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Accelerate Diagnostics And T2 Biosystems: Financial Woes Set To Continue In 2022


  • Both Accelerate Diagnostics and T2 Biosystems have developed promising technology related to the rapid detection of bacterial infections, notably sepsis.
  • Sepsis is responsible for 270,000 deaths in the U.S. annually, making it hospitals' most deadly killer. It is a $62 billion-per-annum burden on the U.S. health system.
  • Both T2 and Accelerate had a rough 2021, however, with their share prices respectively falling by more than 60% and 30%.
  • Neither company appears able to persuade hospitals that their technologies offer an optimal solution to the problem to rapid detection and treatment of sepsis.
  • That is a major problem for both and the reason I think both stocks could continue to suffer in 2022. T2 already faces delisting; Accelerate's shares have further to fall.
  • Looking for a portfolio of ideas like this one? Members of Haggerston BioHealth get exclusive access to our model portfolio. Learn More »

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Investment Thesis

Accelerate Diagnostics (NASDAQ:AXDX) and T2 Biosystems (NASDAQ:TTOO) are two companies focused on the same space - the diagnosis of serious blood infections, and most notably sepsis, which is a bacterial infection that is the number

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This article was written by

Edmund Ingham profile picture

Edmund Ingham is a biotech consultant. He has been covering biotech, healthcare, and pharma for over 5 years, and has put together detailed reports of over 1,000 companies. He leads the investing group Haggerston BioHealth.

The group is for both novice and experienced biotech investors. It provides catalysts to look out for and buy and sell ratings. It also provides product sales and forecasts for all the Big Pharmas, forecasting, integrated financial statements, discounted cash flow analysis and market by market analysis. Learn more.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (111)

Anyone following AXDX? If yes... any comment on recent earnings?
@VIPstock AXDX is NOT an earnings story. It's a story concerning how quickly they can develop their next generation product called "Wave". BDX is in desperate need of a rapid AST device based upon isolates in addition to blood.
Up ~50% in 5 days
Anyone know why?
taferrara profile picture
I would like your thoughts on axdx for 2023
Up 61% today ??! on now news
Anyone know what's going on?

Going out on a limb here.

1. Unlike TTOO, AXDX is 70% owned by insiders including the ultimate backstop--Jack Schuler. The difference between having a deep pocket majority owner and one that does not is beyond important when survival is at stake.

2. At this point, I am virtually certain that AXDX does not have a "going concern" qualification on their financials. However, given their cash burn and lack of immediate revenues, one could be on the horizon.

3. The looming cloud of a "going concern" qualification, is to be avoided at all costs. What hospital would want to invest in new equipment (and more importantly NEW PROCEDURES) with a company that might not be around in a few months.

4. Simply put. AXDX has to get OUT of the public spotlight. They can't have Phillips giving out lame placement, contract and sales numbers. They can't have smart analysts like Weinstein peeking under the hood trying to find rays of optimism.

5. At 97 cents a capital raise is really likely out of the question. Remember Jack spent $5MM at $5 per share at the beginning of the year! Let's ball park it. Roughly 80MM shares. Let's say that Schuler/Pals own 50MM. Let's say that they can get a fairness opinion at $2.50. That's $75MM to buy what they don't already own.

6. Third hand gossip indicates that Schuler and his team are still highly confident about AXDX's prospects. This seems to be the best choice for them to go forward.
AXDX--Mystery to me as to what will occur here. You have the ultimate deep pocket in Schuler who has so much invested in this. TTOO has no white knight. TTOO is also relying upon negative resistance markers as part of their salvation. Good luck banking your future on that.

So let's focus on AXDX. They are running out of money. All of their execs' options are way under water. Employee morale must be awful. They finally have an exciting product line but who knows how they're getting into the hospitals and any kind of hospital purchasing DD is going to notice that things aren't going well and that starts a death spiral.

