Q3 2019 Earnings Call
Please be advised the state's conference is being recorded if your party for their systems. Please press star Zero I'd now like to handle occurrence or to your speaker today, Doug for old VP Investor Relations. Please go ahead.
That's really released our financial results for the third quarter fiscal year 29 team. If you have not seen that press release and you can find website.
During this call will make a number of statements that are forward looking including statements about financial projections existing and future collaboration.
Future business growth trends and related factors prospects for expanding in penetrating our addressable markets our strategic focus in objectives in the development status and anticipated success of recent planned product offerings.
Looking statements are subject to risks and uncertainties many of which are beyond our control, including those described from time to time under SEC filings.
As of May differ materially from those projected on the call today, we undertake no obligation to publicly update any forward looking statements.
Later this week, we'll be attending the answer fabrics in Baltimore.
See many of you there and the week after that or sorry.
Two weeks after that we'll be in New York for both people and Cannacord I know, we've got a number of you want to one or calendars, there so without going to turn the collaborative Brad.
Thanks, Doug Good afternoon, and thank you for joining us today.
Happy to report that our third quarter results reflect strong execution and continued commercial momentum across the business.
During Q3, we grew up once in service revenue by 23% driven by 48% growth in instrument revenue.
Our core encounter business delivered its seventh straight quarter of double digit growth with solid results across both academic and bio pharma customers should better about first commercial geometry, B.S.P. systems accelerated our topline revenue growth.
I read it resoundingly positive customer feedback.
With our geometry, CFP revenue tracking toward the top end of our previous range. We are updating fiscal year 2019 guidance supported from service revenue.
In my prepared remarks, I'll provide an update on progress towards achieving our strategic objectives for 2019 before turning the call over to Tom to review the details of our operating results for the quarter and outlook for the balance of the year.
As we don't want it back at the beginning of the year or first strategic objective for 2019, it's just to sustain double digit growth in our core encounter business. We have consistently enough. This objective during Q3 deliberate poor in kind of revenue growth of 12%.
Encounter instrument revenue grew 8% to 5.8 million bolstered by particularly strong demand from Biopharma customers.
Oh Gee applications motivated about 60% of new encounter placements with most of the balance coming from immunology and neuroscience.
Our installed base of encounter systems increased to more than 820 systems. During Q3, an increase of about 18% over the prior year.
I told me consumer revenue for the third quarter was $15.3 million.
An increase of 11% has broken Lifesize consumables was partially offset by flat for Cigna revenues.
On a life sciences side of our business, we continue to benefit from our expanded consumable sales team once again delivered growth in both our panels ever custom codes that.
The majority of consumable growth came from our portfolio of oncology panels, including the Pan cancer, and 360 families as well as newer offerings such as our car T characterization panel.
Edition product offer offerings outside of oncology or making important contributions to growth.
Revenue from immunology, and neuroscience panels increased by approximately 40, and 65% respectively over the prior year and together accounted for about one third of our panel revenue.
During the third quarter, we continue to expand beyond oncology by introducing two new immunology panels in August we launched a fibrosis panel the study pathogenesis and Biomarkers, if I brought up diseases, such as Nash and cystic fibrosis.
In September we launched a human organ transplant panel that was designed partnership with the Banff Foundation, the consortium of six leading transplant centers.
Panel allows researchers to identify biomarkers of rejection better understand the mechanisms behind tissue damage as most of modern toxicities of immunosuppressive drugs and opportunistic infections.
You can strong interest from both researchers in commercial entities and this panel generated the third largest initial quarter of sales any panel that we've ever offered.
Turning now to diagnostics R&D for diagnostic consumer revenue was essentially flat over the prior year as new guidelines on genomic testing in France temporarily stalled for Cygnus growth in Europe .
Being said group in Europe is expected to return in 2020 benefiting from increased traction in the United Kingdom as well as re a recent decision by the government in more ways to make for Cigna, It's only reimbursed genomic breast cancer test.
Our second strategic objective for 2019 is to position or geometry digital spatial profiling for long term commercial success.
Did you want me to see a few launch is an area of extraordinary progress over the past several months during which we have established strong momentum selling geotext DFT into translational medicine.
We're now beginning to lay the groundwork for 2020 entry into discovery research and positioning our Geo mix franchise for continued growth.
