QTRX - NASDAQ

Good day, and thank you for standing by. Welcome to the Quanterix Corporation Q1 2024 Earnings Call Conference Call. [Operator instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker for today, Francis Pruell of Investor Relations. Please, go ahead.

Thank you, and good morning. With me on today's call are Masoud Toloue, Quanterix' President and CEO; as well as Vandana Sriram, our Chief Financial Officer. Before we begin, I would like to remind you of a few things. This call will be recorded and a replay will be available on the Investor Relations section of our website. Today's call will contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act. These forward-looking statements are based on management's beliefs and assumptions and on information available as of the date of this call. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The risks and uncertainties that we face are described in our most recent filings with the Securities and Exchange Commission. To supplement our financial statements presented on a GAAP basis, we have provided certain non-GAAP financial measures. These non-GAAP measures are used to evaluate operating performance in a manner that allows for meaningful period-to-period comparisons and analysis of trends in our business. We believe that such measures are important in comparing current results with other periods results and are useful in assessing our operating performance. Non-GAAP financial information presented herein should be considered in conjunction with, not as a substitute for the financial information presented in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures set forth in the appendix of the presentation posted to our website and in the earnings release issued today. Finally, any percentage changes we discuss will be on a year-over-year basis unless otherwise noted. Now, I'd like to turn the call over to Masoud Toloue.

