T2 Biosystems 3Q 2023

T2 Biosystems 3Q 2023

Thank you, operator. I would like to remind everyone that comments made by management today and answers to questions will include forward-looking statements.

Those include statements related to T2 Biosystems future financial and operating results and plans for developing and marketing new products.

Forward-looking statements are based on estimates and assumptions as of today and are subject to risks and uncertainties that may cause actual results to

differ materially from those expressed or implied by these statements, including the risks and uncertainties described in T2 Biosystems annual report on Form 10-K filed with the SEC on March 31,

2023, and other filings the company makes with the SEC from time to time. The company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law.

With that, I would like to turn the call over to Chairman and CEO, John Sperzel. John?

Thank you all for joining our third quarter 2023 results and business update call. Today, I will start by discussing our market opportunity and performance

during the third quarter including both the progress we have made across our three corporate priorities and updated financial outlook for the remainder of 2023. I will then address the press release that we issued earlier today, before

providing closing remarks and opening the call for questions and answers.

Our mission at T2 Biosystems is to fundamentally change the way medicine is

practiced through transformative culture-independent diagnostics that improve the lives of patients around the world. We are applying our patented technology in three areas: sepsis, bioterrorism, and Lyme disease. These three markets also share a

common need that we will discuss during today s call that is the need for rapid detection and targeted treatment. Importantly, we believe these markets, collectively, represent a multi-billion dollar opportunity.

T2 Biosystems 3Q 2023

Sepsis continues to exact an enormous human and economic toll. Sepsis is the number one cause of death in

U.S. hospitals, claiming the lives of 270,000 Americans annually, plus another 80,000 who die in hospice each year. Sepsis is the number one cost of U.S. hospitalization, costing our healthcare system an estimated $62 billion annually. Finally,

sepsis is the number one cause of 30-day re-hospitalization in the U.S., causing 19% of sepsis survivors to be re-hospitalized

within 30 days, and 40% within 90 days.

T2 Biosystems products, including the T2Dx Instrument, the T2Bacteria Panel, and the T2Candida Panel, are

the only FDA-cleared products able to detect sepsis-causing pathogens directly-from-blood, in just 3-5 hours, without the need to wait days for a positive blood culture.

The need for rapid pathogen detection and targeted antimicrobial treatment is critical for patients at risk of sepsis, as data shows that mortality risk increases by up to 8% for each hour of delayed, targeted antimicrobial therapy.

A meta-analysis was completed analyzing 14 controlled studies comparing our sepsis products to blood culture-based products. The results, published in a

peer-reviewed medical journal, showed T2 Biosystems products identified sepsis-causing pathogens 77 hours faster than blood culture-based products, allowed patients to receive targeted antimicrobial therapy 42 hours faster than blood

culture-based products, allowed de-escalation of empiric antimicrobial therapy 7 hours faster than blood culture-based products, and allowed patients to leave the ICU or hospital 5 days faster than blood

culture-based products.

We believe the comparative advantages offered by our products, over blood culture-based products, are the key to improving

patient outcomes, reducing cost, and addressing the global threat of antimicrobial resistance.

T2 Biosystems 3Q 2023

The T2 Biosystems team achieved a number of important milestones during the third quarter of 2023, which we

believe have better positioned the company for near and long-term success. We received FDA 510(k) clearance for the T2Biothreat Panel; we received FDA Breakthrough Device designation for the Candida auris test; we filed the FDA 510(k)

submission for the expanded T2Bacteria Panel; we converted 20% of our debt to equity; we raised additional capital; and we regained compliance with Nasdaq market value of listed securities requirement.

Our preliminary financial results for the third quarter of 2023 include total revenue of $1.5 million, which was comprised entirely of non-COVID product revenue, compared to $3.7 million in the prior year period. The decline was primarily due to a $1.0 million reduction in BARDA revenue, a $0.4 million sepsis test backorder, a

$0.3 million reduction in international T2Dx Instrument sales, and a $0.3 million reduction in COVID-19 test sales. The sepsis test backorder directly impacted T2Dx Instrument and sepsis test demand

during the third quarter and led to performance below our expectations. I ll discuss the actions we took, and progress made to address the backorder during our operations update; however, I am pleased to report that as of today we have already

resolved the majority of the backorder that existed as of September 30th.

