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Edited Transcript of QTNT earnings conference call or presentation 5-Aug-19 12:00pm GMT

Q1 2020 Quotient Ltd Earnings Call

Saint Helier Aug 12, 2019 (Thomson StreetEvents) -- Edited Transcript of Quotient Ltd earnings conference call or presentation Monday, August 5, 2019 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Christopher J. Lindop

Quotient Limited - CFO

* Franz Walt

Quotient Limited - CEO & Director

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Conference Call Participants

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* Brandon Couillard

Jefferies LLC, Research Division - Equity Analyst

* Joshua Thomas Jennings

Cowen and Company, LLC, Research Division - MD and Senior Research Analyst

* Sung Ji Nam

BTIG, LLC, Research Division - Director and Life Science & Diagnostic Tools Analyst

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Presentation

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Operator [1]

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Greetings. Welcome to the Quotient Limited First Quarter Fiscal Year 2020 Financial Results Conference Call. (Operator Instructions) Please note that this conference is being recorded.

I will now turn the conference over to Chris Lindop, Chief Financial Officer. You may begin.

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Christopher J. Lindop, Quotient Limited - CFO [2]

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Thank you, Melissa. And good morning, everyone, and welcome to Quotient's earnings conference call for our first fiscal quarter ended June 30, 2019. Joining me today is Franz Walt, Chief Executive Officer of Quotient. Today's conference call is being broadcast live through an audio webcast, and a replay of the conference call will be available later today at www.quotientbd.com.

During this call, Quotient will be making forward-looking statements, including guidance and projections, as to the future operating results. As such statements deal with future events, actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements can be found in Quotient's filings with the U.S. Securities and Exchange Commission as well as in this morning's release. Forward-looking statements, including guidance and projections, provided during this call are valid only as of today's date, August 5, 2019, and Quotient assumes no obligation to publicly update these forward-looking statements.

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

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Franz Walt, Quotient Limited - CEO & Director [3]

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Thank you very much, Chris. What a year we have had since successfully completing our first EU field trial for the initial blood grouping multiplex microarray back in June of 2018. A series of important milestones and achievements since then culminated in the approval of that microarray for the hypercare launch in EU later in April of this year. The achievements of the last year are the foundation upon which we will build the future commercial success of MosaiQ.

With both of our state-of-the-art manufacturing facilities up and running and approved by the relevant regulatory agencies and with the CE marking of the MosaiQ device itself, now it's all about menu. The CE approval of the initial IH microarray gives us the opportunity to place the MosaiQ platform in the hands of our customers to permit them to evaluate the technology [working] in their laboratories side by side with the existing technologies even as our [menu] expansion program continues to move forward.

Remember, our competitive strategy is all about delivering the same tests that our customers are required to perform today on a more efficient, modern platform with the lowest available total cost of ownership by delivering a comprehensively characterized blood product for every donation. This will involve the consolidation onto MosaiQ of the testing done today on multiple platforms and in some cases, even [manually] .

So where are we? And what are we targeting in the next 9 to 12 months with respect to the menu we expect to be available in the marketplace? Well, following the CE approval of the initial blood grouping or IH microarray in June, we submitted for the CE mark approval for the companion initial Serological Disease Screening microarray after a successful field trial. If past is followed, and of course, there can be no guarantees, we may expect to have this available in Europe by early next calendar year.

Our menu expansion plans do lead us to our first U.S. trial, which we have already begun. This involves the initial serological disease microarray with the expectation of making a 510(k) submission later this year. The submission will cover both the MosaiQ device and the initial serological disease testing menu. When approved, this will create the opportunity to place devices for evaluation with U.S. customers that are already aware of the potential of the MosaiQ platform and appear to be very anxious to try it in their laboratories. This initial placement will be important as our menu expansion plans continue to unfold and as they will also conduct, for research purposes, usability testing of our products in development.

Other important proof points for our ultimate menu for transfusion diagnostics, which are planned to be available later this year, include V&V data for both the expanded IH microarray and the expanded SDS microarray. This will add detection of an additional line of clinically significant blood grouping antigens to our initial IH menu and an additional 7 required infectious disease tests with tests for CMV and syphilis which are working so well on the initial SDS microarray today.

We will also follow through on the plan to place our novel molecular disease screening microarray in the hands of a research institute here in Europe. It will be the first test of this unique technology in the field. Once again, our value proposition will focus on state-of-the-art performance [in] results of today's required tests while delivering significant efficiencies and economic advantages through automated workflow and microarray multiplexing on a low-cost disposable design that works with the existing MosaiQ platform.

