Greetings and welcome to the T2 Biosystems Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Mr.

Philip Taylor, Gilmartin Group. Thank you, you may begin..

Thank you, operator. I would like to remind everyone that comments made by management today and answers to questions will include forward-looking statements. Those include statements related to T2 Biosystems' future financial and operating results and plans for developing and marketing new products.

Forward-looking statements are based on estimates and assumptions as of today and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied by these statements, including the risks and uncertainties described in T2 Biosystems' annual report on Form 10-K filed with the SEC, March 16th, 2020, and other filings the company makes with the SEC from time-to-time.

The company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law. With that, I'd like to turn the call over to President and CEO, John Sperzel.

John?.

Thank you for joining our third quarter 2020 earnings conference call. Before we begin, I want to acknowledge the ongoing pandemic and express my gratitude to our healthcare workers.

I also want to thank our team at T2 Biosystems for developing novel diagnostic products that enable those frontline workers to optimize patient care and improve patient outcomes.

On today's call, I'll start with a review about performance during the third quarter, including our significant revenue growth, and then discuss the progress made toward each of our three corporate priorities.

John Sprague will discuss the detailed third quarter financial results, I will make some closing remarks, and then we'll open the call for questions and answers.

The T2 Biosystems team generated total revenue of $5.2 million in the third quarter of 2020; an increase of 213% compared to the prior year period and realized the highest quarterly revenue in company history. Product revenue during the third quarter was $3.8 million, an increase of 219% compared to the prior year period.

Total revenue growth was bolstered by the launch of our new COVID-19 diagnostic test, the T2SARS-CoV-2 Panel, I'm pleased to report that sales of our novel sepsis panels T2Bacteria and T2Candida increased by 70% and 38% respectively, compared to the prior year period, further demonstrating the significant correlation between COVID-19 and sepsis.

The pandemic has served as a catalyst for T2 Biosystems to increase our installed base of instruments in U.S. hospitals. Diagnostic testing has taken center stage during the past year and it is clear that rapid and accurate diagnostic tests are needed to optimize patient care.

During the third quarter, we sold a record 32 T2Dx Instruments, an increase of 167% compared to the prior year period, including 28 instruments sold in the United States.

We believe this larger installed base of T2Dx Instruments, initially running T2SARS-CoV-2 Panel provides an opportunity to accelerate the adoption of our sepsis panels, T2Bacteria and T2Candida. Regarding our outlook for the remainder of the year, we're increasing the low end of our full year 2020 revenue guidance.

We now expect full year 2020 total revenues of $19 million to $20 million, including product revenues of $13 million to $14 million, and research and contribution revenues of $6 million. We expect to sell at least 60 T2Dx Instruments in the United States during the second half of 2020.

The current pandemic has created the potential to accelerate the adoption of our technology, while staying true to our mission; to fundamentally change the way medicine is practiced through transformative diagnostics that improve the lives of patients around the world.

To be very clear, our mission remains focused on success sepsis, which even before the pandemic caused the death of nearly 270,000 people in the United States each year, and 11 million people globally. A written study conducted by researchers from the U.S.

Department of Health and Human Services, estimates that the cost of care for sepsis patients in hospitals and skilled nursing facilities in 2019 was more than $62 billion, a marked increase from previous estimates.

As we've mentioned before, the identification and treatment of sepsis is a race against time, as each hour of delayed targeted therapy can increase mortality rates by up to 8%.

T2 Biosystems is the only company with FDA cleared products able to identify sepsis causing pathogens directly from whole blood in three to five hours, without the need to wait days for a positive blood culture.

Our novel sepsis products and potentially lifesaving technology, including the T2Dx Instrument, as well as the T2Bacteria and T2Candida and T2Resistance Panels aid clinicians in identifying sepsis-causing pathogens, potentially achieving faster targeted therapy, reducing the use of unnecessary broad spectrum antibiotics, and helping to prevent and combat growth in antimicrobial resistance.

To get our traction in the third quarter and position the business for long-term success, we remain focused on three corporate priorities, we set at the beginning of the year, accelerating our sales, improving our operations, and advancing our pipeline.