We expect fourth quarter

2023 sepsis and related product revenue of $2.4 million, representing a sequential quarterly increase of 60%, compared to the third quarter of 2023. As a result of the sepsis test backorder, we expect total 2023 sepsis and related product

revenue of $7.5 million, representing a decline of 10% compared to 2022. As we have previously disclosed, there will be no revenue from BARDA in the fourth quarter of 2023.

We are very pleased with the recent progress in strengthening our balance sheet. As of September 30, 2023, cash and cash equivalents totaled

$24.3 million, including proceeds raised through our ATM facility during the quarter. We reduced our debt and quarterly interest payments by converting $10 million, or approximately 20%, of the CRG term loan to equity. We also implemented

operating expense reductions at the end of the second quarter, and headcount reductions throughout the first half of the year which we have held at under 100 full-time employees.

T2 Biosystems 3Q 2023

As we advance our mission, we remain focused on three corporate priorities, 1) accelerating our sales, 2)

enhancing our operations, and 3) advancing our pipeline. We will discuss each of these priorities in more detail.

Starting with our first priority

accelerating our sales. Commercially, we are focused on expanding the installed base of T2Dx Instruments and increasing sepsis test utilization in existing and new hospital accounts. In the third quarter, we executed contracts for 5 T2Dx

Instruments, including 2 in the U.S. and 3 outside the U.S. We achieved total revenue of $1.5 million, comprised entirely of sepsis and related product revenue. Sepsis test panel revenue was $1.1 million, and we ended the quarter with a

$380,000 backorder, demonstrating continued demand for our products.

Our commercial team is targeting new hospital accounts, while working with existing

accounts to increase their sepsis testing volumes. We have integrated the sales, medical affairs, and service teams to educate and align key stakeholders on broader sepsis testing protocols. Annualized U.S. sepsis test utilization during the third

quarter was $108,000 per instrument, which was impacted by the sepsis test backorder. We believe our integrated commercial approach and clearing a substantial portion of the backorder can drive deeper penetration within each account over the

near-term. In a number of hospital accounts, annualized utilization is well above the $200,000 goal we expect to achieve over time across our U.S. installed base.

As a testament to our commercial team s strong efforts in increasing education and identifying use cases, our customers have continuously demonstrated

their support by presenting case studies highlighting the benefits of our products at industry conferences. During the September Sepsis Alliance Summit, Butler Hospital presented on the critical need our products fill in accelerating pathogen

identification time, enabling a rapid diagnosis with independent species identification. As we discussed on the previous call,

T2 Biosystems 3Q 2023

Butler Hospital has developed a protocol to trigger the use of the T2Bacteria Panel and have shown that the T2Bacteria Panel allowed for targeted therapy as much as 37 hours faster than blood

culture-based methods. At the upcoming IDWeek conference in Boston on October 13, hospital experiences with T2Candida and T2Bacteria will be presented by infectious disease pharmacists from the University of Louisville Health System and Robert

Wood Johnson University Hospital. Creating additional reference accounts like these hospital users is an important part of our commercial strategy. We are grateful for our strong customer support as they spread more awareness around our

instrument s clinical and economic benefits.

We continue to add to our clinical data library and this past quarter have been conducting studies to

advance the capability to test in new ways. As a reminder, we announced a clinical collaboration with Vanderbilt University Medical Center during the second quarter to implement and evaluate our FDA-cleared

T2Dx Instrument and T2Bacteria Panel in a clinical setting. Included in the clinical collaboration is a prospective study that will assess the capability of the T2Bacteria Panel to improve clinical interventions and antibiotic usage for patients

with a bloodstream infection. The T2Dx Instrument has been installed at Vanderbilt, the IRB has been approved, and patient enrollment is expected to begin next month. We look forward to discussing future updates on this collaboration and clinical

evidence, once available.

