Quanterix Corporation (QTRX) CEO Kevin Hrusovsky on Q4 2019 Results - Earnings Call Transcript

Quanterix Corporation (NASDAQ:QTRX) Q4 2019 Earnings Conference Call March 9, 2020 4:30 PM ET

Company Participants

Amol Chaubal - CFO

Kevin Hrusovsky - CEO, President and Chairman

Conference Call Participants

Puneet Souda - SVB Leerink

Sung Ji Nam - BTIG

Tycho Peterson - JPMorgan

Max Masucci - Canaccord Genuity

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Quanterix Corporation Q4 and Full-Year 2019 Earnings Call. [Operator Instructions]

I would now like to hand the conference over to Amol Chaubal, CFO of Quanterix. Thank you. Please go ahead, sir.

Amol Chaubal

Thank you, Cathy. Good afternoon, everyone, and thanks for joining us today. With me on today’s call is Kevin Hrusovsky, our CEO, President, and Chairman.

Before we begin, I would like to remind you about few things. Today’s call will be recorded and will be available on the Investors section of our website. Today’s call will contain forward-looking statements that 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 the uncertainties that we face are described in our most recent filings with the Securities and the Exchange Commission.

During today’s conference call, we will discuss some financial measures that are not presented in accordance with U.S. Generally Accepted Accounting Principles, or non-GAAP financial measures. In the Q4 earnings release and in the appendix of our presentation, which are available on our website, you will find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures to comparative GAAP measures. We believe that these non-GAAP financial measures provide investors with relevant period-to-period comparisons of our operations. These financial measures are not recognized under GAAP and should not be considered in isolation or as a substitute for a measure of financial performance prepared in accordance with GAAP.

With that, I will turn the call over to Kevin.

Kevin Hrusovsky

Thank you very much, Amol, and thanks everyone for listening in.

I’ve built an agenda today that I'm going to talk primarily about our strategic and financial progress, and inside of that we'll talk about certainly Q4 and the full year highlights, but also the vision and strategy both around the execution and the aspiration of our company’s opportunity.

We’ll also talk specifically about our goals and several of the key growth catalysts that are in place for 2020. Amol will then spend some time going through a little bit more detailed look at our financials, and then we’ll open up for Q&A.

Before starting, there has been a lot of news in the last couple of weeks and we've been getting a lot of questions regarding the impact of the coronavirus on Quanterix. Our top concern is our health and well-being of our employees around the world. We have had a task force in place for several weeks monitoring the latest developments. We meet regularly with our executive team to stay on top of the situation. As of today, the situation has not had a major impact on our operations.

Our commercial team is in regular communication with our customers, and we're continuing to support day to day field operations. We've also taken steps to assure continuity of supply. We're also closely following the latest developments from the CDC and developed contingency plans should the situation further deteriorate and necessitate some of those contingency plans. And just in way of the financials, about 13% of our revenue comes from Asia, of which only 7% comes from China.

Only a negligible portion of our revenue comes from Italy. While we have seen minimal impact on revenue and supply so far, we would be remiss if we didn’t comment that the continued global spread of the COVID-19 could impact our instrument placements and consumable and services revenues as we close out Q1 and enter Q2.

While there is the potential for some short-term disruption, we remain very positive on the long-term growth vectors of our underlying business. This is obviously a fast-changing situation, and we will continue to proactively mitigate the impact on our employees, business operations, as well as customers and investors.

So with that brief lead in, I'd like to start on Slide 4 that shows a rapid ramp in our publications for the quarter and the full year as well as the biomarkers that are now being measured by our customers, primarily in blood, but they do across just about every category of sample type from the human body.

We also are shown on this slide our revenue, and you can see that what we did, in fact, deliver very strong Q4 growth, and that led to a 46% Q4 growth and a full-year growth of 51% at $56.7 million. What's most exciting about this as well, the compelling revenue growth has been augmented also by very strong gross margin advance, which we'll show. We did launch early our HD-X. We got that out in Q3, and we also launched in 2019 our SP-X.

Our full-year consumable growth had some one-time, very favorable opportunities built that we actually grew at nearly 90% year-on-year. We also were able to raise $120 million of growth capital, and it gives us a very strong balance sheet which we thought was important to manage any uncertainties that were ahead of us as well as give us the opportunity for some pretty interesting and compelling aspirational growth opportunities.

We were able to acquire Uman on July 1 and close that deal. We initially bought it for defense, but we've now seen some very interesting offense opportunities with that asset. We did license after acquiring the Uman antibody company. And we licensed Nf-L for an IVD license to Siemens, and also provided Techne, a source of supply of our Nf-L to make it an industry standard.

We also had 49 publications and at ECTRIMS this year was one of the strongest showing ever as well as AAIC further augmenting just the strength of our neuro portfolio biomarkers. We added some really important people to our team this past year namely Amol, as well as our General Counsel to continue to evolve the progress of our company. We also recently named Tatiana Plavina as our Senior Vice President of Clinical Biomarkers, given this new opportunity that we see emerging.

So, on Slide 5, you can see that we had very strong Q4 consumable growth of 74%. And we can also see we had 380 bps of gross margin advance on an adjusted basis which is very compelling. We also overall for the year grew our instrument revenue 55% which is a significant surge, we had two products that we launched this past year which created a really nice surge, which is a great leading indicator of future growth, given that the consumable pull through is now 45% of our overall revenue mix having grown greater than 80% this past year.

So on Slide 6, we just illustrate the various components of our revenue starting with the accelerator. You can see our full-year growth there has been very significant. We've now done 101 drug trials, drug trial projects in our Accelerator Laboratory, our services lab. This is very important, and we've continued to create strong backlog there to protect us as we may need it for any of the growth implications going forward. Having a strong backlog just gives us greater visibility to the overall growth trajectory, and we are seeing a really nice strong surge of growth right now given the changeover of much of our installed base on instruments, meaning thatcustomers are seeking out and utilizing our services lab.

And then you can see the instrument placements, we've reached 400 by year end. We also - you could see the growth for the last two years been a step up from the previous three years and the instrument growth nearly 50% both years, and you can see our strong consumable surge in 2019 with some level of one-time revenue, which primarily was Q1 of last year for about $1 million associated with the major Novartis trial, which you may have seen. Last week they announced that they believe they're going to have approval of that MS drug that utilized our Nf-L as a secondary surrogate endpoint.

