Quotient Limited (NASDAQ:QTNT) Q4 2022 Earnings Conference Call June 24, 2022 8:00 AM ET
Company Participants
Ali Kiboro – CFO
Manuel Mendez – CEO
Conference Call Participants
Brandon Couillard – Jefferies
Josh Jennings – Cowen
Matt Sykes – Goldman Sachs
Operator
Greetings. Welcome to Quotient Limited Fourth Quarter and Full Year Fiscal Year 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.
I’d now like to turn the conference over to your host, Mr. Ali Kiboro, Chief Financial Officer of Quotient Limited. Please go ahead.
Ali Kiboro
Thank you, Rob. Good morning, everyone, and welcome to Quotient’s fourth quarter and full year 2022 financial results, as well as the business update. Joining me today is Manuel Mendez, our Chief Executive Officer. 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 future operating results and expected development and commercialization timelines. Because 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. The forward-looking statements, including guidance and projections provided during this call, are valid only as of today’s date June 24, 2022 and Quotient assumes no obligation to publicly update these forward-looking statements.
With that, I would like to turn the call over to Quotient’s CEO, Manuel Mendez.
Manuel Mendez
Thanks, Ali and good morning, everyone. Thank you for joining us today for the fourth quarter fiscal 2022 results and business update.
During today’s call, my comments will cover our strategic finance intersection we recently announced, the exciting progress we have made around MosaiQ menu expansion and the distribution footprint and our pipeline activities in clinical diagnostics. Then Ali will review our financial results and outlook for fiscal year 2023, followed by my summary comments before we open it up for Q&A session.
Today we announced two actions to improve our liquidity runway and provide greater financial flexibility in our balance sheet. First, we amended our senior secured notes, reducing our amortization payments via net $93 million over the next 36 months. Second, we raised $20 million in gross proceeds through an equity deal. The proceeds from the deal will fund our major growth initiatives, which we’ll cover next.
Let me now provide you with a quick update on our commercial execution. Following the extended immunohematology commercial launch, our efforts this quarter have secured 1.4 million of MosaiQ orders in the first quarter of fiscal year 2023. We are focused on expanding our distribution footprint across the major international geographies. The commercial team has made significant progress this quarter and have signed nine international agreements with distributors. Overall, I am very pleased with the momentum we have generated in expanding our commercial distribution footprint and our pipeline opportunities to grow.
In conjunction with the geographic expansion activities, we’re highly focused on the large volume of immunohematology tenders we are tracking in Europe and other eligible CE mark territories. We anticipate these tenders will come into play within the next 18 months. This is an important part of our strategy to drive increased awareness and market share gains with existing and potential customers who may be attracted by the MosaiQ solution Economic and Clinical value. We look forward to updating you on our progress, on the tender opportunities throughout the year.
Turning through our MosaiQ solution for the transfusion diagnostics channel, this past March we were thrilled to receive CE mark of the MosaiQ extended immunohematology microarray. The received of the CE mark was a significant company milestone as it enabled Quotient to commercialize the immunohematology microarray for use with our MosaiQ instrument across the European Union and other CE mark recognizing geographies.
As a reminder for our listeners who are newer to our story, MosaiQ offers our transfusion and clinical lab customers an all in one fully automated high performance multimodal multiplexing solution. More specifically, the immunohematology microarray allows the user to perform extended phenotyping, antibody screening, antigen typing including ABO forward and reverse grouping. Laboratories and clinicians may use the solution to generate comprehensive characterization of blood donor samples through a single test procedure.
Our strategy is to continue to expand the MosaiQ menu to drive increased value for our customers and economies of scale for our business. We have been working with the FDA in the U.S. during our pre-submission meetings as we’re making important advancements in the extended immunohematology trials. Our progress includes performance and manufacturability advances and exciting development work which yielded an expansion of the specificities in this product.
