Q3 2020 Bionano Genomics Inc Earnings Call
Greetings and welcome to biomedical genomics incorporated third quarter 2020 conference call. At this time, all participants Arnie listen only mode. A question and answer session will follow up a formal presentation. If anyone should require operators sister store in a conference. Please press star several on your telephone keypad as a reminder, this conference being.
What it I would not like to turn the conference over to your host actually where I'm sitting with the best of relationships. Thank you you may four feet.
Thank you Latanya and good afternoon, everyone welcome to the bio nano genomics third quarter financial results conference call needing the call today is Doctor, Eric Coleman C E O and he's joined by Chris Stewart C. F O of Bionetic.
After market close today, Brian Eno issued a press release announcing its financial results for the third quarter of 2020, a copy of the release can be found on the Investor Relations page at the company's website.
Before we begin I would like to remind everyone that certain statements made during this conference call maybe forward looking including statements about the company's strategic and commercialization plans adoption of the Sapphire system. The advantages of the Sapphire system overcrowded technologies and the company's expectations regarding timing and content a study results and anticipate.
The benefits of these studies and driving adoption of Sapphire.
Such forward looking statements are based upon current expectations and the results contemplated in these statements may not be realized actual results may differ materially from such statements due to a number of factors and risks some of which are identified in the company's press release and it's other reports filed with the S. E C.
These forward looking statements are based on information available to bio nano today and the company assumes no obligation to update statements as circumstances change and.
I know, they're recording and webcast replay for today's call will also be available online and the investors section of the company's web site and for the benefit of those who may be listening in to the replay or archived webcast. This call is held in recorded on November 12th 2020 with that I'll turn the call over to Eric Coleman Eric.
Yeah.
Thank you are actually in good afternoon, everybody well, let me begin by saying that we are really pleased with how the third quarter. It came together.
Most of our commercial indicators grew over the prior quarter as we saw a significant momentum returning to the business is more and more geography's opened up whether using of Covid based restrictions.
We saw significant progress in key areas of market development, including presentation and publication of evidence in support of Sapphire as a potential replacement for traditional cytogenetics methods.
We transformed our leadership team with the addition of two key executives Doctor Alka choppy, who is our first chief Medical officer.
Okay joined us from Perkin, Elmer where she was the head of cider genomics for Perkin, Elmer genomics and Vantis.
And Chris Stewart, our Chief Financial Officer, who previously worked a Tesla and has had a successful career in the checks and semiconductor industries.
Finally, we acquired the clear diagnostic services business lineage and and the stock based transaction. The acquisition has the potential to expand our commercial services offering to customers, who need clear based data services.
It has the potential to grow total revenues through sales of lineages proprietary testing services for pediatric neuro developmental disorders can it as a potential to provide critical strategic ingredients to outline the path for other clear labs to obtain payment for services.
On Sapphire from third party payers, including insurance companies and governments.
Now our focus since the very start of the year has been to pursue a go to market model. It makes it easier than ever to get bio nano data through a combination of commercial services.
Regent rentals, and a reduced price for acquiring a sapphire instrument. Our goal has been to increase significantly the amount of bio nano data and the number of sapphires in the field.
And based on the results from this third quarter, we can tell that this approach is working.
Probably the biggest milestone that I want to share with you on this call is the publication. This week actually of a landmark study in acute myeloid leukemia or AML by some of the most procedures clinical and cancer institutes in the country, including Augusta University Columbia University Mayo clinic.
M D Anderson and Penn State.
Who evaluated sapphire against the standard of care testing and 100 ml patients.
Any of you will recall that we refer to this work as the Columbia study and I'm happy to report that is done and out and it's it's really amazing the significance of this paper is that the authors recommended that bio nano optical mapping replace Kerry Oh typing his first line clinical test.
In the evaluation of AML and other leukemia patients and this is something that we really think is gonna help us.
As we grow.
The installed base of Sapphire for clinical testing.
Around the world.
