Q1 2021 Fluidigm Corp Earnings Call
Chris length weight, our president and CEO and Vikram yoga, our CFO during the call and subsequent Q&A session. We will make forward looking statements about events and circumstances that have not yet occurred including plans and projections for our business future financial results and market trends and opportunities. Examples include statements about expect.
<unk> financial performance and putting guidance related to revenues product line performance EBITDA margins operating expenses and investment plans as well as statements about COVID-19 testing opportunities planned product releases collaborations and partnerships funding sources market and revenue growth expectation trends.
And diagnostics and other clinical markets and fluids on strategic plans to access and grow those markets. These statements are subject to substantial risks and uncertainties that may cause actual events or results to differ materially from current expectations.
Information on 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, 2020 as well as our other filings with the SEC.
Forward looking statements on this call are based on information currently available to us and fluid I and disclaims any obligation to update these forward looking statements, except as may be required by law. During the call. We will also prevent from 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's operating results as reported under U S. GAAP.
We encourage you to carefully consider our results under GAAP as well as our supplemental non-GAAP information and the reconciliation between these presentations reconciliations between GAAP and non-GAAP operating results are presented on the table accompanying our earnings release, which can be found and the Investor Relations section of our website I will now turn the <unk>.
All over to Chris our President and CEO Chris.
Thank you Peter and good afternoon.
And the first quarter, we delivered on our financial projections and made incremental progress on our vision 2025 objectives.
Amazingly this last quarter marked the one year anniversary of the global pandemic.
While we are mindful of the terrible impact on the pandemic has had on all of us.
We are proud of our modest role and helping advance Sars COVID-19, two research and treatment and diagnostic testing.
Over the last year, we've redeployed the near term financial benefits of more than $40 million of government investment plus the proceeds from selling more than 4 million diagnostic tests worldwide to build a foundation for longer term growth and our core markets and our emerging diagnostics portfolio.
Over the last 90 days, we along with most industry participants have seen a rapid deceleration and COVID-19 testing demand and some improvement and our core business.
As a result, we are revising our full our guide for FY 'twenty, 'twenty, one, including a shift and our projected revenue mix to reflect the latest market conditions.
Vikram will share more details during his portion of the business update.
Today, I will provide a brief overview of new developments and key areas of the business review some key strategic highlights from the quarter and touch on our product innovation pipeline.
On this last point, we are excited to do a much deeper dive into the mass cytometry franchise during our upcoming virtual investor event on May 24th which will include a discussion of vision 2025, including our strategy innovation pipeline and markets and include presentations from select external experts.
Who will discuss the role mass cytometry place today, and how it may shape, the future of health care decision, making tomorrow.
We also plan to host a later event focused on our Microfluidics business.
Before I turn the call over to Vikram to discuss our first quarter results. Let me first take a moment to review our vision 2025, and the relevant guidepost that reflect our progress.
For vision 2025, or three key focus areas are innovation beachheads and new partnerships.
Our execution in these areas will underpin our growth across all product categories and drive growth and our recurring revenue streams.
Over the last two decades, we have built a large portfolio of intellectual property specialized knowhow infrastructure and talent and the.
Last few years, we've added regulatory and quality system capabilities to prepare for a transition of our technology into health care decision, making as we continue to bridge, our leadership and research towards more applications that support human health.
Unlike many other emerging technology companies that are just now entering the research markets. We are established pioneers, where our competitors have aspirations for entering more regulated markets. We already have a clear understanding of unmet health care needs and a strong foundation for sustained success.
Our vision 2025 objectives reflect this steady pivot and the COVID-19 outbreak further accelerated this transformation.
Let me start with mass cytometry, and the business that has been powering our growth for years.
And Q1, while we saw a decline and new system sales versus the prior quarter and year over year. Our overall revenue performance met our expectations with notable growth and European markets.
Excuse me and this is the operating and I apologize for the earliest Lee Delaney and today's conference and at home.
And the conference will resume shortly thank you for your patience.
[music].
[music].
Okay.
Okay.
Yes.
And.
[music].
Okay, Hi, everyone, sorry on backer, the Gremlins disconnected me, so I think I got cut off with the last day and was really around notable growth and the European markets. Some are kind of reset and say you know and Q1, while we saw a decline and new system sales versus the prior quarter and year over year.
