Quotient Limited (QTNT) CEO Franz Walt on Q1 2021 Results – Earnings Call Transcript

Quotient Limited (NASDAQ:QTNT) Q1 2021 Earnings Conference Call August 3, 2020 8:00 AM ET

Company Participants

Peter Buhler – Chief Financial Officer

Franz Walt – Chief Executive Officer

Conference Call Participants

Josh Jennings – Cowen & Company

Brandon Couillard – Jefferies

Sung Ji Nam – BTIG


Greetings and welcome to the Quotient Limited First Quarter Fiscal Year 2021 Financial Results 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’d now like to turn the conference over to your host Mr. Peter Buhler, Chief Financial Officer for Quotient Limited. Thank you. You may begin.

Peter Buhler

Thank you, Melissa. Good morning everyone and welcome to Quotient’s earnings conference call for our first quarter fiscal year 2021. Joining me today is Franz Walt, Chief Executive Officer of Quotient. Today’s conference call is being broadcast live through an audio webcast and the replay of the conference call will be available later today at www.quotientbd.com.

During this call, Quotient will be making forward-looking statements including guidance and projections as to future operating results and expected development and commercialization time lines. Because such statements deal with future events, actual results may differ materially from those projected in the forward-looking statements.

Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements can be found in Quotient’s filings with the U.S. Securities and Exchange Commission, as well as in this morning’s release. The forward-looking statements including guidance and projections provided during this call are valid only as of today — today’s date and Quotient assumes no obligation to publicly update these forward-looking statements.

With that, I’d like to turn the call over to Quotient’s Chief Executive Officer, Franz Walt.

Franz Walt

Thanks, Peter, and good morning, everyone. During my remarks, I will discuss the significant progress we have made during the first quarter of fiscal year 2021. I will dive into three target areas. First, I would like to provide updates on the COVID-19 antibody test; followed by MosaiQ’s potential new applications and last but not least, an update on transfusion diagnostics.

It goes without saying that this is an unprecedented time for everyone, but we reacted to the pandemic and in record time, we developed a high-quality COVID-19 antibody test that was CE marked on May 1 with 100% sensitivity and 99.8% specificity as outlined in our IFU. I’m very pleased that the high performance of the test has been reconfirmed by two independent external studies in Madrid, Spain and in Paris, France. The studies concluded that the important parameter specificity was at 99.8% and 100% respectively.

We pursued a rigorous testing program that included outside laboratories in both France and Spain working with real-life clinical samples. We were thoughtful and deliberate with the technical design of our test including the antigen that are utilized in our microarrays. As a result, we believe we have one of the best-in-class products on the market that detects both IgG and IgM antibodies in serum and plasma, obtained through venous blood draw.

Our test is highly sensitive and can detect antibodies very early in the zero conversion process already seven-day positive PCR test. In addition, we signed 10 commercial customer contracts across Europe and the U.S. for the MosaiQ’s COVID-19 antibody test, all of this with minimal commercial efforts and only three months after starting to work on the test itself.

With the development of this test and signing of the contract, we could prove two things. First, the flexibility and power of the platform in our R&D organization; second that customers are eager to take our innovative technology into their labs based on the very high-performance characteristics.

We communicated previously that we think that the technology is applicable beyond transfusion diagnostics, which was proven with the rapid development of the COVID-19 antibody test. To capitalize on this strong momentum and interest in our platform, we decided to accelerate our work in areas other than transfusion medicine and we are now in active discussions to explore major development opportunities for MosaiQ. The intention behind reaching out to these key players is to explore potential collaboration opportunities to help guide further development of in-vitro diagnostics products designed specifically to leverage the technical and operational benefit of the MosaiQ system and bring to market products in Ortho diagnostics area.

Regarding the transfusion diagnostic menu, we’re delighted that after pandemic-related restrictions, we could restart all three field trials in Europe for the expanded immunohematology microarray. The trials are progressing as planned and we anticipate that we can file for a CE mark in Q4 calendar year 2020.