Bolstering our efforts is the increasing awareness of sepsis as a public health emergency. In September, we promoted Sepsis

Awareness Month. September is recognized as a month to reflect upon the fact that sepsis takes a life every 90 seconds in the United States. Thomas Heymann, CEO of Sepsis Alliance, stated, Sepsis is a public health crisis that no one is

talking about. We appreciate the work Sepsis Alliance is doing to raise awareness and educate people regarding sepsis. We commend Massachusetts Governor, Maura Healey, for recognizing the patient impact of sepsis and for issuing a proclamation

to recognize September as Sepsis Awareness Month in Massachusetts. We also applaud the U.S. Centers for Disease Control and Prevention, or CDC, for taking action to streamline U.S. hospital sepsis program guidelines through their Hospital Sepsis

T2 Biosystems 3Q 2023

Program Core Elements. The program is designed to help hospitals to implement, monitor and optimize sepsis programs through seven elements: Hospital Leadership Commitment, Accountability,

Multi-Professional Expertise, Action, Tracking, Reporting, and Education. By establishing these core elements, they aim to improve upon old, disjointed processes that have failed patients and created a massive burden for our healthcare system.

It is extremely encouraging to have these additional stakeholders prioritizing awareness and calling for action to combat the public health threat of sepsis.

Our message is being amplified by these external voices and we expect this to stimulate additional conversations with potential customers and advance current dialogues. It is clear that significant change is required for how we manage patients

suspected of sepsis. We are confident the growing public recognition can be a catalyst for positive change and that adoption of our sepsis products in U.S. hospitals will advance the standard of care.

Following the FDA approval of the T2Biothreat Panel, we immediately shifted our focus with this product toward commercialization. We believe there are

multiple opportunities to sell the T2Biothreat Panel, including to the U.S. Laboratory Response Network, state or public health labs, the U.S. Strategic National Stockpile, other government agencies (e.g., CDC, NIH, DoD), and international

governments that are U.S. allies.

Given the ongoing wars in Europe and the Middle East, we believe the global population is at an increased risk of

exposure to bioterrorism. We are proud to have developed a test to protect Americans from the consequences of deliberate or naturally occurring outbreaks of certain biothreat pathogens.

Moving to our second priority enhancing our operations. On our last call, we discussed numerous steps we have taken to enhance our operations,

including our cost structure, balance sheet, supply chain, and manufacturing.

T2 Biosystems 3Q 2023

Since our last call and the close of the third quarter, we have made significant progress addressing our

manufacturing processes aimed at resolving the sepsis test panel backorder. At the end of the third quarter, the sepsis test panel backorder was $380,000. I am pleased to report that we cleared the majority of the backorder in early October, we

expect to clear the remainder of it this quarter, and we expect to finish 2023 with zero backorder.

The backorder was caused by a number of factors,

including raw materials, personnel changes, processes, and equipment. We attribute the recent manufacturing improvements to the key measures we have previously implemented, including hiring a new Vice President of Operations, advanced procurement of

raw materials, process improvements, and investments in equipment. The demand for our sepsis test panels within the U.S. and international markets remains strong.

Moving to our third priority advancing our pipeline. Our new product development priorities have targeted three areas: sepsis, bioterrorism, and

Lyme disease. These represent areas of significant unmet medical need in which rapid detection can lead to faster targeted antimicrobial treatment and improved patient outcomes.

We have been advancing five new products intended to expand the test menu on our FDA-cleared T2Dx Instrument and drive

increased adoption, including: the T2Biothreat Panel, the addition of Acinetobacter baumannii to our FDA-cleared T2Bacteria Panel, the T2Resistance Panel, the T2Lyme Panel, and a Candida auris test. Each new test panel, or test, represents a differentiated solution to rapidly identify harmful pathogens and potentially allow clinicians to achieve

faster, targeted antimicrobial therapy.

The T2Biothreat Panel is a direct-from-blood molecular diagnostic test that runs on the FDA-cleared T2Dx Instrument and simultaneously detects six biothreat pathogens, in 4 hours, including the organisms that cause anthrax, tularemia, glanders, melioidosis, plague, and typhus. If not treated promptly,

infections with the pathogens included on the T2Biothreat Panel can result in mortality rates of 40-90%, according to Medical Aspects of Biological Warfare and The Center for Food Security and Public

T2 Biosystems 3Q 2023

The T2Biothreat Panel clinical evaluation assessed the sensitivity and specificity to detect targets in blood

samples containing a range of bacterial concentrations. The positive percent agreement, or sensitivity, for all targets at 1-3 times the limit of detection was 100% for all targets except Francisella

tularensis, which was 94.3%. The negative percent agreement, or specificity, for all six targets in healthy or febrile blood containing no bacteria was 100%. We believe this represents unparalleled performance.