Year, our overall revenue performance met our expectations with notable growth in the European markets.
And in some markets, we faced headwinds from expiration of tax incentives and other COVID-19 related challenges. We anticipate these challenges are temporary and will be resolved over time.
On a positive note we saw good progress and new instrument lead generation and we anticipate further growth and our pipeline on the heels of our upcoming user group meeting on May 25th.
Also we were pleased with the growth and our recurring revenue driven by several key consumables and services wins, including the completion of 14 fee for service projects highlighted by a large program for a leading pharmaceutical company.
And beyond financial performance over the last 90 days, we made considerable progress and our near term objectives for vision 2025.
Let's start with innovation.
Our mass cytometry franchise has long been a major source of innovation for fluid I'm and the cytometry market and for the past few years, we have been working behind the scenes to build a next generation system that will support modal multiple new product launches for competitive reasons, we prefer not to share specifics on the product roadmap at this time, however, I will note.
And that over these last few years, we have built a robust ecosystem of mass cytometry consumables services and analytical tools to serve our growing installed base include.
Including our award winning Max par immune profiling assay.
Which has been used significantly and COVID-19 research.
And a few weeks, we will reveal details of our next generation system roadmap that will address address many customer requested improvements and competitive dynamics.
Progress on this product roadmap, including feedback from early access users has contributed to our improved revenue outlook for our core business and the second half of the year.
From improving precision medicine goals.
We see a future where mass cytometry data could be integrated and the standard bio analysis similar to I H C next generation sequencing and other analytical platforms referenced by physicians.
Or unique approach to panel development can help accelerate this journey and we are working with numerous consortia and other disease areas.
Closing out with partnerships, we added to our portfolio of content software and clinical service partners with and exciting announcement and China.
As we announced we signed an agreement with T. L T Tech and under that agreement, we sold one system and Q1, we anticipate two additional placements to support their initial regulatory filing activities for clinical oncology applications on the Helios platform.
This is yet another important milestone and our journey towards playing a key role and health care decision, making.
Finally, we wish to congratulate another partner immuno escape a private Singapore based company that announced a $14 million round of funding to expand their immuno mix platform powered by our masks cytometry technology.
They are expanding operations from Asia and to the United States and are conducting a number of clinical trials funded by global Biopharma clients.
Value, adding service providers are a critical part of the ecosystem to accelerate the growth and adoption of our technology going forward.
Switching now to our Microfluidics business similar to mass cytometry innovation beachheads and partnerships are the key elements of our vision 2025 strategy for this growth franchise, and we will share more granularity and the investor event focused on this topic later this year.
And Q1.
We saw a modest decline and the number of COVID-19 tests old as compared to queue for 2020. However, we saw sharp drop off and customer demand and the back half of the quarter as the pace of vaccinations increase the United States, which is our largest market for COVID-19 testing.
Based on near term weak demand signals from our lab partners and general uncertainty and the complex testing landscape, we're reducing R. F Y 2021, COVID-19 testing sales forecast by $18 million to $20 million.
During the quarter, despite the slowing COVID-19 testing demand, we did experience growth and our core microfluidics business and applications outside of infectious disease.
Shifting now to innovation and our Microfluidics franchise.
This new platform.
Is being developed with input from the diagnostics market and will leverage our newest sample to answer cartridge as well as other existing ifc's.
We anticipate announcing and early access program for development partners in advance a broader commercial launch in late Q4.
These products transcend COVID-19 and our progress increases our optimism for innovation driven growth from this franchise and the years ahead.
Beyond innovation beachheads, and the clinical market are crucial for providing and install base for further innovation and our testing menu.
During the quarter, we secured a notable new accounts with an associated 1 million dollar order.
This lab will service the public education market and has been awarded a large testing contract the details of which we anticipate sharing in due course.
And finally, perhaps stating the obvious partnerships are a critical element of our sustained success. We are a relatively small company and therefore are focusing on core technology innovation and planning to work with partners to drive menu customization advanced go to market commercialization and augment our distribution capabilities.
During Q1, we made progress with our new partner focused on transplant diagnostics for.
And for reasons of confidentiality, we cannot share any details yet, but we are excited about the prospects of participating in this rapidly growing market with significant unmet needs.
One partnership where we can speak more openly is our long standing collaboration with O link a Swedish proteomics company.