Next, I want to share the progress we continue to make on our serological disease screening microarray assay. Throughout our clinical development work, we are advancing the sensitivity our lead infectious disease immunoassay multiplex panel. The company continues to be on track to submit an application to the EU for CE mark approval in the second half of calendar year 2022.
Next, I’d like to provide an update on our clinical diagnostics. We are very pleased about the clinical diagnostic activity this past quarter, namely our partnership announcement with Theradiag. Our two companies bring together complementary solutions to jointly develop autoimmune MosaiQ microarray reagents and multi constituent quality controls.
First with a collective solution for collective tissue diseases — connective tissue diseases or CTD. Testing involves a complex diagnostics pathway in order to identify the exact autoimmune disease and to distinguish from other conditions with similar clinical signs and symptoms. The integration of several auto antibody deceases and test into a single multiplex assay is start to simplify testing and ultimately provide a faster and more reliable path to patients and clinicians to diagnosis and adequate therapy.
Autoimmune diagnostics provides an additional estimated 2 billion addressable market opportunity for Quotient’s MosaiQ platform and autoimmune microarray we would have a faster path to market at a lower cost when compared to blood diagnostics due to different regulatory requirements.
Now on to our scientific and medical activities. We held our first KOL event this past quarter with Dr. Christophe Martinaud, where he shared his expert insight on the current landscape and unmet needs within blood grouping and donor’s disease screening. During the session he stated, MosaiQ is easy to use and is a game changing system in diagnostics as it has direct impact on patient’s safety through the extended phenotyping. We look forward to organizing more KOL sessions into the year.
Additionally, we are very pleased with the development over MosaiQ Innovator Circle initiative, which we first launched in March. The goal of the Innovator Circle is to create a community of experts from laboratories across the world who focus on transfusion medicine and clinical diagnostics. Our member partners with Quotient to create innovation and evidence generation to improve patient care and laboratory efficiencies.
We’re up to eight members with a goal of expanding our network of experts in the next few months. We signed an international partnership with Centre Pasteur in Cameroon as part of our investigator initiative research program. The partnership will provide Quotient’s R&D team access to rare HIV samples and will also sponsor young scientist studying infectious diseases.
This program is open to all healthcare professionals who wish to study the clinical and economic impact of the MosaiQ System. Currently, two MosaiQ workflow efficiency studies are in progress, one in Europe and one in the U. S. and we look forward to giving you the results in the near future.
I would like to conclude this session with two recent wins. I am pleased to announce that our headquarters and particularly our microarray manufacturing facility in Eysins, Switzerland passed the ISO 14001 certification, which sets out the requirements for an environmental management system. This certification exists to help organizations minimize how operations negatively affect the environment. To qualify, Quotient went through a series of external audits and is now officially ISO 14001 certification. Thank you, Esteban Uriarte, our Chief Manufacturing Operations Officer and his team for leading this important project.
Lastly, I’m pleased to announce that as of today, we have shipped multiple MosaiQ instruments to customers. This is an exciting time at Quotient and I’m very proud of Mohammad El Khoury, our Chief Commercial Officer and the commercial team for making excellent progress and delivering a major commercial win for the whole company. It was certainly a team effort across the board, well done everyone.
Now let me turn the call to Ali for more details on our financial results. Ali?
Ali Kiboro
Thank you, Manuel.
Fiscal fourth quarter sales were $9.8 million an increase of 1.5% from last year’s fourth quarter. Alba by Quotient sales increased by 4.8% year-over-year. There were no MosaiQ COVID-19 antibody testing revenues in the fourth quarter of 2022, while there was $0.2 million of COVID testing revenues in the prior year.
Within the Alba by Quotient business, OEM sales was $6.7 million represented 68% of all product sales. Year-over-year OEM sales increased by $0.2 million, or 2.8% versus the prior year.