At this point, I don't see how it continues to be a public company. I don't know the ins and outs of the taxable impact of Schuler's Foundation being a major owner. But at some point, for the company's future, you don't want to have the world see your dirty laundry.

Safe to say that Schuler could write a $50MM check and buy what he doesn't own at about $2. Can he get a fairness opinion on that? Who knows?

But the present situation is likely untenable. At least AXDX has a Schuler as the ultimate backstop option. Anyone know TTOO's white knight? I don't think there is one.
my dog profile picture
@GoNadsGo who cares
AXDX Conference Call yesterday.

Only confirms that you cannot possibly invest in either AXDX and especially TTOO.

Read the AXDX call. Keep in mind that AXDX does NOT make a Maldi-Tof machine. Maldi is present standard of care for infections ID. Its arrays that can be measured cannot be topped. Problem is that it takes two days.

What TTOO is attempting to do is to unseat Standard of Care. Good luck. AXDX has a work around called Arc that will reduce the prep work by 90% and make Maldi a rapid test. This is far easier to do politically than to admit that you shouldn't have bought a Maldi machine or that you want to do a complete upending of your protocol.

That said....AXDX is running out of money. The Arc machine is going to be ROU until they get FDA. And their breathtaking machine--the Pheno 2 that will do ALL infections (blood, urine, mucus)--won't be out until 2024 at the earliest.

Good luck to all.
Seems pretty biased against one of those 2 names in particular, but hardly justified apart from speculative argument. Rather, it could be viewed that one of the Maldi standard of care competition is about to die...whereas the other guy just extended their debt runway by a full 12 months....
I'm reaching out to the general board here. Not just Joel. I'm fairly well connected with medical device sales.

Has anyone heard anything about AXDX making headway with their undeniably stronger product line? Of course the company itself is mum because that information would be material non public.

But general gossip among guys/women in the field? In pre Covid days we would swap stories over beers but that doesn't happen anymore. If there was any even sniff of progress being made this thing is absolutely cheap. Buy we all know that they have to put numbers on the board.

Not really interested in TTOO as I believe that in the long run negative resistance markers are a non starter to any hospital purchasing committee and the TTOO thesis doesn't work if you believe resistance markers are inadequate
@JrMastermind Go ahead and laugh your ass off.

Presently, AXDX is almost selling at liquidation value of its IP. Their new product line is eye opening to say the least. The MALDI-TOF prep kit alo Ane is worth more than all of TTOO in my opinion. (Reason: Only product like this in the market place while there are countless ID Onlly products)

Indeed, what I'm specifically looking for is any "general sales feedback" regarding the MALDI-TOF product. Has anyone heard of any sales taking place this quarter? Though it's been mentioned in sales presentations and conference calls, it's truly under the radar. I believe that it's this product that has the potential opportunity of turning this ship around in that it is significantly easier to integrate into the lab reporting apparatus than redoing AST reportng.

It is my opinion that any headway on this will be an eye opener and that the stock could quickly rebound should any significnat progress be made. I haven't heard anything thus far. Was wondering if any guys/women calling on hospitals have heard any scuttlebutt.
JrMastermind profile picture
@GoNadsGo LOL! Based upon your constant need to denigrate TTOO, it's pretty obvious that you feel threatened by them.
does the extension of the interest only loan for another 22 months influence your opinion mr. Ingham it gives the company 22 months to convince hospitals that their mri technology will greatly improve patient care
AXDX--maybe there's signs of life after all.

I've often seen sloppy selling where a big block goes on a market order and the market maker reams the price down significantly.

But today? Something completely different. Sloppy buying. THere was a 62K share bid at $3.02. Once the market saw that bid, the share price inched its way up to $3.11 on a very bad Putin inspired day for the market.

This was not Jack Schuler. He employs an excellent trader and even his most sizable buys are hard to detect until he files a Form 4.

