Q1 2020 Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the Fluidigm first quarter 2020 financial results Conference call. At this time all participants are in a listen only mode. After the speaker presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone.
Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero I would not only to hand the conference over to your speaker.
Nestle Vice President of Investor Relations. Please go ahead.
Good afternoon, everyone welcome to Fluidigms first quarter 2020, <unk> earnings conference call at the close of the markets very Pudong released its financial results for the quarter ended March 31 2020 during.
This call we will review our results and provide commentary on their financial and operational performance market trends strategic initiatives at our response to the Cobiz 19 pandemic.
I think for food on today will be Crislip weight, our president and Chief Executive Officer, and become jokes, our chief Financial Officer.
During the call in subsequent Una session, we will make forward looking statements about events and circumstances that have not yet occurred.
Putting plans and projections for our business future financial results and market trends and opportunities.
Examples include statements about expected financial performance anticipated positive impact various strategic and operational initiatives prospects for products and technologies potential customers and collaborators and trends and competition markets research funding and customer demand.
These statements are subject to substantial risks and uncertainties that may cause actual events or results to differ materially some current expectations.
Permission about these risks and uncertainties and other information affecting our business and operating results is contained in our annual report on form 10-K for the year ended December 31, 29 team as well as her other filings with the FCC.
The forward looking statements in this call are based on information currently available to us and Fluidigm disclaims any obligation to update these forward looking statements, except as may be required by law.
During the call. We will also presents some financial information on a non-GAAP basis.
Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement and understanding of the company operating results as reported under U.S. cap. We encourage you to carefully consider our results under GAAP. That's what was our supplemental non-GAAP information and the reconciliations between these presentations.
Reconciliations between GAAP and non-GAAP operating results are presented in a table accompanying our earnings release, which can be found in investor section of our website.
I will now turn the call over to Chris our President and CEO.
Thank you Agnes.
No we find ourselves in a starkly different world when we do look in short months ago.
It is one of extraordinary challenge on the broadest possible scale, but also a moment of great opportunity for the life Sciences industry.
The overall health care sector.
I believe we will rise to the challenge and accomplish incredible things much faster than we imagine possible.
For health care diagnostics and life Sciences companies alike. This pandemic is the public health equivalent of 911.
Even as we rushed to manage the current crisis, a new paradigm is emerging with it there was a daunting realization that we need to make a huge step forward to bio technology investment.
And deployment of new tools on a global scale for the benefit of all men cod.
We have a strong point of view that genomic and Proteomic tools are essentially all facets of this fight.
Understanding of the immune system, an immune response.
Hello.
So working together with Wolfe research.
We believe we can do amazing things to support pathogens surveillance.
System mono therapy.
Therapeutic is walls vaccine development.
Furthermore, as we rapidly deployed tools that address the current crisis, Craig we believe the government and public health bodies will be resolute.
Parents for future pandemic.
And that Fluidigm will play an important role both in the near term and longer term horizon as government support new tools that demand higher throughput flexibility integrated data monitoring.
Public private partnership National Stockpiled, new collaboration networks that will enable faster response future threats.
Our products technologies and expertise to enable important research on multiple fronts years of human health and starting in Q1, we pivoted to support the global scientific community in the fight against the unprecedented cobot 19 pandemic.
A growing number of governments and medical institutions are engaging with fluidigm for immune profiling and virus infection.
Given the powerful capabilities of our two technology platforms mass cytometry Microfluidics. It has no surprise that we were at the forefront this extraordinary global effort.
We remain committed to serving research needs across scores of diseases. However for the near term, we're reconfiguring our core products.
Cohesive matter to address coded 19 needs.
Our innovative technology powered biomarker discovery and deployment puts us in the right place at the right time focused on the right opportunity.
Shifting to Q1, we began the year and a good position with a strong pipeline and backlog.
The first cobot 19 cases emerged in Asia, we move swiftly to organize to sustain response.
Daily executive meetings aligned around three simple.
First and foremost we focused on employee safety.
He said baskets, where Chinese employees fill stockpiles of supplies in our Singapore in facility.
Moved to a protective posture locking down or manufacturing facility from outsiders implementing temperature chucks of employees wiped out procedures, social distancing all stuff moving more than half of our team into remote work environments for safety.
Later, we cascaded this general model around the world.
Francisco, Toronto terrorists, Tokyo and the UK.
I'm pleased to report we have have no confirmed sections of our employees and the organization is performing at a high level.
Second we organized customer facing activities and a new way.
As our customers quickly shut down their operations first in Asia around the Chinese new year Europe in late February early March followed by North America in mid March we refocused our business alone two vectors.
Pathogen testing and immune monitoring.
We selectively sets our field service engineers.
The operational facilities with enhanced pp in.
Internally, our R&D marketing teams constructed co good related value proposition.
Reconfiguring, our existing tools with customized solutions for additional.
For pathogen testing, our Microfluidics platform is uniquely well soon.
As the U.S. ft, a issued guidance for emergency use authorization, we began to point biomarker Juno system, the testing centers, new customer segments for us.
One single Biomark Juno combination utilizing our $192 24, I S C and process as many of 6000 people arent a detection tests per day or more than 2 million tests per year.