We congratulate them on a very successful IPO that will fund growth growth plans, including their journey and the diagnostics.
Our complementary technologies are uniquely suited for the unmet needs of the fast growing proteomics market.
During 2020, we collaborated on a major program that will further cement and to our business relationship and the years to come we.
We delivered on key milestones in Q1 of 2021, including a custom IFC and early access units on our new purpose built system.
Florida and will manufacture both the new platform and IFC consumable, while providing instruments service and support to <unk> customers.
In turn Oh link will be responsible for menu expansion customer application support and sales and marketing.
We will be shifting our biomarker HD sales relationship to the new platform and we have a purchase order for delivery of production units in the second half of the year linked to this platforms commercial launch.
We are excited that there are many opportunities to support <unk> strategic plans and the years ahead.
In summary, our vision 2000, and twenty-five strategy transcends the COVID-19 pandemic and our combination of innovation beachheads and partnerships are providing the foundation for sustained growth and shareholder value creation across our business we.
We look forward to sharing deeper insights to this strategy and key milestones and our planned franchise specific and focused events.
I'll now turn the call over to Vikram for a detailed discussion of our first quarter financial results Vikram.
Thanks, Chris and good afternoon, everyone.
Before turning to our first quarter 2021 financial results I would like to note debt. We have boosted updated supplemental financial information. In addition to our investor presentation on our website.
I'll begin by focusing on financial and geographic highlights for the quarter and and with updates to 2021 guidance.
As Chris has outlined in Q1, we delivered on our financial projections and continued our focus on executing on vision 2025 to deliver sustainable revenue growth.
During the quarter COVID-19 revenue declined sequentially and was below our expectations as testing volumes declined both overall and for our commercial lab customers are.
Our sales remain concentrated and University labs, and consequently, ASB remained at the low end of our historical range revs.
Revenues from our base business, which excludes COVID-19 related revenue was higher than expected, primarily and our microfluidics franchise, but also from mass cytometry.
Total revenue in the quarter was $32 8 million and increase of 19% compared to Q1 2020.
Product and service revenue of $31 million was at the top end of our guided range of $29 million to $31 million and reflected 28% growth year over year.
Microfluidics product and service revenue of $17 million increased $7 $8 million or 85% year over year, primarily driven by COVID-19 revenues primarily consumables.
<unk> contributed $6 $5 million of revenue during the quarter.
We sold one 1 million COVID-19 test kits and the quarter down from the one to 5 million kits that we reported and Q4 2020.
At quarter, and 23 biomarker instruments, we're generating and COVID-19 testing results down from 30 at the end of Q4 2020 as a few of our commercial lab customers discontinued COVID-19 testing. This was partially offset by new customers that commence testing and Q1.
Our base Microfluidics business, excluding COVID-19 related revenue grew $1 $6 million or 19% versus Q1, 2020, driven by both instruments and consumables.
Mass cytometry product and service revenue of $14 million was higher than our expectations, but 6% lower than the prior year quarter.
This was mainly due to expected COVID-19 related delays and instrument orders, partially offset by higher recurring revenues like future customer ordering activity continues to remain dependent on any impact from COVID-19 related restrictions and the pace at which we rebuilt our sales funnel.
We expect new products to strengthen our funnel and capitalized revenue growth beginning in the second half of this year.
Looking at the first quarter revenue compared to the prior year period from a regional perspective, Americas revenue grew 25% to $18 $5 million, including $1 8 million of other revenue.
<unk> and service revenue increased 47% driven by higher COVID-19 revenue.
As in previous quarters, the majority of our COVID-19 sales this quarter were in the U S.
EMEA revenue grew 13% to $9 $1 million driven by mass cytometry revenue.
And Asia Pacific revenue grew 10% to $5 1 million driven by higher recurring revenues, partially offset by lower mass cytometry instruments revenue.
As noted earlier, we reported other revenue of $1 $8 million during the quarter, including $1 5 million of development revenue associated with an OEM supplier and development agreement there.
The development Phase of this agreement is nearing completion and has resulted in cumulative revenue of $10 3 million through the end of Q1 2021.
Now moving on to our operating performance GAAP net loss for the first quarter of 2021 was $18 $8 million and increase from $16 million in the first quarter of 2020.