So somebody out there wants a fairly big block of AXDX. Maybe they know something, maybe they don't. Or maybe somebody belatedly recognized that they have an excellent new product line that for the first time aids Maldi preparation and addresses the need for AST only equipment. Or maybe it's someone who is buying in front of the BTIG conference. (Have been wondering why they were going to attend if their only news was disheartening.)

Or maybe it's nothing.
I've had numerous debates regarding AXDX vis a vis TTOO.

But in fact, they share a similarity that has threatened the viability of both companies. And I feel that it is not quite understood by this community.

The bottom line for both AXDX and TTOO is that these products do NOT sell themselves. It's not like Apple putting out a new IPhone with 100% more battery life.

I believe that many people here underestimate the sales challenge for both companies. You can talk efficacy all you want. TTOO is indeed faster than blood culture in identifying infections. AXDX is miles ahead of anyone else with regard to AST.

But at the end of the day? Hospitals have a means of identifying sepsis--just not as fast as TTOO. And the same holds true for AST and AXDX.

The community does not understand the absolute decimation of hospital budgets due to Covid. Elective surgeries like hip replacements are a cash cow for them. Pretend you're a two income family and that either you or your spouse was let go without any benefits. Now imagine you have an older t.v. If cash was temporarily tight would you be spending it on a new one that was clearly better? Or would you wait until finances improved.

That unfortunately is where both companies are now. You can cite any stats you want about how much faster it is and that hospitals need it. It doesn't matter. "Good enough for now" is the mantra of the day.
@GoNadsGo "But at the end of the day? Hospitals have a means of identifying sepsis--just not as fast as TTOO."

And it's not good enough. Your "just not as fast" means a lot of dead people given the author's stat on per hour passage drop in survival rate, doesn't it.

"The community does not understand the absolute decimation of hospital budgets..."

The hospital does not understand the absolute decimation of community due to staph deaths that could have been prevented.

""Good enough for now" is the mantra of the day."

That's not good enough and it's time hospitals recognize it's not good enough.
@joel menkes Joel. You're sounding like a blinded cheerleader and I'm sounding the bell of what's going on.

No. Right now with the priorities that hospitals face, "Good enough for now" is what is going on. The T2 machines (as well as AXDX) is not like electricity that they absolutely have to have.

As badly as you believe that "hospitals have to have it"--the fact that the vast, vast majority have decided that they do not. In fact, a hospital at this stage would be more likely to purchase a $1MM DaVinci robotic surgery device if it meant luring a top tier surgeon from another hospital because that doctor could bring in much needed revenue.

And remember--revenue is the name of the game here. Right now, they have a lack of it. And they are being pressured to generate more of it. T2 and AXDX product do NOT produce revenue.

You can pound the table all you want and say, "People are dying and that's not acceptable". The truth is, not all of them are dying and hospitals are faced with tough choices and the jury--sadly for T2--has just about spoken.
@GoNadsGo "You're sounding like a blinded cheerleader..."

Just what part of "And it's not good enough. Your "just not as fast" means a lot of dead people given the author's stat on per hour passage drop in survival rate, doesn't it" did you miss that you think i didn't acknowledge your message?

You're way behind the times anyway, we'd gone over the hospital budgets/spending like a couple of years ago and some of us were hoping the european sales, where business is subservient to people concerns, would pick up enough to overcome the American business $ greed. It was going that way, too, until covid came along. Or didn't you notice the european pre-covid sales pickup.
BoringDude profile picture
Why would hospitals use T2 platform for Covid-19 diagnosis, while there are so many cheaper and possibly more sensitive tests available?
@BoringDude - "Why..."

First, none is faster, nor even as fast. The closest i've seen runs at least 6 or 7 hours slower in getting the results back when the i've read in the past several days the success rate of treatment drops 7+% for every hour or delay in providing the proper treatment for the specific strain attacking the body.