Our militarization technology requires 1000 times less reagent than the 96 well format of other platforms and we have an automated approach that reduces the need for human interaction.
We worked with labs to configure extraction procedures.
Workflows.
In Q1 revenue impact from these microfluidic as replacements with incremental to our historic placement numbers.
Given our lack of brand awareness and channel in this customer segment. We've been pleased with this early success.
Our value proposition athlete flexibility, hi, sample throughput conservation of reagent compelled numerous labs to purchase systems.
We collaborated with these early adopters to submit lab specific you a submissions.
Many of these collaborations have been shared on our website social feeds word press releases.
I'm, particularly proud of our work with the University of Oklahoma Health care system, and deploying a statewide testing program at a record pace.
To increase our competitiveness and reduce the burden on customers. We are working on a biomarker based you a this quarter.
We believe that this submission will help close more opportunities and our growing pipeline and partially mitigate the impact on lab shutdown in other customer segments.
We have a pipeline of additional assays and development that will leverage. This initial you weigh system submission and address testing needs in the second half of the year and beyond.
Reviewed monitoring our mass cytometry platform is an excellent tool for coated related programs.
On the suspension saga, we combine flexibility a panel design with a robust reproducibility that allows large consortium to develop databases.
Great examples from geographically diverse cohorts.
Working from our base panels, researchers have rapidly build custom panels linked to covert related questions.
We've added new antibodies to our catalog and our recently released new battles enable deployment of large investigational biomarker panels.
Most impactful.
Our backs part direct immune profiling assays.
2019, that's new product in cell biology provides an amazing backbone for the large multi site studies required to assess immune system response in the code that infected population.
Providing common reagent kits in a simple format.
The same bassi provides a useful tool for supporting vaccine and therapy strategies by providing immune profiling data.
Other groups are using our imaging mass cytometry in new ways for instance, coated researchers at the Gail school of medicine for analyzing lung tissue to understand the impact to the virus or the immune response and critical work.
Programs.
Consortia have formed around the world at an incredible pace. There are already five papers detailing coated related insights gleaned from mass cytometry.
We're sharing the stories with customers and our social fees as fast as they emerge so everyone can benefit as we mobilized as a single community against this common threat.
Everything I've described ties to our immediate response, however, we have additional products to develop.
Including a potential game changer called the Echo program being funded by DARPA.
Oh program will create a rapid detection platform powered by Microfluidics the could process thousands the samples a day persist well measuring host sell infection.
Actually giving evidence of post exposure infection much sooner than conventional real time, PCR arnie tough or serological or antibody based solutions.
Oh program is a collaboration with Mount Sinai Icahn School of Medicine, and the Department of Defense, We will give updates as they become available including dates on you a submission and commercial availability.
Our partners will make the final decision on deployment timelines and we all recognize the importance of balancing speed with robust scientific validation of this novel approach.
The third area of daily discussion has been oriented on cash manager.
Vikram will provide ample color in section in short, we're leaving no stone unturned as we preserve cash during the sharp industry downturn.
However, I cannot overemphasize that our core business thesis is intact and we believe we will emerge and even stronger organization as the research community gets back to work in the coming quarters.
We discuss cash management activities every single day, we have made business tradeoffs to preserve near term health without fundamentally compromising our longer terms trajectory.
And we're benefiting from legal settlements and sponsored research funding groups such as the Darfur related coated work.
As a transition to a discussion of our views on Q1 results and potential impacts in 2020, I want to reinforce one last point.
The immuno market our term for the comprehensive analysis of the immune system and the tools related to these endeavors is more viable than ever.
Over the last few years most of our focus has been on Immunome questions Lincoln College, and immune system related disorders.
But infectious disease was part of our business before and as accelerating today.
Roughly 10% of our best Cytometry publications are related to infectious disease.
For Fluidigm, the covert pandemic provided unique catalyst for tying our portfolio together into a menu of infectious disease oriented offerings.
We remain committed to oncology and other therapeutic areas, but we believe that infectious disease work is going to expand rapidly and we can support this additional mark market vertical with modest impact on our prior endeavors.
In essence, their symbiotic or complementary to most of our core programs.
We anticipate that the microfluidics business could accelerate upward on the heels of the code that response.
Rounding up the commentary we saw a pronounced negative impact on our business as most customer segments shut down operations by the Middle of March we entered Q2 with approximately 60% to 70% of our global academic research community either closed or working at a slower pace.
Basic research projects have been put on hold but not canceled customer activities will depend on when the community returns to a new normal and what budgets will be available.
Our instrument funnel remains strong.
Built backlog due to facility closures were delays facility renovations that have a gating items for putting systems online.
We anticipate a sharp near term deceleration in unit placements not related to covert work.
We have heard similar commentary from other analytical instrument companies.
We've adapted selling and marketing motions to reach customers, who are working from home offices. We believe the budgets are intact and orders will flow once organizations get back on their feet later in the year.
For consumables.
No that many of our core labs have major backlogs of samples to Ron and they're anxious to return to normal operations.
As part of our comprehensive coated 19 response, we accelerated the another important program on our strategy roadmap that merits additional commentary.