Q3 marks the first quarter of commercial Geo mix DSP shipments, which included 10 systems for $2.2 million of instrument revenue.
Most of the customers who are currently receiving instruments. The part of our genomics priority site program and have waited for up to a year for instruments to be delivered.
Doozy hasn't at these sites has been like nothing we've experienced previously.
These customers are hungry to begin new types of studies enabled by Geo mix that have been thrilled to see the technology in action.
During our first onsite training the speed and quality of the high resolution scanning and the intuitive user interface have created a palpable sense of excitement in these laboratories, and our service engineers and application scientists to install the systems and train those customers have returned with an infectious enthusiasm.
With installation and training going smoothly as we dared hope we have geared up for even more shipments and installations in Q4.
We expect to ship approximately 25 Geo mix systems in the fourth quarter, which would put us near the top end of our previously provided guidance of approximately $8 million synergy omics revenue for the full year.
During the third quarter, we also generated orders for more than 15, additional geo mix DSP systems free or cumulative geometry orders to more than 70 systems as of September thirtyth.
We're seeing a groundswell of interest in spatial biology that spans all customer segments and geographies. We're pleased with a sequential growth in Geo mix orders during Q3, and our older volumes year to date are tracking ahead of our internal plans.
Our technology access program or cap, which gives customers an opportunity to generate spatial data from their own real world samples remains an important element of our market development effort at a leading indicator of future Geo mix instrument orders to date approximately half of our Geo mix DFI instruments orders have come from.
Customers, who first experience dsthree DSP through the task service.
Our recent investments and scaling up our top service are paying off and during the third quarter, both new orders and projects completed grew more than 30% sequentially.
We completed more than 40 type projects generating record tap revenue of about $1.2 million, while receiving orders for more than 40 new projects.
We're carrying a pack law that more than 50 projects, providing a growing funnel of future genomics instrument customers.
A secondary benefit of our technology access program is that has helped expand.
The body of peer reviewed literature that demonstrates the unique capabilities some geo mix.
Our cumulative tap output now includes approximately 170 projects that have been completed for about 110 unique customers.
These efforts have contributed the seven peer reviewed publications today, including an immuno oncology paper from David Rim at Yale University that included a high resolution image generated by Geo mix that was featured on the cover of the September issue of the journal clinical cancer Research and was included in our press release today.
We are aware, but doesn't more manuscripts that had been submitted the journals and we are expecting this growing body of high impact papers to continue to raise the profile of the Geo mix DSP.
Later this week, we will engage with the potential translational research customers during the annual meeting of the Association a molecular pathology for example in the society of immunotherapy in cancer for city.
On Wednesday, we'll be hosting several workshops at the conference, including one in which Chris Corliss from our DSP Center of excellence that the away just few night cancer Center will present on the development of encounter Angiomax DFT assays for future CLIA lab applications.
The City Conference later this week will feature several studies with Geo mix VSP data highlighting biomark marker discovery in a variety of cancer types and describing how biotech these aren't a scope reagents can be integrated into the geo mix workflow.
To date interest in genomics is come primarily from translational researchers looking for biomarkers of disease and reading out experiments using encounter systems over the next year, we will begin marketing Geo mix to discovery researchers interested and study more basic biology, and reading out experiments using next year.
Duration sequencing or ngs.
We remain on track to enable several early access sites to begin meeting out Geo mix on Ngs later this quarter in preparation for the 2020 launch of Ngs compatible Geo mix instruments software and consumables.
This morning, we announced two major initiatives that will lay the groundwork for some special.
Cesspool expansion of Geo mix into the discovery market.
First we're expanding our technology access program to include high Plex or any assays enabled by reading out Geo mix experiments on Ngs.
The first assay.
We will offer is named the cancer trips crypto matlosz carefully curated panel that merges the content from our three most popular encounter.
Cancer panels and allows customers to simultaneously measure more than 1600 genes with spatial context.
Data from the cancer Transcriptome Atlas will be featured in a poster at the city meeting later this week.
By offering customers the opportunity to experience the ngs readout of Geo mix through our top service, we're making trial usage, even easier than competing consumable only platforms.
Our second initiative to reach discovery researchers at the partnership with the human cell Atlas Fortyg CA consortium to provide preferred access to Geo mix to the 1000, plus eight CA number institutions.
