Q-linea AB (publ) (QLINEA) Earnings Call Transcript & Summary

Hello, and welcome to this Q-linea webinar, where we're going to present the ASTar system to you. Initially, we planned to do this in Paris at ECCMID, but due to the pandemic, we instead provide this webinar. And we are planning to show you how we can improve infectious disease diagnostics in the future. It will be I who will give overall presentation on the key features of ASTar and the company. My colleague, Mats Gullberg, will then give you a more technical insight in what lies under the hood of ASTar. And then you will see a demo presented by Charlotta Göransson, so you could also see how easy it is to perform an analysis in ASTar. So I suggest we get started with this presentation. Of course, we are a public company, so I need to show this disclaimer slide in case me, Mats or Lotta will make any forward-looking statements. Having that said, I suggest we get started with the webinar. Moving over, I would like to talk a little bit about Q-linea as a company. We are now 12 years since founding. We are based in Uppsala, a little bit north of Stockholm. And I would say all our mission and vision of Q-linea is how we can improve infectious diseases, how we can make better patient outcomes with our technology. So our focus is developing disruptive technology for improved infectious disease diagnostics. We're also planning to bring ASTar, as you can see behind us, to the market, together with a strong sales partner, and that partner will be Thermo Fisher Scientific. And I will talk a little bit about that partnership later in the presentation. I'm also extremely proud to say that ASTar has been invented, designed and is now manufactured fully in Sweden. We have 3 sites, as you can see on the screen. Here, where we are today, is our marketing headquarters, where we can perform demonstrations, training on personnel on ASTar. 50 meters from here, in Uppsala Science Park, we also have our headquarters and R&D facilities. And what you can see in the middle of the picture is our new consumable production plant. It's 1,500 square meters, fully aimed at production of consumables. This is an overview of the company, and I will now take you into the first application that we'll address with ASTar. Sepsis. Sepsis is a huge problem. It's really an overreaction of our immune system. You can have an infection in your lungs. You can have a skin wound. And if so bacteria leaks into the bloodstream, you can have a trigger, an overreaction of the immune system, and that can then cause multiple organ failure and, ultimately, death. Sepsis is common. It's the most common cause of death in our hospital. Here, close to us, we have academic hospital in Uppsala. Around 1/3 of our people that die there will die from sepsis. The other thing that really makes sepsis stand out is that it's extremely expensive to treat. You can see statistics from the U.S. market here. It is actually the most expensive condition to treat in the whole U.S. health care system. The reason for this, while a septic patient traditionally ends up in intensive care unit, and intensive care means you have a team of doctors, physicians around you to help you come back to life and treat that infection. The third part that really is exceptional for sepsis and where rapid diagnostics really comes into play is that if you enter septic shock, the second stage of sepsis, where you have multiple organs affected, the likelihood of you dying increases around 8% every hour if you are on the wrong treatment and treatment is typically antimicrobials, antibiotics or, of course, if you're on no treatment at all. And this is really where our technology comes in. There are now a couple of health economic studies that indicate that more rapid diagnostics can really increase survival rate of this patient group. So sepsis is all about time. Time is critical, and that's really what ASTar is trying to address. If we then look at infectious disease diagnostics in general, you typically need 2 answers. You need to know the identity of the bacteria. Today, that typically tells you where the infection resides. Is it pneumococci? You can think that it's from the lung. And E. coli might be from the UTI system for instance. But because of the rise of antimicrobial assistance, ID answer alone doesn't help you so much. If you go back 20 years and you know that was an E. coli, you could quite easily actually select an antibiotic to treat that infection. But as you know now, in particular, in Gram negatives, we have multiple drug-resistant bacteria. So the most important answer that you actually need is the AST answer, the antibiotic susceptibility test, and that is what ASTar provides, a fully automated antibiotic susceptibility test. And that is also the test that is considered to be the most important for these patients. If we then look at the high level of -- features of ASTar, before Mats provides more in-depth look under the hood, so to speak, of the system, is that we have developed it together with you, our customers. We have spent hours and hours at hospitals in Sweden, Europe, U.S. and really understanding what is needed, what's the workflow, what's the capacity, what you ask for and then we have tried to build the best possible system to address that. And there are typically 3 things