Turning to our liquid reagent business. I'm very pleased to note the recent FDA approval of 13 antisera for use with the OEM automation of one of our major customers. This cycle of innovation and regulatory submissions and approvals has underpinned the strong growth of this business in recent years, and the most recent clearance gives me continued confidence in the long-term prospects for continued growth.

My thanks to the team that worked so hard on the clinical and regulatory aspect of this important milestone. Our experience in creating successful clinical dossiers that have already delivered 70 U.S. biological license approvals will be invaluable as we continue the innovation and approval process for MosaiQ menu expansion and global market access.

So with that, let me hand over the call to Chris Lindop, our CFO. Chris, please?

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Christopher J. Lindop, Quotient Limited - CFO [4]

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Thanks, Franz. While I'm happy to report that the first quarter product sales were a record $8.2 million, an increase of 3.9% from last year's first quarter, reported sales were slightly behind our original guidance range of $8.3 million to $8.8 million. But we still expect to achieve the same revenue and earnings figures for the full financial year that we previously indicated.

The increase in product sales is attributable to both OEM customers and to direct and distribution sales. OEM sales of $5.7 million grew 1.6% year-over-year and represented 70% of product sales while direct and distributor sales of $2.4 million increased 9.7% year-over-year and represented 30% of product sales. Product sales from standing orders in the quarter were 68% versus 65% last year.

Gross profit on product sales were $3.6 million, down 5% compared with $3.8 million last year. In the quarter, gross margin was impacted by additional depreciation and other noncash costs related to bringing online our new Allan Robb Campus. This incremental noncash costs were $400,000 higher compared to the equivalent costs in the quarter ended June 30, 2018, and contributed therefore 490 basis points of headwind to gross margin on product sales, which were 44.1% in the quarter compared to 48.3% last year.

In the first quarter, the operating loss was $18.4 million compared with $18.5 million last year. Operating expenses reduced $300,000 from last year to $22 million, with a $900,000 decrease in R&D expense to $11.7 million, a $300,000 increase in sales and marketing expense to $2.6 million and a $300,000 increase in general and administrative expenses to $7.8 million. The increase in sales and marketing expense is attributable to the expansion of the MosaiQ commercial group in anticipation of the MosaiQ launch. The majority of the increase in general and administrative expenses reflects greater personnel-related costs as we move towards commercialization of MosaiQ. Stock compensation expense is $1.2 million in the first quarter compared with $1.3 million in the prior year.

In the first quarter, net other expense was $5.1 million compared with $6.6 million in the same quarter last year. Net other expense consisted of interest expense of $6.1 million and a $1 million foreign exchange gain arising from the revaluation of monetary assets and liabilities denominated in foreign currency.

Quarterly interest expense included $4 million which is due currently on our senior loan notes, which is paid biannually in April and October. Estimated future royalties due under the senior loan notes and amortization of deferred debt issuance costs are also included in quarterly interest expense. Interest expense increased over the prior year as a result of an incremental borrowing during the last 12 months. Overall, our net loss for the quarter was $23.6 million or $0.36 per ordinary share.

Moving to the balance sheet. Cash and other short-term investments were $90.7 million on June 30 while long-term debt was $148.1 million, with an offsetting long-term cash reserve account of $8.7 million.

On May 15 of this year, we issued an additional $25 million of our senior secured notes following receipt of the CE mark for our initial IH microarray. This debt issuance yielded net proceeds of $24.1 million after funding expenses of the offering which totaled $900,000 and required a $1.5 million addition to the offsetting long-term cash reserve account.

On June 30, accounts receivable totaled $4.7 million and inventory totaled $16.7 million. Capital expenditures totaled $1.1 million in the first quarter.

Now moving to guidance. We are confirming previously provided guidance ranges for products revenues of $30 million to $31 million and an estimated operating loss of $77 million to $82 million. Estimated operating losses include approximately $18.5 million of noncash expenses such as depreciation, amortization and stock compensation. Capital expenditures are still expected to be between $5 million and $10 million for the full fiscal year.

Other revenue estimates include $1 million of product development revenue, of which $300,000 has already been earned during the second quarter and a balance [of] which is contingent upon completion of regulatory submissions and achievement of regulatory approval for certain additional products under development. As such, the receipt of this portion of the milestone payments involves risks and uncertainties. For our full -- excuse me, for our fiscal second quarter, we expect product sales in the range of $6.3 million to $6.7 million compared with $6.2 million in the second quarter of fiscal 2019.