They believe they will have that approval in June of 2020, which is pretty exciting. And the role we played there is even more exciting than you can see the rapid gross margin ascent on the right hand side of the slide.

One of the last things I would state on this slide is in the consumable category, the utilization is the total dollars that we’ve sold at instruments what percent of those total dollars of installed base do we sell annually and consumables and for about three years 15 to 17 we were running around 35% but we've now stepped that up and it's been running for the last couple of years at 50%. So, that step up is coming by our menu expanding, evolving to more kits supply than homebrew and just the better instruments that have greater throughput.

Slide 7 just illustrates the demographics of our revenue. You could see that we're primarily North America but you can see we're growing Europe and Asia faster so it's creating a better balance longer term. We - customer wise we're primarily either academia or pharma but we're about 50/50 now which academia has been growing faster in the last several quarters primarily because we've been launching the smaller product form factors to try to help us elicit greater publication growth from academia.

And you can see neurology growth continues to be very strong and we just now launched into oncology so we're expecting to see some nice growth from oncology in 2020. And then finally from a mix perspective consumables now we had the strongest growth this past year now represents 45% of our overall mix giving us really good visibility for future revenues.

So now I'd like to move just briefly to strategy. The ability to take and see disease much earlier in the disease cycle when the disease is still treatable long before symptoms and to be able to see it noninvasively in blood is the real value proposition for our company and that's oppose to seeing diseases today particularly in neurology and cancer very late stage and many times that require surgery or a spinal tap in order to get the sample to look at that disease state.

So seeing it and blood much earlier is transformative when you consider the opportunity that represents as we combine technology with healthcare and forming these digital biomarkers that basically enable our technology to be exquisitely sensitive.

Slide 9 just shows that there's a lot of things that cause identical twins to be different as they grow up. Primarily, there are environmental factors in the way they live their life. They might have the exact same DNA when they're born, but it's the protein - phenotypic protein that changes and expresses differently throughout their lives.

And these environmental factors trigger a lot of what actually creates disease. And so, we've honed then on the protein and try to really instill a whole proteomics revolution by digitizing proteomics and creating the opportunity to see it with exquisite sensitivity.

Slide 10 just illustrates, above the iceberg analogy that we show here, you can see some companies like Luminex, MSD, ProteinSimple from Techne that have traditional capability to measure at the levels that we show here, nanogram to picogram per ml. And that would also be true for Siemens, Roche and Abbott that have moved about 205 proteins historically into IBD diagnostics, of about 1,300 that are measured overall. But down at the bottom, you can see where Quanterix plays.

There's about over 10,000 proteins we think that circulate in blood that aren't really able to be measured today. And we think that represents an IBD protein opportunity of nearly 1,000, maybe 4 times today's level of approved IBD. And it's our sensitivity into the femtogram per ml that's 1,000 times more sensitive, that's enabling.

So, on the right-hand side, we've just showcased some of the most important biomarkers and we show in green bar vertically today's detection level. And then the yellow bar that goes horizontal shows that the traditional level of those particular biomarkers in human. And when you're really healthy, you're at the lowest level, which would be to the farthest to the left.

And then you can see the red being Quanterix’s LoD on these critical biomarkers. The ability to see them when you're healthy as well as when you're diseased is what really differentiates our ability to achieve it on these critical biomarkers. We’re 3,000 times more sensitive on average. So it's a real key way to differentiate ourselves.

And the next slide is this a slide we’ve used in previous presentations to illustrate that it's typically cancer and neuro degeneration that we find in very late stage, sometimes Stage 4 like in pancreatic cancer s or many of the lung cancers and brain cancers are so far along that there's no good way to treat those diseases. Same is true with neurology particularly for Alzheimer's and CTE and many of the neuro diseases. Sometimes you don't detect them until you have symptoms and by time you have symptoms they’re very late stage.

So now you could see that we've got nearly a 155 publications in cancer, 263 in neurology that not only allows you to see the disease earlier but less invasively and it requires the ability to see proteins at very low concentrations to create that low invasiveness to be able to see in blood what you use to be able to see in an actual surgical biopsy or spinal tap. And that same disease earlier also requires lower levels of protein detection.

So on Slide 12 we begun to illustrate that we do believe we have a low risk opportunity to just continue like a machine to deliver from an execution in the research category where we don't have regulatory or reimbursement risk and we have multiple growth drivers. We've basically grown this business from no revenue four, five years ago to $57 million in 2019.

The growth trajectory has actually doubled in the last nine quarters since we've gone public with the support of a lot of our investors helping us grow because our technologies are helping drug companies increase the probability that their drug is going to be developed and approved. And that is something that must - most of our investors want for their invested - investments in the drug companies, which have helped get our technologies incorporated into those companies.

But on the right-hand side, most importantly a little over a year ago, we regained all of our diagnostic rights and we do see an opportunity aspirationally to enter into a market that's probably 10 times the size of the research market on the left, that does have more risk and does require regulatory reimbursement approvals and that's something that we're carefully trying to measure and manage and study this year, so we can start a way to move from the left-hand side into the right-hand side.

And by year end, we hope to have some pretty good strategic ideas of how we can do that to further tap into this significant opportunity in liquid biopsy as well as we're calling it, liquid MRI, but the ability to see brain health and blood long before a disease could be a game-changing disruption to the way neurology is practiced.

This next slide just show you the execution on the left in the market side. You can see that, that market is more like $1 billion to $4 billion. And today, we play primarily in the neuro market where we have almost 10% penetration of that $350 million market. But we're now moving in with the newer product, SP-X, where we have less than 1% penetration into onco, which is the $750 million market.

And you can see some of the players are mainly Luminex and MSD, but on the right-hand side, you can see that our first volley of excitement is in this neuro-disruptive diagnostics, which we estimate could be as large as $5 billion, and we think our HD-X and SR-X are being built for clinical opportunities as we evolve over this year into a strategic articulation of our pathways into diagnostics.

The next slide, Slide 14, just summarizes that we sell instruments. We sell assay kits which are consumables and then we have this accelerator lab on the right. And we launch that HD-X which is our largest franchise, the HD franchise all the way on the left, early last year. We were able to actually install 56 HD-Xs by year-end which is a very fast surge. Half of those were trade-ins where we are incenting the customer to trade in their HD-1s which hurts short-term margins but actually is going to help long-term margins because the HD-X is pull through, more higher margin consumables and they eliminate a lot of the field service investments that we need in place with the HD-1s.