that comes up. One, it needs to be fast, obviously. We said that time is crucial. But it also needs to be simple to use. When you see infectious diseases today in microbody labs, there's a lot of activity going on. There's a lot of tests being managed. So our goal has really been that every single person can start an analysis in our system at any given time of the day. But then, of course, it needs to be accurate. So we need to provide the correct answer, and we need to provide a broad answer. Because the way we think of this market is that if you want to run a rapid test, of course, you want it to be comprehensive so you don't have to do additional follow-up tests. And that's what Mats going to talk about how we can address that problem. Also from a capacity standpoint, you can run 12 patient samples in parallel. It's a fully random access system, which is good, of course. If you have free capacity, you can always run the test, and you could run up to 50 tests over the course of 24 hours. So I will leave Mats to go into the details of the system, but that's really the priority when we designed it. If we then look at how ASTar fits in the current traditional diagnostic workflow, on the top part of the graph, you can see how it looks today. It basically is the same here in Uppsala, Stockholm, Melbourne or New York. It's a long process, extending over 3 to 4 days. And what you can see every single circle in this graph means that you have to do something with the sample, you get some information on it or you have to move it into a new system. So it's a long process. It's quite labor intensive. Starts day 1 with a doctor doing, basically, a judgment if -- your likelihood of developing sepsis. The first thing you do at that point is to take a blood culture. And this blood culture, the purpose is that if you have bacteria in the blood, you can then enrich them in the blood culture bottle to do follow-up analysis. And that's typically done day 2, where you can get the identity of the bacteria. We see a lot of mass specs being used at least here in Europe and a lot of more molecular technologies so far in the U.S. But then you have to continue purify, enrich the sample until you can actually get AST result. And on this graph, it shows up on day 4. Sometimes, you also see it on day 3 in labs, but it's a long process. The biggest problem here is that you put the patient on empiric therapy day 1, and you will have the answer of what is the effective treatment day 4. This actually has a very dramatic impact. Around 20% of the patient will have died before you get the answer. So the problem is, of course, detrimental for the patient. And for the physician prescribing that, you will have an answer what you should have provided to that patient. So this is where we come in. So if you look at the lower graph, you can see that we follow the exact workflow. We have a positive blood culture. You will then take 0.5 milliliter of sample. And that is what Lotta will demonstrate to you in the demo later on so you can see how that is done. And then 3 to 6 hours later, you will get a very comprehensive answer on what antimicrobial or antibiotic to use and what concentration that inhibits to kill bacteria. This is a dramatic time savings between 24 and 40 hours. And what does that mean? Well, there are a couple of early health economic studies today that have looked into these effects. And of course, we know that many more studies need to come up here. But we have highlighted 3 what we think are quite dramatic effects. As I mentioned before, dramatically increased the survival rate, up to 40% in this particular study. The second part is also to reduce antimicrobial resistance, in this case, superbug infections. Because if you can move away from broad spectrum antibiotic treatment, to pinpoint a narrow spectrum, it means that you reduce the drive for resistance development in the patient and in the hospital, in the society, and this is one of the biggest problem we see coming up. So we think that the middle part is truly important for future generations. Lastly, for the hospital, this particular study indicated that you could get the patient out of the intensive care unit around 2 days faster. And today, when we see the corona pandemic, we know that a lot of corona patients are also spending time in intensive care units. So of course, if we can increase that capacity, that will be good for the hospital, but it will also save a lot of money. So that is the benefits as we see it now. As I mentioned, we would like to come to U.S. customers together with a strong partner. We are happy to announce during the first quarter that we entered a worldwide partnership agreement with Thermo Fisher Scientific. It's a strong, reputable company. You know they are performing the reference MIC testing on their Sensititre platform, and now we can bring a rapid, fully automatic AST to that solution as well. You have a couple of highlighted bullets, why we went with Thermo Fisher Scientific, but overall, I think we share the common vision, and we have very good things to bring to the mix. They are a big partner, big logistics, and we have disruptive technology and can have elevated support. So if we then move on, I have been focusing and talking about ASTar today, and that's really the purpose of this webinar. But