I also want to highlight another high profile paper that was published recently this one is from the labs of Doctor Pooey clock at U C. San Francisco. He worked together with scientists at U C, Berkeley and clinicians at the Oakland Children's Hospital. This was actually funded through a California precision medicine initial.
[noise] of grant and the results came out really nice for bio nano. It was the largest ever set the largest ever published using bio nano optical genome mapping to evaluate genetic disease patients who were previously on diagnosed with standard of care methods using the bio nano mouth.
Being the authors were able to diagnose six patients out of 50 and flag. Another 10 patients with candidate pathogenic variants. Upon further analysis three of those 10 flag in the flag group could also big diagnosed making the total number of incremental diagnoses.
Nine patients or 18% of the undiagnosed population.
That is a really significant number of patients to be diagnosed.
And we believe that demonstrating this increase in diagnostic yield relative to the standard of care is going to be a key step and driving sapphire adoption in the future.
Overall, the number of publications. This year has grown significantly compared to last year. We estimate that there have been 98 papers published on by the use of a bio nano-technology year today compared with just 80 for all of 2019.
Something that's really significant about those Ah publications is that the number of human structural variation focus papers are up 70% year to date compared to 2019 and by and enter data have been presented at major national and international conferences across the globe.
This your virtually of course.
And what we see and all of that is that the awareness of bio nano and Sapphire is increasing we have always felt that is really important for us to take steps to increase the amount of bio nano data in the field and it really feels like our efforts are paying off.
Now, let me turn to some of the other key metrics for the business all of which we believe significant reflect significant momentum in in in the business that we're seeing in other areas.
First of all we shipped 11 sapphires to customers this quarter three of which were sold and eight of those were under reagent rental contracts that 11th systems is equal to the total number of systems shifts in the first two quarters of 2020 combine reflecting we believe a nice recovery.
And the third quarter, and we expect that momentum to continue over the rest of the year now these shipments combined with the installations completed in the quarter brings the total number of sapphires installed to date to 96.
And the number of sapphires that are currently awaiting installation to 21.
Next we had a record quarter for the number of nano channel array flow cells that were shipped with 1785 flow cells sold.
Now recall that a flow cell is the unit of measure that represents the human sample equivalent of chip capacity some of our chips out to flow cells and some of them have three so we measure the progress inconsumable sales in units of these flow sells the 1785 slow cells.
Sold represents 25% growth over the second quarter, and 2020 and 34% growth over what we did in the third quarter of the prior year or 2019.
More flow cells purchase corresponds with more samples being analyzed and more to buy arnatto data that customers and potential customers will hear about the progress here is really significant and this third quarter has been a another strong quarter for.
Adoption of flow cells.
Finally, our commercial bio nano data services has continued to perform.
Well also.
Keep in mind that we launched the commercial services as a solution for researchers who wanted to work with bio nano data, even if they couldn't perch purchase or rent.
Hey, Sapphire instrument and we believe this strategy is essential for market development and the number of projects and samples run by our services lab continues to perform well so far in 2020.
Through the end of the third quarter, we had run sixty-three projects [noise].
And a total of 577 samples.
We compare that to the full year in 2019, when we ran just 338 projects and 212 samples.
So we see substantial growth in the number of samples that were being processed in our lab, which again means more and more data available in the market to drive awareness of by Arnatto and its utility and we believe this effort will result in more publications and more presentations and and in turn.
Contribute to more sapphire adoption.
I also want to talk about.
About what we see as the critical milestones.
To achieving widespread adoption by clinical labs that are seeking to develop laboratory develop tests on sapphire and offer those tests for clinical use.
To succeed along this path, we need to address three main prerequisites.
The first of which is publishing multiple studies that show concordance with the existing standard of care as well as incremental improvement in diagnostic yield.
The second is we need development and utilization of these laboratory developed tests and third.
And this is especially important for labs in the United States.
We need to have a clear path for clinics too.
To build third party pairs for the Sapphire based tests and get reimbursed.
Now, we've been making incredible progress and all of these areas and I want to tell you about it on the concordance data we've been able to show 100 per cent concordance with the existing standard of care and several publications now including publications from M. D. Anderson Radboud University in the Netherlands.