Now let me turn the call back to Franz.

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Franz Walt, Quotient Limited - CEO & Director [5]

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Thanks, Chris. Over the next 6 to 9 months, our expected regulatory milestones include the completion of our first U.S. field trial for each of the initial SDS, the expanded IH and the expanded SDS microarray, followed by submission in both the EU and the U.S. Our commercialization strategy, which commenced last month, includes 9 hypercare sites in 7 countries in Europe. This plan includes the ability to place devices with customers using the initial CE-marked IH microarray but also to share the results of our menu expansion efforts for research purposes as soon as our technical risk is resolved.

In this case, the test results will not become the base of record as the customers will be able to experience the ease of use and other benefits that MosaiQ will offer before initially committing to a tender process. This will permit us to generate large datasets on performance studies in advance of full commercialization and also to allow potential customers to become familiar with and confident about the MosaiQ platform. We expect this approach to accelerate the adoption curve once approved products are available. While the ultimate timing of availability in the market depends on the regulatory review process, we hope to have both the expanded IH and SDS microarray in the European market by the second half of calendar year 2020.

Europe represents a 21 million donation market opportunity, each one of which will require 2 microarrays in order to cover the first 2 testing modalities: blood grouping and Serological Disease Screening. It represents an approximately $300 million addressable market. Obviously, a very significant near-term opportunity and a significant cost-saving opportunity for the European customers that implement this technology. Based on multiple studies using potential customer data, we estimate potential cost savings to be as much as 20% to 25% of their current total cost of testing.

In addition, later this year, we expect to bring forward independently derived performance data demonstrating the effectiveness of our innovative approach to molecular disease screening generated in an independent clinical setting. This study, which is planned and commissioned, will commence later this summer. The timing of the publication of the results of this work may be impacted by the publication cycle within the organization conducting the study. Once again, we expect that the performance results will provide confident -- confidence as to the ultimate donor transfusion diagnostic test menu as well as underpinning the opportunity for MosaiQ in the broader and much larger clinical diagnostics market.

So in summary, nothing has really changed. We expect that we have significantly derisked the technical aspect of our MosaiQ platform as I anticipated we would when I spoke to you at this time last year. We are commencing [tangible hands] on customer interactions and continuing to make good progress on our menu expansion initiatives, which is the key to our competitive strategy of systematic, competitive platform replacement.

As I have said to many of you in the past, this will be a slow and decisive transformation of our initial target market. The change won't necessarily be fast. But like a train leaving the station, once it begins, it will be very hard to stop it.

In our initial target market, the advantage which MosaiQ offers remains very compelling and include: a single unified testing platform for blood grouping, Serological Disease Screening and ultimately, for molecular disease screening, simplifying testing workflows and consumable management; also walk-away automation, which is responsive to current and future shortage of qualified laboratory technicians; and in addition, the ability to comprehensively characterize [cold] donor and patient blood, allowing for better matching of donor blood to patient and cost savings resulting from the elimination of the vast majority of routine manual testing or blood grouping and from the multiplexing of multiple tests in parallel use in a single donor sample and improved throughput and productivity per square meter. Importantly, many of these advantages which will be available initially in transfusion diagnostics will also be big advantage in the central laboratory whenever a diagnosis is required and a panel of tests using multiple testing modalities in a single automated testing event is necessary.

With that, I'd like to thank all of our employees and partners for their tremendous contribution towards the continued success of Quotient. I will now ask the operator to begin the Q&A session.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Brandon Couillard with Jefferies.

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Brandon Couillard, Jefferies LLC, Research Division - Equity Analyst [2]

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Franz, it sounds like you've added 1 extra hypercare site to the 8 you initially planned initially. Can you sort of speak to the level of interest in the program, your ability to service those sites and sort of the phasing of instrument placement to the other 8 accounts kind of over the next few months?

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Franz Walt, Quotient Limited - CEO & Director [3]

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Yes. I mean the term hypercare, I think, says it all maybe. It's not a normal care where you have service and attendance to the customer, but hypercare means almost 24/7, you are reachable to support the customer in testing this new technology. And given the resources we have, we think that we have the capacity to do this for about 8 customers. But then when it came to giving the hypercare sites away, first of all, they were gone within a few days. There was 1 additional customer who didn't take no for an answer. And after a long forward and backward, we said, okay, we take the risk. We take 9 instead of 8. And we make it happen that it is still hypercare, and we have internal -- immediate and top support for the customers. And if we see over time that maybe less support is needed, maybe we can add on one more. But we wanted to play it safe. I think with the 9 as it is now planned, we should be a little bit stretched, but we should be able to do this properly.

