Accelerate Diagnostics (AXDX) 8 Aug 24 2024 Q2 Earnings call transcript

Accelerate Diagnostics, Inc., a company at the forefront of next-generation antimicrobial susceptibility testing (AST), recently held an earnings call to discuss their latest achievements and future plans. The call, led by President and CEO Jack Phillips, provided valuable insights into the company's progress with their revolutionary WAVE system, financial results, and strategic milestones.

Strong Preclinical Trial Results Pave the Way for Clinical Trial and FDA Clearance

The highlight of the call was the successful completion of Accelerate's preclinical trial for their WAVE system. The trial, which included a data set of 1,570 unique bug-drug combinations, achieved impressive results with Essential Agreement and Categorical Agreement rates of approximately 95% across 20 antibiotics. These results are crucial, as they set the stage for the company to begin a clinical trial with four external sites, with the goal of securing FDA clearance for WAVE and its Gram Negative PBC menu. The success of this trial not only demonstrates the potential of WAVE to revolutionize the AST market but also underlines the company's commitment to improving patient outcomes and reducing antimicrobial resistance.

Financial Results and Strategic Milestones

In terms of financials, Accelerate reported net sales of approximately $3 million for Q2 2024, a slight increase from the previous year, driven by strong recurring consumable net sales. However, a decline in gross margin to approximately 23% was attributed to product mix. On the positive side, the company managed to reduce selling, general, and administrative expenses by approximately $2.2 million, and research and development expenses by approximately $1.9 million, reflecting a focus on cost reduction and strategic milestones.

A Strategic Roadmap to Maximize WAVE's Impact

Accelerate's strategic roadmap for WAVE is a three-step process, starting with leveraging the company's position in the positive blood culture (PBC) market and converting existing customers to the new platform. The second step involves expanding into the isolate susceptibility testing market, offering new assays to increase customer engagement and wallet share. Lastly, the company aims to apply its holographic imaging technology to other areas of diagnostic testing, potentially expanding WAVE's addressable market even further. With approximately 75% of the U.S. customer base signed to longer-term contracts ahead of the WAVE commercial launch, Accelerate is well-positioned to capitalize on these strategic initiatives.

Looking Ahead: A Focus on Operational and Development Milestones

With the successful preclinical trial results, Accelerate has decided to focus on achieving critical operational and development milestones before signing a strategic partner. This strategy is expected to maximize value for all stakeholders, including investors and potential partners. The company's recent financing round, which brought in additional capital through 2025, will provide the necessary funds to deliver these important milestones, including FDA clearance for the WAVE system and Gram Negative PBC menu, as well as the development of incremental assays to further demonstrate WAVE's capabilities.

Conclusion

Accelerate Diagnostics' earnings call painted a picture of a company on the cusp of disrupting the AST market with its innovative WAVE system. With promising preclinical trial results, a strategic roadmap for growth, and a focus on operational and development milestones, Accelerate is well-positioned to revolutionize the field of rapid susceptibility testing and address the global health issue of antimicrobial resistance. As the company moves closer to FDA clearance and commercialization, investors and stakeholders alike are eager to see the impact that WAVE will have on patient care and the broader healthcare landscape.