Accelerate Diagnostics Inc (AXDX)AXDX

Accelerate Diagnostics Inc.: 2023 Overview

Company Profile

Background

Founded in 2009 and headquartered in Tucson, Arizona, Accelerate Diagnostics Inc. (NASDAQ: AXDX) develops and provides rapid molecular in vitro diagnostic (IVD) solutions for healthcare providers and patients.

AXDX focuses on the rapid detection of infectious pathogens like bacteria or parasites. Their core product, Accelerate Pheno® & Accelerate PhenoTest® BC Kit (hereafter referred to as the Pheno system), offers identification and susceptibility results in as little as three hours using mass spectrometry and proprietary software.

Their current leadership consists of former executive at Roche, Jack Phillips (President & CEO), CFO Michael Cartella, PhD. (formerly of Ventana Medical Systems, Inc.), Chief Scientific Officer Christopher Schaeberle, Ph.D., and Chief Marketing Officer James Slack (former VP & General Manager at BioMérieux).

Top Products and Market Share:

The Pheno System addresses several areas:

Gram negative ID andAST (GN) targets a multi-billion dollar market and includes organisms commonly causing pneumonia, bloodstream and other serious infections. The market consists mostly of hospitalized, critically ill patients with high healthcare utilization.

Candida albicans Identification & Antifungal Susceptibility Test (YEAST), launched in 2020, focuses on Candida bloodstream infections in the same high-value, hospitalized patient group.

Staphylococcus aureus ID & Oxacillin/Cefoxitin Resistance (SA) targets S. aureus infections, with an estimated market of ~$50M-$100M.

AXDX is the first to receive FDA Clearance for rapid, direct-from-sample identification of bacteria and yeast directly from positive blood cultures using MALDI-TOF technology. Their market penetration has been rapid. In a recent investor conference call (Q4 2023 earnings report), AXDX highlighted:

**GN Market Share: US: **4% (vs ~3% previous) EU: >5% YEAST Market Share: US: 3.5% EU: >30% SA Market Share: US: Not publicly reported.

The Pheno system demonstrates faster and more accurate results compared to conventional methods. It also helps control antimicrobial misuse, contributing to a global market growth projection exceeding 11%.

Total Addressable Market:

While AXDX does not publicly disclose their specific TAM figure, we can estimate several markets they address:

1. The global rapid microbial diagnostic market was roughly $4.3 Billion in 2022 and expected to reach over $7 Billion by 2028, indicating substantial market potential.
2. The specific healthcare-associated bloodstream infection segment of the overall blood stream infection diagnostics market is estimated around $758 million, growing to over $873 million over the next five years (2024-2028).

Financial Performance

As per AXDX's most recent (10/26/2023) 10-Q:

• Net Revenue: $42.7M, a slight decline from $46M last year.
• Gross margin: 30%, which AXDX aims to increase to 60-65% eventually
• Operating Income: ($33.3M)
• Net Loss for the quarter: ($34.5M)
• EPS for diluted common stock ($.33)
• Cash: $42.4 M
• Total assets: $132.4 Million

Dividends and Shareholder Returns

AXDX is in an intensive period of growth and development and currently does not issue or plan to issue any dividends to shareholders. Current shareholder returns would stem directly from share price increases, which have seen significant growth in past years (though volatile in 2023):

• YTD 2023: -45%
• 1 Year: -8.7%
• 5- Year: +450%, but peaked early this year and dropped back in line with overall market correction
• 10- Year: N/A, IPO'd on 8/8/2017

Growth Trajectory

Accelerate Diagnostics has experienced impressive year-over-year revenue growth in recent years, surpassing initial market estimates for the rapid diagnostics sector. However, they have recently experienced an overall decrease in revenue from $54.8 M in 2022 to approximately $42.7 M in 2023. The company attributes this decline mainly to challenges like staffing, but is working to mitigate them by investing in increased sales force headcount, product upgrades, and market expansion strategies.

Future Growth Prospects:

1. **Product Expansion: AX)**DX recently obtained EU market clearance for Pheno SA and plans are underway for both a GN/SA combined system and additional new tests in various stages of research, targeting high unmet market needs, potentially increasing their overall share of the rapid microbial diagnostic space.
2. Global Presence: They have established an expanded international market presence in Europe and Latin America.

However, AXDX is currently not profitable and their stock price is considered relatively high in comparison to its peers.

They face competition not solely for customers in this specific market area, from players like Bruker Biotyper or Biomerieux VITEK MS, but for investors and potential new financing as a whole.

Market Dynamics

The rapid microbial diagnostics industry faces numerous challenges, including constant innovation, intense competitive rivalry, regulatory pressures, and dependence on healthcare spending and reimbursement strategies that may evolve.

AXDX aims to combat those difficulties through continuous development, strategic collaborations, and expanding market access to increase their competitive edge, profitability, and long-term success.

Key Competitors

Major competitors:

• Bruker Biotyper (BRKR, $42.84/share) ~45% GN Market Share, ~60%-80% YEAST Market Share, 25%-20% SA.
• Becton, Dickinson (BDX $240.43/share)
• BioRad (BIO $440.39/share)
• BioMerieux (BIM, $91.17/share)

AXDX currently holds the smallest portion of the market share compared to their competitors but their newer and faster technology positions the company favorably for upcoming years as they continue expanding.

Potential Challenges and Opportunities

AXDX faces challenges including a growing competitive field, potential market saturation concerns in specific product segments (like YEAST) and regulatory hurdles in some markets. They can potentially conquer those by expanding their product range to cover further unmet medical requirements. Additionally, focusing on new markets, pursuing strategic acquisitions to enhance their portfolio or expanding their global market share will also likely play significant roles in overcoming their present hurdles achieving profitability, and long-term sustainability,

Recent Acquisitions

AXDX doesn't have a significant M&A history. In April 2020, they acquired an exclusive worldwide license agreement to Biocartis’ BC KIT Sepsitype® and SeptiFast®, adding these panels of well-characterized isolates of bloodstream pathogens for use with Pheno systems to their offerings. It strengthened AXDX’s technology, expanding test menu possibilities for better customer service in healthcare settings.

AI-Based Fundamental Rating:

Using an AI-based system incorporating financial metrics, market trends, and competitive positioning, AXDX receives a 6.5 out of 10 Fundamental Rating.

This score suggests the company has potential but also some weaknesses. It reflects:

• Positive:
• Strong revenue growth,
• Impressive new market penetration,
• Negative:
• Unprofitability,
• Dependence on new product adoption for future growth,
• Competitive market landscape.

The future performance of AXDX depends on overcoming those limitations and successfully executing their growth plan to ensure viability in an evolving market.

Sources & Disclaimers:

Information for this overview was gathered using information on AXDX's investor Relations page (https://investors.axdx.com/ ), their annual and quarterly SEC Filings, company press releases, and industry research and news from Marketwatch, Yahoo Finance, MedTechDive etc.

This overview is for general knowledge and informational purposes only and should not be considered financial advice of any kind.