This consortium of Cytogeneticist led by Columbia University, including Mayo University of Washington, Penn State M.
M D Anderson Augusta University, and others and as we've already discussed we now see publications that are describing the improvements in diagnostic yield that come with adoption of Sapphire. We expect these efforts to continue but we also feel like we're beginning to.
Build that critical mass and we're so pleased at the Columbia paper has come out because it represents some of the best data that we have so far in the United States.
Now development of left the laboratory developed tests are L. D. Ts is another key prerequisite for clinical adoption, we announced this quarter the German accreditation of Sapphire for detection of various types of structural variations that caused constitutional genetic disorder.
Similarly accreditation processes are underway for genetic diseases, and lacount leukemia in the United Kingdom as part of the National Health system. There similar work is underway in Belgium, and the Netherlands.
Augusta University in the U S is developing and L. D T for cancer based on their results and he malignancies and solid tumor. These have been presented for us at the cancer Genomics consortium meeting last August.
We have other partners that are clear certified in cap accredited labs that will develop L. D. Ts praxis as a commercial service provider that we've talked about.
And here at bio nano, we intend to develop laboratory develop tests as well and so we're making good progress on obtaining a critical mass of.
Clinical assays developed on Sapphire that are commercially available in jurisdictions around the world.
And lastly regarding the third party reimbursement. This challenge is most acute in the U S.
And we acquired lineage and in an effort to overcome this barrier.
With their clear license and vast clinical expertise together with the leadership of our Chief Medical Officer Alka Chubby. We are now position to develop laboratory develop test in house.
That can improve upon the standard of care.
We love working with our partners and they are very supportive, but when we have the opportunity to control. The process, we can be a lot more certain about timelines.
And so we intend to leverage linear agendas expertise and their existing portfolio, a third party payer contracts and certified coders to work out this path for reimbursement of L. D Ts based on Sapphire.
We intend to use a combination of billing existing CPT codes where appropriate.
Obtaining P L. A codes for the service and obtaining coverage from multi ask for a Z codes.
As these paths get established and reimbursement is obtain we intend for lineage into Sara It's sure. These strategies with other labs, which will enable them to follow this path. Our goal is linear Jen is to support the commercialization of sapphire by overcoming key barriers such as reimbursement.
And making those solutions available to the market I want to be clear that our intent with lineage and is not to compete with other service providers, but to make them successful in adopting sapphire.
Finally, I want to say a few things about sapphire and the significant advancements in our technology.
Long them.
Include the biggest upgrade ever to our software capabilities, which is making sapphire more and more capable and importantly easier faster and cheaper to use.
Our newest DNA isolation kit allows for faster and much simpler isolation of ultra high molecular weight genomic DNA from.
Remarkably small amounts of tumor samples, which removes one of the key hurdles in the study of solid tumors.
And this new kit was has been received enthusiastic and our sales to customers have really beat our expectations.
[noise] applications on Sapphire run in the market are expanding we now see our users conducting comprehensive structural variation analysis throughout oncology detecting rare variants that may be responsible for genetic and inherited diseases or looking at off target effects that may be occurring during crisper based Jean.
Editing, all while telling us that our system is easier to use that other genome analysis systems in their laps.
This is the kind of feedback that we've been working hard to achieve and so when we get it we're pleased to hear it and we're so very pleased to tell you about it.
In comparison to other systems for genome analysis, we believe that none is capable of.
The comprehensive structural variation detection the sapphire offers.
Not to mention at the throughput and costs that are achievable with sapphire, especially against long read sequencing platforms like Pac bio in Oxford, Nana poor, which don't have the performance.
Feed or cost metrics that are necessary to compete with sapphire.
And so I was very excited to give you this update on our business and with that I will now turn it over the call too.
Chris Stewart, our new CFO, a for an overview of the financials, Chris straight takes care.
First off I want to say that I'm very excited to be here and I really appreciate it and a warm welcome I received from finance.