We communicated earlier this year that we anticipated a delay on all field trials for one quarter which we can now confirm for Europe. But unfortunately, field trial activities in the U.S. are still impaired due to pandemic-related circumstances. We therefore cannot start field trials and expect an additional quarter delay in the U.S. based on the information we have available today.

As far as it relates to the U.S. 510(k) approval for the MosaiQ instrument and initial SDS microarray, we expect to achieve the approval before the end of the year. I would like to draw attention to the fact that Europe with approximately $21 million donations per year is the larger market when compared to the U.S., which is approximately $12 million donations per year.

Last but not least, I’m very happy to report that we are fully back on-site in Switzerland since May. Everything internally is progressing as normal and we also did not see any slowdown in Alba by Quotient reagent sales due to the pandemic. In contrast, we are delighted to report a strong 8% sales growth for the Alba by Quotient business.

And with that I would like to turn it back to Peter for the financial update.

Peter Buhler

Thank you, Franz. Fiscal first quarter product revenues were $8.9 million, an increase of 9.2% from last year’s first quarter. Alba by Quotient sales for the quarter are reported at $8.8 million, a year-over-year increase of 7.9%. Sales to OEM customers increased by 7.8%, while direct sales increased by 8.1%. Within OEM sales, we see a particularly strong increase in sales to customers in the U.S.A.

Sales of MosaiQ COVID-19 antibody tests are reported at $111,000. 50% – 69% of our sales are related to standing orders. Gross margin on product sales was 39.3% in the first quarter of financial year 2021 compared to 44.1% last year. The deterioration is primarily due to the COVID impact and related lower production levels at our manufacturing site in Edinburgh and therefore lower overhead absorption.

In the first quarter, we recorded an operating loss of $19.7 million, compared with $18.4 million last year. Operating expense were $23.2 million, an increase of $1.2 million over the prior year. Sales and marketing costs were $2.2 million, a decrease of $300,000, mainly due to lower travel costs. Research and development expense were $11.4 million, a $200,000 decrease year-over-year, driven by lower external spend and despite the restart of the IH field trials.

General and administrative expenses were $9.5 million compared to $7.8 million in the prior year, an increase of $1.7 million, driven by significantly increased legal costs related to the auto arbitration, other consulting fees and increased insurance costs. G&A costs include stock compensation expense, which decreased from $1.2 million to $1 million.

In the first quarter, depreciation and amortization were $2 million versus $3 million in the prior year. The decrease in depreciation is due to assets in Eysins that are now fully depreciated. Net other expense was $5.2 million – $5.7 million compared with $5.1 million in the first quarter last year. Net other expense consisted of interest expense of $5.9 million and a $200,000 foreign exchange gain compared to interest expense of $6.1 million and the $1 million foreign exchange gain in fiscal 2020. Overall, our net loss for the quarter was $25.4 million or $0.32 per ordinary share compared with $23.6 million or $0.36 per ordinary share in the prior year’s first quarter.

Net cash used in operating activities totaled $24.8 million in the first quarter of fiscal 2021 compared with $25.1 million in the prior year first quarter. Cash used in operations in the first quarter include interest paid on our outstanding debt of $8.7 million. The use of cash decreased slightly despite higher operating expense due to a lower increase in working capital. Capital expenditures in the first quarter of fiscal 2021 was $800,000 compared with $1.1 million in the prior year. The majority of our CapEx in the first quarter of fiscal 2021 related to the acquisition of MosaiQ Instruments.

Moving to the balance sheet, available cash and short-term investments at March 31 2020 were $94.5 million compared to $90.7 million one year ago. An additional $9 million of cash is held in restricted reserve accounts under the terms of the borrowing facility of $145 million and our Eysins facility lease. At March 31 accounts receivable totaled $6 million and inventory totaled $21.3 million. Both balance sheet items increased compared to prior year. The increase in accounts receivable is related to timing of customer payments, while the increase in inventory is related to MosaiQ.

