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T2 Biosystems Inks Middle East Distribution, Lyme Disease Testing Deals as Q1 Revenues Dip 1 Percent

NEW YORK – T2 Biosystems reported after the close of the market on Monday that its first quarter revenues declined approximately 1 percent year over year, although product revenues were up 24 percent.

Separately, the Lexington, Massachusetts-based firm announced that it has signed a distribution deal for the Middle East, signed a letter of intent for launching a Lyme disease test with a partner laboratory, and converted a portion of a loan into equity.

For the three months ended March 31, T2 Bio posted $2.1 million in revenues, essentially the same as in Q1 2023.

Product revenues — all from sepsis products — jumped 24 percent to $2.1 million from $1.7 million a year ago, while research contribution revenues declined to zero from $423,000 a year ago. Sepsis product sales were led by sales of the T2Candida Panel and international sales of the T2Resistance Panel.

"We believe T2 Biosystems has reached an inflection point, having achieved double-digit sepsis product sales growth in the first quarter, made significant advances across the product pipeline that we anticipate will drive further growth in 2024, and transformed the company's balance sheet to better support the continued advancement of our corporate priorities," T2 Biosystems Chairman and CEO John Sperzel said in a statement.

In the quarter, the firm executed contracts for eight T2Dx instruments, including three in the US, and extended a capital equipment supplier agreement with Vizient through March 31, 2025. It also received 510(k) clearance for an expanded T2Bacteria Panel to include Acinetobacter baumannii targets and engaged Robin Robinson, the former founding head of the Biomedical Advanced Research and Development Authority (BARDA) and deputy assistant secretary at the Administration for Strategic Preparedness and Response (ASPR), as a strategic adviser.

As part of a new strategy for its Lyme testing product, T2 said it has signed a nonbinding letter of intent to enter into a strategic partnership with Eco Laboratory, a Massachusetts-based CLIA lab. The partners aim to launch the T2Lyme Panel as a laboratory-developed test for the detection of early Lyme disease and to build "the premier Lyme testing laboratory" in the US, according to T2.

The firm also said it submitted a 510(k) premarket notification to the US Food and Drug Administration to expand the use of the T2Candida Panel to include pediatric testing, and it plans to submit the T2Resistance Panel to the FDA in Q3.

In April, T2 converted $15.0 million of term loan debt with CRG Servicing in exchange for shares of T2 Bio equity, thereby reducing its total debt and quarterly interest payments by approximately 80 percent. On Monday, T2 said it converted an additional $15 million of CRG debt to equity.

In addition, the firm has signed an exclusive distribution deal for the Middle East with an unnamed distributor in Qatar. Under the terms of the agreement, T2 Biosystems will sell T2Dx instruments, the T2Bacteria Panel, the T2Candida Panel, and the T2Resistance Panel through the newly appointed distributor.

The firm had a Q1 net loss of $13.5 million, or $2.66 per share, compared to a net loss of $18.0 million, or $131.77 per share, a year ago. It used 5.1 million shares to calculate net loss per share in Q1 of this year compared to 136,333 shares in Q1 of 2023.

Its R&D spending declined 17 percent to $3.7 million in Q1 2024 from $4.5 million a year ago, while its SG&A costs dipped 8 percent to $6.7 million from $7.3 million.

The company exited Q1 with $6.2 million in cash and cash equivalents and $551,000 in restricted cash.

T2 Bio expects full-year 2024 total sepsis product revenue of $10.0 million to $11.0 million, representing growth of 49 percent to 64 percent, compared to $6.7 million in 2023. The company's 2024 revenue guidance consists entirely of sepsis product revenue and does not include potential sales of the T2Biothreat Panel or the T2Lyme Panel.

Shares of T2 Biosystems were up approximately 4 percent at $3.78 in Tuesday morning trading on the Nasdaq.