Second, "...possibly more sensitive tests...". I don't remember seeing anything denoting one more accurate. More sensitive and giving off false readings, perhaps there are those, but i haven't seen anything that alleges either more sensitivity combined with more accuracy in the first place. Nor one that's ben alleged to beat t2's for either on an individual basis. If anyone does know of something that says i'm wrong on any of this, please provide the information. I like learning as well as the next guy. As long as it doesn't strain my grey matter by too much. Tia
BoringDude profile picture
@joel menkes do you mean t2’s covid panel can detect the virus faster and maybe better than industry standard PCR test?
@BoringDude "do you mean t2’s covid panel"

Sorry, my fault. I completely missed covid in your statement. No, for covid i really don't know, and i could care less unless someone clues as to why i should care. I don't know that a few hours faster or slower verification of covid means anything in terms of treatment options. My focus is on staph where fast, correct treatment is of utmost importance. Ciao
BoringDude profile picture
"Unfortunately, they are only a part of the overall solution, it seems, and that is not presently enough to persuade hospitals to make substantial investments in their technology."

why is that?
Bruster profile picture
Like other ttoo shareholders I have suffered waiting for industry adoption of the technology but axdx given what they do will never be successful and I'm not sure why anyone has not really seen that there is no way for that company to get off the ground with their biofire and other related products that just are not cost effective in my opinion. If it weren't for the too Bards grant I would not be a shareholder but that will be the bridge to success as we have already seen. 40 too their future also resides in the outcomes of the trials at Mayo and Baylor which I cannot find any current information on
Though the author has done some nice research, he misses by a mile on some parts.

First....Let me agree with him in part. Both AXDX and TTOO have not come close to meeting expectations. Both face huge headwinds due to Covid induced limited hospital access. Neither is in a good place right now. So actually--bottom line, I agree with the author that neither is a good investment currently.

But the author does not really distinguish between the two companies and what they do. Both might have limited utility but TTOO has REALLY limited utility. It's an ID only machine. It does no AST.

The goal is hospital stay reduction and death reduction and to accomplish this AST is the game changer. Not ID. To that end, AXDX is by far the better company. Its new products are meant to address those hospitals who already have sunk $ in expensive ID only machinery.

As one colleague put it, "TTOO has the all time best Betamax machine ever made"

Another huge, huge difference between the two is insider ownership. AXDX is about 70% owned by Jack Schuler and friends This is not a company that is going to run out of money. Ever. These guys have shown patience (actually one of their investors is actually named Jack Paitence) and faith. TTOO doesn't have anyone near Schuler's financial stature.

Author mentions BARDA for TTOO but that's a possibility for AXDX as well. As is China--rumors circulating that AXDX personnel is in Henan Hospital but I can't confirm that.'

Bottom line: Both companies have huge hurdles to overcome. But I'd much rather be AXDX than TTOO here.
@GoNadsGo - "It's an ID only machine."

You show you have no conception of the need for quick identification to provide proper treatment. The quicker the proper treatment is applied the greater the success rate of treatment.
@joel menkes No my friend. You are incorrect on this. Not me. The treatment of infected patients is a TWO STEP process. Not one. The first step is that the infection must be identified. This is where TTOO does indeed have the best made Betamax ever made.

The second step is actually much more important. It's acronym is AST. What it means in plain English is that you need to know what antibiotic will best meet that individual patient's needs. There are about a dozen antibiotics for staph. Which one will work the best? Present SOC is that they pump a ton of shit into patients which can and does kill them.

TTOO is relying upon the approval of somethng tat is called "negative resistance panels" to address this issue. It doesn't have FDA and even if it gets it it is a far cry in accuracy to what AXDX provides in this sandbox.

Given the climate of hospital purchasing committees during Covid, I find it highly unlikely that many hospitals would buy an ID only machine knowing that it only satisfies the first half of the equation.

Indeed, given the climate, I find it unlikely that many hospitals will buy AXDX equipment--though it addresses the bigger issue--because there are so many issues that hospitals face with the cancellation of elective surgeries.

