T2 Biosystems 4Q 2023

T2 Biosystems 4Q 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 fourth

quarter and full year 2023 results call. I will start by discussing our plan to comply with the Nasdaq listing requirements, including the proxy and press release we filed this afternoon. I will then review our 2023 progress and 2024 objectives

across our three corporate priorities, before turning the call over to John Sprague, our Chief Financial Officer, who will review our financial results and provide our financial outlook for 2024. I will then provide closing remarks and opening the

call for questions and answers.

As a reminder, on November 20, 2023, we received a letter from Nasdaq informing us that we had failed to comply with

Market Value of Listed Securities, or MVLS, of at least $35 million for a period of 30 consecutive business days. Today, we participated in a meeting with the Nasdaq Listing Qualifications Hearing Panel, and we presented a detailed plan to

regain compliance with the $35 million MVLS requirement. We expect a response from Nasdaq in the coming weeks. Our Nasdaq compliance plan includes the following steps:

T2 Biosystems 4Q 2023

Step one, which occurred today, and which was previously approved by stockholders, included the

conversion of 82,422 shares of Series B Convertible Preferred Stock, held by our lender CRG Servicing LLC, or CRG, into 824,220 shares of T2 Biosystems common stock.

Step two, which also occurred today, included the filing of a preliminary proxy seeking approval at a special meeting of stockholders to be held on

April 11, 2024, to allow CRG to convert up to $15 million, or nearly thirty-seven percent, of its term loan into T2 Biosystems common stock. We expect the issuance of common stock and the cancellation of this portion of the term loan to

occur within 10 days of the meeting.

Additionally, while not part of our Nasdaq compliance plan, we have numerous business catalysts that we will discuss

shortly, which we believe can create value and increase the market value of our listed securities.

We believe maintaining our Nasdaq listing is in the

best interest of both the Company and our stockholders, as it maintains liquidity for stockholders, helps attract and retain key employees, broadens our access to capital, and better positions the company for potential mergers and acquisitions.

Another benefit of our plan is that we are reducing the Company s debt burden and thus lowering future interest payment expenses.

gears to discuss our 2023 progress and 2024 objectives across our three corporate priorities: accelerating our sales, enhancing our operations, and advancing our pipeline.

T2 Biosystems 4Q 2023

Starting with our first corporate priority accelerating our sales.

As a reminder, 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 U.S. hospital readmission, causing 19% of sepsis survivors to be re-hospitalized within 30 days and 40% within 90 days. Rapid detection of sepsis-causing pathogens is

critical, as mortality risk increases by up to 8% for each hour of delayed, targeted antimicrobial treatment. T2 Biosystems has the only FDA-cleared products able to detect sepsis-causing pathogens

directly-from-blood, in 3-5 hours, without the need to wait days for a positive blood culture.

Biosystems team achieved full year total revenue of $7.3 million, including product revenue of $6.7 million, and we achieved record T2Bacteria Panel sales in the U.S. market. We added 26 T2Dx Instruments to our growing installed base,

which is now approaching 200 instruments globally, including 19 in international markets and 7 in the U.S. market.

In the fourth quarter of 2023, we

achieved sepsis and related product revenue of $1.7 million, representing sequential growth of 13% compared to the third quarter, and sales accelerated each month of the quarter.

Looking forward to 2024, our objectives include continuing to expand our installed base of T2Dx Instruments, in the U.S. and International markets, and

increasing test panel revenue. We plan to increase test panel revenue by selling more products to existing customers, by selling to new customers in our existing geographies, and by expanding our international distribution network into new

During 2024, we expect to commercialize four new test panels, or tests, which run on the FDA-cleared

T2Dx instrument, including the expanded T2Bacteria Panel, the T2Candida Panel with a pediatric indication, the T2Biothreat Panel, and the T2Lyme Panel. We believe each of these products represents an opportunity to increase test utilization among

existing customers and attract new customers.

T2 Biosystems 4Q 2023

The expanded T2Bacteria Panel, to include the detection of Acinetobacter baumannii, was developed

using direct feedback from customers on which bacteria species are most important to identify. We expect this latest FDA clearance to drive increased adoption of our platform, as the expanded test panel now covers nearly 75% of all sepsis-causing

bacterial pathogens commonly found in blood stream infections. Rapid detection of these pathogens is essential to getting infected patients on the appropriate antimicrobial therapy and improving clinical outcomes.

We are expecting a positive outcome on our FDA submission to expand the use of the T2Candida Panel to include pediatric testing. We believe an expanded claim

for our FDA-cleared T2Candida Panel to include pediatric testing will drive increased adoption of our platform as it opens a new pediatric market segment and will allow clinicians to improve outcomes and

reduce cost by achieving faster targeted antifungal treatment for their pediatric patients.

Following the FDA clearance of the T2Biothreat Panel in

September 2023, which we developed in collaboration with the U.S. Government, or BARDA, we shifted our focus to commercialization. Given the ongoing wars in Europe and the Middle East, we believe the global population is at an increased risk of

exposure to bioterrorism. The T2Biothreat Panel provides unique biothreat targets and we believe it offers unparalleled sensitivity and specificity, creating multiple opportunities for sales, including to the U.S. Laboratory Response Network, the

U.S. Strategic National Stockpile, state or public health labs, other government agencies, and international government allies.

Given our advances with

the T2Lyme Panel, we intend to commercialize a laboratory developed test version of the T2Lyme panel in 2024. Accordingly, we are exploring potential partners to capitalize on what we believe is a significant opportunity.