Today, Fluidigm announced the broad commercial launch of a professional services lab, we call therapeutic insights or T. Yes, we incubated the program in Q1.
The T. I asked venue includes a range of imaging and suspension base mass cytometry services from experimental panel design custom antibody sourcing conjugation verification staining data acquisition and data analysis.
There are many elements to this offering we are seeing immediate demand to run samples from labs that are not operational or cannot access their core facilities.
In addition, we provide surge or backup capacity for steel rose, who were selling mass cytometry related services, allowing them to market services without concerns for testing capacity constraints.
The fluid I T slap provides access to newly developed.
But not commercially released mass cytometry innovations and provides a collaboration vehicle for partner institutions developing new panels that could become part of our standard kit business portfolio.
For accounts waiting on instrument funding, they can generate data or conduct important studies.
The fee for service lab is staffed and running projects. We believe will open up new market segments for our technology accelerate the pace of innovation, especially in light of near term disruption, but the pandemic.
In summary, Cobot 19 has brought short term challenges to our business, but we're incredibly excited about the role we're playing and pandemic response, the preparation as well as the new opportunities we see on the horizon.
I'll now turn the call over to victim, our CFO for a complete review of a financial results.
Thanks, Chris and good afternoon, everyone.
Total revenue was $27.6 million in Q1, 2020, and 8% decline compared to Q1 2019.
Changes in foreign exchange rates had minimal impact on revenues for the first quarter of 2020.
Excluding license revenue of $3.1 million revenue was 24.5 million and 18% decline compared to Q1 2019.
We observed a significant slowdown in customer activity during the quarter, beginning in China and spreading to all regions of the world as the quarter progressed.
Widespread adoption of work from home policies caused many are for customers to reduce or suspended activity.
Which adversely affected our revenue in the first quarter.
Revenue exposure to academic customers represents approximately two thirds of far revenue and we estimate that approximately 60% to 70% for customers labs are currently shutdown.
With that context, I will move into details for first quarter financial update.
Demick research centres closed.
Rebuilt instrument backlog during the quarter.
Consumable sales were also affected by the slow down and customer activity outside of Corbett 19 related work.
Microfluidics revenue of 12.6 million increased 11% a year over year, primarily driven by license revenue and higher instrument revenue associated with new products.
Actually offset by a lower sales of conceivable.
Excluding license revenue Microfluidics revenue declined 17% year over year.
The lower sales of conceivable primarily related to slow down in key account activity partially related to the cobin 19 endemic.
Turning down to a regional perspective for Q1 2020 compared to the prior year period.
Pacific revenue declined 48% to 4.7 million, primarily driven by lower math cytometry instrument revenues and to a lesser extent lower microfluidics revenue.
America's revenue grew 14% to 14.8 million, primarily driven by license revenue and higher Microfluidics instruments revenue.
Offset by lower sales of math cytometry instruments.
Without the license revenue America's revenue declined by 10%.
Yeah me a revenue declined by 1% to 8.1 million, primarily driven by lower Microfluidics revenues almost completely offset by higher my cytometry revenue.
Foreign exchange rates had an approximately 2% negative impact on 2020 revenues.
Moving now to operating performance product and service margin was 53.8% in the first quarter of 2020 compared to 56.4% in the year ago period, and 54.7% in the fourth quarter of 2019.
Non gap product and service margin, what 67.3% in the first quarter of 2020.
Bad to 67.7% a year ago period, and 64.9% in Q. for 2019.
The year over year decrease in non gap product and service margin was primarily due to lower S.P.'s and an unfavorable product mix, partially offset by lower service costs and improved manufacturing efficiency.
Sequentially they increase the non gap product and service margin was primarily due to lower service costs favorable product mix and lower <unk> inventory reserves.
In the case of gap product and service margin the year over year decrease in non gap margin was coupled with fixed amortization overload revenue.
The decrease in sequential product and service margin was the result are fixed amortization overload revenue more than offsetting the lower cost and reserves noted earlier.
Operating expenses and the gap basis in the 2021st quarter increased slightly by 1% euro per year to 31.4 million.
And operating expenses in a non gap basis of $28.2 million was in line with the year ago periods.
The increase in gap and non gap operating expenses was due to higher facilities compensation and litigation expenses, partially offset by lower business development expenses.
Gap operating loss for the first.
For the 2021st quarter was $14.9 million.
Compared to 14.2 million for the same period last year.
The year over year increase in gap operating loss was primarily due to slightly higher operating expenses and lower product and service margin offset by license and grant revenue in the first quarter of 2020.
The non gap operating loss for the first quarter was $8.5 million compared to 7.9 million for the year ago period.
Please note that the reconciliation tables between our gap and non gap measures are provided at the end of our earnings press release that was issued earlier today.
Moving on now to the balance sheet and cash flow.
Cash in cash equivalents short term investments and restricted cash at the end of the first quarter of 2000 $20 million to $49.6 million compared to 60.7 million at the end of the fourth quarter of 2019, reflecting a net decrease of 11.1 million in the first quarter of 2020.
Cash flows in Q1 2020 included 5.2 million of cash consideration paid for the acquisition of <unk>.
