quotient limited (nasdaq: qtnt) - jefferies · 2019. 11. 25. · the mosaiq™ instrument or...
TRANSCRIPT
QUOTIENT LIMITED
Franz Walt, CEO
Chris Lindop, CFO
Ed Farrell, President
November 2019 NASDAQ : QTNT
Transforming transfusion diagnostics and beyond
Safe Harbor Statement
This presentation contains 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 and the Private Securities Litigation Reform Act of 1995. These forward-
looking statements include statements regarding our expectations of continued growth,
the development, regulatory approval, commercialization, and impact of MosaiQ and
other new products (including our current expectations regarding the timing of MosaiQ
project milestones) and forecasts of the demand for MosaiQ Microarrays and our
expected sources of funding. Such statements are based on current assumptions that
involve risks and uncertainties that could cause actual outcomes and results to
differ materially.
These risks and uncertainties, many of which are beyond our control, include delays
or denials of regulatory approvals or clearances for products or applications;
market acceptance of our products; the impact of competition; the impact of facility
expansions and expanded product development, clinical, sales and marketing
activities on operating expenses; delays or other unforeseen problems with respect
to manufacturing, product development or field trial studies; adverse results in
connection with any ongoing or future legal proceeding; continued or worsening
adverse conditions in the general domestic and global economic markets; as well as
the other risks set forth in the company's filings with the Securities and Exchange
Commission (“SEC”). Investors are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. Quotient
disclaims any obligation to update these forward-looking statements.
The Quotient logo and MosaiQ are registered trademarks or trademarks of Quotient
Limited and its subsidiaries in various jurisdictions. Any images, schematics or other
graphic or pictorial representations contained herein, including those representing
the MosaiQ™ Instrument or Microarrays, are for illustrative purposes only. Those
representations may change and may not accurately represent final Quotient products
or services.
This presentation contains statistics and other data that in some cases have been
obtained or compiled from information made available by third parties. Quotient makes
no representation or warranty, expressed or implied, with respect to the accuracy,
reasonableness or completeness of such information.
A shelf registration statement relating to the ordinary shares was filed with the SEC
and is effective. We will also file a prospectus supplement with the Sec for the
offering to which this communication relates. Before you invest, you should read the
prospectus in that registration statement, the prospectus supplement, and other
documents the issuer has filed with the SEC for more complete information about the
issuer and this offering. You may get these documents for free by visiting EDGAR
on the SEC website at www.sec.gov. Alternatively, the issuer, the underwriters, or
any dealer participating in the offering will arrange to send you the prospectus if you
request it by contacting Jefferies LLC, Attention: Equity Syndicate Prospectus
Department, 520 Madison Avenue, 2nd Floor, New York, NY 10022, by telephone at
(877) 547-6340 or by email at [email protected]; or Cowen
and Company, LLC, by mail at Cowen and Company, LLC, c/o Broadridge Financial
Services, 1155 Long Island Avenue, Edgewood, NY 11717, Attention: Prospectus
Department, or by telephone at (631) 274-2806.
November 2019 2
Quotient
1990: Scottish National Blood Services creates National Reagents Unit
1998: Diagnostics Scotland (later renamed Alba Bioscience)
created from merger of NRU and Scottish Antibody Production Unit
2007: Quotient founded and acquired Alba Bioscience
2014: Quotient Suisse SA formed & Quotient IPO on Nasdaq
2018: MosaiQ factory ISO certified and instrument CE marked
2019: 72 reagent products CE marked and 70 FDA licensed/cleared
Over 30 years’ heritage in transfusion Dx
November 2019 3
Alba by Quotient>$30 million sales growing high single digit
November 2019
‒ Quotient develops and manufactures high quality reagent products for use in transfusion diagnostics
‒ Our reagents are currently used in over 5,000 transfusion labs worldwide every day
‒ 72 reagent products CE marked
‒ 70 FDA licensed/cleared
‒ Product sales from standing orders approximately 70%
4
MosaiQ by Quotient IVD applicationsMosaiQ microarray multiplexing technology suitable for various IVD uses
November 2019
Target segments within the In-Vitro Diagnostics (IVD) market
5An independent consulting firm was engaged to identify opportunities in IVD beyond the transfusion space.
