Coming off its $74 million IPO in December, Quanterix Inc. (QTRX) was facing its first public presentation this month at the JPMorgan Healthcare Conference, the annual confab where investor royalty rub elbows with blue chip pharma execs and mergers are dished up with appetizers and too many cocktails.
But Quanterix CEO Kevin Hrusovsky wasn't worried about facing investors a month after his company's IPO. "I sent my two scientific researchers out to sit in on every presentation by companies that had pipelines that included either neurology or oncology candidates."
He was setting up Quanterix future.
Most companies go public to gain access to wider capital markets or to accommodate investors looking for an exit, but Quanterix Inc. isn't most companies.
The Lexington, Mass.-based company created Simoa, a digital analysis platform that allows for identification and quantification of proteins in blood at very low concentrations allowing for more of the sample to be saved. The company's IPO was over-subscribed at $15 a share, with the likes of JP Morgan, Leerink Partners, as well as Cowen, BTIG, and Evicore ISI snapping up 4.9 million shares. The company had raised $150 million since 2015 and counts ARCH Venture Partners, Bain Capital and bioMerieux SA among its pre-IPO investors.
And shares have traded up since Dec. 7 IPO, moving from the offering price of $15 to trading Jan. 22 at $21.19. Analysts have greeted the company with a degree of zeal, with JP Morgan initiating its coverage with an outperform rating.
While Quanterix engaged the banks and did the roadshows, the standard pre-IPO fare, Hrusovsky viewed the offering as the best way to get the attention of biopharmaceutical companies. Hrusovsky, the former CEO of both Caliper Life Sciences and Zymark Corporation, believes his company can help those companies formulate safer and more effective drugs, speeding the meds to approval and market. And those meds can serve cancer patients as well as those facing neurology diagnosis and cardiology challenges.
Though Quanterix has been used mostly in research settings, the company sees the future in diagnostics and precision health screening.
While Hrusovsky has tried to get biopharma companies to pay attention to Quanterix, the company gained some notice as it won the NFL-GE Brain Challenge two years running. The Simoa platform is useful for determining the existence of a concussion in a non-invasive way and has promise in determining when a player could be cleared to play again.
In recent years, the NFL has become more active in issues tied to concussions and brain health after former players began exhibiting health issues connected to concussion protocol, chronic traumatic encephalopathy and past treatments. A string of deaths of former players including Mike Webster, Justin Strzelczk, Terry Long and Andre Waters attracted the attention of Bennet Omalu, a Pittsburgh forensic pathologist who pursued the theory that the deaths were tied to a history of repeated blows to the head.
Though the NFL did its best to ignore Omalu, eventually the issue gained momentum. It led to the movie Concussion starring Will Smith. That movie in 2015 pushed the issue of concussions to the forefront of the public's attention. Hrusovsky appeared on Good Morning America talking about his company and its ability to play a major role in the detection of concussions and player safety.
Despite being the dominant sport in the country, the NFL has consistently had a tarnished public image because of the concussion issue as well as domestic violence allegations among its players and this season's issues tied to players kneeling during the National Anthem. While the NFL dragged its feet on the issue of concussions and their relationship to the future of player's health, Hrusovsky dodged any comment on the league's public image challenges with the deftness of a quarterback avoiding a sack and scrambling for first down. "I give a lot of credit to the NFL, they put us on the map," he said. "The culture of the game could change. We are not sure when our test might be fully utilized."
The company realized $1.6 million in grants from the NFL for winning the Brain Challenge.
Quanterix has a headcount of 125 employees now, and is projecting hiring of 25 more by the end of the year. It has two products in the market now, the HD-1 a floor standing instrument and the SR-X, a benchtop machine. The HD-1 is fully automated and tests for protein biomarkers and goes for $175,000 while the SR-X has a tag of $75,000. Hrusovsky said though the company thought it would roll out the SR-X during the first quarter of this year, it was ready and the company sold five of the machines in the Q4 of 2017. The SR-X also tests for nucleic acid biomarkers. All told the company has 175 machines installed.
The company has seen its revenues grow from almost nothing three years ago to $22.5 to 22.9 million last year according to Hrusovsky. While he is bullish on Quanterix sales prospects of its machines, he thinks the company could see growth in its pharma services, the Simoa Accelerator Lab. "Right now, testing on behalf of other companies makes up about 25% of revenues, but I see that growing," he said.
Another probable area of growth is the sale of instruments to pharma companies with neurological products in their pipeline. Hrusovsky points to the difficulty of bringing neurological drugs through trials and his company's platform strength in pinpointing safety and efficacy as a big plus for companies developing drugs for Alzheimer's, epilepsy, Parkinson's disease and multiple sclerosis. While GlaxoSmithKline Inc. (GSK - Get Report) , Pfizer Inc. (PFE - Get Report) , Bristol-Myers Squibb (BMY - Get Report) and AstraZeneca (AZN - Get Report) have all pulled back from pursuing neurological drugs, companies like Roche's Genentech and Novartis (NVS) who are still in the sector can benefit from Quanterix technology, Hrusovsky says.
Among the pharma companies that have already worked with Quanterix are Sanofi SA (SNY - Get Report) Janssen, Merck (MRK - Get Report) , Pfizer, Shire plc (SHPG - Get Report) , Eli Lilly and Co. (LLY - Get Report) Genentech. "Biogen (BIIB - Get Report) has three of our machines," Hrusovsky said.
While neurology is one sector where Quanterix can have an impact, the company is also making a push for its instruments to be used by companies pursuing treatments in oncology, cardiology, infectious diseases and inflammatory conditions.
Hrusovsky says the company plans on using the proceeds of the IPO in 2018 to build out its products, expand the menu of proteins that can be tested for, expand sales and placement on an international basis and consider M & A opportunities.
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