Thank you, Francis. Starting with our first quarter results. Total revenue of $32 million grew 13%. This strong performance was driven by 22% growth from our consumables business and 57% growth in our Accelerator Lab more than offsetting softness in instrument revenue, which was anticipated due to a challenging capital environment. Our Accelerator lab continues to provide a nice buffer to these macro CapEx headwinds. The lab has completed over 2,300 projects for more than 480 customers from all over the world using our Simoa platforms. First quarter non-GAAP gross margin of 54.5% grew approximately 140 basis points, and our balance sheet remains strong with $305 million of liquidity. Our cash usage in the period was approximately $19 million, which was higher than the prior year given timing of certain working capital items. Vandana will touch on these results in more detail later in the call. Moving on from the quarter's financial performance. I'll expand on our leadership in innovation, focusing on new assay development and the durable moat advantaged by incredible, sensitive Simoa technology. Simoa provides researchers the ability to examine and detect critical proteins at ultra-low levels with digital single molecule readout. Breaking sensitivity barriers is a key reason why we've been a pioneer in the discovery of biomarkers and a trusted partner to our pharma and academic customers, evidenced by more than 2,900 publications. Building on the foundation, our incredible team has built over the last 1.5 years, we have a new product development engine. We remain on target to introduce approximately 20 new biomarker assays by the end of the year in the areas of neurology, immunology and oncology. First, we're working on a comprehensive approach for Parkinson's disease, a neurological disorder that impacts millions of people around the world. There remains a critical need to identify treatment pathways to slow the disease progression over time with nearly 140 Parkinson's therapies in active clinical trials. To date, biomarkers such as NfL and GFAP have been implemented as key tools to monitor Parkinson's disease development. For example, in the January publication of the scientific Journal Nature, researchers used Quanterix' NfL assay to measure whether late-stage Parkinson's disease is associated with an increase in neurodegeneration. However, this is only the beginning. Last month, we launched our S-TREM2 assay, a microglial marker implicated in Parkinson's and other diseases, and we continue to focus on clinically relevant forms of alpha-synuclein and lysosomal storage biomarkers. These are important efforts requiring some level sensitivity and supported by our partners such as the Michael J. Fox Foundation. Turning next to a biomarker that has garnered a significant amount of recent intention, tau. The Alzheimer's disease research community is just getting started and holistically evaluating this powerful protein and its many phospho-isoforms. Quanterix has been the leader of pushing forward the measurement and correlative data behind an evolution of tau biomarkers not only with pTau-181 and pTau-217, but also for less discussed markers such as pTau-205 pTau-212 and pTau-231. Each of these specific isoforms may have unique characteristics that are useful in a diagnostic setting with the potential to improve clinical utility if included in a multi-marker assay. Today, the NAA recommends pTau-217 as the best biomarker for accurately diagnosing amyloid pathology. However, progress with tau does not end with pTau-217. Quanterix is leading the way to develop further evidence that more specific biomarkers and robust panels of related brain-specific analyzes may add diagnostic sensitivity to the detection and monitoring of Alzheimer's disease. In an April nature publication, researchers led by group from the University of Gothenburg in Sweden using our Simoa technology, determined that brain-derived tau or BD-tau is a marker that has elevated levels in the presence of amyloid beta pathology and may provide additive sensitivity to a stand-alone pTau-217 assay. Studies suggest that blood total tau originates principally from peripheral non-brain sources. However, BD-tau comes directly from the brain instead of elsewhere in the body and therefore, may offer greater precision compared to the current standard of measurement. BD-tau may improve the current ATN framework for the definition and staging of Alzheimer's disease. We believe this is an important advancement in the field and plan to release our BD-tau assay this quarter. Staying on Alzheimer's disease, our development of a multi-market test continued to progress. More specifically, we plan to present 4 abstracts using data from the BioHermes and CANTATA trials in support of this effort at the upcoming Alzheimer's Association International Conference in late July. As a reminder, BioHermes is a diverse prospective study across 17 domestic sites enrolling approximately 1,000 participants with 200 from underrepresented populations. And Cantata is a multiyear, multiphase study, Phase I of the study encompassed 1,200 retrospective samples and Phases 2 and 3 of which were currently engaged, are targeting 1,200 prospective enrollees across memory clinics and primary care settings. In addition to using these data for a multi-marker test, results from BioHermes and Cantata have been used for clinical validation of our LucentAD pTau-217 assay. Shifting now to progress in the field of Alzheimer's Diagnostics. During Q1, we announced that our pTau-217 blood test was granted breakthrough designation by the FDA. In February, the American Medical Association confirmed new CPT codes for amyloid beta 40 amyloid beta 42, Fossil tau and total tau. We expect CMS to price these codes later in the year. Finally, we are pleased to highlight our collaboration announced in 2022 has resulted in Eli Lilly's launch of Certuit-AD, a blood test that can provide additional diagnostic evidence for Alzheimer's disease, measuring pTau-217 and run on Quanterix' SP-X platform. This test is now available on certuitad.com. Moving next to recent events. In the last several weeks, a few new plasma pTau-217 LDTs have entered the market with varying levels of validation and approaches for interpreting results. While it is still early, this suggests several platforms will serve different use cases in the market. Currently, we believe there are 3 pTau-217 tests available clinically that meet the Alzheimer's Association Working Group recommendations of 90% accuracy. 2 of these 3 tests used Quanterix' Simoa technology and, as such, have been thoroughly validated through well-powered clinical studies. Preliminary results have been presented at recent technical conferences and general publications are expected later this year. We're not aware of any immunoassay that provides higher sensitivity than Quanterix' Simoa technology. The sensitivity to precisely measure pTau-217 at very low levels, ensures the ability to deliver clinically meaningful results across a range of use cases. First, reportable concentrations can be provided for 100% of patients, even those at the very earliest stages of disease. LucentAD pTau-217 has a single femtogram per ml limit of detection, and Quanterix has yet to encounter a single sample unreadable level in over 2,000 samples tested, including the BioHermes and VMC cohorts and hundreds of healthy control participants. In similar patient cohorts, other technology platforms have shown up to 30% of samples were unreadable below the platform detection limit. Second, based on results from recent therapeutic trials, it has been shown that individuals at the earliest stages of the disease experienced the greatest benefit from therapies. Early detection is enabled by higher sensitivity. Third, there is emerging potential to track progression or response to therapy by monitoring tau levels. In any monitoring application, you want to start measuring early and continue to follow the patient as the disease progresses. Resulting small changes at the lowest levels is not only important for early intervention but also provides confirmation when therapeutic benefit has been achieved. Well, we believe the TAM for testing is large and the infrastructure will be built by several immunoassay providers. We believe the Simoa platform will be uniquely competitive for these applications due to its sensitivity. We are expanding on this foundation with multi-marker multiplex testing that other platforms are unable to perform. Multi-marker testing has the potential to bring definitive results to a larger proportion of patients as well as provide guiding information for differential diagnosis of non-AD dementia. As we see therapies advance, anti-tau therapies will require independent measurement of tile pathology and amyloid pathology to understand how combination therapy should be managed. This requires examination of multiple markers to improve amyloid detection and support diagnosis. We look forward to sharing updates on our progress in the coming months. With that, I'll turn the call over to Vandana to cover our financial results.

