes down the pipeline, it's used for drug trials and then it's ultimately used in diagnostics. That's where we think the TAMs get much bigger and the value gets created.

And I look at, for instance, today, there's 3 companies, Roche, Siemens and Abbott, that have nearly $20 billion of TAM on basically 200 proteins, but 100% of that revenue is basically singleplex. So you can see what I mean here that once you hone in on the protein of interest, you can create a lot of TAM and a lot of value for singleplex. So you get this situation that you do need a lot of plexing upfront, but once you get into the utility zone, 10-plex to maybe 20-plex is probably going to be more than -- that's needed for a panel that gives you the specificity and gives you the -- disease specificity and gives you the ability to create utility.

And so I think that there will be the number of tests that are run. You'll find that the volume of testing run will be greatest for the high plexing, but the value of where a lot of dollars sit is going to be in 10-plex and lower. And again, I think Roche, Abbott and Siemens have demonstrated that with their incredible ability to create a lot of value for a very few number of proteins that are all singleplex. Does that help, Sung Ji?

Yes. That's super helpful. And it's fantastic to hear you guys partnering with the payer groups. Just kind of curious, though, are there specific studies that are currently underway where you might have visibility into the time line of when we might be able to see the data readout?

Yes. I think that what you'll see is probably -- it's up to the payer themselves on what they want to publish. And I can't really say at this moment how public they're going to want to be with the surveillance data that they're collecting. But we are running 3 different IRBs right now and see a lot of opportunity for additional ones that I think are informing them at more of a population level. But eventually, we think that this is giving -- it's getting them introduced to what biomarkers can do. And that then can lead to that slide that I showed at the end, 1, 2 and 3, where you could even see biomarker discovery as well as teaming up with pharma companies.

And I think you might have saw the announcement about 2 months ago from UnitedHealth Group and Lilly teaming up. That was an example of the payer groups teaming up with pharma to try to get drugs that haven't been able to be approved, approved by utilizing their membership for some of the disease cohorts. So I think that that's where the opportunity really gets started. And then longer term, you'll see them, I think, practicing biomarker surveillance of all their members probably at a quarterly level, hopefully using home care.

But how much they publish between now and when they get to that state is kind of their call. And we will be continuing to invite them. There's an independent conference summit called Powering Precision Health that we will continue to invite the payer groups to, and that's incredibly aligned with what they're trying to do with outcomes and makes it a really easy putt for their involvement there. And that's probably where you'll see a lot of the readout for some of the learnings that they're getting from their IRBs.

Great. That's super helpful. And then lastly for me, just kind of curious on the COVID antigen test. Obviously, very interesting insight into the disease there. And it sounds like you guys are using it largely for research applications, currently. But do you foresee kind of in the future as you look at the whole field of infectious diseases, you have capabilities of being able to detect antigen -- viral antigens at a high sensitivity could potentially disrupt how disease -- how the clinical diagnostics field might look at detecting viruses and pathogens going forward?

I do think that there are some potential differentiating opportunities in that field of diagnostics COVID. We are trying to treat it as a measure, though, of revenue. We would probably subtract it out because we don't know how long-lived it would be, given the vaccines and given the timing of the overall COVID. And we do think that it's easy to mislead investors in this part of the landscape. So we do expect there'll be some tailwinds.

And one area would be and just looking at anyone, we call them long-haulers, people that are still suffering from symptoms, many of them, 6 months later, there's still people that don't have recovery of taste and smell. And that's a critical CNS function that could be linked to sometimes longer-term neurodegeneration or we've seen evidence of stroke and heart attack and other types of issues from those that have had COVID previously. And the innate immune system being fatigued is another area that there's a lot of focus.

And so I do think that there'll be an opportunity for some diagnostics, looking at the virus in blood to ensure that these patients have eradicated all of the virus from their body, where they might, if they measure it using the traditional nasopharyngeal or nasal swabs, the virus may have left the respiratory tract, and it's only in the systemic blood tract or vascular tract. And so there, I do think there'll be a diagnostic opportunity. And I think the whole field of asymptomatics, if we could get the right samples in the right IRB run, we think we could play a role there to see the virus before symptoms hit when it's more important to manage because that's when you're most contagious, that 24-hour period before symptoms.

So I think those 2 areas, there's a potential chance for some tailwinds in '21, but again we don't want people to buy us based on those tailwinds. It's more an entry for us to get into those research institutions that will really be looking at that long-hauler effect.

Unfortunately, we are going to have to cut off. If there's other questions -- I got to give a keynote and another meeting here at 5:30. If there's other questions, feel free to write those into us. But we really appreciate all the support that the investors have been giving us over the last 3.5 years since going public. And we appreciate this opportunity to keep updating you. And let us know if any of you would like us to reach out to you one-on-one. Thank you very much for your time today.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.