And the first one is already up and running, completed all the testing, and we got positive comments. I mean what resonated well with me is, first of all, setting everything up took only 2 days. The customer said normally, with alternative platforms, it takes around 7 days to get everything up and running and trained. They were also impressed with the built-in quality assurance concept and with that, the confidence they have in the testing results and I think all the compliments we got for the professionalism of our team. I mean the team was really eager and couldn't hold their horses anymore to finally, finally go out and see a real customer employ this technology. So I think our team did a great job as well. So far, so good. And the others are getting ready. In the next 6, 9 months, we will have the 9 hypercare sites up and running.

Also, what came in, in addition, Brandon, if I may just add this in, we thought, oh, it would be actually great for us not only to test and to give -- to play around and become confident in the initial IH microarray but maybe also really the products which are in the pipeline if a customer also wants to have access to the latest available products. So this gives us a unique opportunity to test work in progress and incorporate potential filings already that we wouldn't have as a small organization the capacity to generate these large datasets just on our own. So I think it's a win-win situation for all. If that answers your question.

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Brandon Couillard, Jefferies LLC, Research Division - Equity Analyst [4]

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That's great. It's very helpful. How many of those hypercare sites have technology out clauses? And then if we just look at the broader competitive landscape, you've seen the introduction of the Alinity s. There's a new version of the PK7400 out there. Do those change the competitive landscape at all or lock up any potential customers for an extended period in front of the kind of MosaiQ launch in your view?

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Franz Walt, Quotient Limited - CEO & Director [5]

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I will give it a shot. And Chris, if I leave something out and we have some complementary information, please feel free to chime in. So I cannot talk to how many of these 9 sites have update clauses. I don't know by heart. What I know, although -- all the customers where we would expect tenders over the next 12 months have either postponed their tenders or they have actually the right to upgrade to better technology, so it's a variation of it. Right now, actually, no tenders are taking place. Many of them have been postponed because the new technology is around, and I think that's really to our advantage. So we will be happy if there are no tenders for the next couple of months. That just helps us.

Then I think the second question was a couple of new products from the competitors. Of course, I will resist the temptation to talk about the competition. But if you remember, the value proposition of our technology is that we are able to do, in a high-throughput fashion, testing across several modalities, and nothing has changed there on the competitive landscape. There is still no technology [in site] who can do testing across modalities. Of course, every manufacturer comes once in a while with facelift, doing a little bit more of the same a bit faster on a smaller footprint, but it does not change anything on our original plan. And also, when we put our business plan together, we knew already the timing of our launches and we also knew when the competitors are coming with all their products, so that's already factored in. So from -- without talking about competition, the original concept with MosaiQ, high throughput, multiplex microarray, cross-modality, nobody else has that.

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Christopher J. Lindop, Quotient Limited - CFO [6]

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And the only thing I would add to that is I believe the Alinity in its most recent version has been available in Europe for a couple of years. So our whole competitive strategy is completely informed by that awareness, and it is definitely a niche product for infectious disease testing.

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Brandon Couillard, Jefferies LLC, Research Division - Equity Analyst [7]

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Excellent. Just one follow-up. Sort of help us with the time line which we should expect in terms of the EU data for the expanded IH microarray? And is the start of the U.S. field trial still just kind of a function of aligning schedules and calendars here over the next few weeks?

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Franz Walt, Quotient Limited - CEO & Director [8]

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Maybe I go quickly through the time line. So from a research development perspective, the expanded IH and the expanded SDS, we continue to do this second half this year. We will move to the field trials in Europe and in the U.S. for the expanded IH in the second half '19. I'm always talking about calendar year. For the EU and U.S. as well for the expanded SDS, that's early 2020, also calendar year. And then we will have -- U.S. field trial for the initial Serological Disease Screening microarray, that has already commenced last month. So that's already ongoing.

And regulatory filing, U.S., Europe, expanded IH, early 2020, calendar year 2020; expanded SDS, later, in the first half of 2020. Then on top of that, it's not really a regulatory milestone, but we also expect later this year results of the molecular disease screening research study, proving that multiplexing is a technology [lending] itself for PCR testing as well. So I think these are the key catalysts you will see coming around. Did I leave any out, Chris?

