Q2 2021 Fluidigm Corp Earnings Call
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Please remain on your line, yes will be time second quarter 2021 financial results call will begin momentarily. Thank you for your patience.
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Hi commentary on our financial and operational performance market trends and strategic initiatives presenting for for what I am today will be crystalline wait our president and CEO and Vikram jog, our CFO during the call and subsequent Q&A session. We will make forward looking statements about events and circumstances the have not yet occurred.
<unk>, including plans and projections for our business future financial results and market trends and opportunities exam.
Examples include statements about expected financial performance, including guidance relating the revenues net loss business line performance margins in cash burn as well statements about market trends the impact of COVID-19 product releases and customer demand collaborations and partnerships market and revenue growth expectations.
[noise] and fluidized strategic plans. These statements are subject of substantial risks and uncertainties. They may cause actual events of the results of the different materially from current expectations.
Information on these risks and uncertainty of from the other information of affecting our business and operating result is contained in our annual report on form 10-K. The year end of December 31, 2020, as well as our other filings with the SEC the.
Forward looking statements from this call are based on information currently available to us in Florida and disclaims any obligations update. These forward looking statements except that may be required by law.
During the call. We will also for that some financial information on of non-GAAP basis.
He doesn't have increased and testing of the population is decrease.
Earlier this year, we outlined our 5 year growth plan that we call vision 2025.
2021, corporate objectives are tied to this plan, which is organized and the 3 pillars of growth.
Innovation, each other and partnerships.
During Q2, we made progress in each of these categories as we advance towards our objective the power. The next generation of healthcare decision, making.
We believe the remain on track to achieve the 2021 objectives of this plan.
And I will provide more detail on that in a few minutes.
Now briefly shifting to market dynamics for the period globally speaking, we see an uneven recovery continuing across the various geographies, we serve as individual countries navigate successive waves of outbreaks.
We estimate the lab operations remain below pre COVID-19 activity levels with some marginal improvement over Q1.
And with the slowest improvement in Japan, among the major markets we serve.
We are closely monitoring the delta Varian, which introduces further uncertainty as well as the status of regional travel restrictions and supply chain challenges, which continue to create moderate operational headwinds.
However on balance based upon what we know today, we are optimistic about the second half of the year, particularly for our base business as we see improving demand signals.
As we'll discuss later we of increased our full year based business revenue guidance.
And reduced our outlook for Covid testing revenue, while maintaining our prior period full year guidance range.
Shifting gears I will provide an overview of key business highlights during the quarter and add perspective on how these recent achievements support our 5 year strategy.
As I mentioned, our strategic vision calls for execution of 3 distinct growth drivers innovation beachheads partnerships.
I will break them down the context of each franchise.
Let me start with math cytometry in general market conditions for this product family.
Broadly speaking, we see a steady recovery in our best cytometry business and this includes solid demand across suspension and imaging applications.
There are many labs are still operating below pre COVID-19 levels customer anecdotes suggest there are significant project backlogs the for shadow increased activity.
These customers anticipate higher demand for our consumables to support their work and.
In fact over the last few months, we have seen momentum forming with new purchase orders and new monthly sales records established for our masks cytometry consumables.
These encouraging signs.
Plus our new product releases underpin our growth expectations for the balance of full year 2021.
Turning the innovation.
Starting with our suspension business and May we launched the fourth generation Saipov the instruments the size of equity the.
The launch at the end of May was of 100% digital effort, including virtual training for field service Engineers, which was the first for us.
And we are very pleased with the market reaction as well as our execution of this plan given the ongoing macro environmental constraints.
The events boosted awareness and demand for suspension mass cytometry analyzers and created several hundred potential leads.
Exceeding our registration in attendance goals and supporting what we believe will be of strong opportunity for the new system and the second half of 2021 and beyond.
Internally, we are working to scale up our site prospects team manufacturing capacity to accommodate market interest and we anticipate the more units deliveries in queue for versus 2.3.
For those of you, who did not attend or loss of events or may investor events.
The sight of X P products addresses user of requests for.
For greater automation of sample loaded higher system uptime, and automated approach to cleaning periodic sample clogging of built in schiller to reduce noise and of more compact system footprint the required less room modification.
With these improved capabilities.
Most customers can the kurd deployed to X t's and the space allocated for 1 of our prior generation Hulio system.
The new system is also available to lower its current price and with lower ownership costs over of projected 5 to 7 year operational cycle.
As well as we are and we also offer attractive trading trade up and leasing options.
I am pleased to report that during the first 8 weeks of commercial launch we've sold 7 of these new instruments, including 3 systems for revenue in queue too.
These deliveries, where the accounts that primarily or exclusively for foreign clinical and translational research among.
Among the 7 total orders year to date.
1 zero customer order to X ts to accommodate increasing biopharma demand and represents our first 2 system order.
New customers accounted for 2 of these orders were.
We are we are pleased with these early market signals as we seek to expand our penetration of translational research as well as provide upgrades for our growing installed base.
In the years ahead, we expect the fourth of the fourth generation unit placements will contribute to the growth and our instruments revenue.