I'm pleased without details on our progress within each area through the first nine months of 2020. Let's start by addressing our first priority, accelerating our sales by prioritizing adoption and increased test utilization. At the beginning of 2020, we shifted our commercial strategy to focus our resources on the U.S. hospital market.

At the same time, we set an ambitious target to double the annual sepsis test utilization among U.S. installed base of T2Dx Instruments from $50,000 to $100,000. Consistent with our objectives, the overwhelming majority about third quarter product sales came from the U.S.

market and we continue to pursue our target of increasing sepsis test utilization. The adoption of our T2Dx Instruments by U.S. hospitals during the third quarter was remarkable. We served 28 T2Dx Instruments during the third quarter, increasing our U.S. installed base to 69 T2Dx Instruments.

Fueled by the launch of our T2SARS-CoV-2 Panel, we achieved an astounding 383% increase in U.S. product sales revenue during the third quarter compared to the prior year period. On August 31st, 2020, we announced the U.S. Food and Drug Administration emergency use authorization of our COVID-19 molecular diagnostic test, T2SARS-CoV-2 Panel.

This new test is having a significantly positive impact on our business, providing a catalyst for increased sales of T2Dx Instruments in the United States, which are being pre-positioned for the potential future adoption of our existing sepsis products. This increased demand has allowed us to shift our U.S.

commercial model from the previous reagent rental model, in which we placed T2Dx Instruments at customer sites to an instrument purchase model in which we sell instruments to customers, along with service contracts and obtain large upfront purchase orders with contracted minimum volume commitments and standing orders for T2SARS-CoV-2 Panel.

In fact, each of the 28 instruments we shipped to U.S. hospitals during the third quarter was served in the form of a capital sale.

I'm thrilled to inform you that we also executed two multi-state multi-hospital IDN agreements during the third quarter, providing numerous hospitals within those networks direct access to our potentially lifesaving technology. To drive additional T2Dx Instrument sales, we have begun to increase the size of our U.S.

sales team during the fourth quarter and continue to remain mission-focused on targeting U.S. hospitals to support the significant increase in our T2Dx Instrument installed base, we're also increasing the number of direct service resources to support customer installation and implementation.

The process of instrument delivery setup, validation, implementation, and migration to routine testing was accelerated to less than one month from a historical average of nine months. We're experiencing unprecedented demand from U.S. hospitals for our T2Dx Instrument and T2SARS-CoV-2 Panel following its recent commercial launch.

To put the COVID-19 testing opportunity for T2 Biosystems into perspective, annual utilization for a single T2Dx Instrument running T2SARS-CoV-2 Panels can approximate $600,000 annually from a single instrument.

As hospitals look to purchase and implement our technology, a key consideration on our part is that their decision to acquire a T2Dx Instrument is not solely focused on COVID-19. But they also see value in our platform's ability to address another hospital challenge, the ability to manage and improve patient care as it relates to sepsis.

Recent data has demonstrated that one in five hospitalized patients that are positive for SARS-CoV-2 are also positive for additional Co infections, many of which are super infections and all of which may lead to sepsis, further strengthening the value that we can bring to these U.S. hospital customers. U.S.

hospitals are also experiencing unprecedented demand for COVID-19 molecular diagnostic test. And because many diagnostic test manufacturers are unable to supply sufficient quantities of tests, many hospitals are requiring multiple testing platforms in an effort to meet growing testing demand.

We believe our ability to guarantee our contracted customers with supply and delivery of both T2Dx Instruments, and their specific required quantities of our T2SARS-CoV-2 Panel is a significant competitive advantage.

In thinking about the durability of the COVID-19 testing landscape, we understand that a vaccine is likely to be approved in the near future. We also understand that vaccines may face obstacles and headwinds like efficacy, limited availability, and consumer resistance. As such, we believe the U.S.

hospital demand for COVID-19 molecular diagnostic tests will remain strong through at least 2020 2021. It's important to remember that our objective during this COVID-19 pandemic is to significantly increase the U.S.

installed base of T2Dx Instruments to meet the demand for high quality COVID-19 molecular diagnostic test and to leverage this larger installed base of instruments to expand the use about potentially lifesaving sepsis products well into the future. On September 4, 2020, we announced that the U.S.

