Accelerate Diagnostics, a company focused on revolutionizing rapid diagnostic testing, particularly for sepsis, held its Q1 2024 earnings call on May 8th. While the call focused heavily on the progress of their upcoming Wave platform, a subtle shift in strategy and a previously understated aspect of their existing business might be pointing towards a significant untapped revenue source – international expansion.

For years, Accelerate's core product, the Pheno system for rapid antibiotic susceptibility testing (AST), has predominantly targeted the US market. Their partnership with BD, a global diagnostics giant, seemed poised to propel Pheno onto the international stage. Yet, as Jack Phillips, Accelerate’s CEO, revealed in the call, the initial European commercial agreement with BD was "not something that was setting us up for success."

This admission, coupled with the subsequent restructuring of the European agreement to better incorporate Pheno into BD's tender submissions, speaks volumes. It suggests that the international potential for Pheno, even before the launch of Wave, was larger than previously appreciated, and that Accelerate might be quietly repositioning themselves to capitalize on it.

Adding fuel to this fire is the mention of securing contract extensions with strategic US customers, solidifying roughly 70% of their existing customer base on longer-term contracts, specifically for Wave. This strategic move, while presented as a preparation for Wave's launch, also serves another purpose: it allows Accelerate to shift focus away from the US market and dedicate more resources towards international expansion, confident that their domestic base is secure.

"Further strengthening this hypothesis is the FDA submission of Arc, an automated sample preparation method for rapid PBC ID on Bruker's MALDI Biotyper instruments. This submission, while seemingly unrelated to international expansion, offers a critical insight. It demonstrates Accelerate's proactive approach towards addressing specific market needs. In Europe, where Bruker's MALDI Biotyper enjoys strong market penetration, Arc could become a powerful driver of Pheno adoption, especially with the restructured BD agreement in place."

Let's look at the numbers. The global antibiotic susceptibility testing market is valued at nearly $2 billion and is steadily growing. The US, while a significant market, represents only a portion of this global landscape. If Accelerate can successfully leverage Arc and the restructured BD partnership to penetrate the European market, they could unlock a significant revenue stream, potentially exceeding their current US revenue.

Furthermore, the success of Pheno in Europe, even at a fraction of its potential, would create a powerful narrative for future international expansion, particularly for Wave. Imagine a scenario where Wave launches globally, riding the coattails of Pheno's success in Europe and capitalizing on the established BD infrastructure.

Accelerate's confidence in securing a global commercial partnership by mid-year also points towards a broader vision. They explicitly mention "geographic expansion" as a key objective for this partnership, further supporting the idea of an international push.

Growth of Antibiotic Susceptibility Testing Market

The global antibiotic susceptibility testing market is expected to grow significantly in the coming years. This chart shows hypothetical revenue projections based on a 6% annual growth rate.

Of course, this is all speculation based on subtle cues within the Q1 transcript. However, the evidence, combined with the immense market opportunity, suggests that Accelerate might be quietly orchestrating a global takeover in the rapid diagnostics market. While their focus on Wave is undeniable, the potential for Pheno and Arc to establish a strong international foothold should not be underestimated. If they play their cards right, Accelerate Diagnostics could become a truly global force in the fight against sepsis and antimicrobial resistance.

"Fun Fact: Sepsis, a life-threatening condition caused by the body's extreme response to an infection, affects millions of people worldwide each year. Rapid diagnostic testing, like the solutions offered by Accelerate Diagnostics, is crucial in ensuring timely and appropriate treatment for sepsis patients."