With sales to of mixed with the existing and new customers. These.
These places will enable further growth in a recurring revenue streams of consumables and services.
Given the higher pulled true potential for this platform.
And mass cytometry imaging, we're seeing similar market dynamics customers of reported backlog of the studies that again, the for shadow increasing future consumables demand.
And while we are signalling a new imaging system released in 2022.
Our current generation the Hyperion product remains the gold standard for single cell resolution, Hi, flex protein imaging of tissue for.
We are carefully monitoring changes in customer buying behaviors.
As we release updates on our development timeline for the next generation platform.
We know the market is increasingly competitive, but we believe our solution remains the best positioned to serve clinical and translational research market needs.
We believe are planned second generation platform will put us in the strong position to maintain our imaging market leadership.
Lastly in Q3, we will deliver enhancements to our award winning Max par direct on the profiling asset or <unk>.
Introducing additional antibody content for Ammino oncology and vaccine studies.
In addition, we are planning to introduce a pilot.
Antibody conjugation program that we call backs par on demand, which.
Which features pre curated combinations of isotopes and antibodies.
Are empty IPA product has achieved notable adoption milestones, including more than 400 orders.
$5 million of revenue since launch.
Transitioning from innovation the beachhead.
As we outlined in our math cytometry investor events and May we believe we are underpenetrated and the number of attractive market segments, where we used the opportunities for growth.
In particular, we are working to increase our exposure to customers, who will influence the tools used for future healthcare decision, making.
Including the Sorrows the serve these organizations.
We are pleased to announce a new collaboration of agreement with the imaging sorrow in the biotech focusing on advancing ciara capabilities and drug development utilizing our Hyperion the system.
And the biotech focuses on the oncology and neuroscience of markets and has more than 200 customers.
Most of which are of the farm of sector.
And the biotech purchase the system to serve increasing customer interest in high <unk> high resolution images.
We hope biopharma customers explore contract service engagements with leading cro's such as in the biotech to accelerate the drug discovery and development objectives.
In addition on the suspension side of our business, we added a specialized vaccines sorrow to our community to serve the surging needs of this important healthcare segment.
Another ciara of partner order of the system to support the geographic expansion.
In conclusion, we believe that the path to increased biopharma adoption of our suspension and imaging platforms will be influenced by our growing network of sorrow beachheads.
Our focus on beaches, it's yielding results both in terms of our Ciara of networks and more broadly the increasing number of total users executing clinical and translational studies.
And Q2 or mass cytometry technology was incorporated in the 7 new clinical trials, bringing the total to 162.
Our technology is in feature of the nearly 1600 publications with more than 115 of them related to Hyperion our imaging platform.
Let me turn to partnerships.
In addition to the in the biotech agreement.
We announced the co marketing agreement with the <unk>, a leader of advancing precision medicine solutions.
Our marketing efforts are focused on expanding the portfolio of biomarker discovery and drug development tools for tissue analysis available to researchers.
Our technologies are complimentary and each company will market these capabilities, increasing awareness of new approaches to serve this fast growing field.
Via our therapeutic inside services business, we plan to offer customers access to these combined technologies.
As the sides of we completed 12 projects for Biopharma accounts during the latest reporting period.
We also recently established the collaboration focused on data management and more automated analysis of images.
We signed the code development agreement with Vizio farm.
The demanding schedule, which will support growth for years to come.
Other benefits of our Covid response include of new Biomark platform and novel Chip configuration, well suited for a broad range of diagnostic applications.
Turning now to innovation of this franchise.
We achieved significant internal milestones with respect the development and launch of the next generation Biomark platform, we introduced during our May call.
In addition, we are fast approaching a milestone to submit our new sample the answer IFC for FDA review the shift that can be adapted to numerous applications.
As a reminder of the next year Biomark platform integrates or Juneau, and Biomark Ht instruments into a single system.
1.6 of the size of the 2 current instruments.
With an advanced easier to use the interface that will hybridize or novel approach the PCR with the large touch screen user interface.
In fact, the new instruments will ultimately encompass of 100% of the features of our Juneau and Biomark hte platforms combined at a lower total ownership costs offered tremendous value.
We intend the market these capabilities to diagnostic industry participants with the goals of recruits go to market partners, who share our vision of simple find complex workflows and reducing the cost structure of testing.
Though we have begun to the demo of these new platforms on the new proprietary Microfluidics chips are associated revenue expectations for the balance of 2021 are modest with the vast the vast majority of our projected revenue coming from the existing base business improvements.
And our existing OEM relationships.
We will share more details as we approach the new Biomark launch.
We are entertaining early developer interest now.
Innovation can come in many forms 1 area I'd like the highlight is our service business innovation or.
Our service team continues to execute in the face of the challenging operating environment.
And Q2, we delivered of new quarterly service revenue record.
Service innovation is part of our multiyear commitment to driving sustained revenue growth and meeting new customer needs.
We launched our fluid on pro service brand during the first half of the year.
Offering enhanced service lines.