Direct and distributor sales of $3.1 million increased 9.1% year-over-year and represented 32% of product sales. In the fourth quarter gross margins and product sales were 39% compared to gross margins of 46% reported in the fourth quarter of the prior year. For the year, total product sales of $38.3 million increased by 7% versus prior year with Alba by Quotient sales increasing by 10.7%.
Gross margin and product sales for the fiscal year 2022 was $14.7 million, or 38% compared to $15.7 million or 44% for the prior year-to-date comparison. The difference is mainly due to the third quarter write-down of certain MosaiQ inventory. Excluding the write-down, gross margins would have increased by $2.7 million to 45%.
In the fourth quarter, we recorded an operating loss of $26.9 million compared to $28.5 million last year. Operating expenses were $30.7 million in the fourth quarter fiscal year 2022, a decrease of $2.2 million over the prior year.
Research and development expenses were $16.1 million, a $0.9 million increase year-over-year. General and administrative expenses were $11.5 million, a decrease of $3.1 million compared to the prior year. The decrease in total G&A cost is mainly driven by a reduction in executive management transition costs compared to the prior year.
Included in G&A is stock based compensation expenses of $1.4 million which decreased by $0.1 million versus the prior year. Sales and marketing expenses were $3 million in the fourth quarter, representing a $0.1 million decrease compared to the prior year’s fourth quarter. Net other expenses was $0.9 million gain, compared to a $10.6 million loss in the fourth quarter of last year. At net other expenses consisted of interest expense of $10 million and a $15.6 million gain related to the change in fair value associated with our derivative liabilities, a $1 million loss on the impairment of Credit Suisse and a $3.7 million loss in FX losses arising on monetary assets and liabilities denominated in foreign currencies.
This compares to interest expense of $7.2 million, a $2.3 million loss in the impairment of Credit Suisse Supply Chain Funds, and a foreign exchange loss of $1.1 million in last year’s fourth quarter. Our net loss for the quarter was $25.9 million or 0.25 per ordinary share, compared to $39.3 million or $0.40 per ordinary share in the prior year’s fourth quarter.
Net losses for the fiscal year ended 2022 were $125 million or $1.23 per share, compared to $111 million or $1.21 per share in the prior fiscal year. Net cash used in operating activities totaled $119 million for the fiscal year 2022 compared with $78 million in the prior fiscal year. The increase of cash used in operations was driven by a number of factors mainly the increased levels of R&D, G&A, and movement and working capital.
In addition, last year’s cash flow was positively impacted by the Ortho upfront payment of $7.5 million. For fiscal year 2022, capital expenditures totaled $2.9 million and primarily related to the purchase of manufacturing equipment and information technology.
Moving to the balance sheet, available cash, cash equivalents and investments at the 31st of March 2022 was at $83.2 million compared to $111.7 million at the start of fiscal year 2022. In addition, we held $8.7 million restricted cash reserves related to our senior secured loans, and rent deposit for our Suisse facility. Our short term and long term investments include investments in the Credit Suisse Supply Chain Finance funds. As previously discussed, Credit Suisse suspended redemption and announced liquidation of those funds in March 2021.
During the fourth quarter of the fiscal year, Credit Suisse provided additional information to investors regarding plans to withhold litigation fees from investor recoveries. Due to this information, we took a further impairment of a $ 1 million on our outstanding investments. This is in addition to the $2.3 million impairment we took in March 2021.
In addition, Credit Suisse informed the company that recovery in one of our funds could take longer than a year to recover. And we therefore reclassified that amount as a long term investment. The total remaining investment as of March 31, 2022 was $18.1 million net of the impairment. These funds continue to be subject to valuation uncertainties and the company has therefore maintained an impairment of $3.3 million on the outstanding amount.
As disclosed earlier today, we have amended our senior secured notes with the support of our senior noteholders. The amendment has some significant financial advantages to the company primarily through lowering principal amortization payments and removing the requirement for $8 million of restricted cash. The underwritten equity offering allows us to continue to fund our business as Manuel described earlier.