We actually estimate that by year-end 2020, half of our HD-installed base which will be nearly 300 will be HD-Xs. And again, we think that about 50/50 of that will be trade-ins versus new sales at the $200,000 price point. This technology also gives greater potential for even enhanced sensitivity and better consumable economics. Then you can see the direction in the SR-X and the SP-X, SP-X was launched into cancer this past year and the accelerator we now have CLIA and LDT capabilities for those drug trials, which is important as we demonstrate the ability to help drugs get approved by recruiting earlier cohorts when the disease isn’t symptomatic yet, and its easier for the drug to be effective and lower toxicity because of lower dosing to affected disease.

This next slide just shows the sensitivity enables a lot of things. It’s not just the ability to see low abundant markers but gives you early detection, allows you to see any answer from a smaller sample. You can dilute up for better accuracy.

It also gives you the ability to multiplex multiple markers simultaneously to create better disease specificity without suffering the elimination of sensitivity. And it gives you future proofing because of all these new markers that the proteomics campaign are beginning to uncover.

And on the right hand side you can see we're continuing to invest in greater levels of sensitivity because when our sensitivity is deployed and samples like the cerebral spinal fluid today, we can actually see proteins that we think someday we'll want to be seen in blood and it will require another hundred extra sensitivity to achieve that. So, we're pretty excited about that advance.

This next Slide 16 just shows the toxicity and efficacy challenges of the drug industry and that there’s a 300% improvement and the ability to get the Phase 3 approval from a Phase 1 approval if you're using these biomarkers. And on the right you could see there's now 46 instruments at CROs like LabCorp and Quest and rules-based medicine and Eurofins and Frontage and there has now been 101 drug trials even in our own facilities and in our services.

The next slide shows that the FDA is very homed in on their neurology whether it’d be the 26 suicides a day from soldiers that have post-traumatic stress disorder or the opioid addiction or the rapid ramp up of Alzheimer patients that's being predicted and projected or all the mental health issues that we have in America is creating a large cost burden and that's caused the FDA to issue guidance to use biomarkers to help get drugs approved.

The next slide starts really - it's a buildup slide that you can't see today but it starts in 15 and it builds up to 19. And you can see now all the companies that are using our technology to help support either research or drugs approved.

Slide 19 illustrates these three areas on the right hand side of aspirational that we're starting to do a deep dive strategically to understand the best way for us to migrate a compelling value creation opportunity into neurology liquid biopsy and point of care. And you can see the value proposition that we feel we have in order to enable that As a platform company, we think in many ways we could become somewhat the liquid - the Illumina of liquid biopsies or maybe the exact sciences of the brain by evolving our platform technologies into these rich diagnostic landscape.

To illustrate that, Slide 20 just shows you the rapid ramp-up of drug trials using our neurofilament light. You can see there were 42 trials thus far using our Nf-L primarily as secondary surrogate end points. There's currently five Phase III trials across 1,600 MS patients utilizing the Nf-L. Then on the right-hand side, you can see that the Nf-L also works against other disease, nerve diseases like Alzheimer's, TBI, ALS. And there's currently 134 Nf-L clinical trials using our Nf-L.

The next Slide 21, has been shown in the past, but it illustrates that by seeing with our exquisite sensitivity, the greatness that Uman antibody pairs had for Nf-L gave us an advantage to buy that company and 172 of the liquid blood-based publications are all based on the Uman antibodies, as well as our Simoa. And that combination makes it very specific and very sensitive. And you can see on the right-hand side, we looked for three years to find somebody other than Uman and nobody was able to supply this very specific antibody pair, which we've now got in-house to protect our franchise, but also to allow us to grow it.

This is the first time we're showing Slide 22, and this is follow-up from the two investor meetings we had in the last two weeks. We illustrated that Nf-L is continuing to grow. And this shows you the total clinical studies using Nf-L, there's a total 134. And you can see that some of those are completed, some of them are active either observational or interventional, meaning that they actually have multiple cohorts and they’re measuring versus a placebo effect or even an existing drug.

In the middle category you can see that the 76 actives, you can see how they cut across the different Phase 1, 2 and 3 and 4 and then you can also now see the category that those particular trials are in from the different neuro diseases. Then when we take the three key neuro diseases over to the right you can see that our penetration is less than 5% across all the trials in those three categories. The light blue represents our current penetration.

So this is a set of slides that we've been working a lot to better articulate just how big this opportunity is that we're using with our field to try to get further penetration of our Nf-L dimensions and in actual trials by linking up our sales teams with the chief medical officers of our key customers in the neurology framework.

This next Slide 23 just shows that whether it be drug trials like Novartis as we've already mentioned or drug selection for which is the best drug for that disease because there are today 16 approved drugs for MS worth $22 billion. Nf-L can be the way in which you can keep an MS patient very rapidly to get them on the right drug. And the difference between dying in a wheelchair with your life expectancy is the same for an MS patient versus dying standing up.

The difference between using an MRI that 2.5 to see if a drug is working there is evidence now within three months as one of these trials here illustrates the first one that you can see the impact of the drug on the MS patient. There's also trials going on with disease biology and there's a lot of evidence that this is going to advance into the clinic and we're working to try to create an FDA opportunity for a meeting this year.

The next Slide 24 that shows two key trials. One is for analytical validity for the FDA. Over 17 will be soon be a publication on this where we were able to get the same results across different users in different labs, different customers.

And then on the right hand side you can see that there's already been an equal 130 healthy people from ages 20 up until ages 80 to see what their Nf-L levels are because as you get older your neurons die and we can measure that that neuronal damage of age. But if you're above the line, it says that there's something going on from nerve degeneration whether it’d be Alzheimer's or MS, Parkinson's or even concussions that could be putting you in harm's way, so, there's a large 11,000 healthy control study now being run in Europe across 18,000 samples to create that moment to data which would be important for the clinical validation with the FDA.

So, Slide 25 illustrates the various key goals for 2020. We're going to continue penetrating with high consumable utilization in neurology and that HDX will be key for us. By yearend we'll have half of them of the installed base VHDX’s. We're also expanding our Asia-Pac presence.

On oncology, we got that new SPX. We are adding 50 assay to grow the SPX and primarily on neuro - I'm sorry and immuno assays where you're looking at the immune system to treat cancers and our technology could help scientists get better at the rate = immune profiles for cancer treatments.