And 3.5 million of cash received pursuant to a licensing and legal settlement. In addition day sales outstanding was 47, Dave at the end of the first quarter.
53 days at the end of the fourth quarter.
A year end the borrowing base under our acid based revolving credit facility was 8.6 million none of which was utilized in April 2020, we extended the maturity date of this credit facility by two years to August 2022.
As Chris has mentioned in his remarks, we're focused on preserving or liquidity, we have taken several steps in evaluating expenses beyond the obvious areas like travel and then started implementing reductions in our operating expense structure.
Including salary reductions unconstrained hiring until the business returns to more normal volumes.
We have withdrawn our annual guidance in light of the uncertainty surrounding the ongoing and evolving covert 19 pandemic.
We expect to update our outlook at such time as the effects of the pandemic and our business becomes clearer to.
You have guide investors and revenue, we can provide a little color or not thinking which is dependent on many factors that are unpredictable.
Including the timing and cadence of when our customers go back to work.
Back from a second wave of infections of any and timing of therapeutics and vaccines to address the pandemic.
We believe that the second quarter would reflected further decline in revenue as the first quarter did not reflect the full impact of customers shut downs in all the regions of the world.
We are assuming for now that labs and research facilities begin reopening into third quarter with customers picking that project back up and resetting their work priorities for the rest of the year.
Currently do not expect customers to be able to recapture the time that has been lost so there will be limited conceivable catch up.
In addition, it should be expected that due to the length of the selling cycle.
Some capital purchases that were expected to have been placed in 2020 would move to 2021.
Customers start to fully execute on their pipeline of research project, we would expect sequential revenue growth in the fourth quarter.
Assumes that there isn't a second wave that necessitates another global logged on the scale of this first phase of the pandemic or even on a greater scale.
As a potential offsetting item. We're also seeing demand for a covert 19 testing and research solutions, but revenue growth would depend on the number of testing centres that employ or technology and the ramp of customers using mass cytometry and imaging method geometry for clinical research work and immune profiling.
This adoption is already begun.
Mainly in the Americas and in Europe, but we do not yet have enough visibility to fully forecast the potential impact of this opportunity.
As a result, we expect 2020 product and service revenue to be lower than 2019, not including any revenue from covered 19 opportunities.
Based on these assumptions 2021 should be a stronger year as our customers come back to a more normal state with their current projects, assuming vaccines and patient treatments are in place.
And with that I will turn to call back to Chris for closing remarks.
Thank you <unk>.
Pandemic has completely transformed our world in a very short amount of time with an unprecedented.
Down.
However, it is also created an opportunity for us to showcase the power of Fluidigms technology products and solutions.
Similar to the new market opportunities created after 911, we believe that there will be a durable responsible government some public health agencies to prevent future outbreak.
Fluidigm will be well positioned to play a role for years to calm.
We are unwavering in our fundamental business thesis.
Standing on locking the power of the immune system is critical to improving light.
Fluidigm is uniquely positioned to measure genomic the proteomic information across biological systems.
Integrating these insights into new health care paradigms.
From an investor perspective, we are prudently managing our cash and I've implemented cost savings initiative.
Pandemic.
I'm confident in our ability to pivot our technologies to serve our customers in the fight against held at 19.
Providing a new vertical of growth and infectious disease, along with the longer term need for biomarker discovery diseases like cancer.
We believe that are activities around until the 19 will strengthen our portfolio.
Provide new innovation for the future.
As I.
I think are over 500 employees for their contributions this past quarter.
So proud of how quickly the t. move to support customer demand.
Solutions.
Well many of our employees transition to working from home.
We are in awe of our customers, who are moving mountains to develop test short time frames and shifting their immunology research to advance clinical studies that support the development of vaccines and therapeutic.
As well as research to understand this novel virus.
Humble by our role in this critical work.
On a final no.
I want to share some changes in our board of directors.
After more than 20 years and incredible service.
Hello, Our board Chairman has elected to retire from Fluidigm effective at the end of June.
Sam has been a tireless advocate for shareholders and a trusted advisor to me and my colleagues.
Deeply thank him for as many in sight.
Stewardship thousands of hours of time invested in Florida.
Wishing well with his future endeavors.
Dr. Carlos pile, a trained immunologist infectious disease expert division has been elected as our new chairman.
Carlos brings a unique talent to the chairmanship and you combine scientific and medical knowledge with operating experience as you know an executive in drug development.
In addition, Pat Jones, our current audit Committee Chairman is retiring from the fluid on board effective at the upcoming annual meeting.
For more than nine years, how displayed a critical governance role, including overseeing a very successful life.
Has been a valuable mentor in college.
<unk>.
<unk> will become our new audit committee chairwoman and she brings the right level of financial acumen and operating experience as a season public company CFPO to ensure we build on the legacy Pat established.
Please join me in thinking Sam and half of their service.
Welcoming Carlos and Laura to these new roles.
With that I'll open the line for questions.
Thank you know as a reminder to ask the question it would need to Palestine wine on your telephone we ask that you. Please limit yourself to one question in one follow up question. You May then return to the queue to a giant question. Please press the pound key please stand by volley compiled the <unk>.