Centers for Medicare and Medicaid Services extended the new technology add on payment for end cap for our teacher bacteria panel for an additional year to fiscal year 2021. With this addition, U.S.

hospitals treating Medicare in-patients with sepsis can continue to receive an additional reimbursement of up to $97.50 for the T2Bacteria panel for eligible patients. We believe this reimbursement decision will potentially be a catalyst for the adoption of our T2Bacteria battle in the upcoming year.

Moving to our second priority, improving operations by prioritizing cost of goods and expense reductions. During the first half of 2020, we made significant progress in reducing our cost structure.

We reduced headcount by 20%, consolidated our facilities, and reduced our real estate footprint by 22%, and aligned investments with our corporate priorities. We implemented a number of initiatives to reduce the manufacturing cost of our products, primarily focus on our sepsis test panels.

We're now beginning to see the benefit of these improvements in our financials in the form of reduced SG&A expenses and reduced cost of product revenue compared to the prior year periods.

In addition, the increased sales volume associated with our new T2SARS-CoV-2 Panel is improving overhead absorption and allowing us to leverage our supply chain and implement additional improvements. During the third quarter, we rapidly increased production output of our T2Dx Instruments and our test panels to meet the demand from U.S. hospitals.

Our goal is to deliver at least 60 T2Dx Instruments in the United States in the second half of 2020, which represent a greater than seven-fold increase over the prior year period. In addition, during the third quarter of 2020, we manufactured approximately 70,000 test, also greater than a seven fold increase over the prior year period.

We plan to further increase our test manufacturing capacity to approximately 300,000 tests per quarter by early 2021. To support these expansion plans, we are hiring, manufacturing, quality control and quality assurance personnel and taking all necessary measures to secure our supply chain.

As a reminder, each T2Dx Instruments has the capacity to consume up to 60 T2SARS-CoV-2 panels per day, depending on workflow. That coupled with our customer standing order process enables us to accurately calculate and forecast testament based on our instrument installed base and plan manufacturing schedules accordingly.

Moving to our third priority, advancing our pipeline. By prioritizing programs under the milestone based product development contract awarded by the US government or BARDA in 2019.

The pilot contract contains a base phase in six options totaling funding of up to $69 million to develop a biotech panel, next generation instrument and expanded sepsis panel. We recently completed all milestones in the base phase of the contract, on schedule and on budget.

The progress by our development team led by this decision to exercise option one of the contract valued at $10.5 million, which was announced on September 30, 2020. As a reminder, the contract terms require that T2 Biosystems incur expenses and then submit them about each month for reimbursement.

We do BARDA's decision to exercise option one as a positive development, reinforcing our shared objective to improve the diagnosis and management of bloodstream infections. And we believe the new products will be highly differentiated and highly disruptive.

We remain on schedule to develop a biothreat panel, as well as the next generation instrument and expanded sepsis panel. We believe the next generation instrument and expanded sepsis panel will be a major leap forward for direct from blood diagnostic testing.

It is being designed to potentially cover up to 99% of all blood borne infections and detect more than 250 species, including pan-Gram positive and pan-Gram negative results in addition to all blood borne antibiotic resistance threats, identified by the US Centers for Disease Control and Prevention, or CDC.

This pandemic has highlighted the need to address society's vulnerability to emerging pathogens and raise awareness of the impact that growing antimicrobial resistance may have on our ability to fight future pandemics. We believe our current and future products can play an important role in addressing these global threats.

Now I'll turn the call over to John Sprague to detail the third quarter financials.

John?.

Thank you, John. Total revenue for the third quarter of 2020 was $5.2 million, an increase of 213% compared to the prior year period. Product revenue for the third quarter of 2020 was $3.8 million, an increase of 219% compared to the prior year period, driven by increased test panel and instrument sales.

Research and contribution revenue for the third quarter of 2020 was $1.5 million, an increase of 198% compared to the prior year period, driven by increased activity under the BARDA contract.