You see a project is a global collaboration to identify map and characterize the trillions of cells in the human body.
It has become the driving force behind the rapid growth.
Single cell biology market.
HCV investigators have identified spatial biology as the next major focus of this audacious undertaking and were honored to have Geo mix become part of their landmark project.
Our third strategic objective for 2019 to advance our high density platform towards commercial launch.
We continue to make steady progress on the high potency program internal increasingly focused on infectious disease applications.
This is an area of high unmet need we're a simple fast workflow confers tremendous medical value and competitive advantage.
We will provide an update on hybrid seeks potential within infectious disease. Later this week during the conference.
Where we will present data demonstrating the ability to conduct blood culture independent pathogen identification and rapid phenotypic antibiotics is stability testing using heightened seek.
We look forward to seeing many of you there.
Before turning the call over to Tom I'd like to highlight some important additions we've made to the nanostring team over the past few weeks.
In early October we added more Wyndham as our senior Vice President of operations.
Mark spin a decade with applied Biosystems and life technologies, where he was responsible for more than 40 manufacturing sites worldwide and more than 2500 employees.
Excited to have more joined the team at a time when we're bringing online a second we exit manufacturing plant and significantly expanding our portfolio of products.
We're in a great positioned to benefit from has decades of experience and scaling operations globally.
Last week, we added Don Kenya to our board of directors.
Many of you remember Don from its successful run as the President and CEO of electron microscopy believe leader FDI, which was acquired by Thermo in 2016.
Don's experience successfully scaling a life Sciences company from 300 million to more than a billion dollars will be a tremendous benefit to the company as we continue to develop and commercialize leading edge technologies, especially in the field of spatial genomics.
Now I'd like to turn the call over to Tom to review the details of our third quarter results.
Thanks, Brett.
For the third quarter of 2019, we reported product and service revenue of 26.3 million, which was above the high end of our guidance product and service revenue grew approximately 23% year over year and included 8 million of instrument sales 12.7 million life Sciences consumable sales 2.5 million approach.
Cigna sales at 3.1 million of service revenue.
Consumable pull through was within our guided range at approximately $76000.
As Brad noted earlier, our third quarter instrument revenue included 2.2 billion from 10 Geo mix DSP systems shipped during the quarter, representing average revenue per system of $220000.
Three revenue per Geo mix system reflects the instrument portion of the Jim its pride priority site promotional bundle that we ran back in the fall 2018, which for $295000 included a top service project and a starter package of reagents, we expect revenue per system shipped in the fourth quarter will be approximately.
In line with Q3, and then to rise over subsequent quarters as we fulfill the last of the GPS orders.
In Q3, we also reported 31% increase in service revenue driven by continued strong demand for our Geo mix technology access program.
Collaboration revenue was 4.3 million with or Lam research partnership accounting for the majority.
We received 4.5 million and cash from collaborators during the quarter.
Gross margin on product and service revenue was 59% compared to 57% in the prior year, our gross margin for the quarter was positively impacted by a mix shift towards our Max and flex and counter instruments as well as sales Agilemax DSP instruments.
Turning to operating expenses recent increases and stock based compensation, which are primarily due to the rise in our stock price. This year have impacted comparisons of our GAAP reported expenses across periods for the third quarter total stock based compensation expense was 4.7 million, which is up from 2.8 million as compared to the prior.
A year.
R&D expense was approximately 17 million an increase of 2% over the prior year period, excluding the impact of stock based compensation R&D expense was in line with the prior year, which reflects the start of our transition to a sustaining level of R&D activity. Following the commercial launch of Geo mix.
Gionee expense was $23.4 million, an increase of approximately 31% as compared to the prior year period, excluding the impact of stock based compensation SGN increased 26% driven by investment in our commercial team and market development activities for Geo mix DSP.
We exited the quarter with approximately 129 million of cash cash equivalents of short term investments.
Now turning to guidance, we've raised our Geo mix revenue guidance to the upper end of our previous range of six to 8 million and we updated our full year guidance for product and service revenue Accordingly.
We also provided an updated full year outlook for total revenue gross margin operating expenses and GAAP net loss in our press release for the full year 2019, we now expect product and service revenue of 100 to 103 million, including approximately $8 million and revenue from Geo mix DSP, representing an annual growth rate range of.