As I said earlier, I agree with the author with regards to his conclusion but strongly disagree about his reasoning in getting there.
@GoNadsGo "The second step is actually much more important."

Actually, no my friend. You are trying to separate one step from the other and without either neither works. Without properly identifying the causative factor treatment is guesswork and until the factor is properly id'd time slips by and with it the odds for treatment being successful grow smaller.
i lack understanding of todays events. all good news and the stock is down. i need understanding and clarity.
@stevenfried As a guess, simply not good enough.
The Auryn profile picture
@stevenfried This stock is always the same. Good news premarket gives it a +6% or so bounce premarket, but it never holds once the market opens.
Bruster profile picture
Any one have info on baylor or mayo trials? Shareholder relations won't say anything to me
I have been long TTOO for a little over 3 years now and always believed the tech was fantastic, a game changer... I have a large position , deeply underwater currently, and I will hold. I believe that a reverse split will occur soon, rather than delisting. Hopefully sales will pick up in 2022..
@me66 - Hi 66, long time. Came looking for you over spir, i added a bit today, but coming across this article i figured why not read. Got up to "That is the good news in relation to T2,...", from that point on i did a quick scan to see if anything was mentioned on the expanded panel in development, particularly as the author also mentioned "...and although they may be slower, budget constraints in hospitals dictate that legacy systems - which carry out multiple other functions, are preferable to specialist platforms such as Pheno or T2Dx, which are faster but not necessarily more effective, and lack the multipurpose functionality required by hospitals" in relation to what products are being bought by hospitals today.

All i caught when i scanned was mention of candida and covid, one other i think but don't remember at the moment, but no mention of the expanded panel noted. If it's in there then my apologies as i obviously missed it. If it's not in there then mention should be made imo as it meets that "multiple other functions, are preferable to specialist platforms" wanted by hospitals.

Ok, that's it for t2 other than my son wanted me to buy some for him now, he's not permitted to buy penny stocks in his position. Wanted 1000 shares in return for the new computer he bought and set up for me so i got him 1000 shares in my account. He'll get it as part of his inheritance some day i guess, assuming the company's still in business. On to spir.

So, any thoughts on spir? Seems to be a dearth of articles on it, i did tap into one titled something along the lines of "thank me if you buy it" from october, and i'm sure no one's thanking him for it given the decline since then. Ameritrade had only one supposed research report which was much of anything. Just trying to get some kind of handle on its future prospects. Added the bit i did today, at 3.04 i think it was, simply off the drop in price.

Hope all's going pretty well with you, and it stays that way. Ciao
@joel menkes howdy Joel ! I added 120 more TTOO, sold CCs with $5 strike, I guess I still have hope. I added 250 more SPIR recently, < my CB. I don't expect much until earnings in Feb. But I'll keep tucking in a few shares..... Kurt Spanos wrote that article, I agree w/him. He also likes BKSY as a satellite play, I am watching it also but SPIR is cheaper P/S metric, so I'll add more there first & watch BKSY, for now
We are exactly on the same boat and with the same hope... CEO and Top management packages are outsized-ly generous though and they should increase he variable over the fixed portions... that would be the start of a better Buy signal.
They have to walk the talk now.
Konann profile picture
Regarding hospital adoptions of the T2 system, it's problematic from a couple budgeting perspectives.
The first is structural:

The second, COVID disruptions, potentially compounding the first:

While it'll take time for adoption of the T2, given the financial state of the company.....time is the enemy here.
Long T2, great tech IMO, and buying some more down here as a speculative position. But it's more of a gamble than a solid investment for sure.
True Orion profile picture
I wouldn't be too quick to judge T2. One of the major positives of this company is its expansion worldwide. In the U.S. hospitals rely more on the free market hypothesis than their international counterparts. Thus, such new tech investments are easier to be done overseas (with taxpayers' money). I believe that international expansion will act as a booster for US expansion.
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