And non-GAAP net loss of $11 1 million increase from $9 4 million and the first quarter of 2020.
The higher net loss in Q1 2021 versus the prior year period was driven by higher R&D and commercial operating expenses, partially offset by higher product and service revenue.
With the introduction of new products with high differentiated value to our customers and continued attention to cost containment and margin improvement on <unk>.
<unk> is to improve this figure over the next few quarters at the same time, we continue to look for alternative cost effective revenue sources to help fund investments with new product development, while mitigating cash usage and the impact on our bottom line.
The remainder of my comments on operations will focus on non-GAAP measures. Please note that the reconciliation tables between our GAAP and non-GAAP measures are provided at the end of our earnings press release that was issued earlier today.
Non-GAAP product and service margin was 66, 4% for the first quarter and was down by about 90 basis points compared to the prior year period, driven by lower instrument Asps.
Partially offset by a favorable product mix.
Sequentially product and service margin increased 370 basis points from 62, 7% and the fourth quarter of 2020, primarily due to the absence of charges for excess and obsolete inventory taken in the prior quarter, coupled with favorable product mix.
Non-GAAP operating expenses were $34 1 million and the first quarter of 2021.
Paired with $28 2 million and the year ago period. The increase in operating expenses was driven primarily by higher R&D and commercial head count and higher variable compensation expenses.
Also contributing to the increase in operating expenses year over year on higher R&D project related expenses and facility costs.
Moving on now to cash flow and the balance sheet cash and cash equivalents short term investments and restricted cash at the end of the first quarter totaled $58 million compared with $69 5 million at December 31, 2020.
Operating cash burn was $12 9 million during the quarter and increase of $8 6 million compared to the first quarter of 2020.
Employee bonus payments in Q1, 2021 were $6 $2 million higher compared to the prior year period.
Investing cash flow was a negative $4 9 million for the quarter, including $5 9 million for equipment purchases for the expansion of the IFC manufacturing facility, which is being funded under the rat ex program.
During the quarter under this program were $2 million.
Cumulative proceeds from and expenditures related to our <unk> grant through the end of the first quarter of 2021 were 27 4 million of proceeds and $18 $1 million of expenditures, including $16 1 million of capital expenditures.
At the end of the quarter, the borrowing base under our asset based revolving credit facility was $13 $2 million, none of which was utilized.
And in closing, let me provide some color on guidance.
COVID-19 revenues in Q1 did not meet our expectations and while we believe we have innovative solutions to address critical evolving testing needs and the outlook for our testing revenue and 2021 remains highly variable.
Our base business, which excludes COVID-19 revenues performed better than our expectations and Q1, and we are more positive on the full year outlook for the base business, driven by new product introductions, and improving business conditions as increasing numbers of our customers return to their labs.
With this background.
We are revising our revenue and net loss guidance to reflect lower revenue from COVID-19 testing, partially offset by higher anticipated revenue from the base business, excluding COVID-19.
We now project product and service revenue of approximately $130 million to $135 million or approximately 6% to 10% year over year growth.
This includes based product and service revenue, excluding COVID-19 of approximately $116 million to $117 million or 16% to 17% year over year growth.
Revised upwards from the previously expected, 8% to 12% growth.
COVID-19 revenue of $14 million to $18 million.
<unk> downward from $32 million to $38 million.
Other revenue of four to 5 million and total revenue of approximately $134 million to $140 million.
GAAP net loss of $57 million to $60 million and.
And non-GAAP net loss of 24% to $27 million.
At the franchise level mass cytometry revenue is expected to be above our base product and service revenue growth range driven by growth across the product line, including instruments consumables and service.
Microfluidics base revenue, excluding COVID-19 revenue is expected to be below the low end of our based product and service revenue growth range.
For Q2, 2021 product and service revenue is projected to be approximately 29% to $31 million or 29% to 38% year over year growth.
We anticipate based product and service revenue, excluding COVID-19 revenue to be approximately $26 million to $27 million or 28% to 33% year over year growth driven by mass cytometry.
Other revenue is expected to be approximately $1 million as a result, we anticipate total revenue for Q2 to be between 30 and $32 million and with that we'll open the line for questions operator.
At this time I'd like to remind everyone in order to ask a question press star one on your tongue.
On the funds.
So on your question.
And once per month and compile questions.
Your first question comes from Ryan from UBS.