20% to 23%.
Gross margin to be in the range of 58% to 59% collaboration revenue of approximately 21 million and total revenue of 121 to 124 million.
For the fourth quarter, we expect product and service revenue to be in the range of 30 to 33 billion, including approximately $6 million and revenue from Jim. Its DSP. This would represent growth of 27% to 40% over the prior year, we expect approximately $3 million and collaboration revenue, resulting in a total revenue range of 33.
Billion, 33% to 36 million.
Now I'll turn the call back over to Brad for closing comments. Thanks, Tom in closing our performance in recent months as increased our confidence in our growth outlook, our core encounter business and sustain double digit growth what our geometry CFP launch has generated tremendous excitement amongst researchers.
Multiple indicators of genomics momentum have increased sequentially quarter after quarter.
We are set up for a strong finish to 2019 and continued and continued growth beyond.
With that ill open up the line for your questions.
Thank you at this time I would like to remind everyone in order to ask a question. Please press star one on your telephone keypad.
Cost of small into compiled acuity roster.
Your first question comes from Doug Schenkel with Cowen Your line is open.
Hey, good afternoon, guys. Thank you for taking my questions.
So for the second straight quarter, you added 15, new genomics orders, which is which is great last quarter. You indicated you were targeting.
10 to 15 orders per quarter.
Given you've seen.
Orders come in at the high end of the range. This quarter and last is that 10 to 15 targets still intact and given your robust funnel of interest do you do you think this is going to increase at some point in 2020.
Yes. Thanks for the question Doug So in Q2, we delivered about 12 systems.
Sorry, we've received orders for about 12 systems and then in Q3, we.
Received orders for more than 15, so we've seen nice sequential growth.
In order volume from quarter to quarter, and we're very pleased with that as I mentioned during my prepared remarks. This is actually running ahead of our internal plans.
And we feel great about the momentum.
As we go into the fourth quarter. The year, we're now expecting to end the year with about 85, plus orders, which you implies about 15, new orders or more in the fourth quarter.
We look ahead to 2020.
It's hard to know exactly what the seasonality will imply on a quarter to quarter basis, but overall, we do expect the rate of new orders to increase both at our existing funnel of translational researchers.
We are considering geometries matures and of course as we begin to address the discovery research market by opening up the system to readout on Ngs.
Okay that makes sense, thanks for that Brad and added.
From a seasonality standpoint, recognizing you're not guiding 2020 today Q1 revenue usually steps down a bit relative to Q4 due to normal seasonality.
That said heading into next year, you're going to have TMX shipments rolling.
And youre going to at some point the opening up the platform to use ngs is a detector, which should broaden demand.
Is there anything you'd want to share with us that might be helpful. In terms of just the tug of war between.
Seasonality angiomax momentum as we attempt to balance these things.
Our model.
Sure.
Obviously have a lot more to say about this on our call in February but as you begin to model 2020, I would think of our business in two parts. The encounter portion the poor encountered portion of our business I would expect to follow the same seasonality patterns that we've seen year after year, which includes the sequential step down from Q.
Four to Q1 in revenue terms that Youve that you mentioned in your question.
The Geo mix DSP orders should also be expected to follow some amount of seasonality.
As we know that buying patterns are stronger in Q4 than they often are in Q1, though that the exactly with the order pattern looks like remains to be seen.
That being said the Geo mix DSP revenue patterns will not follow the typical seasonality and thats, because we'll be carrying a substantial amount of backlog from 2019 into 2020, and we'll be looking to sustain a relatively robust installation rate during Q1 in Q2.
We continue to try to deliver systems that are research customers in the waiting for sometimes up to a year in total length. So do expect to see Geo mix revenue be relatively strong in Q1.
Probably stronger that even than the order book.
Okay. One last one you guys have had some nice momentum this year with with core and counter revenue.
This is both on the instrument and consumable side.
On the consumable side, it seems pretty straight forward as to why that might continue over the next several quarters. Our would continue over the next several quarters on the instrument side part of what's driven.
The resilience as than I believe.
Customers buying GM access who are also interested in using those with and counter instruments.
Do you think that that can keep up or is that something we should think may lose some steam as you open up Geo Max.