From a strategy standpoint, we're looking to land an IVD partnership this year. And also we'll continue looking opportunistically for M&A. And we do the financials continue to see a long term growth prospect over three years of 30% to 40% top line growth. The first half of this year we do expect to see a slower mix growth for instruments and consumables but will be made up in our services because as the installed base changes over to the HDX and our customers revalidate they're coming to us to get the answers from our services and so we don't see any shift in the overall growth rates just a little bit of a mix shift through the first half and continue evolution of strong growth margin and instrument growth and we are continuing to advance R&D-wise, to 100x sensitivity.

So in summary, Slide 26 from the execution side, all the way to the aspirational side, we feel we have a category-defining technology. We've been operating somewhat flawlessly now for 4.5 years every quarter, showing quarter-on-quarter growth as well as annual growth. So we think we have a best-in-class rivaled sensitivity, and the market is a very big market both in research where there’s very low risks and in diagnostics, which the risks are higher but we're coming up with a way to use our pharma relationships to navigate into those.

So from a market perspective, we think we have a very strong opportunity. We've got now all this validation, 19 to top 20 pharmas. This Power Precision Health summit, that we're the top sponsor of, there are drug trials over 700 of them. And then all these third-party peer reviewed pubs over 600 of them at this point.

We also from a penetration standpoint have a very strong consumable pull through, this great visibility to our penetration and gives a much better risk reward evolution as we continue to commercialize with the - really an incredible commercialization management team and board that has had a lot of experience in us.

So Amol, I'd like to now turn it back over to you for some financial discussion around our first - of our fourth quarter and our full year 2019.

Amol Chaubal

Thanks Kevin.

I'll be referring to Slide 27, as I go through this. As Kevin noted, revenue in Q4 of 2019 was $15.9 million, and came at the midpoint of the range we had provided at the JPMorgan Conference. This represents 46% revenue growth compared to $10.9 million revenue in Q4 2018. Product revenue grew by 53% driven by 74% growth in consumables and 30% growth in instruments. Service revenue grew by 26%.

For the full year, the total revenue was $56.7 million, a 51% increase driven by 86% full-year growth in consumables and 55% full-year growth in instruments. On a non-GAAP basis, full-year revenue growth was 56%. As stated previously, we are not providing revenue guidance.

Demand for HD-X, HD-1 trade-in program and strong adoption momentum contributed to our revenue growth although the success of our trade-in program negatively impacts gross margin, as we had expected.

As stated in previous quarters our goal is to deliver meaningful growth each quarter, while continuing to build backlog for future quarters. On a non-GAAP basis, Q4 gross margin was 47.3%. Q4 2019 gross margin includes a 410 basis points negative impact from our HD-1 trade-in program, which continues to outpace our expectations.

As discussed in our Q3 earnings call, while this may create near-term unfavorable impact on gross margins, it is a very compelling investment to drive future consumables growth and excitement around our technology. Our non-GAAP gross margin excludes the impact of non-cash acquisition-related purchase accounting adjustments and provides investors with a relevant period-to-period comparison of our operations.

Excluded from the Q4 2019 non-GAAP gross margins are $0.7 million in non-cash purchase accounting adjustments, relating to the Uman acquisition. We expect similar quarterly Uman acquisition-related purchase accounting adjustments going forward, subject to movement in acquired inventory.

On a GAAP basis, our Q4 gross margin was 43.1%. GAAP gross margin includes impact of both HD-1 trade-in program and the Uman related purchase accounting adjustment. Prior year Q4 gross margin was 47.9%. Full year 2019 non-GAAP gross margin was 49.7% versus 45.9% in 2018, an increase of 380 basis points. We believe we have a significant opportunity for gross margin expansion in the future beyond the 2019 performance as we scale our overall business, reduce product cost, and continue to drive the mix to more consumables revenue.

Our objective was to achieve long-term steady state gross margins of about 70%. In 2020, we expect gross margin expansion to be approximately 200 basis points as our scale, efficiency, and mix improvements are partially offset by the continued success of our HD-1 trade-in program. Operating expenses totaled $18.4 million in Q4 2019, and $68.4 million for full year 2019. The balance sheet is in good shape as of December 31 with approximately a $109 million in unrestricted cash.

During 2019 our cash balance increased by $64.8 million driven by $112.6 million in net proceeds from our ATM & Follow-On offering, partially offset by $14.5 million use of cash to close the Uman acquisition, plus our P&L loss excluding $10.3 million of noncash items such as stock options, depreciation and amortization, and working capital and other requirements of $2.8 million.

In Q4 2019 cash balance decreased by $4 million as P&L loss net of noncash items was partially offset by effective working capital management. Weighted average shares outstanding for EPS totaled $28 million for Q4 2019 period. Overall, we are pleased with our Q4 and full-year 2019 performance and are committed to delivering solid 2020 results in line with expectations.

I will now turn the call back to Kevin.

Kevin Hrusovsky

Thank you very much, Amol.

Just wanted to show one last slide before opening up for Q&A. Its Slide 28. Basically, this is a summit that we run called Powering Precision Health. Quanterix actually is one of the lead sponsors, however on the left-hand side, you can see all the companies that sponsor. And this makes it a free summit for most of our attendees as a result of all that sponsorship. And you can see in 2018 it was in Amsterdam, in the level of attendees and number speakers. And in 2019, it was Barcelona. And then in 2020, we're expecting it's going to be in the month of October, November in Boston.

Also want to let you know that we have a webinar plans for Nf-L on March 12. If you're interested to participate, please let us know. It's already got a very significant participation, where we’re just going to further describe some of the things around our Nf-L opportunity.

So, with that, we’ll open up for questions.

Question-and-Answer Session

Operator

[Operator Instructions] And your first question is from Doug Schenkel of Cowen.

Unidentified Analyst

This is Chris on for Doug today. Thanks for taking my questions. Kevin, on Slide 6, oncology revenue increased sharply at your accelerator services business in 2019. Could you just talk about the key drivers of this growth and was that all generated on your SPX system? Additionally, do you believe this is a good leading indicator for SPX placements in 2020? And does that give you confidence in your SPX placement target?