$40bn
IA & MDX in Central lab Plasma Transfusion Patient Transfusion Donor
November 2019
Initial SDS
Expanded IH
Expanded SDS
MDS
IA & MDx in central lab
Commercial plasma
Proof of principal First powerful commercial combination Significant upside sales & profit potential Beyond transfusion Dx
Current focus
Strategic Roadmap
Factory ISO certified - Instrument CE marked - Initial IH microarray CE markedFactory ISO certified - Instrument CE marked - Initial IH microarray CE marked
Future opportunities
Initial focus on Transfusion DX with longer term potential in the broader IVD market
An independent consulting firm was engaged to identify opportunities in IVD beyond the transfusion space.
6
Transfusion Dx MarketAttractive $3.4 billion* market growing low single digit
Patient Testing
Donor Testing
Donor Testing 2/3
SDS: $875m
MDS: $1,100m
IH: $325m
– Concentrated customer base
– High test volume per customer
Patient Testing 1/3
– Fragmented customer base
– Low test volume per customer
IH: $1,100m
*Source: Independent global consulting analysis commissioned by Quotient and Quotient’s own internal analysis
November 2019 7
Transfusion Dx Players Fragmented market with many highly specialized players – MosaiQ has the potential to cover all testing needs
MDS
SDS
Source: Independent global consulting analysis commissioned by Quotient and Quotient’s own internal analysis
IH
November 2019 8
MosaiQ Value Proposition1) One technology for all testing needs
November 2019
Serological
Disease
Screening
Antibody
Screen/ID
Molecular Disease
Screening
Manual
Testing
Blood
grouping
9
MosaiQ Value Proposition1) One technology for all testing needs
November 2019
Manual Testing
MDSExpanded SDS
SDS (CMV & Syphilis)
Blood grouping
MDSSDS
Expanded IH & initial SDS
Blood grouping only
10
MosaiQ Value Proposition2) Automation helps to address shortage of qualified staff
Sources: Number of tests based on Genetic Testing Registry Data in National Center for Biotechnology Information [NCBI], https://www.ncbi.nlm.nih.gov/gtr/
Workforce calculation based on total number of Medical and Clinical Laboratory Technologists and Technicians jobs (Bureau of Labor Statistics [BLS], 2018)
Source: Mounting shortage of medical lab techs hurts most in rural Alberta, expert says 4 April 2017
.
November 2019
300000
315000
330000
345000
360000
375000
10000
20000
30000
40000
50000
60000
2013 2014 2015 2016 2017
Nu
mb
er
of
tests
Wo
rkfo
rce
[…] Canada’s aging population
is creating an increased demand
for lab tests, including blood
and DNA tests.
[…]. But with too few graduates
to fill the positions opening as older
workers retire in the coming years, the
problem is going to get worse,
[…] According to CSMLS, almost
50 per cent of its members
will retire over the next 10 years.