To use ngs at detector on the backup.
Yes, so the resilience of the encounter business has been.
Strong this year.
I'd point to a couple of different things for it one is.
The effort that we put in place a couple of years ago to put it to move beyond oncology.
And both instrument placements and panel sales into areas like immunology and neurology I've been much more robust in 2019 than they ever have been any previous year and you're hearing that in my prepared remarks.
Certainly geo mix as an application genomics readout as an application has brief new life into encounter and given a whole new category of customers a great reason to own it encounter system.
Today, I think about 20% of the encounters that orders we've taken have been in some way or another associated with Geo mix.
Possibly as part of a bundle or otherwise we think that's a great thing.
I don't think we believe that's going to curtail substantially in 2020.
Or even at all but but we're not really focused on that as a question. We're focused overall on total revenue growth.
And taking capturing the overall opportunity.
As you know the decision to open up geometry to read on Ngs was motivated by the tremendous market opportunity that we can then access amongst the 15000 ngs systems and because the geo mix opportunity toward the encounter opportunity in totality, we're not really overly focused on.
Any detriment that could come to the encounter business by opening up Geo mix, we're focused on capturing that enormous spatial genomics opportunity.
Okay, Thats really helpful. Brad Thanks for all that I'll get back in the Q.
Your next question comes from Tyco Peterson with JP Morgan Your line is open.
Hey, guys. This is Jeff on for Michael.
Just one housekeeping question to kick things off.
Are you still assessing all geo amex priorities sites customers to receive that system by year end 19, I feel like you alluded to this in the prepared remarks around drag on the fee because of the promotional thing.
That's sort of gap up to sort of closer to that to 95, Kmart stock starting one Q nextera will that be a more gradual ramp.
Yes, I think I think the ASP or the revenue recognition upon instrument shipment more precisely will be a gradual ramp over the next several quarters certainly we're doing our best to prioritize the geometry priority site program sites for early shipment.
But but I don't believe we'll have every single one of those installed by the ended the year. So I do expect more gradual ramp in the revenue recognized for system.
Got it and then just on the point on pricing I mean would you be open to considering sort of alternative pricing mechanism CR just to reduce some of that upfront Gordon on your customers.
Let me ask some of the competitor to start getting does the new fashion out into the market and.
If so what sort of an impact do you see that having on that six month sales cycle that you've spoken often the boss.
Yes, so I think first to respond to the the idea that.
The $300000 approximately charter free geometries, an impediment, so far we've really seen little or no pushback on the capital expenditure thats required to access Geo mix, we've been carrying as you know a tremendous backlog of interest we've been accruing orders that at a pace that exceeds our.
Our internal plans.
And really $300000 for the types of customers that were addressing if not an enormous capital expenditure for people, who are accustomed to pathology equipment, it's more or less on par with high resolution scanners that are used to read out things like immunohistochemistry and certainly for the genomics community 300000.
Is less than they pay for next generation Sequencers on regular basis. So we really do not see the capital expenditure required for Geo mix to be an impediment in fact, we see the automation and work flow and the ability to interact with the data and the sample as a tremendous benefit of ours.
System and some of the feedback we've received from our customers who've received the first systems.
We're delighted with the ability to select regions of interest using sophisticated software. We're delighted with the high resolution scanning they're getting off the system have really underscored that of course, if we believed that we can grow our business much more rapidly or we can better serve the needs of our customers through a more.
More flexible pricing approach that in a lower the price of acquiring the equipment in exchange for a very robust consumable stream, we're going to do the rational thing.
And of course, we remain to retain the flexibility to do that but I guess at this stage, we really don't see the need.
To execute that kind of tactic.
Got it and then one final one for me.
On on Max I mean, and the boss Brad you spoken of.
2500 are still need alpha, which are qualified and I'm sure a bunch of those have translated into orders, even greater number of being absorbed into your tap program backlogs.
How long do you expect to tap program to remain on offer and is there a point, where you'd rather the smaller customers send samples to DSP sort of power users with multiple instruments or when you sort of continue offering the service for the foreseeable future.
I think what we've learned about path is it it really provides a very convenient and compelling test drive of the Geo mix DSP instrument, we intend to maintain that tap service really in perpetuity at this standpoint.