We have not accrued any loss in relation to the arbitration against Ortho as we consider an unfavorable outcome is not probable. Liabilities includes the 7% cumulative redeemable preference shares acquired by Ortho in 2015 for a total amount of $20.7 million at June 30 2020.

Moving to guidance. For fiscal 2021 we maintain our full year revenue from product sales of our Alba by Quotient reagent in the range of $32 million to $34 million. No milestone-related other revenues are expected. For the second quarter of fiscal 2021, we expect sales of Alba by Quotient reagent between $7.5 million and $8 million.

For COVID-19 antibody test, we are not in a position to provide any sales guidance due to the inherent uncertainties of this new market. We maintain our forecast for capital expenditures in the range of $5 million to $10 million and the cash used in operations of approximately $5 million to $6 million per month. Low guidance is provided on operating loss, given we are currently unable to forecast MosaiQ revenues related to the COVID-19 antibody test.

With a cash position of $94.5 million at the end of June, we will be able to finance our operations well into 2021. We are still not in a position to forecast how much cash did COVID-19 antibody test will generate, we will continue to monitor our cash position very closely.

With that let me now turn the call back to Franz.

Franz Walt

Thank you, Peter. Looking forward now I will dive into the three target areas once again. First, I would like to share upcoming plans on the COVID-19 antibody test followed by MosaiQ’s potential new applications and finally our view on what’s to come in transfusion diagnostics. To start, we expect the FDA emergency use authorization for COVID-19 antibody test and MosaiQ instruments soon. We had to wait for two months to get a reviewer assigned to our dossier.

Compared to some of the other manufacturers is in our case the instrument not yet FDA approved and therefore the review includes not only the test, but also the instruments and the software. We answered of course all the questions the reviewer had. These were all routine questions and we are now waiting for the EU approval. It’s important to bear in mind that we could nevertheless signed already three U.S. customer contracts and the instruments are shipped already.

No one knew how COVID-19 antibody testing would evolve. What we have observed so far is that in the initial base the focus has been more on testing for the virus PCR testing. We anticipate however that with the emergence of vaccines and better understanding of immunity antibody testing will likely become more prevalent. As we have 10 high potential customer equipments with — equipped with our technology, we are very likely to profit from a potential increase in demand.

In addition, we are currently developing a COVID-19 semi-quantitative antibody test to help with clinical guidance. We expect to make it available in the next few months. Quantification is important in view of the anticipated vaccine launches. Qualitative tests provide a positive or negative result a semi-quantitative or quantitative test provides more information about the quantity of antibody in the sample. We know there are certain concentration of antibody in particular to the spike antigen relate to neutralizing antibody capability. Therefore, above a certain concentration, we know that this neutralizing antibodies are present, and this will most likely be associated or be associated with some form of immunity.

With this type of data, we can begin to establish if vaccines and individual vaccinations are effective. We understand that all tests currently on the market are qualitative tests, but some provide relative strengths of signal data. We believe that the semi-quantitative assay that we are working on is a step forward.

On top of that, we also know that our excellent team of scientists were ahead of the game when we specifically selected an antigen to detect antibodies to the spike protein, which we anticipated were most likely to be associated with neutralizing antibodies and vaccines.

Evidence continues to emerge hoping that the spike antigen is the superior choice according to a recently published FDA study. The alternative antigens like the nucleocapsid causes an antibody response, which may decrease more rapidly over time and are, therefore, not the ideal option when looking for neutralizing ability.

As communicated earlier this year, we have ordered a significant number of additional instruments to arrive in the next couple of months. This will allow us to respond to increasing demand either for COVID-19 antibody testing and/or to be prepared for the upcoming launch of the first transfusion donor menu.