11
*Throughput and footprint based on publicly available data and targeted MosaiQ performance
November 2019
MosaiQ 125
PK 7300
Erytra
Vision MAX
IH 1000
Neo Iris
2,750
2,400
800
690
720
480
1,782
1,491
1,039
527
488
223
MosaiQ Value Proposition3) High throughput and productivity per m²
Company & Instrument Throughput (Tests/h) Productivity (Tests/h)/m2)
Expanded IH
12
MosaiQ Value Proposition3) High throughput and productivity per m²
*Throughput and footprint based on publicly available data and targeted MosaiQ performance
November 2019
Company & Instrument
MosaiQ 125
PRISMnEXT
PK 7300
Cobas e801
Vitros 3600
Architect i400SR
Throughput (Tests/h) Productivity ((Tests/h)/m2)
1,125
960
600
300
189
400
729
490
370
178
100
98
Expanded SDS
Alinity S 600289
13
MosaiQ Value Proposition3) High throughput and productivity per m²
*Throughput and footprint based on publicly available data and targeted MosaiQ performance
November 2019
Company & Instrument
MosaiQ 125
PRISMnEXT
PK 7300
Throughput (Tests/h) Productivity ((Tests/h)/m2)
1,938
800
480
1,256
490
231
Expanded IH + Expanded SDS
Erytra
Neo Iris
Alinity S
14
MosaiQ Value Proposition4) Better workflow leads to better cost position addressing budget constraints
November 2019
Total costs of ownership
Current practice
Direct testing spend
Other testing costs
MosaiQ
€¥
£ $
Total testing cost per donation
Current reagent testing spend
Total testing cost savings
Other testing costs
15
MosaiQ Value Proposition5) We believe comprehensively characterized blood is a better and safer product
November 2019
Standard characterised
bag of blood
Comprehensively characterized
bag of blood
16
MosaiQ Value Proposition6) Individual MDS testing saves time and money
November 2019
Positive
test for
pool
Individual
donor
results
Individual
donor
results
Process with
current industry
standard
1 2 3 4 5 6 7 8
1 2 3
Process with
MosaiQ
17
MosaiQ Debut at ISBT 2019
November 2019
29th Regional ISBT Conference 22nd - 25th June – Basel, Switzerland
2400 attendees
45 customers attended demos
“This proves that the microarray
technology works. It’s no
longer just a vision or dream”
Customer comment in reference
to CE approved MosaiQ system
18
MosaiQ Debut at AABB 2019
November 2019
19th – 22nd October, San Antonio, Texas
3,900 attendees
80 customers attended demos
“It’s good to know that the MosaiQ
system is capable of delivering various
tests at the same time, which would
save labor and time in the lab”
Customer comment in reference
to CE approved MosaiQ system
19
Customer Feedback: EuropeInitial IH hypercare launch
November 2019
“After 2 days, I’m impressed
by the simplicity of the
installation process. Other
companies need one
week or more to manage
the installation”
“Very low level of noise
compared to other
instruments. This is very
important in an open
space where there are
many instruments”
“Time to perform daily
maintenance with
MosaiQ is 30 minutes.
It’s 1 hour or more with
other instruments”
“I’m impressed at how easy
the instrument is to use,
finding menus and routine
task management on the
software is very intuitive”
“Less waste when
compared to
alternative
instruments”
20
Customer Feedback: USInitial SDS field trial
November 2019
“Much less waste
compared to
other instruments”
“It’s a pleasure to work
with a coordinator
and company that is
this well-organized”
“We are impressed by
the quick start-up
and total daily
maintenance time”
“I love this
instrument”
“This is the most user
friendly instrument
I’ve used in my 27
years in the testing
lab”
21
The MosaiQ™ system is now commercially available in Europe. 22
Milestones
– Consolidation on Allan Robb Campus completed
– Publication of successful Expanded IH data
– Initial SDS field trial commenced
January 2019
– Initial SDS EU field trial results published
– Obtained CE mark for first microarray
April 2019
– EU submission of Initial SDS
June 2019
November 2019
– Positive results Initial SDS US field trial
– Publication of positive V&V results for Expanded IH microarray
– Reports positive customer feedback from
European hypercare launch and US field trial sites
– Initiated 3 additional hypercare sites
– Preliminary quarterly revenue higher than guided
October 2019
22
November 2019– Successful equity offering raised $90 million net and
termination of ATM
November 2019
MICROARRAYMULTIPLEXING TECHNOLOGY
23
MosaiQ Microarray Technology
November 2019
IH illustration
Red cell
Antibody
24
Red cell
Detection
Target antibody
MosaiQ Instrument
November 2019
CE marked
Combine sample
and diluent
with microarray
Homogenize
sampleIncubate
Remove
excess sample
Image analysis
antigen typing
Enhancement and
image analysis of
antibody detection
25
Donor Portfolio RoadmapComprehensive donor menu pipeline
3 donor microarrays
November 2019 26
Planned Donor Transfusion Dx Three multiplexed microarrays covering all testing needs
November 2019 27
Expanded IH V&V PerformanceNext step: EU & US field trials
November 2019
Antigen Type A B D C c E e K Cw
Concordance 99.6% 100% 99.3% 99.4% 99.7% 100% 100% 100% 100%
Antigen Type k Kpa Fya Fyb Jka Jkb N S Leb
Concordance 98.9% 99.3% 98.8% 99.7% 98.6% 98.9% 100% 97.7% 98.1%
28
Initial SDS EU & US Field Trial DataNext steps: CE mark approval and FDA 510(k) submission
November 2019
Pathogen Sensitivity % Specificity %
Syphilis 99.4% 99.7%
CMV 99.7% 94.8%
*US field trial performance data
Pathogen Sensitivity % Specificity %
Syphilis 100% 99.6%
CMV 98.7% 97.8%
EU field trial performance data
*Preliminary results
29
MDS Proof of ConceptComing soon...