At this point not as a driver of revenue growth or as a substitute for contract research organization, but as a way of providing a simple easy to access.
Experience of the Geo mix DSP technology as part of the evaluation process that leads to an instrument purchase. So we have in the last quarterly call that we held at the end of July I talked about it investment and additional capacity.
And in terms of staff and weekend shifts so that we could continue to provide.
Rapid turnaround times, and it's been a respond to expanding demand on tap we're continuing that this morning. We we added next generation sequencing based read out to our tap program. So that we can begin to address those discovery customers. So we think path will be around for a long time that being said.
Over that period tap is going to shift from providing.
Service for very large studies to the academic and Biopharma customers to one that provides very small convenient test drive type experiments to prospective customers and we will be redirecting those large experiments to a set of contract research organizations some of her.
I would have been amongst the wave of customers that we've enabled early on in fact.
As we installed one of the first GM. It systems is on at a major international CRM low just a few weeks ago, we learned that they already had at least one bio pharma project that was cued up to run on that system and that's great. That's the kind of thing that we want to have happened outside of Nanostring NCR.
Gross that we can use our top capacity to cultivate instrument customers.
Got it thanks, so much guys.
Your next question comes from confidentiality with Baird. Your line is open.
Hey, guys. Thanks for the questions I guess first can you just remind us where you are in terms of instrument rats angiomax specialists from any plans to expand that team, particularly as you open up the sequence or readout capability.
Yes, we've.
We're in a good place both in terms and the number of instrument reps and the number of Geo mix sales specialists I believe that today, where maybe we're at about 40 quota carrying instrument reps and about.
10, Geo mix sales specialists thats, the right order of magnitude at least those groups are being highly effective at.
Driving the.
The order uptake and continuing to build the sales funnel, we do not expect to invest more in that on the street sales capacity that being said, we are making some investments in our sales channel on the inside sales front, our experiment with consumable sales from telephonic inside sales.
Reps has been such a resounding success that we're continuing to scale up that sales channel and adding to it that telephone based market development capability focus specifically on Geo mix. These will be the people who are tasks on following up on the enormous numbers of leads that we're generating at major meetings.
And through participations in road shows and Webinars.
Understanding and qualifying their interest before those leads are passed into our sales funnel. So that is an area, where we are making an investment and that's I think a very cost effective one.
Okay, and then there's been some developments in the company competitive landscape and the spatial genomic industry recently have you sensed any customers holding off on ordering geo mix to evaluate competitive technologies or are you seeing any of that really play out within the customer base.
Yes, I'll say the competitive noise has been a great deal louder within the investment community than it has been and the actual research customer community to date, we have not seen major competition will consideration of other offerings.
That would have in any way slowed down the order pace.
The GM it system. So we're very pleased with the unique positioning of the GM. It system for translational research, where it's really the only system thats, both compatible with formalin fixed paraffin embedded tissue capable of reading out both foreign and protein and which provides the throughput required to process entire clinical.
Trials, where the samples, we really have seen little or no competition from new entrants in that segment and now that we're entering the discovery research market, we feel really great about our offering.
We have data coming out it at major meetings now with our new high flex or an Atlas panel and we'll be providing a very convenient way for discovery researchers to take a test drive of our capability VR tap program.
Okay, and then last one from me for their human cell outlets initiative, what's the magnitude as the preferred pricing for that customer basin is there a time limit for that pay for performance.
Yes, I would call the preferred pricing.
Within the realm of customary discounts I think through the partnership we have with HC, a we'll be taking a few kind of negotiation cycles out of the sales process getting those CA members discounts that we may have offered on a customary basis, but doing it automatically because of their commitment to the very important scientific endeavor.
So I don't I don't think that that is something that we view as either transient or.
Below market in terms of the economics, but rather a long term commitment to base of customers, who will provide an enormous market potential for GM, it's in the future.
Alright, great. Thank you.
Since your last question comes from Dan Brennan with US Your line is open.
Great. Thanks, Thanks for taking the question guys.
Did I hear you correctly, Brad I think in the prepared remarks with a 220000.
Annualized pull through on genomics in the first quarter I mean on and this quarter so far.
No I'm, so glad you asked and no $220000 in the prepared remarks referred to the average revenue recognized upon Geo mix DSP instrument shipment and on home explain the reason that substantially less than the list price.
