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T2 Biosystems Advancing Pipeline, Accelerating Instrument Placement Strategy

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NEW YORK – Despite the benefits gained from providing COVID-19 testing, T2 Biosystems is sticking with sepsis testing as its main focus in 2021 and beyond.

During the company's first quarter earnings call, T2 CEO John Sperzel said that while COVID-19 "presented a new and challenging opportunity to demonstrate the capabilities of our technology," sepsis is its primary focus and it intends to change the standard of care for sepsis testing in hospitals from blood cultures to PCR testing using its T2DX instrument.

Throughout the first quarter, contributions from the firm's T2SARS-CoV-2 panel had an annualized run rate of $214,000 per instrument compared to its sepsis test's annualized run rate of $111,000 per instrument. The sepsis test annualized run rate in the prior year period was $60,000 per instrument. The firm received Emergency Use Authorization from the US Food and Drug Administration for its SARS-CoV-2 test in August. However, T2 has a three-pronged plan for the future that doesn't include much in the way of COVID-19 testing.

On the company's fourth quarter earnings call in March, Sperzel mentioned the company would focus on three corporate priorities, and during the most recent earnings call this week he reiterated the emphasis on those priorities: accelerating sales, enhancing operations, and advancing the pipeline.

For accelerating sales, Sperzel said the company's goals were to transition its T2Dx instruments sold in the US for COVID-19 testing to sepsis testing, increase sepsis test utilization in its legacy installed base, and increase the T2Dx installed base overall.

Aparna Ahuja, who was hired as T2's chief medical officer earlier this year, is working to generate evidence of the clinical and health economic value of T2's products, and Sperzel said the company expects to see data published throughout 2021 that will hopefully build greater awareness of its products. Ahuja is also overseeing the creation of T2's scientific advisory board and building its clinical affairs team.

T2 also touted the results from a recent meta-analysis of its products published in Expert Review of Medical Devices. The study found that compared to blood culture, T2's diagnostic products reduced the time to pathogen detection by 81 hours and time to species identification by 77 hours and decreased the length of patient intensive care unit stays by five days and the length of overall hospital stays by 4.8 days, Sperzel said. The analysis also found use of T2's products could reduce hospital costs by $25,000 per patient.

As COVID-19 cases continue to decrease, Sperzel also said the firm expects to see increased access to hospital personnel to sell new instruments and sepsis test panels to customers that are currently using only its COVID-19 panel.

The company has added nine new sales representatives to address different regions, and Sperzel said in April the firm closed two accounts with Baylor and the Mayo Clinic health systems. T2 is targeting a mix of integrated hospital systems and standalone hospitals, he added.

He added that 70 percent of T2Dx instrument sales are expected to come in the second half of the year. T2 expects to place 30 instruments this year, with four placed in the first quarter.

T2's hospital selling strategy since the pandemic has been to sell its instruments to only prequalified US hospital microbiology labs with a "stated interest in evaluating the use of T2Bacteria and T2Candida panels for integration into their sepsis treatment protocols," he said, in order to ensure the emphasis remains on sepsis products.

He also said the company expects to increase test utilization and is targeting an annualized run rate of $200,000 per instrument per year. While the firm was short of its 2020 target of $100,000 per instrument due to COVID-19 headwinds, Sperzel said the company considers $200,000 the right threshold for a sepsis-utilizing customer.

As for the operations side of the business, T2 has scaled its manufacturing capabilities and strengthened its supply chain relationships over the past year, Sperzel said on the call this week, while T2 CFO John Sprague added that the company has put in operational efficiencies on its plant floor, driving better throughput and better yields.

The firm is also continuing efforts to advance its product pipeline with an ongoing focus on developing the programs outlined in its $69 million contract with the US Department of Health and Human Services' Biomedical Research and Development Authority. T2 completed the base phase of the contract in the third quarter of 2020 and is currently working toward fulfilling the Option 1 milestones. It announced this week that it has modified the terms of the contract to advance future deliverables into Option 1.

There are six options in the contract, and T2 pulled milestones from Option 2 into Option 1 as part of the modified agreement. It plans to continue pulling in milestones from further options as it progresses through the contract to move faster on all of its projects.

The contract includes the T2Biothreat blood panel, the T2Resistance panel, a next-generation instrument, and a comprehensive sepsis panel. The biothreat panel is designed to detect six biothreat pathogens from a single sample and will run on the T2Dx instrument, Sperzel said.

The comprehensive sepsis panel will detect approximately 99 percent of all bloodstream infections caused by bacterial and Candida species and antibiotic resistance markers identified as threats by the US Centers for Disease Control and Prevention with a time to result of three hours, Sperzel said. He added that the test has the "potential to totally disrupt the traditional blood culture workflow," which usually takes days to detect pathogens so clinicians can target therapies appropriately.

Its next-generation instrument, meanwhile, will be fully automated and random access like its T2Dx instrument but is being designed in parallel with the comprehensive sepsis panel to detect an increased number of pathogens from a blood sample independent of blood culture.

The T2Resistance panel, which was listed as an additional service in the original contract, was pulled into the BARDA program so it can include milestones in Option 1 and accelerate the program. It will be commercialized in the US market to provide results in hours and help clinicians target therapies. The panel is currently being sold in Europe with a CE mark but needs additional verification and validation studies for 510(k) clearance from the FDA.

The panel received Breakthrough Device Designation from the FDA in 2019 and was developed in part thanks to $2 million in funding from global nonprofit CARB-X. It detects 13 resistance genes that can confer resistance to typical empiric antibiotics, such as carbapenems, vancomycin, and penicillin, and Sperzel said he believes it will "enable more patients to get on the right targeted therapy faster, potentially reducing mortality and hospitalization costs."

The firm also has its T2Lyme test, which it plans to initially sell as a laboratory-developed test through a partner. Work on the test was put on hold due to the COVID-19 pandemic, but Sperzel said the company hopes to make progress on it in the second half of the year.

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