Kevin Hrusovsky

Yes interestingly, we have had recently a very nice surge of SP-X interest at a services level. And when we launched our HD-1 back five years ago, we didn't really have an accelerator business, and we converted somewhat of a promotional opportunity where we ran samples for customers into our service business, and it really was key to growing the instrument placements was to get a bolus of activity in our services lab. And so, this has been a good leading indicator for us that we've begun to see strong movement in the - we’ll call it the planar technology. We also do have good movement in the bead-based technology for planar.

I'm sorry for oncology as well, but we really are primarily wanting to make sure we maintain the bead-based technology, primarily for neurology because we think that in oncology the bead-based is actually a little bit limited versus the planar, and that's part of the acquisition we made where we can do 10-plex and having a larger multiplex and still maintaining the sensitivity is important to interrogate the immune system. So, we're pretty excited now that - both in inflammation and cancer, we’re seeing a nice uptick for services which bode well for 2021 for placements of instruments.

Unidentified Analyst

Okay and maybe on the coronavirus situation. Do you have enough backlog in the accelerator, and I guess demand from others is to offset coronavirus related growth, revenue growth headwinds in APAC, does that materialize more meaningfully?

Kevin Hrusovsky

Yes we don't actually provide that level of granularity in guidance, but what we can say was we were planning for the conversion of our installed base of HD-1 to HD-X, and we knew that as customers in the first half of 2020, we're revalidating that technology that it would slowdown consumable purchases, while that is being revalidated. And during that period, they would likely utilize our services in order to get the data that they need to continue while they're doing the revalidation. The good news here is that because we anticipated that, we did and are continuing to have a very healthy backlog of our services business for the purposes of what we consider to be an important installed base conversion. Probably one of the things that we've noticed though that further augments this kind of somewhat coronavirus resistance relative to what I know a lot of the companies will experience is that if a company does go in what we call lockdown, and they have some level of quarantining occurring, or they're working from home, it could impact their ability to run their instruments; and again, could impair somewhat consumable purchases as well as instrument sales. So, having this service is really quite opportune for this particular issue that you cite, the coronavirus, which - that wasn't our initial intent. I think some of that, the harder we work, the luckier we get maybe, but having that strong backlog is very productive, obviously, for both of those reasons.

Unidentified Analyst

Maybe just the last question on gross margin, how should we think about phasing in 2020 just given the trade-in system that you have in place?

Kevin Hrusovsky

Could you repeat that question?

Unidentified Analyst

How should we think about - I guess, pacing of the gross margin expansion in 2020 just given that you have the HD-X trade-in dynamic in place?

Kevin Hrusovsky

Perfect, I’ll…

Unidentified Analyst

Do you expect that to be more first half weighted or second half weighted?

Kevin Hrusovsky

Yes, I'll start that answer, and then I think Amol will provide some color. Absolutely, the trade-in program does dampen the pace in which we grow our gross margins. We still plan to grow them. It's just that the pace of growth we've been running at about 400 basis points a year over the last couple of years. We're projecting on a full year basis that it's going to be more like 200 basis points. And so, most of that is the effect of that trade-in program and we probably also have some level of mix effect that's occurring in the first half based on those large trials that Novartis ran with the Nf-L last year in the first quarter. So, I would say that there's an overall effect that we expect, it's just going to slow the pace of gross margin expansion. And I do expect that we'll probably see a bigger issue in the first half than we will in the second half based on that changeover. Amol, you might want to comment as well.

Amol Chaubal

Good and thanks, Kevin, and to build on it Chris, the headwinds we will see is on the first half of the year from the trade program. On a full year basis, we are seeing 200 basis points. So, in Q1 and Q2, we expect gross margins to start coming up from the Q4 levels as some of our mix and productivity kicks in. But the effect of it, you will only see in Q3 and Q4.

Operator

Your next question is from Puneet Souda of SVB Leerink.

Puneet Souda

Yes hi, Kevin, Amol thanks. And thanks for the details on the slides and thoughts on strategy going ahead. So, I think the bigger question here for investors is the long-term guide. So, I just wanted to make sure you – I mean you posted 51% growth here in fiscal year 2019 and 65% last year. Given the number of growth drivers that you're pointing to, is it safe to assume that you will continue to be a 40% CAGR longer term despite being 30% to 40% topline growth that you're mentioning for this year?

Kevin Hrusovsky

Yes, we do think that - in some ways there is a little bit of a correction this year. Not really a correction off of a pretty strong growth pace, but I think when you consider the types of things that were doing with the overhaul of our installed base. Coupled then with the fact that our denominator is bigger and we know we had just a small amount of one-time large trials from Novartis. When you add all that up, we feel very confident in this three-year CAGR of 30% to 40%.

Where we end up this year? We don't guide it in annual basis, but there are as you point out lot of healthy growth catalysts. We just - as you know are very conservative and wanted to make sure that we don't get ahead of our skis relative to a lot of the transition that's occurring this year. This is a year where we've got tremendous growth catalyst in place, but it's also a year that we don't want everybody to just simply add all those growth catalyst up and look like we're going to have another 50% growth year, which we've had the last two years. So, our commentary is pretty common with the way it's been historically.

So, we feel very good going into this year that we have a lot of nice growth catalysts in place. But at the same time, we do think that as a denominator gets bigger and with the level of execution stuff that we're trying to achieve this year, it's going to be smart for investors not to expect the high end of this curve right out the gate. But obviously, there's opportunities for upside as we traverse through this year.

Puneet Souda

But for the longer term 40% CAGR is still something that you are still aspiring to and then you're confident of.

Kevin Hrusovsky

Yes, we basically have stated that actually in our slides that we have a 30% to 40% CAGR for a three-year period. And that assumes that the denominator is getting bigger each of those years. And it also assumes that that is for research. And as you know, we're making a lot of headway on possibilities for measuring Nf-L and clinical studies. And so we don't have any of the potential upside of let's say if we were successful moving into LDT, single side LDT for Nf-L. We don't incorporate and - at this point plan on any of that revenue but certainly we're working towards that as you know.

Puneet Souda

And then on clinical trials, those have been obviously a major driver of growth this year and last year. So on Nf-L, can you help us - help me understand whether these biomarkers that are coming from Uman, would they be exclusive to you when the Nf trials were to turn into a companion diagnostic? And could you maybe give us a sense if the or could they be used on competitor systems as well, meaning the antibody being used on competitor systems as well and they’re still license from Quanterix? Just help us understand how should we think about the actual companion diagnostic product if the drug was to improve with that product?