Costs and operating expenses for the third quarter of 2020 were $15.8 million, an increase of $1.9 million compared to the prior year period, driven by increased cost of product revenue from increased sales and offset by lower research and development and selling, general and administrative expenses.

Net loss for the third quarter of 2020 was $11.3 million, $0.08 per share, compared to a net loss of $14.2 million, $0.31 per share in the prior year period. Total cash, cash equivalents, current long-term marketable securities and restricted cash for $61.8 million as of September 30, 2020.

We expect working capital will increase compared to prior periods as receivables and inventories increased to higher sales.

To reiterate the guidance John provided earlier, we now expect fourth quarter 2020 total revenue to be between $8.7 million to $9.7 million, including product revenue between $7.2 to $8.2 million and research and contribution revenue of approximately $1.5 million.

In the U.S., we expect a minimum of 32 T2Dx Instrument will be sold in the fourth quarter of 2020. Thank you. And back to John Sperzel for closing remarks..

Thank you, John. The third quarter was transformational for T2 Biosystems. As we continue our growth as a commercially driven customer focused company. We achieved record sales during the quarter, grew our U.S.

installed base of T2Dx Instruments by nearly 70%, saw strong demand from US hospitals for our COVID-19 molecular diagnostic test, and have commitments from customers to adopt our products that positioned as for long-term success. We entered the fourth quarter with strong demand for our products.

And we're excited about the future of T2 Biosystems and confident in our ability to lead the molecular diagnostics sepsis testing market. We look forward to providing updates on our progress in the future. We'll now open it up to questions.

Operator?.

Yes, thank you. [Operator Instructions] Our first question is from Max Masucci with Canaccord Genuity. Please proceed..

Thanks for taking the questions, and congrats on the quarter.

Just with the recent resurgence in COVID-19 and if we examine the demand trends you're seeing in the hospital lab setting in particular, can you just highlight any unique or key assumptions embedded into the implied Q4 guidance?.

Hi, Max. We are seeing strong demand as I mentioned both for the instrument and for the T2SARS-CoV-2 Panel. One of the ways we differentiate ourselves from our competitors is by making a commitment to deliver a specific volume of COVID-19 tests.

And we're able to deliver on this promise because we can accurately calculate the test utilization of our installed base, and scale our test production accordingly. And we also remain laser focused on our long-term customer target, which is U.S. hospital systems.

I've witnessed a number of diagnostic suppliers try to chase every single testing opportunity out there only to disappoint their core customers by placing them on almost immediate backorder. So others deliver on our promise, establish strong relationships with these hospitals.

So we're trusted partner, which will lead to a better potential in our sepsis products moving forward..

Great. And then a multi-part question here.

Can you just specify how many placements that came from the two multi hospital contracts? And then just generally, how is your strategy of targeting multi hospital systems playing out in recent weeks versus in early July, when you just launched your COVID-19 test? I mean here in November, do you find it easier to get in the door with these types of customers?.

Less than half of our 28 US instrument sales came from those two hospital integrated delivery networks. And our strategy, going into the launch without COVID test was to target both individual hospitals as well as hospital systems or integrated delivery networks. So we're really pleased with the execution that we had during the third quarter.

And we'll continue to follow that same approach during the fourth quarter.

In terms of our ability to get access to these accounts, a lot of the sales that we're doing, we're using technology, we're having zoom meetings, go to meetings, we're using email, we're having telephone calls, because that's what our customers prefer in the current environment. We're prepared to do the same thing during Q4.

I mentioned, we're going to add to our sales team so we can accelerate things. And we'll continue to do so, so long as hospitals prefer to work with us this way..

Great. Maybe one more quick one.

Can you just give us a sense for how many of your new placements in Q3 signed on for multi-year consumables contracts? And if there's a certain percentage of these contracts that include T2Bacteria and T2Candida as well?.

Yeah, I would say that most of the customers, in fact, all of them are signing a contract. I wouldn't get into specifics about whether they're one year or longer than one year contracts. They all have committed purchases. They've all paid capital for the instruments. They're all on a standing order process. And we feel really good about that.

The instruments that were sold in Q3 are entirely consumed with COVID testing. So the plan and our strategy is to subsequently when space is allowed on those instruments convert some of that testing through sepsis testing, but the customers right now are fully adopted the COVID test..