I'm convinced that this is the perfect time to be joining by any of them as you can see by the announcements from just this quarter. We've made substantial advances to make sapphire more usable and we're building towards critical mass on the depth and breadth of published data on efficacy, including concordance with multiple existing cytogenetics standards of care.
While we were also starting to see evidence being published that Sapphire can increase diagnostic yet.
I plan to leverage my experience in managing companies through periods of change the channel the momentum we're seeing into business success, we will continue to build out the infrastructure and business processes to support the profitable growth that we expect.
Reagent rental program and the services products have been very well received in the market and are having the intended effect as we're getting sapphire systems and data into the hands of influential people.
We believe that this will translate into the growth of our consumables business, which is expected to be the long term profit driver for the company.
Now, let me turn to a breakdown commercial results for a quarter revenue in Q3 was $2.2 million, 86% sequentially from two want from 1.2 million in queue too.
Revenues comprised of about 725000, or 33% instrument sales 855000, or 39% and consumables.
And including those related to a reagent rental program and $616000, 28% services and other revenue.
Q3 services revenue includes approximately $445000.
Avenue for many again for the period from August 21st through the end of the quarter.
Going forward. We will include many of June with our services running.
Organically buying in in revenue was up 48% quarter on quarter. This increase was driven by the started for recovery from the comic shutdown that we experienced in queue too.
Europe was particularly strong returning to levels, we were seeing at the end of 2019.
Well many customers are still not back in their laps and they are certainly a risk of of Covid resurgence that can continue to impact our business. It was encouraging to see the enthusiasm with our customers as I started to get back to working with Sapphire systems and data.
Cost of sales in Q3, one $5 million, resulting in a gross margin of 34% gross margin was down from 49% in queue to do mainly to the higher mix of insurance sales versus consumables and services that we saw in Q3.
Could you.
Second quarter operating expense was $11 million, an increase about $3 million of our last quarter. The increase was primarily due to $1.5 million a transaction related costs for the one neogen acquisition as well as additional operating expenses related to the lineage of acquisition.
We also returned salaries to their pre COVID-19 levels after the reduction salaries that management and cute too.
Finally as of September 30th our cash balance was $18.9 million.
This includes about 15 million received in the corner pursuant to warrant exercises.
Therefore, we believe we have adequate cash to curious into the first quarter of next year.
As we've talked about before we do have an S. Three in place and believe we have sufficient options available to raise cash in the future.
Looking forward into 2021, we are focused on growing revenue with the continued underlying goals building on published data and exposing more researchers and clinicians to the advantages of sapphire and creating a path to reimbursement for software testing in the clinic.
We will build on both our sales and marketing and R&D teams prudently through the year.
With that I'll turn it back over there.
Great. Thanks, Chris and let me say welcome aboard and let me say the same to Alka, it's really great to have our team at critical mass and with that I will turn it back over to the operator to open up the call for Q&A operate.
Thank you at this time, we will conduct a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
A confirmation tone indicate your minds any question in queue.
You make price star too if you would like to remove your question from the queue for participants using the speaker equipment. It may be necessary to pick up your handset before pressing the star Keith Once again, that's star one at this time, one moment, while we pull far first question.
Our first question comes from Kevin to Teeter with Oppenheimer People's feet.
Good afternoon, guys I want to add my congratulations so the the new members of the team in what looks like a really solid quarter here I guess, a couple of questions. If I may starting off with.
The publication this week.
It was.
You're very impressive and I guess my question here is do you think you need you know.
Large datasets in you know other hematologic subsets to to really kind of change practice, particularly here in the U S or you know do you think it's sufficiently broad study to be you know practice changing sort of a cross.
Cytogenetics wasting term seem target community.
Look more data are better and nobody has ever satisfied with the amount of data. That's available you you you know that but what I will say is that across the leukemia is this as a seminole dataset, we expect it to be submitted for peer.
Review public peer review and publication later on this year and our studies will continue.
I would say overall in hematologic malignancies is that we would like to expand our data sets and multiple myeloma specifically.