At the same time with our new applications, we will further shape the content of our beyond pipeline and we are conducting feasibility assessment of a specific micro avenue for the commercial plasma industry, as well as immunoassay and molecular diagnostic micro avenues for the central lab.

Regarding our upcoming transfusion diagnostic activities, after completion of the expanded IH field trial submission for the CE mark, we anticipate the receipt of the CE mark by Q1 calendar year 2021.

With that, we can begin selling the first powerful commercial combination initial SDS and expanded IH in Europe in Q1 calendar year 2021. The expanded IH U.S. field trials are currently planned to be initiated towards the end of this calendar year or beginning of next year provided the U.S. situation will allow it. We expect the U.S. FDA 510(k) approval for the initial SDS microarray and MosaiQ instrument before the end of calendar year 2020. We aim to report internal V&V data for the expanded SDS and start the European field trials before the end of the calendar year 2020. In the U.S., we plan to start the expanded SDS field trial after completion of the U.S. expanded IH field trial.

All that being said, I’m confident that Quotient is on the right track in its mission to transform transfusion diagnostics and beyond and I’m very pleased to see how our program gets increasing traction as Europe is getting back to normal following the lockdown related to COVID-19 and we are poised to continue to deliver consistently on our milestones.

With this increased momentum in our business and heightened focus on the diagnostics, we look forward to accelerating our development plans and capitalizing on multiple opportunities that make themselves available to Quotient.

With this, I would like to hand over to Melissa to open the Q&A session.

Question-and-Answer Session


Thank you. At this time, we’ll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Josh Jennings with Cowen & Company. Please proceed with your question.

Josh Jennings

Hi, good morning. Franz and Peter thanks for taking the questions. I was hoping to start off…

Franz Walt

Good morning, Josh.

Josh Jennings

Good morning. I was hoping to start off on the MosaiQ COVID antibody testing. You guys cited some revenues in the quarter. Are you recognizing revenue on the capital sales? And then also just wanted to get a sense of — or if you could provide give us a sense of kind of the run rate at some of the centers that have MosaiQ installed in terms of their COVID antibody testing volumes either on a daily or a weekly rate? I know, there’s probably a wide iteration with the current customer base. It’s still very early, but maybe give us a sense of if you can of any testing run rates at your higher volume centers?

Franz Walt

For the contracts, we have in place now we have 10 customer contracts. And Peter correct me, if I’m incorrect, but I think all of them are factoring the price of the instrument into the consumables. So, we basically charge by test. Now, once you sign a contract you still have to ship the instrument. You have to install it. You have to train the staff. They do internal validation and then they start testing. But like I said, there’s a time gap between signing a contract and realizing revenues. We think we will report some meaningful revenues in the next quarterly call. But what our customers are telling us everybody was expecting a big run on antibody testing. But in this initial phase, it was really more on PCR testing for the virus.

We do anticipate as I mentioned during my prepared remarks that the need for antibody testing will increase once vaccines are in clinical trials you need antibody tests for that. And then once vaccines become available and also to see whether it’s working and when is a revaccination necessary. And of course, you can need antibody testing for all the obligations like epidemiological questions as well.

So our time will come. We believe in it and we have the 10 instruments at – sorry, the 10 customer contracts activated. We are ready to go. And if we get momentum and the demand increases we are in the best position to benefit from that. Anything you would like to add Peter?

Peter Buhler

No, I think you answered the question.

Josh Jennings

Great. Thanks for that. And just wanted to dig into the system inventory. By our math you may have three systems left in inventory. It sounds like STRATEC going to fill your earlier order in the coming months. STRATEC was on an accelerated manufacturing time line. I think you’ve informed us on the last earnings call. But, can you just help us think about any more details you can give us on timing of when you’ll have more systems whether it is three systems left in inventory and then –

Franz Walt

Yeah. I think you know that also systems, of course, which are in the field for the field trials, yeah. They can also be redeployed, if necessary. When we mentioned the 13 instruments now we have 10 customer contracts. I think you need about 13 instruments for these 10 customers. First of all, you want to have a backup just in case something could happen.