Great. Thanks for taking the question..

Thank you, Max..

Our next question is from Puneet Souda with SVB Leerink. Please proceed..

Yeah. Hi. Thanks, John. So, first question is a bit of a clarification. You obviously have the T2SARS COVID to test and then there are subsequent tests that are being conducted if sepsis rule out, I just wanted to clarify if you can provide contribution from each of those in the quarter.

I just wanted to clarify, if the COVID -- it appears that the COVID-19 T2SARS-CoV-2 test is driving that, but if could you also give us a sense of how you would sepsis rule outside?.

Sure. Our sepsis tests were up as I mentioned in the prepared remarks, something like 70% and close to 40% year-over-year Q3 2020 versus Q3 2019. So we feel good about the continued progress of our sepsis business. Those are global figures.

In terms of COVID, the majority of our sales in the US during Q3 was COVID driven, exactly what we expected, because our strategy again is to drive significantly increases of our installed base of T2Dx Instrument that will later serve as a natural customer to go evolve into sepsis testing..

Okay. Okay, great. And then in terms of that evolution of conversion from COVID to continued increase of sepsis test, to walk us through maybe your confidence in some of the things that you're seeing in some of these early accounts where at one point COVID is hopefully is going to decline.

Obviously, you're seeing a strong growth here in the near term, but as we go into 2021 latter half, hopefully the sepsis volume should increase, but I just want to clarify, if you could give us a sense of how that transition is likely to happen.

And what are some of the things you're seeing in these early accounts, so as to see a long-term uptake of sepsis and Canada product?.

Sure. That's a great question, Puneet. First, it's important that we target the right customers, which is why our focus is on U.S. hospitals, because they are our sepsis targets. And before we sell a T2Dx Instrument for COVID-19 testing, we're pre-selling our unique sepsis solution.

And this is important part of the sales process, which we refer internally as COVID driven instrument sales. Second, when we talk to hospitals prior to COVID, most said sepsis was a top priority. And we believe that remains a top priority even in the midst of the pandemic. As I mentioned earlier, data from the U.S.

government indicates that the estimated annual cost of sepsis to our healthcare system is $62 billion, in the 10 months, since I joined T2 and became CEO, that estimate has risen from $27 billion to $41 billion to $62 billion over 10 months. So it's not getting better.

Finally, we have a clear strategy to transition customers from COVID testing, when demand subsides. And as you said, we hope that it does through sepsis testing. And the launch of our T2SARS-CoV-2 Panel has been a vehicle to convert one of the most challenging stakeholders in the hospital, and that is the hospital laboratory.

So with the lab as a T2 Biosystems to advocate or a champion, if you will, we plan to access other key hospital stakeholders within the sepsis management process, for example, clinicians, and recent data has shown that one in five hospitalized COVID-19 patients that are also positive, -- I'm sorry, that that are also positive for additional coinfections, many of which are super infections, and all of which can lead to sepsis.

This strengthens the value of what we have and what we can bring to hospitals..

Okay. That's great.

And on the investments that you're doing here in the fourth quarter, wasn't sure if you already provided the sales team number as to what it should increase by in the fourth quarter? And could you walk us through what are your thoughts in terms of additional investments here to sustain the growth into -- maybe into 2021?.

Sure. I'm going to take those in reverse order, Puneet. So, first of all, we had a really good book-of-business ending Q3 and rolling into Q4. And that's the nature of a razor-razor blade business. I mean, we're in the business of selling tests and providing information to customers, so they can make decisions on how to handle the care of the patients.

The instrument is simply a vehicle. That's why I tried to give some context about the potential value of a fully utilized instrument for COVID testing up to $600,000 annually. And a little bit of context about where we're trying to take our installed base of instruments that are used solely for sepsis.

So the nature of a razor-razor blade business is the more instruments we have fully functioning going into the next quarter, understanding orders committed purchases, the better our prospects are the less new customers we have to go out and win. So that's all part of our commercial strategy.