And lymphomas to really round out the heme malignancy space and we will continue to add more and more studies in leukemia, but this is really a seminal data set for us that goes along way.
Right and then my next question, which may be somewhat related you know you did touch on you know engagement with multi acts as an important component of the payer in third party reimbursement discussion can you can use comics of where that stands currently you have you had any interaction.
You know with the folks there and how should we think about potential timelines and critical milestones started along that process.
Sure.
The company has been engaged with a fork said multi acts and palmetto and those engagements and interactions that have.
Influenced our thinking and helped us form different strategies, what we are now engaging in with them as they're very specific conversation based on the data sets that we now have available in this paper from the Columbia consortium.
Is something that really helps us have those conversations because in a very objective way we can lay out.
How sapphire transforms the current standard of care and so it's really about taking those general conversations and making them more and more specific and so we can get into what coverage would be like and.
When it comes to a timeline.
I think that you were pursuing three strategies in parallel leveraging existing codes and so we can do that essentially right away engaging with moldy acts as you.
Picked up on as well as the P. L. A code process and these will unfold certainly for the remainder of this year and into next year and will be driven by the sort of standardized timelines that are out there for this process I I do think it's gonna take you know into next year before we see.
See a lot of measurable outcomes from this work, but we're very much engaged and moving along at a rapid pace.
Okay, and then just maybe one more follow up in a housekeeping if I may can.
Can you remind us under the existing codes.
When a lab submit sort of what that.
Reimbursement rate or a range and can be and you know and the housekeeping about a year or if I think about the <unk>.
1700 and 85.
Thousands of quarter should we think about those as.
Principally all through the research market or are there some early cytogenic in clinical volumes, they're kind of feed into that number.
Yeah, well, let me with regard to the what is the average reimbursement around existing codes. You know this is always dependent upon what.
You know a a a a lab has in their contract with the pair but you know these range in in the one to 2000 dollar range, depending on upon indication and can even go higher it just depends upon the specific application, but they are there.
You know in in that in that range solidly between one and $2000 with regard to wear these flow cells are going.
You know of course, we have an installed base, which is primarily research I would say 80 per cent, but when we look at the adoption that we're seeing.
That's actually the other way around it's probably 80% clinical and a lot of these flows those are going there to support the.
Reagent rental contracts that they live in entered into so very crude back of the envelope math would probably put that at 50 50.
Which is incredible yeah, no isn't that's great. Thanks, so much Eric I appreciate taking the questions.
Our next question comes from Jeopardy, Cohen with Ladenburg Thalmann. Please proceed.
Oh, Hi, Christian or can really you.
Good Thanks, how are you.
Trish fine right at home.
It started with some of the so you placed.
Living units, so there's 96.
If we could you talk about that with.
A little bit of you mentioned 21 units to expect those to be.
And placed in a up and running.
The end of the year or so.
Q1 as well.
Yeah, if I had to make.
Make an estimate.
Over the course of the third quarter, we installed nine so I think we went from 87 to 96, so we were able to install nine so.
If our access to labs.
State, where it probably improved a little bit I think we can cover probably about half of these at least and maybe a little bit more but part of the problem is just getting access to two labs and as as everybody should know the.
The situation is is not.
Not stable in Europe. For example, so restrictions are being reintroduced and our best guess is that.
Those reish restrictions will not completely prohibit us from installation, but it could delay so I'm gonna I'm Gonna say, you know, let's let's say that in the fourth quarter. We can do you know roughly half of those.
Yep, Okay got it first could you speak to the D. S. She knew and I knew that there's one portfolio the transaction relation from where did you want to retrieve it there to your competition with the 33 I didn't have to use for my new job. So.
444, cashew what might look like going forward kind of you know what's the baseline for.
For it shouldn't be should I reboot back to some.
Some degree of Q2 or would you expect this to be the new based on going for it.
Yeah certainly.
Accounting for the one time expenses.
That could be back in the range.
Where we were towards the end of 2019 and early 2020.
As far as organic bio nano and then the.
Religion business.
Another 15 ish percent.
Percent of that so.