On the other hand, we also have customers. So we have already indicated, if they get momentum with antibody testing they may need more instruments. So I think we started to develop this test and within three months we had a test and 10 contracts and everything, which is in inventory basically allocated at this moment. And of course – and more instruments are coming very soon.

Josh Jennings

Got you. And then just a follow-up on that. Can you just talk about the funnel the demand funnel from customers that may have been vetting MosaiQ for COVID antibody testing how that’s shaping up? And how do you temper that demand in this interim period before you get the next delivery from STRATEC?

Franz Walt

So it’s a little difficult. I can’t make a forecast here, because our customers don’t know themselves. I think there is overall a little bit of a negative sentiment in the market for antibody testing all these messages, which are going around. And I do still believe and my colleagues too integration of time and it will get traction, but nobody knows how much of a traction we are going to see. But as we speak today, there’s not a single customer who can give us kind of a forecast. They all have different expectations. Variety of expectations, but it’s too early to tell. I mean, last time in the quarterly call, I told you hopefully in a couple of weeks we know more. But the couple of weeks are over and we still don’t know more. I think next quarter, I can give you a better indication. But it would just be a guess, if I say something now.

Josh Jennings

Understood. And just last question. We appreciate you giving an update on the semi-quantitative COVID-19 antibody test. But you’ve talked historically about earlier – I mean, sensitivity and specificity holding up earlier than 14 days relative to your competitors and potentially even at seven days you have, I would say….

Franz Walt

The seven days was PCR. Yes. So just…

Josh Jennings

I was just going to say, is there any opportunity to get a label change or a label addendum for the same sensitivity and specificity rates at an earlier time period, or is that not on the table? Thank you for taking the questions.

Franz Walt

In our view that seven days after the positive PCR test and that’s significantly faster than with some of the other tests, because we can detect in very — with very high sensitivity both IgG and IgM. And then also in the meantime if you look at the trials we did for CE marking then the independent evaluation in Spain and France, we are looking at over 1,500 samples, which have been tested. So it’s really rock solid. It’s really a great test.

And I think we got also more than lucky, because we really have some smart scientists in our team going for an antigen, which can detect the spike proteins with such a high sensitivity. And I’m sure that’s going to be the right thing for the future, yes, for vaccines checking the effectiveness of the vaccines as well as detecting neutralizing ability.

Josh Jennings

Excellent. So just to be clear, so that’s already within the label is that — it could have been my misunderstanding seven days for the PCR…

Franz Walt

Yes. That’s already in there and out there and also for the emergency use authorization, we have this seven days in there. For the same quantitative one then there’s a software change. We have to resubmit, again, for CE Mark, which I think will go very fast and to tell you how long will it take in the U.S., it’s a bit more difficult to predict. But it will be an additional CE Mark, and it will be an additional EUA necessary for that. But I think it’s mainly a software change. So we’re very confident. In a couple of months we will have a quantitative semi-quantitative test. You cannot make it fully quantitative, because there is no standard yet to compare it with — at this point.

Josh Jennings

Excellent. Great. Thanks. Thanks for taking all the questions.

Franz Walt

Thank you for interest.


Thank you. Our next question comes from the line of Brandon Couillard with Jefferies. Please proceed with your question.

Brandon Couillard

Hi. Thanks. Good morning. Franz, could you just touch on why the FDA is now kind of tying the 510(k) approval of the instrument in the first SDS microarray to the serology EUA? And does that give you more visibility on the time line now that this has kind of been bundled together? I’m just kind of curious about the process and why that’s necessarily the case.

Franz Walt

I think it’s not bundled together. So the 510(k) is a instrument that the initial SDS that goes on a parallel track. And for the emergency use authorization we have different reviewers. If you get the emergency use authorization, and let’s say, the crisis is over you have to pull it back and then you still need the 510(k) approval for later on.