Hey, guys. Thanks for taking the questions.
Moving to start off could you just walk us through.
In terms of your full year guide on the base mass cytometry business and the pad and the base Microfluidics business they'll come see you are basically saying you expect mass cytometry to be ahead of the underlying 16% to 17% on microfluidics and be below but just give some color around visibility on that.
And how much you're assuming for new products, because I think Chris during your prepared remarks.
You talked about some demand already that youre seeing from some of the early access stuff. So maybe you can tease that out a little bit for us.
Sure Hi, Dan good to hear from you maybe Vikram you on a go ahead and take that.
Yes, sure I can take the percentages as we've mentioned, we're not specifying it to a degree of specificity beyond saying that we expect the overall growth rate and mass cytometry and to be higher than the 17%. That's implied 16 to 17, that's and.
<unk> I would say that it would be and the low to mid single digit percentage points higher than the overall growth rate.
Got it and then we can just saw from like for like so maybe just talk a little bit on the quarter itself. So I think you talked about.
Mass cytometry business.
It was down year over year, but it beat your internal expectations, Chris I think and the prepared remarks, you talked about some lingering impact from labs, maybe not being open just give us some color.
Around you.
And what transpired in the quarter any color on the order book on demand trends.
Cause you are coming off obviously, a very easy comp in 2020, so just give us a sense of that funnel.
Yeah sure I can.
Yes, Chris go ahead go ahead and you can go first if you like on.
No I was just going to say that the business overall performed better and I think some of the some of the drag on the business. We had already talked about or when we gave the guidance and it was more related to I would say second degree effects of COVID-19. So for example, we had a tax permit issue and China, that's still ongoing.
And we mentioned that and are prepared remarks today and there was some funding issues and in other geographies et cetera, but overall, we performed better than we expected across the business and but instruments consumables and service and.
And the first quarter.
Yeah.
Yeah, and I'll, just kind of maybe address the second part of that Dan So as a strict from did highlight I think the.
We had highlighted and most of the things that Victor and just described were all mass cytometry specific so the tax permitting issues, the Canadian approval or the Canadian both lab access and the funding releases and the province and national level.
And some contribution from restricted lab access continues to occur and certain sections, and Lockdowns and Canada. So I'll kind of shifts that really kind of the the leads overall so what we saw and we talked a little bit about this through the course of last year as our business and the capital equipment business generally speaking has been a nine to 12.
Once a day.
Leads to close cycle, and we certainly saw a degradation of the leads.
During the time period of the Q2 immediate shut down last year and so you know probably started in Asia and the back half of the first quarter squarely impacted us in Q2, and then Q3 and continuing through the year, we shifted to digital mediums and all the digital conferences and zooms that we're gonna it's hard to go into all the time, but that really we had to stand up a whole new comps.
Lynsey and going through the conferences and more traditional lead generation activities and so that's we've seen a steady improvement as all of those new channels are come on line and continuing to see strength through the first quarter of this year.
I think what we're really just been careful about is this was a new normal. So these are leads that are coming through different channels and we had experienced in the past we will be the what will be the quality of those leads and what will be the will the close rates that we've heard we've traditionally had from identification of lead or inquiry and qualification through to close be consists.
And with our historic experience or not so and we're running that experiment and real time, so far through the first quarter, we took a pretty conservative view on that it appears to be that it is improving and there.
And so they're showing strong quality leads and we're seeing close rates. So we just wanted to that's informing part of our incremental confidence and the mass cytometry capital equipment fleet piece in particular.
The information that we shared about the new products.
And in terms of.
In terms of the new products, obviously, we're going to hear about them more coming up but again in terms of.
Maybe some of the you talked about some of the early on I guess customers and the interest and the features that you are building, but again implicit in the guidance right now Chris or overcome have you baked in a benefit from expected order or trends or demand from these on yet to be unveiled products.
Oh, yes that has been baked in.
To a small degree or to a big day rate can you speak to any on.
And granular quantification, but just any relative degree.
Oh, well, we haven't we haven't quantified that.
Any new products are really being careful to temper our expectations. So with the launch we believe that debt and appropriately factored in.
But we haven't quantified the exact the exact amount.
Got it and then.
And then you talked about.
I know on some of the partnerships pick on the Microfluidics side, you talked about only Inc.