Thank you, Masoud. I will now add color to our first quarter results and also expand on our reiterated guidance for 2024. As Masoud described, Q1 was a solid quarter and consistent with our plan. We are pleased with the momentum we have to start the year. Total revenue for the first quarter of 2024 was $32.1 million, an increase of 13% compared to the prior year. Accelerator lab revenue was $8.7 million, an increase of 57% as customer appetite for our in-house clear lab services remains strong. Consumables revenue was $17.1 million, an increase of 22% and instrument revenue was $2.5 million, a decrease of 52%. In terms of revenue stratification, our customer mix in the period was nearly 50-50 between academia and pharma, and 85% of our assay and Accelerator sales were for neurology disease states. For the quarter, our total installed base increased by a net of 16 instruments. As others have noted, the capital budget environment remains challenging. However, we are seeing healthy demand from our Accelerator lab to offset this weakness. Shifting next to gross margin for Q1. GAAP gross profit and margin were $19.6 million and 61.2%, respectively, up $2.7 million and approximately 170 basis points compared to the prior year. First quarter non-GAAP gross profit was $17.5 million, and non-GAAP gross margin was 54.5%, up $2.4 million and 140 basis points, respectively, compared to the first quarter of 2023. Expanding on gross margin for a moment, our non-GAAP gross margin improved considerably on a sequential basis, up approximately 800 basis points compared to the fourth quarter of 2023. We're pleased with this performance as we more efficiently managed inventory in the period, achieved higher pricing and continue to see the benefits of our corporate transformation. Moving down the P&L. First quarter GAAP operating expenses were $33.6 million, an increase of $7.2 million compared to the prior year. Non-GAAP operating expenses were $31.4 million, an increase of $6.9 million compared to Q1 '23. With this operating expenses, higher spending compared to the prior year was primarily due to investments we continue to make in our R&D and commercial efforts. Moving to the balance sheet. We ended the first quarter of 2024 with $304.5 million of cash, cash equivalents, marketable securities and restricted cash. Cash flow in the period was a net outflow of $19.4 million. Q1 for us historically, is our quarter with the largest cash outlay given the timing of bonus payments, which was an outflow of $7 million in the period. In addition, the quarter's cash results were impacted by the timing of receivables and inventory. Receivables were up $4 million due to the timing of revenue versus billings, and inventory was higher by nearly $4 million to support our growth initiatives. Our liquidity remains strong and provides excellent flexibility in what remains an uncertain funding environment. Moving on from the first quarter. Our full year 2024 outlook is unchanged with a revenue range of $139 million to $144 million and a non-GAAP gross margin profile in the low to mid-50s. As a reminder, this guidance does not include revenues from diagnostics testing, which were immaterial in the first quarter. We expect the pacing of our revenue and gross margin throughout the year to be in part dependent on the rollout of our new advantages assays as well as customers switching to these new products. We are still in early stages of this activity and expect the sequencing of revenue to be weighted to the second half of the year. Within our guidance, we continue to assume cash usage between $25 million to $30 million, which assumes approximately $20 million of investments in strategic initiatives such as ramping up our commercial capabilities in diagnostics and in product innovation. I will now turn it back over to Masoud for his final comments.