Now turning to guidance. For fiscal year 2023, we are introducing a total revenue forecast in the range of $39 million to $42 million. Capital expenditures for fiscal year 2023 expected to be in the range of $5 million to $10 million. We estimate that cash used for operations will be in the range of $6.5 million to $7.5 million per month, excluding debt service costs and capital expenditures. We are not providing guidance on the size of the operating loss that we expect to report on the current fiscal year.
And with that, let me now turn the call back to Manuel.
Manuel Mendez
Thank you, Ali.
Let me frame our upcoming priorities and activities for our company for fiscal 2023. Our most important priority is the continued commercialization of the MosaiQ solution following the recent CE mark of the extended immunohematology microarray. We’re actively expanding our geographical distribution and looking forward to participating in tenders across this regions over the next few quarters. We expect to submit extended immunohematology BLA filing in the second half of calendar 2022.
We’re confident in our serological disease screening microarray profile. We aim to submit an application for CE Mark in the second half of calendar 2022 and BLA in the U.S. in the first half of calendar ’23. We have added depth and breadth through our Scientific & Medical Affairs strategy through the creation of our Innovator Circle and new partnerships agreements with global transfusion leaders.
We have built an experienced and talented executive management team who have the desire and vision to take this company forward during an exciting time of platform and menu expansion.
We’re on track to expand our distribution partners from nine to an expected greater than 20 by the end of the year. This will include the addition of other geographies, which are leading global markets that account for greater percentage of the white blood donations and growing in double digits in the other regions.
We will also expect the distributor presence in the major countries like in Latin America and Asia Pacific which represent material opportunities for us to grow.
Following our recent financing, we have the balance sheet to enable us to make the necessary investments to drive profitable growth, extend our cash runway and value creation for this company going forward.
As you can probably tell, I’m extremely enthusiastic by our future at Quotient. And now, I invite for an open Q&A. Rob?
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] Our first question is from the line of Brandon Couillard with Jefferies. Please proceed with your question.
Brandon Couillard
I just want to confirm the guidance does include or does not include some commercial MosaiQ revenues? And then what are the main KPIs? What are the main metrics against which we should measure the success of the launch in the first year externally? What are the main numbers we should focus on, whether it’s installed base, number of customers, kind of distributor build out, what’s your view that’s most important?
Ali Kiboro
Thanks, Brandon. So the number does include MosaiQ sales. We do not include the tender business there in any material fashion because it’s hard to predict, but it does include placements of instruments as well as our distributor channel in that number that we’ve just communicated.
What we said as you look through our press release and our comments here today is really to look at bookings and the number of distributors that we have because we do have greater visibility to that as opposed to the to the tender channel that we’re not baking into this number at this point, given it’s only been 90 days since we launched. So really the guidance we’re giving is to what we have visibility to, which is the distributor channel as well as our core Alba business.
Manuel Mendez
And then we’re also going to be communicating. So I think in terms of, yes, so you should expect that we’re going to communicate the expansion of distribution because that should have a direct link into revenue and it’s more predictable. And then as we participate in tenders, we’ll communicate our participation and the success there, which will then drive revenue from that standpoint.
On the tender business, maybe we’ll start communicating bookings because that’s very — it’s different from go-live. As you know, sometimes it takes a little longer. By the time you get awarded and you go live, depending on the needs of the customer and varies by region. But that’s probably will be some of the things that we should be looking at in terms of metrics.
Brandon Couillard
Okay. So the $1 million of initial orders, were those with distributors? Were those on a direct basis? And have there been any tenders that you’ve participated in yet that have kind of been decided or won yet?
Manuel Mendez
We participated in the tenders that have not been awarded. Their initial number is through the agreements through distribution and then there’s others. So it doesn’t fully comprehend all the agreements we have in place. Like I mentioned, we have already nine, so some of them. There are others that are in conversations as to what those requirements are from a revenue and commitment to minimums. So those, we’ll be giving updates in the weeks and months to come.