And a few others just just can you speak to what's.
What's assumed from some of these partnership opportunities implicit in your 'twenty, one guidance and.
Is there a potential that some of these partnerships can be material. This year or is it more going to be a multi year opportunity for them to grow into something more meaningful.
Maybe I'll take the first part of that I know you directed it to Vikram, we have not broken out so we're not going to break out here of the contribution of partnerships versus other core business or other business lines for the measurement period for the guide for so far for 2020, one period, but what we tried to do I think through the qualitative response.
Certainly my section was to highlight a number of these partnerships one of the transplant space, which is already contributing now and when we anticipate contributing more and the back half of the year we.
We talked about the relationship with O link and.
And so if people have had the benefit now seeing kind of the initial projections. So these are things that should contribute to ultimately they control the timing and the channel relationship. So what we have and hand as contracts for delivery of next generation systems and.
And some.
Forecast from them. So all of these things that we actually will see contributions from these partnerships. This year and we do anticipate that they're going to become increasingly a bigger contributor over the course of the coming years.
And maybe just a few more just back to the mass cytometry, sorry, so the Tac from any issue in China, and then restricted access and kind of a fixed access that just typical pandemic opening up but the tax permitting issue on China, maybe I missed it how meaningful a drag is that and.
Is that expected to get better and your Q2 guidance or is that baked and later in the year because any any any way to help us think about that.
Yeah, we shared a little color on that and the.
First and the last the prior call, which sees it over overlooked and I'll welcome bicker about any additional comments.
There was so it impacts all the academic and government and and particularly hits capital equipment and China. So for that segment they file through the provincial level and the national level four and <unk>.
<unk> credit and there's quite a significant import tax against western goods and higher capital equipment.
That had expired after many years I think youll see in the space other parties have been impacted by this also.
It was modeled that it would that it would be restored by the end of the first quarter.
That is so far and are in the second quarter were still have not seen a fully resolved. So part of it is important to see how things come out of Golden week. This particular week to see if those provinces start moving forward again anticipate it's a temporal issue, but since it's one that's completely out of our control we've taken on.
Preet.
Conservative view on them.
And maybe last one sorry for hogging up just on COVID-19 can you speak to the relative conservatism or not implicit in your new guidance like how do you feel about what you've assumed now do you feel like you've been appropriately conservative from the trends that you're seeing and the trends you expect.
I think the only thing that I can safely say is that none of us and model anything related to COVID-19 and then certainly has been incredible all of last year and it continues this year.
We count on the we don't conduct the test directly ourselves. So we work off of the forecasts that come from our testing partners and.
And there's an overlay of public policy and then the uncertainty on vaccination rates and even vaccines are testing.
Testing fatigue, but at least there's something I think to talk about and this country. So that's on the negative side of the larger on the positive side are well it depends on your look we all want this thing to be done as quickly as possible.
Is the belief that the uncertainty of the variance and the role that variant testing will eventually play on this process. So COVID-19 testing as we know it today, we do believe will evolve into other categories and respiratory and two things related to protect potentially to a variant identification and that's something we think we have a lot to say and.
On the variance because of the unique architecture of our chip, but just for conservatism. We felt it was appropriate to continue that.
Broke out and our after the attempt and the earnings press release to kind of break out COVID-19, you've got the numbers specifically for the first quarter. We've given some color for the second quarter. So you can see that we're modeling at this point that it's going to continue to decline.
And you know approximately to kill relatively rapidly on sequential quarters and.
And if were aired on that and that'll be something that we will put back in.
Great well, thanks for bearing with all the questions guys.
Thanks, Dan.
Your next question comes from.
And from BTG.
Hi, Thanks for taking the questions and just a few questions on the Microfluidics side.
Chris You mentioned there are some customers that you found out and if I misheard. It but there are some customers that are discontinuing COVID-19 testing and it was kind of curious are they redeploying the biomarker for other purposes or kind of how how you know just if you could talk about that.
And in terms of the capacity that's out there.
Yes for sure that's a very good question. So that's why you know the penetration of these clinical labs kind of broadly has been a theme that we believe is important because it establishes beachheads for us for additional categories to move into.
Some of the lower hanging fruit is likely in the laboratory developed test and space supporting other assays and they're running already today or are they anticipate wanting to stand up new offerings.