Thank you, Vandana. Our principal framework remains creating tools to enable discovery and improve health outcomes. This is a Quanterix commitment to product innovation. We're working towards pushing beyond the industry standard we set for ultrasensitivity, approaching the boundaries of physics and improving plex across new sets of protein biomarkers. This year, we're making significant investments in menu, technology and diagnostic testing. We're doing this with a new operating model that effectively scales and expect to realize operating leverage as we drive toward profitability. Our ability to identify new markers translate these analytes into assays for research and now into clinical applications is unparalleled. Neurology is on the doorsteps of the next era of exciting discovery and Quanterix is poised to help unlock this opportunity. We can now take some questions.

[Operator instructions] Our first question comes from the line of Puneet Souda of Leerink Partners.

So, first one on the Accelerator growth that you're seeing here. Can you talk a little bit about if there is some contribution from sort of biotech funding picking up in the first quarter? Are you seeing some of that come in? What sort of it is contributing? Is it just a large -- you pointed out in neurology obviously being the driver, but just maybe talk to us about what's driving that growth? How sustainable is that? And should we expect the 20 new biomarker assays to be contributing to the growth in Accelerator services through the year as well?

Hi, Puneet. Yes. So, Accelerator has been a great story. As you know, we've built a lot of testing capacity and scale in the business. We had a 50% improvement in our testing scale. We're currently looking at 750,000 tests with capacity to increase threefold. So, we've built that seeing that there's a lot of interest in neuro trials over the last year or so, and they continue to be strong. So, I think most of that growth has come from pharma versus some of the smaller biotech. And 80% of that has been reoccurring customers. So, we have a pretty decent visibility into our projects coming into the Accelerator Group and remain very excited about the prospect for additional work there. On the assays, one of the great parts of Accelerator that we're very thrilled at is, we get with our customers, we get to sit down and we have an early perspective of the important markers for future clinical trials and future neurology projects. And we work there in collaboration and that work does feed our product pipeline, our kit, an assay pipeline. And as we develop assays, it helps with clinical trials. So, it's a strong flight wheel that has been great for the business.

And then you talked a little bit about competitive dynamics. I mean, recently, there was a large peer in diagnostics that also announced the breakthroughs for pTau-217, I believe. And can you elaborate how you're thinking about the competition for sort of Simoa? How Simoa differentiate itself in HD-X will differentiate itself versus what appears to be more automated high throughput systems to serve the Alzheimer's diagnostics market?

Yes. So, I think it comes down to 2 key points, and I'll expand on that. But the first point is sensitivity. The Quanterix platform at Simoa technology just has incredible sensitivity that a lot of other platforms just can't match. And the second is our ability to multiplex. And those 2 technology features really open up a lot of doors. So, first, our limit of detection really is in the single femtogram per ml limited detection. And when we look at patient samples or patients, we don't get an unreadable result. And so, we had a nice diagram we're showing that the Quanterix platform, although there hasn't been clinical data where a lot of clinical data out there with new platforms. We've put a lot of clinical data, but other platforms haven't seen that clinical data. If you give full credit to, let's say, the results, I would expect competitor platforms to perform similarly with patients that have science or symptomatic for Alzheimer's disease, and that's one portion of that market. The issue is that when you look at situations in the clinic, you're not looking at a fixed cohort of patients that have the disease. You're looking at people at the very early stages, folks that have memory concerns, but don't have amyloid pathology. And so, the clinical utility is a very different sort of situation than fixed studies. So, you have patients coming in who have a very low result may have memory concerns and those results are not readable. And so, we haven't missed a patient in any of our clinical trials. So, that's number one. Number two, 30% of the symptomatic patients that are in the pipeline or that come because they have an issue, don't have Alzheimer's disease. They have some other pathology and would benefit from a multimarker test. And so, we think there's a real opportunity there. We'll be talking about our multi-marker in a month or 2 at the AAIC conference. And then finally, progression of disease, and there was an interesting paper about APOE, recently a couple of days ago that came out. And if you're measuring folks that have suspect or history or genetic history of the disease, you need to measure someone who's early and you need to resolve changes early in the cascade. And so, as the disease progresses, we think that you're going to need sensitivity for that as a person progresses through that disease cascade. So, those are the 3 kind of main areas and why we think the Simoa platform is going to have a leadership role in Alzheimer's testing.