That that's probably the way to think about it.
Okay got it and then Mercier could you talk about looked like putting the issue, though so you shouldn't could you talk about the.
Put in.
Fishing, she's as far as the charge processed to us and you know could you see.
More efficiency or faster throughput going forward with the current equipment or.
They're developing.
Yes.
So so.
In constitutional genetic disorders.
And the inside of the next overall.
Samples a week is like a sweet spot and we've been driving towards that and we are there in the constitutional genetic disorders now and some of the cancer applications because these special.
Specimens are highly heterogeneous in the pathogenic variants maybe present at very low abundance, you got to collect a little bit more data on them and so what we're doing is accelerating the methods through a variety of tweaks. These are just turning knobs here and there to speed that up and.
Get that up to the hundred sample a week level of course genetic diseases will speed up as well.
But.
Where we're at now is really a good place even for both indications and so the improvements in speed that we get will be will be gravy. There are other areas of optimization that we are working on and that will make it easier to process multiple sample.
<unk>, let's say.
At one time, and so automaticity, we're going to be able to bring.
Cost per sample down through that process that some of the longer term.
R&D initiatives that are underway.
And then we want to simplify.
Data analysis by adding features and capabilities to the software.
And that has the effect that it speeds the process up because the people who are interpreting the data.
We'll have to do less work and so those are really three programs that are ongoing and will continue to to to to progress as we get more and more adoption of sapphire higher and higher volumes labs use it they're gonna want things to go faster and faster and so we're constantly pressing in that.
Direction.
Okay. So no no curb hearing limitations, but.
Chablis, others in your dressing on the commercials cycled before.
That's right.
Yep that's correct.
Okay that does it for me.
Thanks Jeffery thanks.
Our next question comes from Scott Henry with Roth Capital. Please proceed with your question.
Thank you and good afternoon, a couple of questions first the leukemia market Yeah, how should we think about that in terms of you know the target market for for placement in that category.
As well is procedures.
Yeah.
I mean, they are about 200000 people diagnosed with leukemia every year.
In the U S S.
And those are just the patients that are diagnosed so many many more are tested and then you've got the lymphomas to go along with that and so you know this is a substantial patient population overall, we would estimate it to be in the neighborhood of 1 million patients reliably.
And that testing in the U S is spread out across so between $550 750 labs.
And so that would be the placement opportunity and the volume opportunity I I do think that a lot of these labs are going to end up adopting multiple sapphires. So let's say that minimum is 550 to 750 and then the total number of sapphires is going to be driven by the the testing volume itself.
Off.
Okay. Thank you Andrea.
Those are U S numbers and.
By the way in Europe, and in Canada, where they have a rational single payer health system.
They're ahead of us an adoption and so.
Those and the combination of of of Europe, and Canada together.
Robley represent the same kind of economic opportunity that we see here in the U S.
Okay, great and the flow cell number isn't that a figure you're going to give us going forward.
Yes, that's our intention yes, I think we've report we certainly reported last quarter and I think we did the quarter before that but that's really the best way.
Yeah, if we talk about shifts some shifts have to flow sell some chips have three. So then you need to know which chip, but if we just tell you. How many flow cells went out then you have a sense of the amount of consumable capacity, that's being purchased by the market and as long as they keep purchasing it it's because we're growing the installed base.
And the existing installed base is using what they purchased.
Okay, and I think I I Cook down 34% year over year, what was the sequential change or if you could just give me the the two Q flow cell number.
24% I think.
Versus the second quarter.
Of.
25% over Q2, 2020 and 34% over.
Third quarter 2019.
Okay. Thank you and then that was the highest number of ever you know that was that was that was the.
That is the world record to date.
Okay, Great and then I I didn't see the 10-Q, yet but could you give me the shares outstanding I didn't see that and they're really but.
Let me go get it for Ya.
Oh I'll come back.
Okay fair enough.
<unk>.
I think that this was a partial line again revenue quarter, I mean, now that you've kind of on that business for a little while.
How do we think about the steady state revenue run rate of that business now.