Brandon Couillard
Got you. Okay. And then in terms of the manufacturing of the microarrays, can you just update us again on the current capacity, where yields are right now and remind us how much of that is actually allocated to R&D as opposed to commercial sales of that capacity?
Manuel Mendez
Yes, thanks for the question. Look, I think yield, it’s ongoing.
We’re making great progress and ready for commercialization and the needs that we expect from a commercial standpoint, a little bit different what we’ve done. I know in the past we’ve talked about allocations of R&D to address that. We have implemented R&D lines that are going to improve prototyping and speed of development, which then — is not then taking the yield time from our main lines that are more for commercial focus now.
So we’ve implemented those in the R&D areas, both here and in Edinburg to facilitate a faster development. We’re doing some sort of fast prototyping and it’s [ Prince ], as we call it internally. So it’s not necessarily an issue at this point. And again, we’re ready for process.
And with the addition of Esteban to our team, I think he’s done — he’s brought a lot of good maturity, very focused on metrics, which really give us a great level of confidence in being able to deliver the market demands.
Operator
Our next question is from the line of Josh Jennings with Cowen. Please proceed with your questions.
Josh Jennings
Wanted to follow-up on the orders that you received already for MosaiQ and just how we should be thinking about these distributor agreements. Are you generating revenue for MosaiQ system sales as well as microarray sales through these distributor channels?
Manuel Mendez
Yes. And that is the agreement. And it’s not just, again, these are distributors and then going to customers. So it’s active, so it’s not generating inventory. It’s actually going to customers.
Ali Kiboro
Josh, just to make sure I add on that. Yes. So you would have the three pieces of it, the instrument itself, the consumables and the service pieces.
Manuel Mendez
That’s correct.
Ali Kiboro
That is what the agreement with the distributors is going to cover.
Josh Jennings
Yes. Excellent. Thank you. And just thinking about the tenders and the 20 submissions over the next 18 months. Any way to just help us think about tenders that are coming up within six months versus 12 months versus 18 months. Are most of these submissions going to occur in second half of this 18-month window? Or should we think about it kind of every six months, a third, a third, a third? Just wanted to get a better handle on timing of these standard processes.
Manuel Mendez
Yes. Look, what I can say is, it varies. There are some that that are coming now in the month of June even before it’s finished. Then there’s some coming up in July. And then the assumption that we have is on what they’ve communicated to us when they’re going to open and they’re going to be posted, which varies. Sometimes they say well, we’re going to post in June and then it goes into July.
So it’s hard to predict and I would hate to give you a number that then it may change. But our expectation is that in the next six months, we will have seven or eight of those that are going to be available. They’re going to vary in range, so there’s some smaller, there’s some larger. And then the rest within the 12 months, similar number.
So at the end of the day, we’re working through those and ensuring that again we’re working with the customers and the different institutions as soon as they get published and we will participate.
So it’s a little vague answer, I’m sorry, but it’s difficult to know when they are actually going to be published or not.
Josh Jennings
Understood. Thank you. And wanted to check-in on your comments around BLA submission to the FDA in the second half of calendar 2022. Just what’s left in front of that submission. Just any update on the U. S. field trial when they will start and just any other kind of next steps before that submission could be made?
Manuel Mendez
Yes. So we had conversations in the pre-submission. What you do there is you get guidance, hey, this is what we’re planning to do, this is what — where we are now good feedback and on track on that. At the end, what we should expect is then trials to start in the next couple of weeks. And then with that, we again prepare the submission and submit in the second half.
What I would say that what’s really interesting and nice on this submission is that the team has done a really nice job in taking — improving the performance even what we had previously. It’s going to include more specificity than what we have already gotten a proven in CE mark. So we’re very excited at this point of. And on top of that, what we’ve done is also added some elements to a manufacturer ability with the communication between both teams from the operations perspective, the tech transfer and then the R&D team that improved also manufacturability.