And if I could just squeeze one quick one in for one to that. Can you elaborate where the pricing improvement was coming from? And how should we expect the gross margin cadence through the year, specifically on pricing? Was it more RUO assays or Accelerator side?

Yes. Thanks for the question, Puneet. So, really pleased with where we landed on gross margin for the quarter. On the pricing front, we implement an annual price increase every year that went into effect at the beginning of the year. That's across all of our products. So, you see that kind of across the portfolio. On the Accelerator side, there's a little bit more bespoke project work that goes on. So, there is a little more variability there. And this quarter, the projects that we executed were very favorable from a pricing perspective and helped on the margin front. So, we feel really good about the margin. The price list helped, the revenue mix also definitely helped us this quarter. And then a lot of the fixes that we put through in the transformation also have started to take home.

Our next question comes from the line of Matt Sykes of Goldman Sachs.

Maybe the first one for me, just looking at the instrument Accelerator lab mix, how much of that do you think is due to the weaker capital equipment demand environment and customers just more willing to use the Accelerator lab? And if we do see an improvement in the capital equipment demand environment, do you expect that mix to shift back? Or are there some customers that have gotten used to the Accelerate lab services and we'll be more willing to use them? And then longer term, if that mix stays that way with Accelerator lab growing at a faster rate? What is the impact on margins going forward?

Yes. Thanks for the question, Matt. We think it's really both. On the one hand, the Accelerator product has become a really unique offering on its own. So, we think there is a value crop for it that stands on its own, and Masoud mentioned that about 80% of the customers are now repeat customers. So, we feel like that will continue to grow. Maybe those growth rates won't be as high as they are right now. But we think that value crop stands on its phone and will continue to have a really important place in our portfolio for many different reasons. On the instrument side, certainly for this quarter, we definitely saw a lot of that CapEx pullback show its way in Accelerator. So, in the short term, that might be something that continues for another quarter or 2. But our expectation would be at some point that balances out and as the funding environment eases, we had both models running together where we are still selling instruments, but we still see Accelerator as a really viable franchise.

And, Matt, the only other thing I would say is that when you think of Accelerator, you think the value of Simoa and the sensitivity that we offer. When we perform these services, they're margin accretive to the total business, meaning, there's a valuable service that we offer with valuable technology and they're priced as accordingly.

And then, Masoud, just now that we have the donanemab AdCom date for June 10, there's obviously a focus on both safety but also on tau levels and detection. What is your expectation for labeling? And if there is tau on the label, is the Certuit-AD offering sort of the preferred testing platform? Do you believe for Lilly to execute those tests that do need to get bids in order to get people on to therapy?

So, we don't have a really good sense of what the label will look like. Obviously, we're very interested to see what the outcome is going to be of that AdCom meeting. I think we're hopeful that the results are positive for patients and having another therapy or therapy option in the market, I think it's just overall good for patients. But as to the label, we don't have a sense of what that would look like. From the laboratory or Certuit-AD, we've been working very closely and collaborating with Lilly over the last several years, and super excited that it resulted in the development of this test.

And just one more from me. Just given the manufacturing changes that you've made over the past year and looking at Q1 and the consumables growth, it was quite healthy. Is there still an element of switching over to that new process that might have held some growth back in consumables? And do we see that kind of progressing from an ease of manufacturing and higher throughput through the manufacturing lines as a potential Accelerator for consumables?