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Christopher J. Lindop, Quotient Limited - CFO [9]

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No. But to that question, the next thing up will be V&V for expanded IH. So just stay tuned.

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Operator [10]

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Our next question comes from the line of Josh Jennings with Cowen and Company.

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Joshua Thomas Jennings, Cowen and Company, LLC, Research Division - MD and Senior Research Analyst [11]

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Congratulations on the continued progress. I want to just ask about the CE mark approval process for expanded IH and SDS and expanded SDS. With your work with the [notified body] for the initial IH menu approval, I mean, can you leverage some of that work on future submissions? And should we be thinking of potential streamlined process? Or should we be thinking standard time lines as those submissions come through?

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Franz Walt, Quotient Limited - CEO & Director [12]

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I think the advantage is that the notified body is already now familiar with the technology. But still, for our planning, we are conservative. We are planning -- or we factored in 6 to 9 months approval time. It might be faster than that now as the first one went through. But then if you go for an expanded menu, it's also more things they have to verify and to validate, so the amount of paper, the paper mountain will be much larger.

So to answer your question, yes, the notified body should know already a lot, but the menu is also significantly increasing, which gives them also more work to verify. It's difficult for me to tell. I think with a planning assumption of 6 to 9 months, we should be on the safe side.

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Joshua Thomas Jennings, Cowen and Company, LLC, Research Division - MD and Senior Research Analyst [13]

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And thinking about the U.S. and the initial field trial with the SDS menu, how many sites are you using for that field trial? Will they be the same sites for the expanded IH menu and expanded SDS menu field trials as well?

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Christopher J. Lindop, Quotient Limited - CFO [14]

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Yes. Three sites and it will not be the same sites. So you can think of 6 sites getting exposure to the technology.

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Joshua Thomas Jennings, Cowen and Company, LLC, Research Division - MD and Senior Research Analyst [15]

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Great. And then just thinking about future submissions. Are there differences between the SDS submissions in the U.S. and the expanded IH menu? I believe the SDS submission is 510(k) pathway, but I just wanted to just hear that confirmed. And then maybe just the time line you expect for once you submit.

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Franz Walt, Quotient Limited - CEO & Director [16]

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You're absolutely right, there are different submissions. So for the IH expanded, that's a BLA. A BLA takes more time. In our planning, we factored in up to 18 months to get the BLA approved. The initial SDS is the only microarray which is only a 510(k). That's also the reason why we pulled forward the SDS field trials, SDS 1 -- initial SDS field trial, so we can go for a 510(k) submission for the instrument and for the first microarray faster and we can then get a faster approval. So here for the 510(k), which is the instrument and the initial SDS, we factored in up to 6 months. And then if we have an FDA approval earlier than in the original plan, we can also start earlier discussions with customers, which we can't do, at least not the same [content] right now, and give it to them to test it out and become familiar and get the feedback as well.

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Joshua Thomas Jennings, Cowen and Company, LLC, Research Division - MD and Senior Research Analyst [17]

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Okay. So more hypercare?

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Franz Walt, Quotient Limited - CEO & Director [18]

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Yes, more hypercare. Hypercare is not only for the customers to feel confident, but it's also for us to get additional people working on the technology, meaning that we include much more than we could do just on our own.

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Joshua Thomas Jennings, Cowen and Company, LLC, Research Division - MD and Senior Research Analyst [19]

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Excellent. And then -- so just in the U.S., we should expect another hypercare-type launch? And any thoughts or any details there in terms of number of potential initial centers? And will the lag time between the SDS approval, [an] instrument approval and expanded IH menu be about a year?

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Franz Walt, Quotient Limited - CEO & Director [20]

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Yes. So I think it will be about a year later. And like in Europe, for the real commercial success, we need the expanded IH and the initial SDS. And that alone -- in many of the presentations, we showed how the menu growth will allow the customers to reduce complexity. So that alone, the expanded IH and initial SDS is already a valid business case in itself. And remember the slide with the green line around it. But then, of course, if we follow up with an expanded SDS, that would be a fantastic upside. And if we -- and the cherry at the top would be MDS. And all the results we have so far on the MDS are extremely promising, very good results. So we are confident that we will have a comprehensive menu.

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Joshua Thomas Jennings, Cowen and Company, LLC, Research Division - MD and Senior Research Analyst [21]

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Excellent. And my last question, just on the tender schedule for the rest of the year in Europe. I believe some tenders open up later in the year, maybe October or beyond. Can you just refresh us just as you're -- within this hypercare launch, how you expect tenders to potentially roll through and how Quotient will or will not participate in them?