So we’re super excited about this product. And then the good news about that is that we submit to the clinical trials and once we submit, we can use that data to then come back and then even enhance even further our CE marking product, which then that’s going to be amazing for customers in Europe because it adds some nice specificities on top of what we already have.
Josh Jennings
And just a follow-up on this BLA process, and just how you’ll communicate with the investment community on those improved sensitivities and also potentially a bigger menu that’s going to be introduced in the U.S. field trial. Will you guys share verification of validation results or should we be thinking we’ll just see results at the end of the U.S. field trial? Wanted to just better think when we’ll present [indiscernible].
Manuel Mendez
Yes, Josh, I think that’s a fair question. I think look, I think it’s a better for we will share through papers and publications, Dr. Ginocchio is going to address that through scientific and medical affairs. And so you may see some things associated with it. As part of the clinical trial process and particularly with the FDA, you don’t want to be sharing data in between. So I think what’s been sort of a custom in the past, we probably move away from that and then more, hey, once we submit whatever it’s allowable for us to submit as part of those agreements, and in conjunction with the without risking the approval, we’ll do those and communicate those.
But I think again, the important thing is to focus on completing the trials, submitting the data and then getting approval as soon as possible. That’s our focus.
Josh Jennings
Thank you. And last question, just on the collaboration with Theradiag for the autoimmune microarray. You’ve talked about entry in the U. S. and in international markets in calendar ’23 seems like a nice accelerated timeline. So any help just to think about where internal development program stands today and just a roadmap to get to those entry points next year — next calendar year. Thanks for taking the questions.
Manuel Mendez
Look, we’re super excited now the teams have met multiple times. As a matter of fact, they were here this week making progress and advancing that. So look, we’re extremely excited. Theradiag is well known for their autoimmune portfolio, their CE marked. They have expertise in this area when you compare it to the menu and scale and capabilities from an organization perspective. They are equal to or better than other products that are in the market.
So we’re extremely excited with not only the fact that now we streamline our development process and timeline, but the fact that we are partnering with them, it’s just lower cost, right, because then we can go to market faster. We don’t have to a lot of in development — a lot of the trial and error is around antigen antibody selection upfront and those raw materials and how they work. So having the expertise on something that is already validated and works, that’s a huge, huge factor in being able to come to market much more quickly, plus also they have access to samples and rare samples that really help us characterize the performance of the product.
And so it’s an overall win for them, win for us. And that’s why again for — I think the key message is faster to market and lower cost of development, which is, as you know, one of the key things that we have to do in this process. So we were very excited about the partnership and again super collaborative.
Operator
Next question comes from the line of Mark Massaro with BTIG. Please proceed with your question.
Unidentified Analyst
This is [indiscernible] on for Mark. Thanks for taking the questions. So on this 20 tenders could you just remind us how much of the overall market does account for? And how to think about that opportunity? And what the geographic mix looks like? And just given that you secured that $1.4 million in orders, are you in any conversations about expanding to SDS potentially as well? Thanks.
Manuel Mendez
Yes. So look, the way to look at the current immunohematology and the tenders that we’ve outlined, look, if we look at immunohematology overall, it’s about $300 million market. We’ve started including the U. S. because as you know that’s not accessible at this point as we were waiting for FDA approval. So it’s about $300 million that’s at play. And then through that, some of the tenders that we have, it probably represents about 60% of that market that is accessible. If we look at the EU, it’s about $100 million and 60% of that is the tenders that we’re discussing.
So if we look at about — it’s probably about $60 million of opportunity that potentially can be in play. And so our goal is to look at some of those figures and then have access to that as part of that process. So — and what was your second question? I’m sorry.
Unidentified Analyst
Yes, just conversations about expanding to SDS.