Yes, that's a great question. To your point, over the last year, we've improved production by 300% since we began the transformation, we were able to produce 4 million tests annually with capacity to ramp. So, we announced all the work that we had done had come and resulted in new assays that we released in Q1. And so, now we're in the process of customer switching to those new assays. So, we probably hadn't done a lot of conversion in Q1. I mean, it's a process. So, switching from an old assay to a new assay, but we expect that conversion to ramp in Q2 and subsequent quarters.

Our next question comes from the line of Kyle Mikson of Canaccord Genuity.

Just a finer point on the near-term outlook. Just wanted to ask what the 2Q instrument placement revenue forecast could be how you're thinking about that relative to 1Q perhaps. And I know we just kind of talked about the consumable rebound, I guess, I mean, not even rebound just like the continued strength. Pull-through was decent in 1Q, a little higher year-over-year stepdown from 4Q, but how could all these updated SKUs and new assays and manufacturing kind of affect, I guess, sequential growth and improvement in consumables in 2Q just based on what you just said Masoud?

Yes. Thanks for the question, Kyle. I'll take a crack at it food stuff. So, you mentioned there's a lot of stuff going on in consumables. That's certainly a factor as we look at our Q2 as well as the sequencing of revenue for the rest of the year. If you look at our history for the last 3 years, we've generally been about 50-50, 49-51 from a revenue mix perspective, first half versus second half. This year, we think that mix is going to be more like 45% to 47% because of all the factors that you mentioned below. On the consumables side, we're still very, very early in the process of customers switching over to the new assays. So, we think that's a bit of a longer process, and it's going to take some time to really take hold. In addition, we have new assays coming out every quarter, but that base does pick up in the second half of the year, and that will also contribute to revenue for consumables. On the instrument side, it's been tough, it's been an environment for all of us. We see the pipeline there. We see the interest, but we still see a lot of time to actually convert to revenue. So, again, we're cautiously optimistic there, but it's really too soon to call how that shapes up for the second quarter. We've had other instances where we started with a good pipeline, but takes very, very long to convert. So, we're a little bit cautious there on how soon that bounces back.

And then a follow-up on that question about the AdCom, the Eluvia AdCom. Definitely, you're going to be focused on, I guess, safety and efficacy, but I know we don't know any of the topics of the questions yet for that meeting. But like are there any read-throughs to Quanterix specifically from like that we should be looking for when that takes place in June? I guess, assessing tau-baseline limited duration dosing was there important features of kind of like the donanemab. And then in the meantime, it looks like Louis going to prepare the market for launch post AdCom. What does that mean for your kind of diagnostics business in '25 and beyond?

Yes. I mean, Kyle, I think the way to think of this is that up until, let's say, a year or 2 ago, the need for testing just wasn't there. There wasn't a therapy on the market. There weren't real solutions for folks suffering from Alzheimer's disease. And now that there is a therapy and potentially hopefully soon 2 options, 2 therapies for patients, there's going to be a real need for testing. And that's kind of a wide range of tests, right? Picture yourself in an office and you have patients that are coming in that have family history but aren't exhibiting memory symptoms. They have actual memory issues or symptoms, and they're asking, hey, are these therapies right for me? And so then the need for a large infrastructure of testing for clinical trial work, validation of which tests, when, where? Is it a diagnosis prognosis, is it for monitoring? Is it post-treatment monitoring. These are all important questions, and it's not going to be one test that answers all of them. And so, we think that it's a dynamic, situation dynamic market, and we're excited to participate with what is a leading test when it comes to sensitivity. So, I have no specific comments today with regard to the AdCom other than we're hopeful that there's more options for patients.