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Franz Walt, Quotient Limited - CEO & Director [22]

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Yes. I think maybe just to ensure everybody has the same reference, basic information, we have 250 contacts before the product was launched, individuals, professionals. We talk to over 125 different accounts. There were 75 opportunities identified. But you know what -- maybe every 5 to 7 years, that's when all the opportunity is on the horizon and across 20 different countries. Out of them, we identified hypercare sites which are relevant or for tenders, yes. So I mean we also teamed up with customers who have tenders coming up near or midterm.

And then from September, October onwards, we expect around 15 tenders. But it's just what they told us. I mean it's up to the liberty of the customer to postpone it again or to make another change, we don't know. But based on what we know, no tenders right now. It will be September, October or later, and then about 15 are around the corner for the following 12 months. And as I've said before, the more they postpone, the later they become available, the better for us because our menu will progress in the meantime.

And maybe just to add on, for us -- a big thing for us, after getting the CE mark also for the first microarray, we could for the very first time show it to customers. And so MosaiQ had its debut at the ISBT in Basel that was 22nd to 25th of June. And we've had a lot of traffic. At ISBT, there were like 2,400 attendees and 45 customer demos. And there are really fantastic quotes. I remember one was saying this proves that the microarray technology works. It's no longer just a vision or a dream. So a very good response from customers. And now we can actually talk with them openly. We don't have to show only for inputs to development behind the current instrument. It's publicly visible, so a big thing for us.

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Operator [23]

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Our next question comes from the line of Sung Ji Nam with BTIG.

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Sung Ji Nam, BTIG, LLC, Research Division - Director and Life Science & Diagnostic Tools Analyst [24]

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Just a few clarification questions. So the hypercare sites in Europe, are they also -- are some of them your field trial sites? I'm trying to figure out the overlap. Is there a full overlap potentially?

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Christopher J. Lindop, Quotient Limited - CFO [25]

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No.

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Franz Walt, Quotient Limited - CEO & Director [26]

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No, overlap, but they have been selected in terms of what I mentioned before. Do they have any tenders coming up short or midterm? So they are all relevant tender sites.

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Christopher J. Lindop, Quotient Limited - CFO [27]

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And high-quality sites.

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Sung Ji Nam, BTIG, LLC, Research Division - Director and Life Science & Diagnostic Tools Analyst [28]

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Okay. And then for the molecular assay, will there be an initial menu -- initial group of testing as well? Or will it be a pretty comprehensive list of pathogens?

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Franz Walt, Quotient Limited - CEO & Director [29]

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Most likely, there will be an initial and then an expanded. There are 5 to 8 tests which should be on there. And I think we'll see how it -- it's too early to tell, but at least 5 tests will be on it and maybe we do then an expanded. But 5 tests is much better than just 1 test as is possible today.

And the advantage of our technology is that you don't have to do any pooling. I mean for those on the phone not so familiar with the MDS process, for cost reasons because it's such an expensive technology, normally, today, they pool 16 to 20 samples from 16 to 20 days from the patient -- donors rather and they do the testing. And if something turns positive, they have to go back and redo all the testing to find out which person was positive. It can also be multiple.

So in our case because the microarray will be available for IH, SDS and MDS, for every single patient, no pooling is necessary. So you completely get around this additional work, cumbersome work step. The technology is, of course -- for us, it doesn't matter whether there are 1 test, 5 tests, 8 tests, it's the same price.

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Sung Ji Nam, BTIG, LLC, Research Division - Director and Life Science & Diagnostic Tools Analyst [30]

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Great. And then, Chris, could you give us an update of your cash burn expectation for the remainder of the year?

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Christopher J. Lindop, Quotient Limited - CFO [31]

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No change, right around $5 million in operating cash burn per month. And that ties in with what we did in the first quarter if you adjust for the noncash portion of our expenses and $5 million to $10 million of CapEx over the course of the year and then, obviously, debt service. And that debt service is running -- is now about $4 million a quarter, the cash part, the part that gets paid currently.

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Operator [32]

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

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Franz Walt, Quotient Limited - CEO & Director [33]

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Thank you very much, and thank you, everybody, for joining us on this call today. So Quotient, as you have heard, continues to make considerable progress on MosaiQ, and we look forward to its initial commercial launch next year. And in the meantime, thank you very much, and all the best. Take care. Buh-bye.

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Christopher J. Lindop, Quotient Limited - CFO [34]

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Thank you.

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Operator [35]

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