So I do believe that's going to be a trend that we want to capitalize on what we wanted to take advantage of these beachheads and it really just depends on its a its a very labs specifics. So some cases theyre going back to their core businesses and some cases, where part of the technology stack. They use in their core business already today, others are looking at new categories that they proceed and be more durable and our.
<unk> offerings for new categories. They perceive a more durable so it's something we want to keep a close eye on because we think it's and so we don't want to lose these beachheads and we need to take advantage of the penetration we've gained over the last.
For quarters, three and a half quarters of activities related to COVID-19.
So I don't know if there's a trend there if we as we see more trending information that provides I think hopefully meaningful insights for the business for the future forecast and we'll share that with you.
Gotcha. Thank you.
And then on the Nextgen biomarker that integrates that debt Gino system and debt H D. Smith and do you.
And to support that key driver and you know potentially try though.
And with placement of your installed base current installed base, a biomarker and systems.
Yeah.
I think it's it will be our workhorse workhorse platform of the future that I feel very confident.
<unk> at this stage.
The rate of and that's part of what we'll discuss probably in more depth. When we come to the focused earnings day and get closer to that you're focused investor event and then we got closer to the actual launch then we can talk about the positioning of HD and the long term on the tail for support of that platform or the positioning of that platform versus the new platform.
I think it's important to kind of continue to reflect the chips are really the core technology for us are the instruments can be really great. We think and has the chips on that open up a whole wide range of sample types and substrates or the number of assays and it'll be run and the amount of testing volume that will Q and a given tests are given batch run.
So we imagine flexing and reflects different combinations of ships to take advantage of that core platform. The replacement cycle is something I can only speculate on at this stage as far as the replacements from H D. As we said, it's kind of the next generation chip with this.
On a single U R. This integrated sample to answer cartridge is really important because we're going to make sure. It's.
Retro compatible to the bio market is going to be it is retro compatible to the biomarker H D.
As well as this next generation platform. So it may or May not drive a replacement cycle immediately I think that's something we'll have to wait and see it's been a lot of years since we've had on a new system and the PCR space.
Gotcha and just a clarification do you do you foresee that kind of really targeting the clinical diagnostic market and more so than the research markets.
Yeah, I think that's a really good redirection and I'm glad you asked that too because that is really what we're focused on this platform being.
The platform of the future for us with the design history files with the clinic and mines.
We do envision this and the Soviet Dx product.
We'll have our <unk> applications for it and so it can be used for developers and both modalities, but it's the Dx future that we're primarily focused on and I'm sure. We'll pick up some research business with it also along the way.
Gotcha and then just lastly from me great to hear about your partnership with only and obviously it sounds very unique and that you're building a purpose built on the system for and Dan I just kind of curious are there a lot of opportunities out there and your view of this type of relationship.
Or do you think this is a pretty unique guy partnership and you have.
You know on the proteomics space I think it's probably a unique partnership with regards to the our microfluidics platform and and proteomics application, specifically and I think they're a great partner and we will look forward to helping them be successful and everywhere. We possibly can there is a this is a great exemplar this plus the transplant exam.
This next generation platform, which while we really want to talk about it and the and the.
And the sample to answer.
Chip that goes with it is because we can envision a whole spectrum of partnership relationships that can emerge from this platform.
So there's a lot of predicates and our industry between.
White labeled our OEM versions of the platform versus a fluid on branded product there.
And to customize elements of the software that are specific for applications and then one that so that's designed or one version that can be used for general purposes and contract testing labs and research contract testing labs that will offer a broad menu of assays that they may develop themselves. So I think.
And it gives us a lot of flexibility and the types of partnership models that will embrace and the future and that's why we're just really excited about getting these underlying enabling technologies out as quickly as possible into developers' hands.
Great. Thank you so much for taking the question.
Thank you Sanjay.
Thanks.
Yeah.
And our last question and at this time I will turn the call over to Chris and thank for closing remarks.
Yeah.
Alright, Thank you very much I apologize for kind of the communications and signal stuff today, we'd like to thank everyone for attending our call. A replay of this call will be available on the investors section of our website.
This concludes the call we look forward to the next update following the close of the second quarter 2021, please reach out to us if there are any further questions. Good afternoon, everyone.
This concludes today's conference call. Thank you for participating you may now disconnect.
[music].