Kevin Hrusovsky

First thing I would say, I wouldn't look at it as a negative. We actually look at it as a positive that we think it's important that we get multiple pathways into the market utilizing our antibody peers or it will never be the standard. It will actually get reinvented and could dismiss a lot of the long term value creation opportunity. So a lot of what we're doing is proactively establishing a long-term value for this Nf-L franchise. And so the one place so far that we have licensed and we've only licensed that for the purposes of a long-term IVD diagnostic is to Siemens.

Siemens has an installed base of 10,000 - 7,000 to 10,000 instruments and we believe there are some use cases that you'll be able to deploy, in an IVD setting, inside of their instruments that we think it bodes well for us to work with them to get the Nf-L and an IVD basically franchised.

And so they will be making investments, significant investments over the next several years to get our Nf-L as an IVD on their platform. Now that is a non-exclusive, meaning, that we can in fact, move that on to other diagnostic platforms and we do think that Roche and Abbott, both are very significant installed basis. All of these companies Roche, Siemens, and Abbott do primarily singleplex, they don't do multiplex.

We think longer term, that for a drug - for disease specificity, having a panel is going to be important because Nf-L only shows neurodegeneration. So it's kind of like the cholesterol of the brain, that could be a lot of different things that cause cholesterol to go up. And so there's a lot of pathology that different drugs go after. We now have drugs going after Nf-L, believe it or not, as a target. And so, our view is if that, longer term, when there is interest for specificity, is it Alzheimer’s that’s created the neuronal disease or is it MS, or is ALS, or is it concussions?

We think the specificity is going to require other markers to be added to the panel, and that’s something that unfortunately, many of our IVD partners - we have two right now, we have Siemens for Nf-L and we have Abbott for blood screening but not with the Nf-L but just in the general category.

They would not necessarily be able to utilize it in a multiplex because they don't do multiplex and if they did they would not have sufficient sensitivity for those use cases. And so in a way we think we're building a very bold market for Nf-L and for Samoa given that we think longer term a multiplex is going to be very much needed to get sufficient neuro disease specificity.

Puneet Souda

And then so last one on the current commercials for us that you have in place. I wonder if you could give us a sense of where do you stand with the sales reps and remind us as you move towards these efforts should we expect any expansion there in the commercial organization and more importantly the sales force?

Kevin Hrusovsky

Yes. We typically are making investments in our sales force at about the 20% to 30% level per year so you would expect growth in that headcount of 25% on average. We have also recently brought in what we consider to be some of the top sales leaders in the entire landscape. We started searching for a new North America sales leader back about a year ago and Hether Ide has now joined us from Thermo and she took over the reins - right when the year started and her first sales meeting was focused on what we called one team.

It’s part of our insider revolution campaign where they basically are taking the field applications scientists which are primarily PhDs that support the sales force coupled then with the field service engineers that are in the customer shops fairly routinely at least at a monthly level coupled them with the salespeople and team selling.

So, we call it one team, but she's kicked that off as our European team has a leader two that we brought in about a year-and-a-half ago, [indiscernible] one of the top European commercial leaders. She also launched one team in Europe. We also brought over from SomaLogic one of the top commercial Vice President leaders from that company. His name is Andy Keys. He's running all of our services on the accelerator and that's why we've seen such a bolus of growth. We've got these three sharpshooter leaders that are really honed in on the inside of revolution of what we call one team and now we're focused on Asia.

That's the next major focus point, is to further build out our Asia operation. And we had a lot of meetings over the last six months. We have about five or six people that are on the ground, but we're primarily using distributors throughout China right now. But we do see longer term, maybe not in the first half this year given the coronavirus, but we do see significant opportunities. It's only, today, 7% of our sales, and so we're pretty underpenetrated. But we see a very significant opportunity.

So, I would say that you'll see a 25% investment in head count, but it's the quality of what we're bringing in that is really high quality and they're actually linking into our investor base that's providing its leads because of the drugs that they want to get approved with our technologies.

Operator

Your next question is from Sung Ji Nam of BTIG.

Sung Ji Nam

Just a couple of questions. Maybe going back to Chris' first question, I was wondering if I could get a bit more color on the oncology market opportunity near term. So, it seems like a lot of the near-term opportunities are coming from better characterization of later-stage cancers. I'm not sure if I'm later stage cancers. I'm not sure if I am interpreting that correctly but was wondering if there are kind of meaningful opportunities in the - in the near term for some of the earlier stage screening to disease recurrence monitoring and things like that near term. And then, when you talk about the utility of HD-X as well, do you think HD-X is more - their utility, therefore, kind of even the earlier, the more sensitivity needed, I guess, segment of that market?

Kevin Hrusovsky

Yes. You're asking some pretty interesting questions, Sung Ji. They border between the left-hand side which is research and execution to the right-hand side which is our aspirational liquid biopsy opportunity assessment that we're doing this year. Starting on the left-hand side, the product that we've launched as a CorPlex. It's an assay of 10 of the most important cytokines, interleukins, interferons that basically today you can't really see them at baseline healthy levels with the competitor’s technology on a routine basis.

And we think that on most of the markers that we have in our panel, you're able to clinically distinguish and discriminate the baseline levels. And so, any movement from baseline for immunotherapies is a very important finding in measurement because in general, if you look at like KEYTRUDA in some of the immunotherapies, they have response rates that are less than 20% and they also have cytokine storm or lethal toxicity that's around 10%.

And so basically 80% of the time these drugs are not providing the cancer patient any benefit. And of that 80%, a portion around 10% of that time they're actually up-regulated immune system that becomes toxic and kills the patient. So we think that seeing these cytokines at baseline levels is a great research opportunity.

And today, we have competitors in this landscape where we don't really have a neurology competitors but in this oncology landscape, there are a few companies that are incumbents, that we're disrupting what our sensitivity. And it's not only the ability to see these cytokines have baseline movements and seen them earlier but it's also the ability to get better clarity and less false positives and negatives through the dilution of samples. And so we're pretty excited that we've got kind of an avalanche of interest in our services lab to utilize these 10 flexes for cancer and inflammation or immune system kind of work.

So, those all get written up and become testimonials and give us a lot of bandwidth for research opportunities. But I would say that that's in the drug industry. There’s a lot of researchers that are looking at our technologies for liquid biopsy, believe it or not. There are several companies that have bought our technology that are building out their own liquid biopsy position utilizing our ability to see proteins that exquisitely sensitive levels as well as we see early detection in blood of breast cancers and things of that nature as alternatives to today's technologies I’ll call them imaging screens like mammograms etcetera.