And then finally, just on the brain-derived tau. It's interesting. Did you talk about which antibodies you're using for that? I think I saw Biolage in Thermo in the publication. And is this BD tau market going to be added to the multi-marker panel that's due to come out, I guess, in the next 6 to 12 months?

Yes. So on the BD tau, I don't recall if we've disclosed the antibodies that we're using, but it's a really interesting marker. I mean if you look at just tau in general, a large portion of that are from peripheral sources, meaning not from the brain. And for as much as you can make it more brain specific, we believe that could improve the testing, and it could improve both accuracy of the test and sensitivity of the test. So there, we're looking at BD tau in combination in a multimarker setting, one having it alone, but 2 in a multimarker setting, potentially with some of the fossil tau that we've talked about to see if we can see improvement there. Obviously, you want to be measuring the brain tau specifically and not peripheral sources for Alzheimer's pathology.

[Operator instructions] Our next question comes from the line of Sung Ji Nam of Scotiabank.

Maybe on the 5 health network collaborations, you announced earlier this year as well as the licensing opportunity, nonexclusive licensing opportunities for laboratories. Could you kind of give us an update? I know it's early on, but kind of the progress you're making there or the traction you're getting currently and kind of any feedback there early feedback from it?

Yes, Sung Ji. So, the feedback has been very positive. I think each of the partnerships and collaborations that we've signed, they're very enthusiastic about the sensitivity of the platform. I would say, immaterial revenues in Q1 that will probably be paced by adoption, adoption of the Leqembi therapy and future therapies that might come in the market. So, we're looking at that as the largest pacer. But in the meantime, there's been a lot of interest to be able to adopt the Simoa platform. We announced 5 in the first quarter, and we hope to continue with those announcements as we go into the second quarter.

And then just my follow-up is on the roughly 85% of the business or the growth driver is currently coming from neurology applications. Just kind of curious, how much of that is driven by Alzheimer's disease specifically? And then within Alzheimer's, also, do you have a sense of how much of the growth is coming from truly novel mechanisms of action or biomarkers?

Yes. That's a very, I'd say, insightful question. Right now, I would say that, it's a pretty even split. There's a large interest in Alzheimer's, but just off the top of my head here, I wouldn't say it's the largest portion of the business. I think if you look at some of the other neuro markers that we have, just general neuro markers for neuro health are extremely attractive in a lot of these tests and trials. You have to imagine these markers are ultimate proxies for brain health. And short of doing surgery and going into the brain, you need some sort of proxy of, hey, is the therapy creating an issue in the brain? Or is the patient improving? Are there clinical attributes that might not be detectable today, but I'd be able to measure something in blood that would give me a good proxy for that. And so, those tests, those trials are all ongoing, and they're not necessarily the taus that we have in the portfolio. So, a good portion is not Alzheimer's related. And I would say a growing portion are for future neuropathies, pathologies of the brain.

Our next question comes from the line of Dan Brennan of TD Cowen.

Congrats on the quarter. Just maybe zoom out, you'll spend a lot of time on danonemab and what impact that could have. But just it's still obviously very early patient volumes on new therapies and obviously, for blood-based testing with regulatory reimbursement still a lot of that to come. So, could you just give us a sense for investors if we're looking out, say, over the next 6 to 12 months, and we're trying to identify some of the key events that will give us more clarity on the initial uptake of your clinical business and maybe the competitors? Just what are those key events you think we should be looking at that will give us some important guide post how this market will begin to develop and the impact for Quanterix?