November 2019
Concept study data expected to be published November 2019
V&V data planned for Q2 CY2021
EU & US field trials planned for Q2 CY2021
30
Next Planned Major Milestones
• MDS proof of concept study
• Initial SDS FDA submission
• Expanded SDS V&V data
• Expanded SDS EU field trials commence
• 510(k) approval for instrument and Initial SDS
• Expanded IH US field trials commence
• Expanded IH CE mark submission
• Expanded IH FDA submission
Outlook next 12 months
November 2019 31
November 2019
FOCUS NOW ON SUSTAINABLEBUSINESS MODEL
32
$451 million of Capital Invested in the Last 8 Years
Source of funds ($m) Use of funds ($m)
$74 million in available cash at end of second quarter
Equity, $387
Debt, $145
Capital & Equipment, $109
R&D MosaiQ Instrument, $26
R&D MosaiQ Microarray, $209
R&D Reagents, $15
Corporate Costs, $48
Debt Service, $44
Increase in cash resources, $81
November 2019 33
Indicative Reagent Spend and Total Cost of TestingSavings in total cost of testing should permit premium pricing
Current Reagent Spend per Donation North America EU
Immunohematological Testing $ 8.00 $ 6.00
Serological Disease Screening $ 12.00 $ 8.00
Molecular Disease Screening $ 15.00 $13.00
November 2019
Total testing cost per donation
Current reagent testing spend
Total testing cost savings
Other testing costs
34
Based on survey of potential customers; presented for illustrative purposes.
Microarray Dollar Unit Cost at 50% yield*Fixed cost leverage and automation drives gross margins
10MM** 60MM
Depreciation Overhead Labor Material
*The information on this page is illustrative, based on management's current estimates as of November 4th , 2019 using assumptions about future cost for MosaiQ microarrays. Such estimates rely significantly on management's judgment and
while presented with numeric specificity and considered reasonable by management, are inherently subject to significant business, economic, competitive, regulatory and other uncertainties and contingencies, all of which are difficult to predict
and many of which are beyond our or any other person's control. There is no guarantee that these estimates will ultimately be realized. If the actual demand for MosaiQ is materially less favorable than shown in this illustration or if the
assumptions used in preparing this illustration provide to be incorrect, the price of our ordinary shares may be adversely affected. See the Safe Harbor Statement included on slide 2.
**MM = Million Microarrays
November 2019 35
Profitability and Cost at Various Microarray Sales Levels*Operating leverage drives profitability
10MM 60MM
COGS Operating Expenses EBIT
Revenue, costs
and EBIT in $
10MM** 60MM**
*The information on this page is illustrative, based on management's current estimates as of November 4th , 2019 using assumptions about future cost for MosaiQ microarrays. Such estimates rely significantly on management's judgment and
while presented with numeric specificity and considered reasonable by management, are inherently subject to significant business, economic, competitive, regulatory and other uncertainties and contingencies, all of which are difficult to predict
and many of which are beyond our or any other person's control. There is no guarantee that these estimates will ultimately be realized. If the actual demand for MosaiQ is materially less favorable than shown in this illustration or if the
assumptions used in preparing this illustration provide to be incorrect, the price of our ordinary shares may be adversely affected. See the Safe Harbor Statement included on slide 2.