We've got a lot of researchers that are shown a lot of advancing of the protein and the proteomics which in many cases is more phenotypic and also complimentary to the DNA and RNA. And I think you're probably aware to our STX can do DNA and RNA has exquisite sensitivity levels without using PCR. And so, we've got kind of a multi mix shot on goal with our SRX into cancer but the SPX has been primarily for researchers and immunotherapy and now we've got researchers looking into the liquid biopsy landscape. We are either with the SRx or with the SPx.

I don't know if that gives you an indication. I would say that the right hand side aspirationally we've watched all these companies like Natera, Guardant, 10x Genomics. Most of them are kind of based on the Illumina technology. When you look at the market caps of those downstream companies, I think another one to be foundation medicine that kind of add up to 2x that the market value of the Illumina.

And we've got this translational platform that isn't quite as discovery focused as say a next generation sequencer is but it does allow you to measure the concentration of these critical protein markers that there are other ways to find them in the cerebral spinal fluid and more invasive samples that were then able to translate into a translational opportunity which we think we'd like to better understand how we can maybe enable the liquid biopsy with our own platform. So that's part of the research that we're doing this year. That is not a short term opportunity. That's something that we're doing the opportunity assessment in 2020.

Sung Ji Nam

Great. That's very helpful. And then just my follow up is on instrument placement. I was not sure. Remind me again if from an intra-quarter standpoint, for the instrument and shipment I guess cadence within the quarter, do you see the majority of that in the last month of the year? I mean I'm sorry - last month of the quarter…

Kevin Hrusovsky

Yes. I would say…

Sung Ji Nam

…as many other tools companies do. I was just curious if you guys also see that.

Kevin Hrusovsky

I would say the last couple of years we've probably, Sung Ji, I have had pretty good visibility throughout the quarter so I think that we do know with the launch of the HD-X that in Q1 and Q2 we are going to probably see some increase in our growth rate and the services that cover for a lot of the validations going on with this newer technology. But in general we have pretty good visibility to instruments throughout the quarter and we do see purchases, not just at the end of the quarter, but also early in the quarter.

So it isn't uncommon that you do see a little bit of a fourth quarter surge in capital equipment purchases versus other quarters. That's not uncommon. But I would say that for us our first half is going to be really increasing the mix of services which does two things, we have great gross margins in our services, but it also creates future demand for our instruments. So we're pretty excited about those prospects as we try to build out the longer term consumable pull through which we've had I think five years in a row now of very strong growth.

Operator

And your next question is from Tycho Peterson of JPMorgan.

Tycho Peterson

Kevin, I have a follow-up question on the partnerships as we think about Abbott and Siemens. Are milestones we should be paying attention to and then thoughts on time lines of when we can actually see something on the market?

Kevin Hrusovsky

Yes, I would say that we are in our strategic goals for this year attempting to land another IVD relationship. And you might remember we had a deal where you - we got all those rights back. And so now we're in a position where we can kind of re-cash into the right landscape and application space. [Bill Maher] was not focused on neurology and oncology and we do think that Abbott and Roche and Siemens do have very nice participation in those categories. So, hey, we can't time a deal like this but I can say from a strategic standpoint, we are setting up a target to try to get another one landed this year.

We did the Siemens last year, which was primarily only on the Nf-L. This one, we hope to achieve this year, would be more aligned with where the opportunity landscape is for these diagnostics and we think that there is tremendous potential to use our Simoa technology to not only someday, advance into a point of care, but also to enable significant benefit to core labs today with just much better economics, given that the sensitivity allows you to get answers from smaller samples more productively.

So we're very bullish on an IVD relationship opportunity in 2020. We can't time it. We can't tell you when that would happen, but I do think that it will be a fairly significant milestone for our company, further validating what I consider to be disruption that we could create with this technology. And one of these diagnostic companies acknowledging that opportunity and teaming up with us.

Tycho Peterson

And then thinking about HD-X, you’ve talked about the expecting 50% of the HD-1 installed base to be upgraded by year-end. Can you maybe just talk about what it takes to get the remaining accounts to upgrade and then, how should we think about overall utilization, HD-X has I think 20% higher pull through. So how should we think about average utilization across the installed base as you go about HD-X?

Kevin Hrusovsky

Perfect. Yes. So first of all, the way we’ve set up the target for the installed base of HD-1 versus HD-X is that by year end, we expect that the total amount of HD-1s will be roughly 150, and there’ll be roughly 150 of the HD-X. So 50/50 by year-end. And off those units that we sell, the share of HD-Xs, we think that probably half of them will be upgrades to the HD-1, the other half would be new purchases at the $200,000level. And from then, as you point out the overall pull through, when we first started, Tycho, we talked a lot about a third of our instrument revenue would be kind of recurring. Well, now, we're up to 50%.

And so, we're fairly confident that the total dollars of instrument installed base, we will get that same level 50% or greater of pull through. So, in the case of an HD-X, it goes for $200,000. We would expect that we're going to be able to pull through $100,000. Now, that typically is a quarter to after the install that takes a little bit of time for them to get up and running and the validations will be complete.

But the 50% is now a pretty good number to be using for modeling purposes, even though it had been as we pointed out lower than that when we started.

Tycho Peterson

And then last one, just on pipeline, if I go back to our conference in January, you talked about potentially inferring liquid biopsy and single cell. I know you mentioned liquid biopsy a couple of times in this call. So, how are you thinking about that opportunity in single cell? And then as we think about the sensitivity improvement, the 100-fold target increase, how should we think about how derisk that is? I think you talked about already having the past in place to get to 40x. But how should we…

Kevin Hrusovsky

Yes. First, on this liquid biopsy, we clearly - we count proteins versus measure a broader-based concentrations. We’re actually counting the number of them in the way their digital technology works. And so, whether it’d be in the area of doing it with a single cell or whether it's with a lot of cells that your heterogenetically looking across the tumor, our view is that knowing how many of the proteins of interest there are is a unique opportunity.

And we think that the protein is much more phenotypic and many of the customers that we have in those liquid biopsy field, has been primarily honed in on molecular, but they're now wanting to augment it with the ability to do some level of protein work as well. So, I think that our goal would be by year end we're going to have the ability to articulate what our position is on our ability to evolve into liquid biopsies.