Manuel Mendez
Yes. Well, look, I think SDS is huge opportunity for us. We expect to get approval in the first half of next year. It gives us access in the full market globally, it’s about $1.3 billion. And from that it would be accessible. Again, 75% of that market is in Europe and the rest of the world. So 25% is in the U. S. So that gives us another access to $900 million. If we look at the opportunity then between SDS and IH, so it would be greater than $1 billion in terms of access opportunity.
If we look at — every time we have an immunohematology account, whatever we win on an immunohematology account, the idea is that we just add then the SDS becomes as an opportunity because it can be used on the same platform. So look, it’s represents a big opportunity for us to leverage any placements and any wins that we have on the MosaiQ with now. Once we launch in the SDS, we’ll just leverage that installed base and those opportunities.
And in the meantime, we actually already know the tenders that would be available, that are available, that are in play, our teams already not only identifying those and also influencing those tenders with the ability that all of a sudden now a customer will have the opportunity to have both modalities, so both immunohematology and SDS on the same platforms. So this is again a big game changer with respect to what they have ability to be able to engage today.
So they’re very excited about that. We’re already doing also some workflow analysis with some partners on the impact of having IH and SDS on the same instrument in the same account. So we’re looking then to have some papers to be published around that in anticipation of the launch of next year. So we expect some of those things to come out in the next month.
Unidentified Analyst
Perfect. Thanks so much. And just a quick follow-up. As far as allergy and autoimmune products in the pipeline, any updates there from an R&D perspective in progress towards approval? Thanks.
Manuel Mendez
Yes. Look, like I mentioned before, look, we’re making great progress both Theradiag and our companies that we’re working very closely together. We have project plans advancing. So yes, we’re very excited with the expertise of Theradiag and the expertise that we have on microarrays, it just represents a significant opportunity again to leverage the capabilities of assay development, control development of Theradiag which again is just basically giving us access to this $2 billion opportunity for autoimmune and then also of course that is just the platform to start the autoimmune and then give us access to other clinical applications like allergy that we’d identified that also become significant opportunity for us.
And then it applies the same way. Once we get into an account with an autoimmune solution, microarray. Once we develop an allergy, that could be something that could be add on to that system, which creates and helps build steady revenue razor or razorblade model for us. And then for the account, it’s just they don’t need incremental instrumentation to be able to add those capabilities into that side. So it’s just a win-win for everyone.
Operator
Our next question is from the line of Matt Sykes with Goldman Sachs. Please proceed with your question.
Matt Sykes
Maybe just following up on the last question regarding SDS. See that you guys outlined a EU commercial launch in the first half of next year. Would there be an expectation for an acceleration in terms of the momentum from MosaiQ given the availability of SDS. Kind of similar to last question, are you having conversations with folks who might be waiting for that SDS capability prior to pursuing instrument? Or is at first IH and then when SDS comes you to add that on?
Manuel Mendez
Yes. No, that’s a great question. So look, what we’re seeing is great activity for many customers to get into the IH right now. Why? Because when you look at the immunohematology instruments that are available today from other competitors, they are extremely cumbersome, very manual. They have potential of risk from user intervention. They also cannot consolidate with the multiplexing capabilities that we have on the MosaiQ, they cannot offer all the specificities integrated into every single sample. So that’s very appealing and they want to be able to adopt now. That’s again the feedback we received on the immunohematology.
Now on top of that, when you add then the serological disease screening opportunity and that being available, that is just going to be an incremental opportunity for them to once they have the MosaiQ with the IH, then it’s simply just adding that SDS microarray onto the platform, which is a huge benefit from user interface, space and other value that we can certainly — that they have articulated to us from a staffing perspective and to splitting.
So there’s so many other things that they value on that. So yes, I think it’s — IH stands on its own as an opportunities creation now. And then we’re anticipating it’s the discussions with other customers, as I mentioned before, where we are doing workflow evaluations now to be able to demonstrate not only for the immunohematology, but the immunohematology and SDS together. And then that’s becoming extremely appealing, oh, so I can get this benefit on IH. And then on top of that, when I get on SDS, I’ll get even further value. So they’re eager to be able to address that.