I first question today will come from sound <unk> with B.T.I.T. Please go ahead.
Hi, Thanks for taking the question, which curious about to the extent that you can comment on it could you talk about what the cost structure for the Epee Tonight.
Ah Tat for corporate 19 could look like in comparison to the P.C.R. based testing I'm, just trying to get a better sense that whether these tests are.
To go hand in hand, or do you think they might be competitive to each other how do you have kinetic testing might be deployed is it more for surveillance purposes, do you think or or the opportunities for actual casting detection as well.
Hi, <unk> thanks for the question.
It's kind of a difficult one for us to answer right now because the we have an agreement with Mount Sinai and the Department of Defense, who are both department <unk> defenses funding. This work.
And the Mount Sinai as the primary contractors, who owns the overall project program.
And as the final product configuration is that then we'll have more flexibility to talk about intended use and all the details related to the cost structure.
So without kind of deviating too far from that I think you'll get a pretty good sense that it harnesses. The same microfluidics architecture that we use in or other offerings things like our bulk ornate offering second give you a pretty good indication of the kind of target costs point, that's probably related to it but the final configuration of the product the availability of it commercially and the.
Intended use are all decisions that are owned by the the prime.
Okay.
Fair and then just at the follow up at the extra nor acquisitions. That's very interesting could you talked about how much. These sam how much you sample proper bottle necked for unless they kind of tree adoption and you guys. I think mentioned a pretty sizeable addressable Marquette near <unk> in the near term and was wondering how quick.
Do you think you can capture that.
You know what's kind of across the K.. So do you think for that business that over the next few years.
I agree question also so yes, the the industrial acquisition and we'll announce the trade name here very shortly as is very exciting. So I think of what it leads for us as a huge margin market opportunity as you know, it's well suited bills for flow cytometry as well as mass cytometry for us.
It was about primarily for putting it in front of the mouse cytometry work flow it matches very well with the throughput of the Healios platform and in particular with the M.D.I.P.A.R. Preconfigured.
Leading you know top products from 2019.
Biology product offering so it's a great way to further automate the work flow and reduce some of the manual preparation steps that sit in front of all cytometry platforms, both mass cytometry inflow cytometry.
So it's so initially targeted for our greater than 292 unit install base. On then we'll have addressability for the clinical market the clinical flow market and other aspects of the flow market.
I think you know obviously are channel strength sits within the mouse cytometry space. So that'll be the target for us in the first wave, but I would suspect that will pick up opportunities in other adjustable market segments outside of our core dressel market segment.
And without really kind of speculating on the curve of that I think it's early days for us so it and certainly with a coded backdrop, it's harder to speculate even more so on a product adoption curve.
But since it aligned very well with their M.D.I.P.A.S.A. in or existing mouse cytometry base, that's where we're going to focus first.
And I think as it becomes a meaningful contributor to overall portfolio.
In terms of revenue in the coming quarters, and I think will be better position to give an indication of what it could look like as far as how well we can penetrate that overall you know pretty large market.
Great. Thank you so much.
Just think about the biomark itself and the technology I think <unk> important aspect is the ability for by Mark maybe to be differentiated from traditional P.C.R. in terms of.
Whether it be do ever genetic markers or other this earlier detection opportunities. So <unk> whatever you can provide that would help us think about what is differentiated about the bar Mark and is it something that would be unique in terms of this earlier detection capability.
Thanks to the question Dan Yeah, there's a number of things to build off of so you know kinda first and foremost the core power the microfluidics misses something we've been trying to talk about.
You know for multiple quarters, because it's been one of the areas holding back the overall performance of the port of the company in terms of you know needs to see microfluidics grow in a sustainable basis, and we've made investments in this area.
You will know where related to aren't they seek and then a supporting the Oh link applications and so this offers a third the ultimately the core technology. The Microfluidics chip an architecture, it's throughput it's ability to process inflexibility the number of different the matrix ease of the number of samples that you can process simultaneously with an and and.
Massively parallel sequencer process sorry.
The number of of assets that you want to interrogate provides a lot of flexibility so whether to 90 696 format, asking 96 questions and processing 96 sample simultaneously.
Or what's being used primarily in the bulk are in a testing for coded 19. That's the 192 Dot 24 that gives you 24 different pathogens you can screen against and process 192 samples simultaneously.
In addition to miniature <unk> of reaction volumes and when we talk in terms of nano leaders instead of microliters. So we're seeing a thousand fold thousand times reduction in the necessarily agents and then you also have this automated process for processing for loading and then processing the samples themselves.
This power has many many different applications of which.
Everything from Biomark or discovery to ornate sequencing prep two things like and that's on the Juno, but on the.
And to the code that based testing.
192, not 24 illustrates the power of that when I was trying to get the Microfluidics architecture. Overall. So this is you know this is a huge opportunity both in bulk ornate testing and then when you look at the are the epigenetics you carry all those same benefits forward into the epigenetic question that needs to be at Aster answered you're looking at methylation patterns and.
Folds gene expression changes and you're able to look at no capture all the same advantages in terms of throughput the flexibility of the panel itself in the marker set that you choose the militarization of reaction volumes and then the speed and cost profile related to the Biomark architecture.