So I think it’s an interdependency. So I think the only good thing here with them having a look at instrument software in the test for the emergency use authorization is that they had a look at the instrument already, which will be a very good indicator for us. What’s happening with the 510(k) where we are — we have full confidence we will get it. We also are fully confident that we get the emergency use authorization. It’s just a question of time.

And also the contracts we signed with you with customers. They know exactly where we stand. They know exactly where we are in this entire process and how our dose looks like and they felt like we it’s just a question of time and that’s why they signed the contract although we haven’t had the EUA yet.

Brandon Couillard

Got you. Okay. Any update you see on the hypercare program the number of labs that you’ve started up? Has that changed at all? And are you been able to regain access to those bigger labs in Europe at this point?

Franz Walt

There’s no hypercare sites running now. And I think with 10 active customers, they’re not COVID-19, we don’t need it anymore. We may consider that for the U.S. when we get into the U.S., but in Europe the hypercare phase has been successfully completed. All feedback we received from customers, we are incorporating in the future development, so that’s completed. It’s really all about completing now the transfusion diagnostics field trials in the U.S. and then hopefully starting as soon as possible in the U.S., as soon as the situation allows it. So hypercare is finished in Europe.

Brandon Couillard

Got you. Okay. Makes sense. On your last point there, as far as being able to restart the U.S. field trials. Is that a function of just travel restrictions from Europe? And are the three customers, I think, you mentioned for serology testing in the U.S., are those the same clinical trial sites? Is there overlap there? Thanks.

Franz Walt

Yes. It’s the whole package, but also, of course, the travel restrictions. We cannot get our experts over to get it all started. And so, the expanded IH for U.S., I indicated before, that we will initiate this towards the end of this calendar year, worst-case beginning of next year. So it really depends on when the U.S. situation is improving.

And after IH we can do the expanded SDS, because our timing was differently half a year ago when we wanted to do it sequentially. If everything is now on hold and everything opens up suddenly, we still have to do the IH first and then the SDS, given the capacity we have and there was resources to cover those trials.

Brandon Couillard

Very good. Thank you.


Thank you. Our next question comes from the line of Sung Ji Nam with BTIG. Please proceed with your question.

Sung Ji Nam

Hi. Thanks for taking the questions. Maybe on the antibody test, Franz, if you could elaborate a little bit on the value proposition there. Obviously, you’re gaining good traction. You talked about flexibility on the platform, you talked about the semi-quant capabilities, et cetera and obviously the performance characteristics.

But I was wondering, are there other factors in terms of — it’s a very competitive field. There are other systems out there. Would you be able to comment on maybe is there a cost advantage, cost per test advantage, running around MosaiQ, maybe if you could kind of delve into some of the other advantages?

Franz Walt

Yes, cost advantage. I think, it’s a premium price for a premium product, because it’s really the gold standard in terms of sensitivity, specificity in combination with the early zero conversion. I think another benefit is that, it is a dedicated platform. So you can run 3,000 microarrays a day if you want to, if you need to. So you don’t have to interrupt your normal workflow like being 100 or 200 different tests on the platform and one of them is COVID-19.

So it’s fully dedicated, high throughput, very efficient. If you start the instrument in the morning, it takes about 30 minutes, after everything is up and running and then you get a test result every 24 seconds. So it’s really the efficiency, the high throughput capability, the extremely high accuracy of the test.

It’s the early zero conversion. These are the benefits. And if we come then, soon with the quantification, semi-quantification, because there is no standard yet, as I mentioned before. This will be an additional benefit and a step forward for clinical guidance once science has approved and what kind of levels do you need, what kind of antibodies do you need for immunity. So this will help in clinical guidance.

Sung Ji Nam

Great. And also, Franz, I really appreciate you giving us a bit more color in terms of what the utility for the antibody test could be going forward. Would love to hear more about, are there thoughts in terms of how the antibody testing will be utilized? Obviously, COVID is unprecedented case here.