**MM = Million microarrays
November 2019 36
Key Takeaways
We built the platform and now we are focused
on menu expansion
Initial attractive commercial combination
expected within the next year in EU
Continue to remain laser focused on delivering
on our business plan
November 2019 37
QUOTIENT MANAGEMENT
November 2019
Speaker bios
38
Franz WaltChief Executive Officer, Quotient
Franz Walt joined Quotient as the company’s Chief Executive Officer
in April 2018. He brings over 30 years of experience in leadership
roles at two of the largest, most influential healthcare companies,
Siemens Healthineers and Roche, and serves as an expert advisor on
the in-vitro diagnostics industry to manufacturing companies and
private equity firms. His career has focused on business turnaround,
above-market growth, profitability improvement, innovation, strategic
alliances, quality, new product introduction, commercialization, media
and investor relationship management.
He served as President of Siemens Healthineers Laboratory
Diagnostics from 2014 to 2017, where he had responsibility for global
P&L and portfolio. In this role he led a turnaround, while bringing to
market the first Siemens-engineered line of diagnostic instruments
branded Atellica® and establishing complementary partnerships to
build a growth portfolio.
During his 23 years at Roche, he held positions of increasing
responsibility in pharma and diagnostics – such as: CEO, Managing
Director and President. The roles were based in various geographic
regions for Roche Diagnostics, and he also served eight years as a
member of the Roche Diagnostics Executive Committee (DiaEC).
Mr. Walt served as a board member of the AdvaMed DX industry
association, where he actively contributed to shape healthcare policy
in diagnostic testing to improve patient health. A Swiss national, he is
fluent in German and English. Mr. Walt also serves as a supervisory
board member of Epigenomics AG (FRA:ECX) since May 2019.
Epigenomics focuses on liquid biopsy tests for the detection of cancer
with their proprietary DNA methylation biomarker technology.
Mr. Walt holds an MBA from City University in Bellevue, Washington
and completed executive programs at Columbia University, IMD,
Switzerland, London Business School and INSEAD, France.
November 2019 39
Ed Farrell
November 2019
President R&D and Manufacturing, Quotient
Edward Farrell joined Quotient (NASDAQ:QTNT) in February 2013
and serves as President of R&D and Manufacturing, overseeing
the product development and manufacturing of MosaiQ™ in
Switzerland and Scotland.
Mr Farrell has over 20 years of engineering, manufacturing and
R&D experience in medical diagnostics in various roles including
several senior positions.
While with Siemens Healthcare Diagnostics, Mr Farrell served
as Managing Director and Vice President with responsibility for R&D
and manufacturing, for a point-of-care diagnostic instruments and
consumables facility, and subsequently, for a high-volume
immunoassay reagent plant in the United Kingdom. Prior experiences
at Siemens include, working in the United States as Director for a
Distribution, Service and Repair site, and as a Senior Manufacturing
Manager in a large diagnostic instrument manufacturing plant in
Ireland. Previously Mr Farrell worked at Ingersoll Rand as a
Production Manager, as Intel Manufacturing Engineer and Supervisor.
Mr Farrell received a BE (Mechanical) and a Masters in Engineering
Science from University College Dublin.
40
Chris LindopChief Financial Officer, Quotient
Chris Lindop joined Quotient (NASDAQ:QTNT) as the company’s
Chief Financial Officer in February 2017.
Mr Lindop has more than 15 years of experience in senior finance
leadership roles with public healthcare companies. He previously
worked as Chief Financial Officer of Haemonetics Corporation
(NYSE:HAE), a global leader in blood processing technology and as
Chief Financial Officer of Inverness Medical Innovations, Inc., a global
developer, manufacturer and marketer of medical diagnostic products.
In addition, Mr Lindop was a non-executive director of Parexel
International Corporation (NASDAQ: PRXL) from 2006, where
he was chairman of the audit and finance committee and a member
of the nominating and governance committee until its sale.
Previously, he served as an audit partner with the Boston office
of Ernst & Young LLP and with the Boston office of Arthur Andersen
LLP. He holds a BA in Business from the University of Strathclyde
(Scotland).
November 2019 41
QUOTIENT LIMITED
Franz Walt, CEO
Chris Lindop, CFO
Ed Farrell, President
November 2019 NASDAQ : QTNT
Transforming transfusion diagnostics and beyond