The number with with solid and in the third quarter, but I'm not sure how much of it it entailed.
I'm, sorry, I was looking for the short term number. So so the so it was roughly $450000 of revenue attributable to that services business in the third quarter.
And the time period was August 21st through the end of the quarter, so roughly half of the quarter and I think that that's that's been there steady run rate this year, but their businesses.
Is.
Muted as a result of Covid because doctors offices are not operating at full capacity, which is needed to see patients and refer them for testing so there's upside to that.
But please please keep in mind that.
Revenues help in that cash comes in the door and that's really important.
We also value heavily the strategic capabilities like the clinical team that.
Inherited the day she joined.
And so there's a tremendous strategic benefit but there is upside if you say that they are running at roughly $752 million per quarter, that's probably what they've been doing this year and we would expect that to pick up next year.
Okay, and just to fall to follow up on your responses you don't how how is the shelling environment. When we think about queue for each typically seasonally the strongest quarter, but COVID-19 I mean, how is you know she should we think about that is you.
Twenty-five percent haircut to the market right now or how how do you think about that environment out there for fourth quarter.
Yeah, I mean, what we have seen is I think nice return here in the third quarter versus our first and second quarter.
We do expect our fourth quarter to be better than our third quarter, reflecting this seasonality and so forth.
However, without a doubt there are.
Limiters on the ability to get in and see customers customers are not operating their labs at the same levels of capacity. If you look at published information that's out there you'll see that labs are are running anywhere from you know a <unk>.
Research lab, let's say cancer research lab is going to be running anywhere from 25% to 75% capacity.
Yeah, So what I would say.
I'm not really going to try to quantify it for you, but but we are we are thinking that will do better in the fourth quarter than we did in the third quarter, reflecting an ongoing improvement in the momentum and the other thing that I would say is that.
Of all of our markets. The U S is toughish not because the COVID-19 situation is necessarily tougher here or or not but because of just where we're at in terms of customer readiness to adopt so the researchers.
They are on board and they're using the system, but they're not working as much the clinical folks are on board, but they need they need they need more as we've been talking about whereas in Europe. The clinical folks are are are up and running more significantly. So I think Europe is going to contribute significantly to the business and the fourth.
Quarter, we do see recovery in the in the U S. So I just want to say that.
Will do better in the fourth quarter than we did in the third reflecting continued improvement.
Okay fair enough.
And and the final question is kind of a tough one, but but I think it's a fair question the scientific momentum.
In my opinion, just seems like it's never been better if you're getting traction you're making a lot of progress.
But the burn rate you to kind of hold T back a little bit because it it's still significant you know relative to the company size do you think you know from Q3 do you think this is going to be a high watermark for the burn meaning it should start to decline in you know obviously, you got a little bit of a of a headwind and not have.
Being that one and a half million transaction cost after Q3, but do you think we should start to see that decline now are we are we at that inflection point.
Yeah, I mean, I would like to say definitively yes.
Tough right because what we need to do is continue down the path of building on the data that's out there right. So we need to continue to get satisfy our systems into the hands of the people that can can publish data.
We do with the way we're operating rental program, we can do that and grow revenue at the same time.
But we're still making investments we still have to grow the sales and marketing team, especially in the clinical side and we have some investments to make to expand even further on the capabilities higher make it easier to use and things like that so.
I hope, we're not increasing the burn over time, but I wouldn't I wouldn't call it.
An absolute high watermark.
For the for the near term future.
Okay. Thank thank you for the feedback.
And the share count weighted average share county into Q3 was about 133 million chairs and.
We've had a little bit of option exercise or excuse me weren't exercise.
So this year counts up a little bit from that as of today.
Thank you ladies and gentlemen, we have reached the end of the Q&A session. So at this time I would like to turn the call back over to management for clothing comment.
Thank you operator, and thank you to everyone for joining and we look forward to speaking with you.
After the fourth quarter.
And.
I appreciate you joining thank you very much.
Thank you. This that concludes today's teleconference. You make disconnect your lines at this time and thank you for your participation and have a great day.