As you know, there’s a lot of challenges from a customer perspective on workflow today. There’s challenges on staffing, not on people, there’s challenges on budget. So the fact that we can help address all these challenges is extremely valuable for them now.
Matt Sykes
And then just in terms of the EU tenders, I know you gave a lot of color in previous questions. But I’m just wondering, is there a kind of a templated duration of submission to award for these tenders or is it more case by case? I’m just trying to think about not just the cadence of how they lay out, which you answered before, but more about the timing between submission to award and if that varies between tenders or if there’s a standard time that we should be thinking about?
Manuel Mendez
That’s a good question. So look, it varies. So there’s no standard at all. You’ve seen one, you’ve seen one. But what I can tell you is our expectation at least as we participate in the tenders normally as you know is a technical and a financial, we normally would expect that within 60 days that you would get a some kind of indication or response, sometimes it takes longer while we’ve seen, it takes longer, what we’ve seen today.
And then from that, it could take up to 90 days, maybe longer. But normally, at normal situation, it should be between 45 days to 90 days, right? Then from that, what I would say is that you would expect to go live anywhere between three months to five months. In some cases, depending on where they are in their contract, where they’re on the year. But at the end, what we’re confirming with customers is we’re ready to go, we submit — we’re ready when we submit the application. We’re ready to go with our team that is focused and then in the implementation process, our teams are ready to go on that.
So again, we understand the process very clearly. We’ve seen it. We’ve done it. And we’ve augmented with people that have a lot of experience in this area. But yes, we are ensuring that we understand the timings and how then we can of course accelerate the ones awarded to go live.
Matt Sykes
And then just last question, Ali, for you. Just given the amendment to the senior secured notes, the equity financing last night and then kind of what you outlined in terms of CapEx and cash usage for next year, like what is kind of your expected duration of cash runway at this point given all the things that you’ve done?
Ali Kiboro
So based on the things we’ve done, as well as the things that we’re working on, we have runway into next year and we’ll continue to work on all the other things that we are continuing to work on beyond these. We think it was great that we were able to restructure our senior secured note given how important it has been for the company knowing that our senior secured noteholders had previously pushed out the amortization. This time we were able to push it out all the way into 2025. So we thought that was very helpful because it gives us a lot of flexibility in terms of funding the business without having to consider the fact that there were principal payments for amortization coming up.
So we thought that was really excellent. All the other different factor that we’re looking at in terms of funding the business, whether it’s [grant] or R&D or looking to do things like strategic partnerships, royalty rights, distribution rights similar to what we’ve done with partners like Ortho. Those now become much, much easier to do and much more helpful given that we’ve been able to come to this amendment that really reduces the near term use of proceeds to pay for principal. So pushing that out three years out and pushing almost $93 million into 2025 really does give us flexibility and runway. So we’re excited about that.
Manuel Mendez
And I would like to add one thing. Frankly, I have to say that our senior secured note partners have been extremely helpful. And extremely cooperative to the process, which is great to be able to have that as a company. Again, I don’t know that many companies can say that in this day and age with this macroeconomic environment that we’re facing. But the fact that we have that support and that we can say today that we have signed this amendment, it really is a testimony to the partnership that they’ve shown us. And what we expect going forward. I think again we have a great executive team. We have great partners both on the credit side, on the investor side. a very supportive board. Again, I think again the momentum is great and we look forward to driving that home.
Operator
Thank you. We have reached the end of the question-and-answer session. I’ll now turn the call over to Manuel Mendez for closing remarks.
Manuel Mendez
Well, thank you for all your questions guys. I would just like to reiterate what I’ve mentioned before, I’m so proud of what we’ve made as a team in terms of progress. We will continue to drive the next fiscal year very laser focus and empowerment our customers and transforming patient care. Thank you very much and enjoy the rest of the day.
Operator
This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.
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