You can see when now we've used a couple different applications here to show what there's really huge potential for Microfluidics and these are two great. Examples right now that we're seeing right in front of us happen in real time.
Great.
Yeah.
Some of their news articles, we've read suggest that.
When the work.
That researchers are going to open up the insights and allow other labs.
Maybe utilize somebody insights can you comment at all in terms of.
You know to descend it sounds like they're planning to file on the way shortly if they haven't already filed it with the plan or whatever you can discuss publicly with the plan b. that it would be utilized on the biomark or would also be plans to leverage it to other labs and that could develop you know this kind of capability on their own platforms.
Yeah, I think the simplest way to talk about this is that ultimately at the department of Defense DARPA. Specifically in this case has has abroad mission statement and that's pandemic preparation and obviously, putting it investing a next generation technologies in making that technology available for the benefit of the entire country.
As well as the United States collaboration partners around the world in which they share information.
The Microfluidics architecture provide these really unique advantages in terms of throughput flexibility of <unk>.
So and crop cost architecture. So I'd be you know, it's ultimately their decision I'm sure they'll make the pad I would suspect that they'll make the signature very visible, but as well as but capturing the amount of throughput that's required and all the other benefits I think it's gonna be very difficult to other platforms.
On it and I'm trying to beat this but is there is the throughput.
And the amount that you could process is that related to the ability to like whatever level of sensitivity eliminate detection you need to get to is that something that's related to that the possibility to find this you know the signal earlier than you might be able to find on something that doesn't have the ability to look at all these targets at once.
That is that related to because I I'm I'm still not clear if the if the bottom arc sounds like it's very differentiated I'm throughput very good functional functionality.
Costs, but this idea that you can make a one day detection, possibly versus five day in real time, P.C. or is that something you think would be unique to to buy a more.
The basic mechanism, a P.C.R., which is the final detection or the signature is ubiquitous across other P.C.R. platforms. So I don't think L.P.C.R. is PCR. What this says if this is a blood extraction, you'll converted into a format that can be read an amplified on a P.C.R. a third recycler platform.
There's so many other incumbent advantages to our architecture and support that I would only be speculating on how easily be ported to other technologies. So I think that you know the coming back to the core.
The the actually itself is measuring is likely to measure methylation pattern changes on gene expression changes in a signature so the basic advantages about the speed you know there's only two basic methodology for doing viral detection right now you're they're doing it through viral load and you're looking for the shedding in the signature and it takes time for the Apple for.
<unk> for the basically for the the the virus to shed enough of its ornate or D.N.A. into sufficient quantities to be measured by the limits of detection of most technologies. So that's why we have this lag of many many days from time from infection until we can measure detect whether it's in saliva.
Blood or fits in a fair in jail swab.
The second is antibodies and the antibiotic section as you will know is limited by your the ability of the bodies acquired immune response to generate sufficient antibodies to be then be detected by the limited detection again in the blood. In this particular example that process also intrinsically takes 56789 days based upon your immune the rubber.
Distance of your immune system.
So what host sell detection allows is at the cell itself is coming under initial stress, it's being attacked by the virus.
Moment it begins to send out signals that it's cell itself is becoming under just or an under stress. That's the signature that's the speed that we're talking about that's why it's potentially a game changer, because you're able to method now unlocking third potential way to measure.
Infectious disease or infectious agent that attack in the south that's the fundamental difference it's not the P.C.R. itself.
Got it sorry, Thank you, Chris <unk> that collars Super help, but maybe one more on that aspect. If you don't want and then I can turn it over and I can always come back and we would there be to the extent you know this gets filed and then you get to prove can you comment at all on how we might expect a rule out to occur I know, it's not in your hand, or maybe a week and discourse.
But it's just something that might sit at DARPA is it something that might get broadly distributed just something that might sit at Mount Sinai can you comment at all in terms of how we might expect us to roll out if in fact, it you know it it's successful and gets approval.
Yeah, I mean, again I'd be speculating, but I mean, there's gonna be they're going to need to be a kitten solution for this ultimately if the if the the government's I believe that the government's goal for this is to make sure. It's widely available. So therefore, it is going to have to be.
Kid and made available into central testing labs, and multiple geography is so you know as part of that that's part of the government's entire pandemic response strategy.
I think Mount Sinai as their research partner in this so they'll need to have industrial they'll need an industrial partner.
Of which I think fluidigm, obviously as well positioned to be leading industry partner.
Great. Thank you I'll turn the Florida. Thank you.
Got it thanks, Dan.
Thank you know our next question will come from Paul Night with Jenny Montgomery. Please go ahead.
<unk> can you you mentioned earlier to Biomark network, what's the installed base wants to push back on getting more of these out in the field and then the second part of the question is.
On.
The testing market is this.
Pricing going to be the below 10 dollar for testing can you talk about where you think pricing will be on the test.
Yeah.
Oh, Thanks for the question Paul Good to hear your voice. So I guess two parts so kind of similar to how I responded to sung G. I can't really I would only be speculating on what the final costs might look like.