Thanks, Dan. So, well, first, I'm going to do an ultra-zoom out and say that, first, if you think of the field of diagnostics and you're a company that's interested in doing something that's differentiated in the market. And you want to have a test or a solution that's not me too. It's going to come down to sensitivity. Can you detect disease early? And that's the fundamental paradigm of health care versus sick care. Can you measure something early? And can you detect it so that you can do something about it? And Quanterix has been working on this on several disease fronts. And when it comes to Alzheimer's, we're putting this into practice because there's now therapies in the market and testing early, we believe, is going to be important. Specific to sort of market conditions and what's happening. We think that adoption is going to be of a testing is going to be paced by therapy. It's going to be paced by additional clinical work, clinical trials as we look at the limit of detection that we're at today and future clinical cutoffs. I think there's going to be more and more interest in testing earlier as we see additional readouts from clinical trials that show better efficacy for patients that are measured early. I think that's also going to be a positive sign for testing. And there are complicated problems in the clinic, which 30% of symptomatic patients have pathologies other than Alzheimer's disease, and that needs to be assessed through differential diagnosis. So, at a very high level, I would say there's a lot of research work that has to be done and that will be done in conjunction with these pharma companies through our Accelerator program. There's a lot of clinical trials that we're performing, but our partners are also performing with our platform that has to be done to progress the field. And as patients make the decision of whether they want to get under the therapy, there's going to be testing that has to happen for those patients. And we think that Quanterix is going to play a role in each of those categories.

So maybe as a follow-up then, I know you mentioned a few of the trials that are going to be reporting out for yourselves. Could you just give us a little more color on the timing around those trials? And could you also update us on kind of where things stand with the FDA?

Yes. So we talked about on the FDA front. So, we're excited about the breakthrough designation. We're working, obviously, with the FDA on the trial and the testing and the results that we're going to be providing throughout the year. And so, as we make more progress, we can provide an update. The trial work has been great. We're going to announce a multimarker data that's coming from both BioHermes and Cantata late July at AAIC. And we'll probably save some of the highlights for that meeting. But that trial work has been great. It's supported our 217 work, both BioHermes and the VMC cohort of Cantata. We've done some early publications of that, and we expect a peer-reviewed publication to be submitted in May. So, strong progress, very happy with the results. I think, I mentioned that we're measuring of the 2,000 samples that we measured in BioHermes and VMC cohorts, of which a large number of those were at normal levels, we were able to detect all of those patients. And so, I guess it couldn't be going better in terms of a clinical trial prospector both Cantata and BioHermes. More to come in July.

And maybe one for Vandana, maybe just on the gross margin solid beat. Just maybe what drove the strength? How do we think about the progression? And I know there was a question earlier on kind of the components of your revenue growth. And I know you kind of gave some qualitative thoughts, but would you be willing to kind of give us some more granularity like how we think about like kind of full year component for instruments, consumables and Accelerator projects?

Sure. Let me do our gross margin for the quarter, then we'll do revenue. So, for the quarter, there were a handful of factors that really helped on the gross margin side. Revenue mix was favorable, higher accelerated sales with individual projects that were at really good margins. We talked about the price list that we implemented at the beginning of the year as well as the fixes that we put through in the transformation. So, overall, more productive process, better cost control in the process. And then lastly, our inventory management costs were also low. Recall that Q4 is our quarter for physical inventory, and there's normally some noise that comes out of there. So, that's kind of the profile on the gross margin. There are a couple of variables that can swing it a little bit on a quarter-over-quarter basis. Revenue and project mix is a big piece of that. We're working really hard to drive instrument volumes out. And as and when that happens, that would be slightly dilutive to margins. And then the second factor there is, we're still in early stages of the customer switch to the new assays. So, there's probably some headroom that we need there in case that's longer or more expensive than we expected. So overall, really pleased with where we landed, but planning for a couple of points of availability as we go into the next few quarters. From a revenue perspective, I indicated that Q2 probably points to, call it, getting us to 45% to 47% of revenue within the first half of the year. For the second half of the year, we continue to see Accelerator have good momentum. So, even as we drive instruments up and as we try to bring that back up to where we'd like it to be, we still see Accelerator as a growth engine. And consumables, possibly a slower start in the second quarter as we finish up all of the switching activity, but definitely expecting that to do well in the second half of the year, partly from completing the switch and also partly from the new assets that we're bringing in.