Accelerate Diagnostics, Inc. 2016 Q3 Results Conference Call Thursday

Good day and welcome to the Accelerate

Diagnostics, Inc. 2016 Q3 Results Conference Call. All participants will be in listen-only mode. After today's presentation

there will be an opportunity to ask questions. Please note this event is being recorded.

I would now like to turn the conference

over to Laura Pierson of Accelerate Diagnostics. Please go ahead.

Before we begin, I would like to advise

you that information presented during this conference call may contain forward-looking statements within the meaning of Section

27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

Forward-looking statements include statements

about our future and statements that are not historical facts, may contain expectations regarding revenues, earnings, operations,

and other results and may include statements of future performance, plans, and objectives.

Forward-looking statements include statements

pertaining to, among other things, our projections as to when certain key business milestones may be achieved, including marketing

authorization by the FDA of the Accelerate Pheno System and the Accelerate PhenoTest BC kit for positive blood cultures, the commercial

launch of the Accelerate Pheno System and Accelerate PhenoTest BC kit for positive blood cultures, the expected results of our

Phase 2 clinical trials, the potential of our technology generally, our estimates as to the size of our market opportunity and

our competitive position and our future development plans and growth strategy, including with respect to research and development.

These statements represent only our belief

regarding future events, many of which are inherently uncertain. You are cautioned that any such forward-looking statements are

not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those

projected in the forward-looking statements as the result of various factors.

Information regarding important factors,

including specific risk factors that could cause actual results to differ, perhaps materially, from those in our forward-looking

statements are contained in reports we file with the SEC. You should read and interpret any forward-looking statement together

with the reports we file with the SEC.

I will now turn the conference call over

to Mr. Lawrence Mehren, President and CEO of Accelerate. Larry?

Thank you, Laura, and good afternoon everyone.

I appreciate you joining us for our third quarter 2016 conference call.

Over the last quarter, the company has

made solid progress across a number of fronts. These include FDA's substantive review of our De Novo submission, Phase 2

of our clinical trial, our European launch, preparation for our US launch, and research and development. I will cover these topics

in order, and then turn the call over to Steve Reichling, our CFO, to review the quarter's financials. We will then open

it up for questions.

Let's begin with progress towards

FDA clearance. As we mentioned previously, on July the 7th we submitted our application for De Novo clearance of the Pheno instrument

and our positive blood culture kit. The submission is over 10,000 pages long, and includes clinical study data for 118 assays,

multiple analytical studies and other important validations of our Pheno systems' performance.

Under the De Novo guidance the FDA has

120 days to review and approve or deny this application. However, this time period can be extended if questions and/or requests

for additional information are asked of the applicant - a common occurrence. Given this short review process, the FDA designated

multiple reviewers to our submission who have been working through the large document and supporting data.

Our regulatory and scientific teams have

also been actively involved in answering questions, and providing additional data that have been requested during the review. I

am pleased to report that in our view, this cooperative, interactive review approach has resulted in significant progress towards

completion of the FDA review process. And we are highly confident of a positive outcome.

In terms of timing, I will reiterate that

while specific review times are not directly communicated to us by FDA, from our perspective, all signals would indicate that the

process will be finished soon. Accordingly, we are now confident to have a decision no later than Q1 2017 and hopefully as early

Now on to phase 2 clinical trial; again,

this trial is being done primarily to continue testing assays not reaching sufficient powering during the initial trial, and therefore

is much smaller in scope than the first. We believe performance to date has been excellent, with results similar to what we saw

Further, we are close to completion, having

enrolled 270 out of the 409 required. Given this progress, we expect to finish enrollment in the fourth quarter, with submission

to FDA in the first quarter of 2017.

Now switching over to commercial progress,

we believe results for the quarter from our EU launch have been extremely positive, exceeding our expectations. Demand has been

strong and our funnel continues to grow. Capitalizing on this interest, our veteran team in Europe has done an outstanding job,

signing numerous contracts and installing scores of modules.

As mentioned, while we believe that the

tender process and other factors will slow time-to-revenue in this geography, we believe we will begin generating the first revenue

from these contracts in the fourth quarter.

Commercial progress in advance of our launch

in the US has also been very positive. We have completed the build-out of our sales team and now have 25 world-class professionals.

This team has grown our funnel of qualified

leads substantially, giving us confidence in an outstanding US launch. Even more bullish, we continue to see the number of customers

signing contracts to acquire the system.

These pre-approval contracts are designed

to allow customers to do a systematic evaluation against predetermined endpoints. If these endpoints are met, including FDA approval,

the contracts proceed to acquisitions.

Further, during the evaluation period,

we expect to continue generating kit revenue from customers sharing the cost of these evaluations, the first revenue of which was

recorded this quarter.

All in all, we are very pleased with global

commercial performance to date. We believe customer enthusiasm is high and growing. Funnels look great and contract to conversions

are proceeding at a solid pace. Needless to say, we are looking forward to FDA approval, after which we plan on providing specific

numbers on contracts and placements.

Moving on to research and development,

where we also believe progress has been solid, first, as mentioned on our second-quarter call, we have been working on a simplified

QC kit, development of which was completed in the second quarter. This kit has now been tested and performance has been as expected,

allowing us to move forward with registration. We believe this will have a positive impact on the customer experience and decrease

the time and complication of the verification process.

In addition, the team continues to make

progress on our Beyond the MIC program, formally referred to as SIR 2.0. Our Beyond the MIC program uses our proprietary technology,

Morphokinetic Cellular Analysis, to deeply interrogate the phenotype of a pathogen, looking for signatures that can better predict

antimicrobial therapy success or failure. While still very early, we believe this research effort is yielding important findings.

For example, many key opinion leaders believe

that the failure in certain patients of vancomycin, a potent antimicrobial, is caused by a phenotype referred to as hVISA. This

is not detectable using molecular methods, nor any other standardized method.

However, early data from our research suggested

the Pheno system's unique ability to determine heterogeneous populations of bacteria could result in the systematic detection

of this dangerous form of resistance. The detection of this could have a material impact on patient care and further differentiate

Finally, we continue to make progress on

our next kit, directed at bacterial respiratory infections. These infections are a leading cause of mortality and morbidity and

commonly are resistant to standard antibiotic treatment.

We believe our solution will be the first

to provide direct-from-sample ID and antibiotic susceptibility testing, greatly decreasing time-to-result and improving clinical

outcomes. Based on progress to date, next quarter we begin early feasibility studies at one site, working towards a late 2017 launch.

And with that, I will now hand the call