Q-linea as a company is truly unique in my sense. We focus on ASTar, of course. That's the first product to bring to the market and bring menu expansion to that. We have additional products that we think can dramatically increase and improve infectious disease diagnostics. I will not go into details, but you can see our world's first portable blood culture cabinet. That's really use time instead of waste time, and we will come back to that product in a future webinar as well. Then we have the ASTrID platform, which is really direct-from-patient diagnostics. You don't need positive blood culture. That's a highly molecular ID followed by AST, and we demonstrated that on patients a couple of years ago. Then to the first slide, we have the [ Astria ], the small system, still, of course, tentative, that's for ultra-rapid urinary tract testing. So now the question that you've all been waiting for, when is ASTar available to me? Well, to give you an insight there is that we are now in late-stage testing, verification and a lot of preparation for the upcoming clinical study. We're also in discussion with beta testers that will then take the system as an early adopter. And our goal is to start the clinical study during the second half of this year, the same plan as we announced earlier. So that really covers the general piece of this part. And as I mentioned before, Mats Gullberg, who's our head of the research department, will now provide a deeper insight of looking into the shell or under the cover, so to speak, of ASTar. So please, Mats, go ahead.

Okay. Thank you. Mats here, and I will give you some input into what is done in ASTar and, hopefully, it gives you some better view of why we have designed ASTar the way we have designed it. This is a similar slide as Jonas showed you earlier. And before I go into ASTar, I would like to go through the steps you today do in laboratories, taking a blood sample from a patient, ending up with an antibiotic susceptibility testing. And on the slide in front of you in the screen, you see an upper panel, where you see this positive blood culture where you have a cultured bacteria. You take out. You determine if it's a Gram-positive or Gram-negative bacteria. And then you isolate the bacteria. Today, it's usually done by taking an aliquot and putting on a solid media, allowing it to grow and then you have this show a day after colonies on that plate that you take out, you make a new liquid broth and you determine the concentration on this one. And why do you then determine the concentration? It's adjusted to ensure that every time you start an AST, you have a defined concentration starting in here. Then you allow bacteria to grow in the presence of different antimicrobials at different concentrations. And 18 hours later, you look, and the lowest concentration of antimicrobials that do not promote visible growth, that's the minimal inhibitory concentration. And that's the MIC value that are used to guide treatment for patients. In the lower panel, you see the 2 consumables used by the ASTar system here that automate this process from a positive blood culture to an AST. The first consumable, the cartridge, isolate the bacteria, and we have -- to shorten time to result, we have skipped the solid media isolation that is done in laboratories today. So we go directly from the positive blood culture, isolate bacteria, determine the concentration and adjust it to ensure we, just as with a standard method, have a defined inoculum going into the AST. So looking into this, why is it then important to have a standardized inoculum? And the reason is, depending on how many, the concentration of bacteria you grew into an AST, you get different MIC results. And it's the MIC results that guide treatment -- that are based to guide treatment. And on this slide, you see data from a study -- from a U.S. study, and that tested a lot of different concentrations going in the AST, starting with this one. And you see that on the X-axis [ on this one ] and on the Y-axis, you have the MIC, the difference in MIC value from the standard concentration you usually do. And the most important curve in this graph is the red one. That's a resistant bacteria, a bacteria that is resistant to meropenem, an antibiotic you use for serious bacterial infections. And you see if you go in with too low concentration in this test, the MIC value you generate gets lower. Lower means you would classify this as a bacteria that would be treatable by meropenem, whereas in reality, treatment outcome is probably very poor for this one. And the same goes if you're going with too high concentrations of bacteria, you will have a higher MIC value. Therefore, you would remove very likely useful antibiotics from the repertoire of antibiotics you can use. Now for positive blood cultures, this is where you -- the way to reduce time is to skip this solid media isolation step, and that is to go directly from the positive blood culture. And then you have no control whatsoever on what's in there because the positive blood culture does not produce a single uniform concentration. In the graph in front of you now, you see some -- a lot of gray dots and those are the concentration of bacteria measured in positive blood cultures taken once the system has signaled positive. And you can see they differ by more than 