$295000 is that so far the instruments that we have been shipping have been to geometry priority site customers, who were awful bundles that also included technology access program service and consumables, so that the amount of of revenue recognized from the.
Instrument alone per the accounting rules is less.
Than the normal list price.
Thanks, Brad at that time any update with respect to the consumable sales.
Patients for Geo mix as we've guided in the past. We are first order expectation is that it will yield 75 to $80000 per system per year in recurring consumable revenue.
We don't have an update to that number at this time.
Great and then I think someone asked earlier, maybe I think the last time you update to the number of leads that you were qualified where does that number stand today I know you had a bolus north of 2000 HCR, but then you since qualified that so where do those lead sent today.
Yes, we've continued to qualify those leads we've invested and actually staff dedicated to that effort as I mentioned in the answer to one of the previous questions I'd say that we've worked our way through the majority of those leads at this stage and we're now kind of going back to meetings like Amp and city. This week in generating a whole new round of leads.
We're very pleased with the with the growth in our genomics instruments sales funnel that has resulted from all that lead processing and we feel really confident in the outlook for continued growth and Geo make instrument sales.
In terms of the north of 15 orders you've got this quarter, it's a bit above I think where you were guiding to any.
Again, a few instruments can drive that so could just be.
I see a little bit of timing, but any any qualitative color. What you think is driving a bit at a faster uptake that you're seeing in terms of orders.
Well I think it's all the usual things it's the tremendous.
Tailwind of the Great science, it's coming out in the peer reviewed literature, showing what geo mix is capable of.
It's the tremendous latent demand of.
First spatial biology solutions.
I'm pleased to say, it's really good execution amongst our sales and commercial team.
So we've continued to always just be positively surprised about the reaction in response, we are getting to this offering and.
It's allowing us to.
Guide up the expectations for how many quarters, we expected booked in Q4 and to guide the instrument installation numbers towards the top end of our previous range also for Q4.
Thats again, if you commented on this previously but when you think about the ramp as we get into 2020, obviously not going to guide, but when you think of the encountering predicate.
So it's a different price content, but also jianming sounds like it's much more.
Disruptive novel. So so so is the encountering predicate is that is that fair that you would expect other can can you comment the gentleman SRAM first is the encounter.
Well the Geo mix ramp to date has vastly outpaced the adoption of encounter.
At 70 plus systems.
For.
Yes orders to date.
We have.
Achieved day level of adoption that took several years of encounter sales to achieve so I don't think encounter is a good analog in that sense. You remember when we launched encounter ended the gene expression market, we are really carving out a whole new niche.
In the mid Plex of the gene expression market that existed for a long time I'm very proud of what we've achieved there and I think we've made encountered indispensable tool for translational research.
But we were really a new market and entrant into a pretty crowded market. When we launch that technology. In contrast, with Geo mix, we're at the bleeding edge of an exciting new market.
Probably the first company with a very robust solution of strong automation and flexibility.
Enter this market and that puts us in a position for potential leadership that we simply did not have at the time of encounter in so.
Said earlier I think the total the total.
Market opportunity size for Geo mix, and nanostrings potential market share in that market, both vastly out strip, what we have experience with encounter.
Maybe last one so in terms of the Arnie opportunity I don't know if you've addressed it before but we think about the ramp in 2020 should the follow a similar is looking at the first year. The protein ramp is that is that similar kind of predict could do you think.
In terms of the order pace and kind of placement pacings like that.
I think it's a little too early to say Dan I think.
We will not have a geo mix instrument software package and consumable offering immediately right sometime in 2020, we will begin to ship those systems, but we're following a similar playbook to what we used at the time of the original encounter enabled Geo mix launch which was.
Start by offering a technology access program to build the funnel of potential customers.
And then to enable.
Those customers through instrument shipments when.
The product was ready to go and was sufficiently robust it's hard to know if that will translate into something that looks numerically identical to what we achieved but I'm confident in the overall long term success, because we've seen that playbook works so well.
The launch to date.
Thanks, Brad.
There are no further questions I turn the call back to Doug barrel for any closing remarks.
Thank you very much for joining us today, everybody. If you did miss any portion of the call there'll be a replay available in the next 60 to 90 minutes or so.
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