In terms of the team, we didn't disclose the number of people because it's more than just a single type of person. We're adding sales representatives. We're adding -- we expect to add medical science liaisons going into 2021. We're adding field service representatives.

We're adding sales implementation people so it's a -- it's not just a single type of person and we didn't describe the breakout of those..

Okay. And then last one, if I could squeeze in in terms of the BARDA contract good to see the progress there.

But overall, as you look at this offering venue expansion offering, what's your timeline here for potential regulatory approval and potential reimbursement as well?.

So the BARDA contract, as we sit here today runs through 2024. And it includes 510(k) submission. It does not include the timing for which we get a 510(k), assuming we do. As I said, on the last call, I think there's an opportunity to improve that schedule. It obviously has to be aligned with funding from the U.S.

government that those discussions have not occurred yet, because the government's been pretty consumed with the current pandemic. But I anticipate that those will and look forward to giving updates on our progress there as we go forward..

All right. Great. Good to see the progress. Thank you..

Thanks, Puneet..

Our next question is from Mark Massaro with BTIG. Please proceed..

Hey, guys. Thanks for the questions and congrats on the record quarter..

Thank you, Mark..

My first question is on what percentage of the record 32 placements went to hospitals that are new to T2 versus placing existing customers?.

Overwhelming majority..

To overwhelming majority to new..

To new accounts, yes..

Okay..

I can tell you that the two IDMs the hospital systems, the company had been trying to get into for years, literally. So we feel really great about that..

Okay.

And do you think the two large IDMs likely have been the number of systems they need to handle the COVID crisis through 2021? Or do you see additional potential there?.

One of them does have enough instruments to handle what they need from T2 Biosystems. The other one, I think there's potential to expand..

Okay. And then I know you've talked about increasing annuity per system as an important goal for the firm.

How does it track here in Q3? And can you comment on your goal to continue to hit $100,000 at the end of the year?.

Yeah. So we're working through that Mark. We saw an uptick in our sepsis panels. So we're continuing to see increases in our installed base of sepsis instruments and the annualized utilization. What we didn't want to do is dump all the COVID into that number. I mean, it would look fantastic. It would be way north of $100,000.

And we might feel great about that. But that's not the way we laid it out at the beginning of the year. We laid that number out without the benefit or without the foresight of a COVID pandemic. So we're trying to keep those completely separate. We're continuing to see an increase in our sepsis panel utilization.

It's not as fast as we had hoped, because we've seen some headwinds of getting into customer accounts and driving our sepsis business, but we're pleased with the progress..

Okay. Understood. And then, as we think about the 32 placements this quarter, maybe 32 or more, or roughly 30, next quarter. Obviously, that's really strong demand, you know, as we think about fine tuning our models for next year.

Do you think 30 is a decent place as a launch off number? Or, you know, can you give us a sense for your funnel and how you see demand hitting your business next year?.

Well, as I was saying before, the number of instruments that we have in customer sites, running patient samples, as of December 31, will be a really important metric that you can jump off point, if you will, to start the year, because that will drive demand for that -- drive demand forecast for that installed base.

We didn't plan to get into guidance for 2021. I mean, we would typically do that when we announce our full year 2020 earnings early in 2021, where we'd lay out priorities and set guidance..

Okay. Understood. Last question from me, if I can.

Can you comment on how the Medicare NTAP might be playing into the sale process in maybe driving bacteria panel revenue? And maybe if it's not having an impact, can you comment on what your expectations might be over the coming quarters?.

It's not having an impact yet, Mark. And I think that's one of these headwinds of COVID where customers right now are fully consumed in their own environment, dealing with COVID patients. So they don't have a lot of bandwidth to address new technologies, including sepsis, even considering how big of an issue it is.

So we anticipate going forward that that's going to be important. As customers get control of this pandemic, whether it's through vaccine, better therapies, more diagnostic tests, we think they're going to have increased bandwidth. And then, we're going to be there to address sepsis with them, and NTAP should be an important part of that..

Okay. That's it for me. Thanks, guys..

Thank you, Mark..

Thanks, Mark..

Our next question is from Steve Brozak with WBB Securities. Please proceed..