Given you some indication ended k. indication of the configuration of the of the potential and products you can kind of work the mouse out yourself, but there's certainly nothing to set until the final configuration is prepared and approved by the proper regulatory agencies.
The second part is about the Biomark install base.
So we do a I think I don't have it right at my fingertips I'd have to look it up we can get back to you with that but I don't think we break out the biomarks specific.
Well, we we measure it Oh, we share with you and I think in our last in the Investor deck that was just posted we'll have a an updated biomark install base than I think it's a biomark plus E.P. one install base if I go from memory and I think the combine numbers about 500, but you'll have to Factcheck me on the website.
Yeah, That's correct press about 500, Thank you think I keep forgetting yeah. Thanks.
Hmm.
And with the with the mouse cytometry technology I'm on my understanding would be that.
They are your.
They're working while you're working the customers are working with a divine library sat on the detection element.
Where where do you think customers are with eating the correct libraries around the antibodies needed to be detected with his coded virus.
Yeah. So if I understand the question Paul what you're asking is so for mass cytometry suspension looking for what's the code that signature and what are the kind of standard questions that they're going to ask and cocaine configuration. How close are they without the question is to make sure I get it right. Yeah. So what we're seeing right now at this moment.
Feels like they're mostly looking they're using our abroad M.D.I.P.A. signature, which you remember as kind of a great backbone and there's a couple examples in our investor deck also that shows different configurations, damn D.I.P.A.S.A. and how we leave open channels, so that the beauty of that <unk>.
We we had some of the most common immune signature types and then what they are able to do is then use the additional metal that we released in the fourth quarter.
And couple that with the additional channels that we had available already so they can push up to almost 50 marker panels that they can run starting with the M.D.I.P. backbone.
Why are conjugation kids are model kits and then we also are offering additional antibodies rapidly for derivatives of covert related question. So I can imagine that will likely have a covert configuration.
Very soon that will be more of a consensus coded panel, but it appears to be the majority of the research community is starting with our derivate our backbone since it's a very very good place to start.
Okay. Thank you.
You're welcome.
Thank you know and our next question will come from Stephen Mom was Piper Sandler. Please go ahead.
Hey could afternoon.
Hey, Steve <unk>.
Thank you.
So you just have a one question.
Guards to your new therapeutic insight services.
How should we think about that in terms of long term strategy to businesses, it's something that.
Yeah Big focus.
And second you know how big do you think the opportunity is if this isn't longterm strategy change.
[noise] great questions do you. So I think the the therapeutic insights was definitely a was was very very high in our strategic room on our road map and priorities. So we had already started doing programs in the first quarter as we are prototype in it and making sure we could scale that business and that's why don't we moved to the.
God commercial release concurrent with this earnings announcement I.
I think it's a very big opportunity. So as you remember it think about our total mess cytometry strategy, our business or core business model has been you know initially was to place instruments and drives and then build out the tool kits to more complete the work flow.
Using examples of that we often been launching more medals antibodies preconfigured panels for some of the most common questions putting those into lafollette format for ease of use.
Adding the instron or or a acquisition to do upfront standing in preparation for that work flow and then layering in software solutions on top of that to complete a more complete the work flow and then on our business model. We had both that ability free and then we then we open up new customer segments through contract research Organiser.
<unk> and using going beyond the core labs, and the core academic centers to begin to open up the pharmaceutical and biotech segments of the market.
In parallel we've we've been striking partnerships with organizations for instance, we announced to Georgetown collaboration of the prior quarter call that are developing novel content with us that are for specific biological or therapeutic questions of interest. So all of this fit together, we're going to have as we knew there was a segment of the market.
That would not be willing are ready or able to purchase an instrument outright and they needed to have her support programs very quickly they had samples ready and wanted to run those and they were either in the long queue to get into those Lord those larger core centers or those C.R. rose and so we saw this is a huge opportunity to open up another segment of the market.
So we're this is really also being pulled by our customer base to create this capability and so I think it can be quite significant I think in a very very healthy business will likely have a good mix of.
Programs and projects that are run through our therapeutic insights labs will continue with Vince replacements, we're going to continue to launch new technologies that are complementary to our existing instrument base.
And this also provides a labore Tory for people to access those new improvements that we're making and then for us to run real projects real life samples and challenges and get that technology and pressure test that technology before we decide if we want to launch it as a kid format for the broad market. So this is really a symbiotic product offering or service line extension that.
Fits within the context of our instruments are Sir our software solutions are kits and individual antibodies and labeling kits hopefully that's been a helpful.
Oh, Yeah, that's very helpful and you're going to run the services out of your your existing San Francisco facility.
Yeah. In this particular case, we do run out of San Francisco, but as you know the majority of our mass cytometry business is in Canada.
So we have a backup facility also there so they can work together as a team.
Okay alright, thank you.
You guys. Thank you.
Thank you know and we do have a follow up some Dan Brennan with U.B.S. Please go ahead.
Hey, guys effect to come at the end here with a couple of questions. So Chris you mentioned during that prepared remarks, or think you plan to submit your own.
You a on that real time P.C.R. test can you just as opposed to just relying upon some of your customers cutest describe.
The process is there timing and how that would impact the opportunity.