3 orders of magnitude. And from the previous graph, you can see that already one order of magnitude could shift the MIC value. So what ASTar system is doing is taking out this bacteria, measure the concentration and then normalize it. You see 2 dashed lines in this graph that goes beyond the actual graph, and that's the guidelines on the concentration you should use, used by European and U.S. authorities or that's EUCAST AND CLSI. And you see that the orange dots that ASTar generates in inoculum, that allows us to go in with this standardized inoculum already direct from a clinical sample. And so that's the first, the concentration determination step. The second is the AST part. And in order to save time there, we are using a broth microdilution, but we need somehow to shorten time. And I will describe you how we do that. And first, looking at the consumables. We use a disc, traditionally use microtiter plates, a rectangular plate. The disc that we use is more or less the same with the difference that we have more reaction conditions that we are able to test. So you can see that one consumable in ASTar corresponds to approximately 3.5 standard tests. When you look in a standard AST, you wait 18 hours and then you look for visual growth. An obvious way to shorten that time is to be able to see fewer bacteria. And one used -- that we used for centuries to observe bacteria is microscopes. If you use a microscope, you can see individual bacteria. That's nothing new. It's been used since 16th century, I think. So we've built a high-speed microscope, and in the middle here, you see an enlargement of images from 1 well in the microscope. You don't really see any bacteria, but you see in this gray scale image, in the outer part, you see black areas, and that's actually the wells -- corner of the well. So that means we take a picture of the entire well of all these 336 wells. I will enlarge a few of these to look at the Klebsiella pneumoniae that's been growing for 3 hours. In this case, you see a low concentration of imipenem, that is, it grows like nothing is there, and it's completely separated with bacteria after a few hours. If you would have more antimicrobials of this imipenem, there are no bacteria left because they are dead. And if you look at the MIC value, you can actually see bacteria swimming around here. They are grossly enlarged because that's the way imipenem works, is the bacteria are swollen up. And if you look at these 3 slides, you can wonder why do you then take an image of an entire well because any one of you could probably see where is the MIC value in this image. And to do that, we should go back to how the standard method is performed. It's an 18-hour test. And just to have a hypothetical bacteria with a doubling rate every 30 minutes, 1 bacteria gets to 1,000 in 5 hours, 1 million in 10 hours and 10 to the 9, that's 1 billion in 15 hours. So in a standard test, even if you kill 99.9% of bacteria, it will be determined as a growth, and that's what really sets the breakpoints that are used to guide treatment. And we don't know what of these 1 or 1,000 bacteria that actually would start to grow. Therefore, in standard AST, you can work with this uneven response of bacteria by extending time. In rapid AST, we don't have time. So we have to spend it by sampling. And we do it by sampling as much as possible. So no matter what bacteria that starts to grow, we should be able to detect it to ensure that even a rapid AST gives the same response as those that are used to guide clinical guidance today. And we have tested this in-house in analytical studies, and we have done it close to 4,000 bug-drug combinations, daily increasing, Gram-negative, Gram-positive fastidious bacteria and number of antimicrobials, and we look forward to be able to present the outcome of the clinical study once that is finished. And as Jonas mentioned earlier here, ASTar, the first product we're going to bring to the market is Gram-negative bacteria from positive blood cultures. But the system we have, the ASTar system, is designed to be able to handle more of the needs in the laboratory. And here, you see just example graphs of Gram-negative as well as Gram-positive streptococci in the lower, but we also showed data earlier on urine, where you need drastically larger amounts of samples. We use 0.5 milliliter in blood culture, but in urine, you use 10 milliliters because there are fewer bacteria. But the consumable, the cartridge are able to cope with this, and we can generate an AST as well as we can generate AST by using an isolate system to measure the concentration, adjust it automatically and then you run an AST. So it's a pretty versatile system, first launch Gram-negative bacteria for positive blood cultures. So we've designed ASTar to be fast by using a microscope, simple to use by having consumables that automate the process that is done today in laboratories and accurate by allowing a lot of different reaction conditions to be assayed in one test. And this decreased our need to extrapolate this MIC value outside the tested range or in between tested ranges within a sample. So I hope this gave you at least a little view of what's actually going on within ASTar and understand why we have designed the system we have done. And we will give over to demo now from Lotta Göransson.