Will there be more broad usage of antibody testing, once the vaccine is available? I’m just kind of curious we don’t necessarily see a lot of antibody testing associated with vaccines for other types of diseases. And I was kind of curious is there kind of a thought process where there might be a little bit of shift in paradigm of antibody usage?

Franz Walt

Yes. I mean, you can test it for — you can use this test for epidemiology, of course, but you also can use it for convalescent serum that pharmaceutical companies are considering that as well, then you need also antibody testing, then I think we talked about vaccinations. And we also spoke about, I mean, doing an antibody test to see whether you have immunity, if that is established that they provide immunity, whether you have immunity or not. So there are a variety of obligations.

But in this process getting a new virus learning about it kind of a logical process that you test for the presence of the virus. These are the PCR test when you understand how this particular patient works that behaves then I think antibody test will become more important.

I think I mentioned all the potential obligations we have heard back from our customers. And we are confident it’s a question of time and pretty sure we will see some soft traction and then we are there. We are on location. We don’t have to ship anymore. We are on location to get started.

Sung Ji Nam

Great. Thank you. And then just lastly for me. You have in transfusion diagnostics. You guys are less than nine months away or nine — a little more in terms of the competitive menu launch in Europe. Could you just remind us what the early sales ramp could look like?

You talked about the hypercare programs being completed successfully. Just trying to get a sense of like what the sales ramp could look like what the tenders that might be available? What the timing around those might be?

Franz Walt

Yes, I mean the good news for transfusion diagnostics we lost one quarter in Europe to-date, we lost — we’re going to lose about two quarters in the U.S., but there are no tenders. So, we didn’t miss a single tender because they were also postponed. I think everybody had very different problems now than writing tenders.

So, somehow we are the company benefiting now from that. We think in Q1, we will have the first powerful commercial combination. And then it really depends on — starting with the tendering process already in Q1 or not because right now everything goes on ICE. I assume as soon as the situation calms down it will go back to their old pattern and the tenders will be available.

And then we have to participate in the tender. We have to win the tender. There are different durations from a couple of months to worst-case up to a year and smaller countries smaller labs are much more flexible. And as you know almost 100% of the customers in Europe — potential customer for this menu — transfusion menu in Europe and in the U.S. they know us already and they’re looking forward what this technology can do for their workflow.

And I think the good thing with the COVID-19 exercise here is for us we could go to laboratories who didn’t know Quotient, who didn’t know MosaiQ, and had to pay a premium price for a top-notch product. And it was no effort whether it was an effort but it will take us long to have all 10 customer contracts signed.

So, it was easy for us to convince customers that this is a really compelling new technology and can do a lot. And in these discussions, we also discovered a lot of interest from those central labs to use this technology beyond COVID-19. They said okay if you can really do multimodalities, you can do with one sample an immunoassay test, the molecular test, immunohematology whatever that’s also interesting for them.

So, we initiated serious very specific discussions already with customers also with very large ones. And they want to look into what this technology can potentially do for their workflow and what kind of customized microarrays we may develop for this field of centralized diagnostics.

So, our strategy was always transfusion and beyond. And the beyond would have been plasma and then central happened with COVID-19 the beyond took over transfusion. That was not planned that way but gave us a real-life check and exposure is it adaptable? Did customers embrace it? Yes, they do.

And as you already know interest in this technology for further applications in their central lab as well. But we still have our old plan transfusion, plasma, central labs. We just accelerated. We go more aggressively in our central lab application because we wanted to use this momentum we have now. If that answers your question.

Sung Ji Nam

Yes, great. Thank you so much.


Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I’ll turn the floor back to Mr. Walt for any final comments.

Franz Walt

Yes. Thank you everybody for joining us on this call today and we look forward to updating you on the progress we expect to have made by the time of our second quarter fiscal 2021 conference call. Thank you very much. Bye, bye and stay safe.


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

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