Yes, certainly down thanks to that question also so just what the bulk are in a task. We you know for the.
We felt that having our own you a submission would be another critical building block, it's actually part of a multi generational multiply a quarter story for expanding the utility the access for coded.
Related questions, so having an U.A. on our own platform in our own product configuration. We think is a logical next step.
And and this provides a very wonderful opportunity we were able to kind of the reason why we didn't rush out to do it immediately as they gave us a huge up we <unk>, we got to collaborate with these early adopters to work out what you a configuration would look like on our own product.
And so this gave us I think a really good running start into preparing our own filing submission.
So I feel this is a top priority for us something that you should expect from US you know very shortly so ultimately the final decision of courses with the F.D.A. on the timing for that but the work on all we have a very clear road map on our side on what we're gonna do.
And your boxes like do you need to get the March or how it's working in Oakland.
I presume.
Boxes are you Oh <unk> are you so you get the way.
Like does it does and enable any customer who wants to run their you know the test on on their box that they were just maybe help us think about the opportunity I guess a lot of other companies have helped us frame is real time P.C.R. testing opportunity, you've got 500 replacements, I don't know, which one of them to really applicable for running on okay. 'cause director for Kobe detection, maybe just give us.
The little color on how we think about the opportunity.
Yes, we see many different flavors of this I mean first off the way itself there'll be no change or configuration of the box itself. So if you have an R.U.O. box then you're going to have an U.A. cleared box.
Yeah, you still will take the Kid solution and you will have to do some work on your side every lab has to do that.
But it's a it's it's a very expedited process. So this will unlock the potential for those addition, those units does that are out in the field to potentially be run using code. The testing and in fact, we have seen customers who have taken biomarks that were sitting in other portions of their academic medical facilities and moving them into Cortez.
Facilities that can support.
Coated based testing so there's.
There's many different methods from which to me, we may drive incremental unit placements or c. higher utilization than we've historically had on our biomark platform on the backs of coded based testing and they can use this you aid kit configuration with our recommended.
Approach that and that will including extraction. So you have to have everything from extraction all the way through to a final answer so we're putting that whole a kitten solution together and that filing plus the instrument becomes the leg.
And can you is or is there any way to size something.
All that could occur from this mean, you're competing with obviously a lot of these big box diagnostic companies that have significant install base and work clothes and things like that but you offer.
A very low cost alternatives with a lot of other benefits by any any sense on from some of the early interest in uptake how this might play out for you.
Oh I can give you some simple math. So if you imagine just with the throughput that we've described it would take.
The national targets are goals for the United States right now is to run a million test today.
You can run a million test a day and 160 biomarks.
So we're not talking about a mommy and even with our existing install base just mobilizing our existing install base simple math would run more than 3 million task.
Approximately.
3 million test today.
So there's massive firepower and potential sitting in these boxes, which is why the government very encouraging Abbas to move forward and you've seen groups like Mount Sinai embraced this technology, obviously oklahoman saw the potential and there's the numerous others.
<unk> and then they maybe one last once maybe restrict them more Chris but can you <unk> is there any color and what the <unk> could be you gave obviously qualitative color on consumable that in two minutes, but is there any way to frame what a reasonable kind of guy pose for two years in terms of that and then.
You know you mentioned that the funnels in good shape have you seen any cancellations on instruments or how do we think about.
Any qual any any quantitative call them on the backlog and the ability to convert that backlog in economic growth after we get through.
The you know the depth of this cue to privacy issue.
Yeah sure <unk>.
Obviously as you know in the two was industry a lot of the business into the courtroom happens in the last month's last last two weeks. So even in the normal course, it's hard to give color, but but I can't tell you.
Z. are not in normal course, obviously that goes without saying.
But we have tracked our business and bookings in our revenues in April and why this is not intended to be a guide for acute you by any stretch of the imagination because for they just said you're tracking it about 70% of the year ago period, so compared to in front of 2019.
Both our bookings and our.
Revenues are tracking in at about 70%. So that's neither here nor there and the other metric that we will enjoy only be tracking and which is our defeated which our customers get back online. So we entered cute too.
Oh, we're 60% to 70% off our customers either completely shut down or in the state of suspension or doing very limited go with 90 work.
So hopefully that gives you a little bit of color, but again stress that you can't you draw a conclusion on month, one performance so for the quarter as a whole.
With respect to a second question right now we don't see any evidence order cancellations, we don't think that the consumable.
Orders are likely to get <unk>.
But for now our assumption is that the instrument order is when you get delayed but you have not seen any order cancellation and the delays good extends.
Beyond 2020 into the following year.
Hopefully that gives you some color of what you're looking at as we sit year in the first week of me.
Great. Thank you.
[noise]. Thank you speaker I'm showing no further questions in the queue. At this time I would now like to turn the call back over to Miss Agnes leave for any further mark.
Yeah.
We'd like to think everyone Crow, telling our calls today a replay of this call will be available on the investor sight of our website. It's concludes the call. We look forward to the next update following the close second quarter 2020 base, we talked to us at the F. further question good afternoon everywhere.
You may now close the call.
Thank you ladies and gentlemen, this concludes twenties conference call. Thank you see it participation you may now disconnect.
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