Thank you so much for the introduction. I will now demonstrate the ASTar instrument. So first, you can see that the system is a stand-alone benchtop instrument. It's fully automated with integrated sample preparation and AST analysis. The instrument has 6 drawers for the sample preparation cartridge and 1 tray where you load the AST disc with prefilled antimicrobials. As you can see on the screen, these inner bars here represent available cartridge positions and the outer circle indicates available disc positions. The system can hold, as you can see, up to 12 discs at the same time. So you can load 12 samples at one time. After that, the system will work as a random access system, and as soon as the one sample is ready, you can load another one and so on. In order to run an ASTar test, you need -- the first step is to add positive blood culture to the sample preparation cartridge. This is done in a safety cabinet. When you are ready to start your run, you press the Start button and the disc tray will come out. Just place the ASTar disc in the tray and press Proceed. The next step is to scan the sample preparation cartridge, as indicated here on the screen, and that will scan both the cartridge barcode as well as the sample -- patient sample barcode. An available drawer will open, and you just place a cartridge in the drawer. As indicated on the screen, remove the lid and then press Proceed. In the summary here, you can see the panel you have chosen, your sample ID, and the ASTar instrument can run the whole analysis without knowing the pathogen ID. But if you have it at this time, you can add it. Otherwise, you just press Start Run and the ID can be added later on during the run or after. So now you are done. As you can see on the screen here, it is now indicated that one cartridge position and one disc position is occupied. In order to follow the progress of your sample analysis, you can open the sample details view. Here, you can see the progress of your sample, and you can see the time when it's ready. This also indicates that it's waiting for ID. So you have to add the ID before the instrument can report results and your MIC values. A run will take between 3 and 6 hours. To report the results, the system needs the pathogen ID. If the system is not connected to the LIS system, you can enter the pathogen ID manually. Just press the Results tab and press the Enter Pathogen ID button. You can just then scan the patient barcode again and just select the ID, in this case, E. coli and then press Confirm. You can now access the results. Here, you have the antimicrobials, the MIC values and, when applicable, the SIR interpretation. To start a QC run, you just press the Quality Control tab and then the Start QC Run button. Now you have started the QC wizard. Put the panel you want to test in the tray, press Proceed, then you take your cartridge with your QC isolate, scan and then press -- put in your drawer. If there is an already used cartridge in the drawer, just remove it and dispose. Add your cartridge in the drawer, remove the lid and press Proceed and then Start Run. When you want to empty waste, you just press Empty Waste button here. The waste drawer will open, and you can dispose the used discs. To empty cartridges, keep on pressing the button Empty Cartridge and the drawers will open. And you can take the next cartridge. And that concludes this demo. Thank you so much for watching. And back to the webinar studio.

Thank you very much, Lotta. I do hope now that you have seen the ASTar performance demo, you can see how easy it is to access the system and that's really been our goal that everyone should be able to start an analysis at any given time point. I hope also that you're seeing some more technical in-depth analysis on how our technology performs provided by Mats. And having that said, I think it's time to conclude our webinar today. But importantly now, as you can see down on the screen, please don't hesitate to contact Lotta. If you want to have more information, we would be happy to book a virtual demo of the system or a virtual meeting, at least for now. And of course, in the future, we will be happy to come out and visit you. So please contact us and reach out. Having that said, we say bye from Uppsala, and thank you for joining today.

Bye.