T2 Biosystems 4Q 2023

Internationally, we sell our products through a network of distributors. During 2024, we expect continued

expansion of our international distributor network. Today, we announced that we have expanded distribution into the Netherlands, Belgium, and Vietnam, and we have re-entered the market in Switzerland through

one of our existing distributors.

As part of our commercial growth strategy, we have prioritized expanding our clinical evidence. We recently announced

our collaboration with the NIH-funded Antibacterial Resistance Leadership Group, or ARLG, to evaluate T2 Biosystems direct-from-blood diagnostic technology for the detection of ventilator associated

pneumonia. Specifically, the FDA-cleared T2Bacteria Panel, and the T2Resistance Panel, will be evaluated for the ability to detect infections in the blood currently missed by conventional methods in a

prospective, observational, diagnostic, feasibility study. The study will aid in exploring whether combined diagnostic testing can provide more targeted antimicrobial therapy, strengthen stewardship, and improve outcomes, and we look forward to

providing an update once available.

At IDWeek 2023 in October, our team presented new clinical data with encouraging early detection data for the

T2Resistance Panel. The poster included data showing rapid detection of antibiotic resistance genes direct from whole blood samples by T2 Magnetic Resonance (T2MR). Oral and poster presentations demonstrating speed, accuracy, and clinical benefits

of the T2Dx Instrument and T2 Biosystems sepsis panels were also presented by customers. Real world performance and use case of our products were highlighted as part of sepsis patient management. We continue to appreciate our customer support

aiding in increasing awareness of both the clinical and economic benefits of our technology.

Moving to our second corporate priority

enhancing our operations.

Throughout 2023 we made significant progress enhancing our operations. This included strengthening our operations

leadership, mitigating raw material issues, improving manufacturing processes, and addressing the sepsis test panel backorder. I am pleased to announce that we cleared all backorders for the T2Bacteria Panel and the T2Candida Panel in December 2023,

and we cleared all backorders for the T2Resistance Panel in January 2024.

T2 Biosystems 4Q 2023

During 2023, we made material headcount and operating expense reductions. We strengthened our balance sheet

by reducing our debt by $10 million, or approximately 20%, extended the interest-only period and maturity date of our term loan to December 31, 2025, and permanently reduced the minimum cash covenant from $5 million to $500,000.

Looking forward to 2024, as I mentioned earlier, we will further strengthen our balance, following stockholder approval, through the conversion of

$15 million, or nearly 37 percent, of our term loan with CRG into T2 Biosystems equity. In addition, we expect to reduce inventory levels to positively impact our balance sheet, reduce scrap to increase efficiency and improve

product gross margins, continue to improve on-time delivery of our T2Dx Instruments and sepsis test panels, and complete the Oracle ERP system cutover.

Moving to our third corporate priority advancing our pipeline.

As a reminder, we are applying our proprietary direct-from-blood technology to three areas sepsis, bioterrorism, and Lyme disease which all share

a critical need for rapid pathogen detection and targeted antimicrobial treatment. We have made significant advancements across our new product pipeline, which is focused on expanding the test menu on the

FDA-cleared T2Dx Instrument. During 2023, we filed three FDA submissions and we have already received two FDA 510(k) clearances.

First, we submitted a 510(k) premarket notification to the FDA for the T2Biothreat Panel, and we announced receipt of FDA 510(k) clearance in September 2023.

As a reminder, 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, including the

organisms that cause anthrax, tularemia, glanders, melioidosis, plague, and typhus. These pathogens have been identified as threats by the CDC and, if not treated promptly, can have

mortality rates of 40-90%. Our clinical evaluation of the T2Biothreat Panel demonstrated positive percent agreement, or sensitivity, of 100% for all targets except Francisella tularensis, which was

94.3%, and negative percent agreement, or specificity, for all six targets of 100%.

T2 Biosystems 4Q 2023

Second, we submitted a 510(k) premarket notification to the FDA for the expanded T2Bacteria Panel, to include

detection of Acinetobacter baumannii, and we announced receipt of FDA 510(k) clearance earlier this week. As a reminder, the T2Bacteria Panel is the only FDA-cleared diagnostic test able to

detect sepsis-causing bacterial pathogens directly from blood, in just 3-5 hours, without the need to wait days for a positive blood culture. The expanded T2Bacteria Panel now covers approximately 75% of all

sepsis causing bacterial pathogens commonly found in blood stream infections, including E. faecium, S. aureus, K. pneumonia, A. baumannii, P. aeruginosa, and E. coli.

In a large study of nosocomial bloodstream infections, A. baumannii was the tenth most common pathogen and has a crude ICU mortality rate of 34.0% to

43.4%. Due to the emergence of pan-antibiotic resistant A. baumannii, the World Health Organization has identified A. baumannii as the most critically important bacteria that requires improved

prevention and therapeutic approaches. Acinetobacter resistance to many antibiotics, including carbapenems, highlights the importance of rapid detection and targeted antimicrobial treatment.

Third, in December 2023, we submitted a 510(k) premarket notification to the FDA to expand the use of the FDA-cleared

T2Candida Panel to include pediatric testing. As a reminder, the T2Candida Panel is the only FDA-cleared diagnostic test able to detect sepsis-causing Candida pathogens directly from

blood, in just 3-5 hours, without the need to wait days for a positive blood culture. According to the U.S. Centers for Disease Control and Prevention, or CDC, up to 95% of all

invasive Candida infections in the U.S. are caused by the five Candida species detected by the T2Candida Panel, including C. albicans, C. tropicalis, C.