Follow these are grim times. Thank you for providing, should I put it, a positive note. Congratulations on obviously, everything that you've done. Just one quick question and I'll hop back into the queue.

CMS has been tracking a grim number where those patients that especially the elderly patients, that have COVID and then have subsist that 60% of them are on the elderly side are succumbing within a six month timeframe with both.

Can you tell us how this would react to your modeling and specifically how you would look at it in being able to address the future need for quick steps this point of care detection? Thank you..

Thank you, Steve. I hadn't seen those statistics. But I can say, as someone who's battled a life threatening illness, those are disheartening statistics. On the business side, I'd say those figures reinforced the link between COVID-19 and sepsis. They also underscore the need for rapid, accurate, detection of sepsis causing pathogens.

They should highlight why hospitals should implement a technology like ours, and frankly, why the U.S. government should support technologies like ours as well, that can address both sepsis and COVID. I think we saw the link very early between those two. And it seems these statistics are not getting better..

So I'm -- I guess, unfortunately for these patients, but fortunately for the fact that there's that -- there's now a way of going out there and addressing this -- this issue right away, that obviously strengthens the case for adoption of T2, right, I guess that's a self-evident statement?.

Steve, I would say this is -- this is also reinforcing why we're laser focused on critically ill hospitalized patients, we are not chasing other market opportunities. There are many out there, many competitors are chasing them. We exist to treat critically ill hospitalized patients we're staying true to that. There's a link between COVID and sepsis.

And we're going to do everything that we can to get into as many hospitals as possible to help those patients. So they have better outcomes..

Great. Well, thank you for taking that question. And, again, obviously, congratulations on the progress that you've made this quarter and into the future..

Thank you, Steve..

Our next question is from Ben Haynor with Alliance Global. Please proceed..

Good afternoon, gentlemen. Thanks for taking the questions. First off, for me on the install delivery resources.

You know, it's actually quite impressive progress that you've made going from a historical average of nine months down to a month, the resources you're adding, I mean, is that going to, take it down to a week or two weeks? Or is it just trying to kind of keep up with the install demand that you have the incoming sales.

I don't think that we should anticipate reducing that to week, we're obviously going to do our part to make it as efficient as possible. I think a month's time, from closing a sale to having patient samples run on a routine basis is probably about as good as we could expect. It's been a monumental effort by our team.

It's been super impressive to see them execute like that. And we think we just need more resources so that we continue to provide great customer support. Because how we do in this pandemic is going to set the stage for how well we've satisfied customers and how open they are to adopting our sepsis panels.

This is a moment for T2 to be in front of these customers and be a good partner..

Okay. That's a good point. And then, you know, just with the fact that you're hiring this people trying to create a good experience.

Yeah, the 32 systems they expect to sell this quarter, it sounds like you have pretty good visibility and they get in there, if I'm hearing you, right?.

Well, we're sitting here on November 4, so we still have a ways to go in the quarter. But we've made -- we've made really good progress..

Okay. Fair enough. And then lastly, for me, let's say you do hit the guidance, where you're at right now, in terms of the system sales, and then, the consumables that are associated with those.

Can you kind of give us a sense of what you think gross margin could look like in Q4, assuming those figures that in embedded in guidance or achieved?.

Something, I would say Ben is that it just for context, the revenue guide for the full year 2020, that we've given total revenue between $19 million and $20 million that's an increase over the prior year, somewhere between 129% and 141%. So that guide is a substantial increase over 2019.

And as we mentioned earlier, the instrument sales that we expect in the second half of the year, because they're all occurring in the second half of the year in the U.S., is also a substantial increase over 2019. We're not guiding on product gross margins, we typically don't do that. So hopefully, that's enough context for you..

Okay. Fair enough. I'll leave it at that. Thanks a lot for taking the questions, gentlemen. .

Thank you, Ben..

Thank you..

We've reached the end of the question-and-answer session. I'd like to turn the call back over to John for closing..

I'd like to say thank you for joining our third quarter 2020 earnings conference call. We appreciate your support and look forward to updating next quarter. Thank you very much..

Thank you. This concludes today's conference. You may disconnect your lines at this time. And thank you for your participation..