We want to make sure that it's going to be something that makes a lot of sense for our investors because it would be a higher investment profile to move into that landscape. And today, we can watch that many of the liquid biopsy companies really haven't migrated into early detection. They're more into measuring drug efficacy and patient monitoring and residual disease monitoring as opposed to getting to the upstream actual diagnostics and early detection of the cancer.

Where we do seem to have an opportunity, the only thing I would say that we're doing is - as we watch the different columns that we see evolving in liquid biopsy and we've got all the logos of these various companies that primarily are utilizing a luminous platform to get to some kind of an answer. We are building those same columns in the neurology landscape and trying to understand how our technology might be able to do for neurology, that a lot of the things that the companies initially thought they might be able to do for oncology. And we don't really see a lot of competitors there, because we're able to do not invasively this exploration of the brain and blood.

And so, the thing that's really attracted us to the second category the neuro disruption with the Nf-L plus many other markers like the [P-Tals the Phosphor related Tals are ] like one of the hottest areas right now to augment our Nf-L. We've got a lot of trials going on right now even at Alzheimer’s utilizing our technologies as well as amyloid betas. What we think is pretty exciting as many of our customers have deployed this exquisite sensitivity on the cerebral spinal fluid where typically the proteins you find in blood are about 50 times more concentrated in the CSF.

And so there is a body of evidence in CSF that is being created using our exquisite technology, but they're going to need another 100x in order to build and see in blood. And so, we're creating our own market and moving into blood with the exquisite technology being deployed on the more invasive samples. And so that's led us to continue to accelerate this advance, and you're right we have already shown in our prototypes 40x. There's even the beginnings of 100x been shown in certain prototypes.

So we're fairly confident, not only in our technological ability to get to 100x, but we're also very excited about the market that we're creating for the 100x and what we're doing in CSF with today's technology. So it's a fairly unique opportunity to disrupt and build the next round of disruption through increased sensitivity. And we're feeling very confident in our ability by the end of 2021 to have a product on the market that will give us that 100x and maybe even earlier.

Operator

And your final question is from Max Masucci of Canaccord Genuity.

Max Masucci

So you’re confident as an expanding global footprint, can you just go a bit deeper about how you’re mitigating any supply chain impact from coronavirus? And then, any details around the discussions you’ve had with some key global pharma customers and how their thinking about any impact? Thanks.

Kevin Hrusovsky

So first, I would say that there are certain customers of ours that have already started some levels of lockdown relative to working from home for a large percentage of their populations. And it's still fairly minor, but we're watching it closely to see how that evolves and I think we've seen announcements, public announcements from Biogen as well as to Takada at this point. We also from our vantage point, started very early. We've had a task force established.

We actually had a kind of what we called an insight 1.4 meaning that basically honed in on all the things that could interrupt our ability to be performing in the first half of this year. And some of the things that we cited were supply, and we actually don't see any short-term supply risks based on the current state. Obviously, as the coronavirus continues to spread and - they work on mitigation strategies that could change. But right now, we feel good on the supply side. The demand side, also we mentioned that we have fairly limited exposure based on Italy and China being a very small portion of what we have.

The pharma side of this is what we want to keep an eye on because interestingly these pharmas are really trying to utilize our technology to get drugs approved, and that's their value proposition. That’s the number one thing that they really do for their investors. And so, what we've been seeing at least in the short-term in Q1 is an excitement to utilize our services as a way even if they can't utilize their own instrumentation inside because of whatever quarantining or whatever issues they might have.

So we are continuing to work hard on our own position making sure that we've got our contingency set to try everything we can to keep our employees safe and effective, and making sure that we don't put them in harm's way. But to the extent that we can continue to evolve productively our services, we're still feeling very good that there won't be an issue from the supply side of what we need to build the kits and the instruments.

Even though I would say that like some of our instrument providers do have work from home types of contingencies that they've been setting up. We don't see that impairing our ability to get the instrument supply for the moment and we'll keep a very close eye on that Max.

Max Masucci

And then just one broader question. So, I guess how does Novartis’ success with their drug that maybe approved in June kind of set precedent for the use of protein biomarkers in these Quanterix in the future trials? And then on that note, just given that your 10% penetrated in that neurology research segment just speaking to the global demand appetite sustainability of global spending for neurology research in 2020 versus 2019? Thanks.

Kevin Hrusovsky

Absolutely, one of the things that we saw recently, we had up a major show in Boston and I think there were five Chief Medical Officers attending from some CROs that are doing drug trials as well as from pharma. And there’s a very high level of excitement for neuro filament light being an early indicator of drug efficacy and drug performance. And we’ve just got some evidence that if you turn off the drug in a patient that within a week to two weeks you can actually see the Nf-L levels start to return to disease levels.

And so this is a very quick cycle time as opposed to the MRI that we think it could take as long as two years to two and a half years to be able to see brain atrophy as a result of some of these diseases. So, we think we've got a new gold standard of opportunity and there does appear to be robust interest across pharma for the technology which I think that we're still seeing almost a revival in some respects of neuro pipelines with the concept of having an objective biomarker, which they've never really had before.

So, we actually got one drug company. We just did a video for if anyone interested on the call it’s with the SARM. They got the SARM protein that they have a drug that they're going after that basically can prevent external damage and neuronal damage. And it's almost like the Nf-L has become a target for them. So we actually are pretty excited that having this biomarker that's so low cost, so noninvasive that also provides the opportunity to measure neuronal health is creating more excitement and more interest for the neuro pipelines.

So we feel pretty good and we also feel like there's a national priority on mental health given all the issues of post-traumatic stress disorder. The opioid crisis and also the onslaught of the demographics of how many Alzheimer patients are going to hit the healthcare system over the next 30 years. So all those, we think bodes well for why the FDA has been trying to help researchers use biomarkers to get drugs approved before - the symptoms of dementia and other things set in when it's much harder than for the drug to work.

Operator

And there are no other questions in queue.

Kevin Hrusovsky

Okay, great. Well hey, we really appreciate all the support. We wish everyone the best of luck and good fortune as we all navigate through this coronavirus spread throughout the world. We will keep you abreast of our developments and we're very bullish on how we're going to turn and translate 2020 into another value creation year for our investors. Thank you very much.

Operator

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.