And we are driving the pipeline of service line extension of new capabilities.
To enhance the value of our growing installed base.
Now, let me turn the partnerships in our Microfluidic franchise in.
In Q3, we anticipate transitioning from the development phase of our contract with Owen proteomics to.
For the commercialization and scale of phase.
We are grateful for the opportunity to serve this exciting market.
An important partner.
We are excited for the prospects of our partner the penetrate the markets and advanced the feel of the proteomics in the years ahead.
In queue to our partnership achieved of major milestone as old link launched at the signature Q1 hundred product.
Which is the designated Benchtop system for protein biomarker analysis.
Q1 hundred is conceptually and and market application specific derivative of our next Gen Biomark.
We look forward to learning more about early market response to the launch events in the weeks ahead.
In summary, we are pleased with the continued execution against our vision 2025 strategy and.
And the steadily growing improvement in our base business in the early response to our new product introductions and both the math cytometry and Microfluidics business.
I will now turn of the call over to Vikram for of detailed discussion of our second quarter of financial results from.
Thanks, Chris and good afternoon, everyone. The.
Before turning to our second quarter of financial results I would like to note that VX posted updated supplemental financial information. In addition to our investor presentation on our website.
Let me begin with the Red view of our financial and geographic highlights of the second quarter of 2021 and.
And then provide some updates to our 2021 guidance.
We demonstrated continue topline recovery and are based business from a difficult year ago periods.
And we projected recovery to continue across both NASDAQ geometry and Microfluidics.
Reported the new product introductions.
Our revenue COVID-19 testing continued to decline and came in at $2.3 million for a few too down sequentially from $6.5 million in Q1 and below our expectations of $2 million to $4 million as testing volume declined both overall and for our commercial lab customers.
Yeah.
Year over year for the testing revenues were flat for the quarter.
We are continuing to monitor the COVID-19 testing landscape in view of of the recent uptake of infections and the impact of the Delta variant of.
Note that we recently released and argue Covid variant testing panel, but.
But for now we have provided updated guidance for testing revenues that does not incorporate any potential the effect of that family.
Total revenue for the second quarter was $31 million, an increase of 19% compared to 26.1 million for Q2.2020.
Changes in foreign exchange rates contributed 2 percentage points to the year over year growth.
Based product and service revenue, which exclude COVID-19 testing was $26.9 million or 33% over the year ago period.
We now expect our full year 2021 based product and service revenue to grow between 20 and 22% year over year.
Where we are now to the performance of each of our franchises mess.
<unk> product and service revenue of $16.6 million for the second quarter was up 33% over the prior year quarter and of 19% sequentially.
Year over year of growth of balanced across all product categories. When the sequential growth was driven by a recovery and instruments revenues.
Based microfluidics product and service revenue, which excludes COVID-19 testing was 10.3 million up 36% of the prior year quarter, and we're doing the flags quarter over quarter.
Including proven 19 testing Microfluidics product and service revenue was 12.6 million of 26% over the prior year, primarily driven by the base business growth.
Before moving onto the region I would like to take a moment to call out our services business, which achieved a new quarterly revenue record of 6.6 million of 29% over 5 for $1 million for the second quarter of of 2020.
Will the service revenue as the incrementally increasing every quarters since Q1 of 2020 illustrating the value of of our technology to customers.
About 70% of this revenue is related to the maintenance contracts, which provides us visibility into recurring revenue.
Looking at the second quarter revenue compared to the prior year period from the regional perspective.
The Americans revenue do 16% to $16.1 million, including $1.8 million of other revenue.
Product and service revenue increased 38%, driven primarily by higher consumables and slightly higher instruments sales.
EMEA revenue grew 41% $292 million driven by improved method geometry, and microfluidics instruments sales and increased consumables changes in foreign exchange rates contributed 9 percentage points through the year over year of growth.
Asia Pacific revenue in 2% of 5.7 million. This geography experience challenges due to a slowdown in Japan changes in spending priorities and continued delays in issuing tax exemption certificates in China.
Currently we have $2.2 million and instruments shippable backlog of leading release of such statistics and this number of May increase through the second half of this year as we take more orders.
As noted earlier reported other revenue of $1.8 million during the quarter, including $900000 of development revenue from our studio MX Sublime development agreement.
Total revenue recognized the disagreements since its inception in March 2020 is the $11.1 million.
And higher R&D project and marketing program expenses.
The sequential decrease in operating expenses was due to lower variable compensation and benefits costs.
Also contributing to the decrease were lower outside services and consulting expenses.
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 second quarter.
The $31.9 million compared with $50.8 million at March 31, 2021.
Operating cash burn was $14.7 million during the quarter, an increase of $1.8 million compared to the first quarter of 2021.
Lower customer collections, driven by a lower receivable balance at the end of the first quarter of 2021 versus the fourth quarter of 2020 more than offset the impact of employee bonus payments in Q1.2021.
Second quarter cash from operations was also impacted by higher inventory purchases and the timing of payable.
Accounts receivable day sales outstanding were 46 compared to 45 days at the end of the first quarter of 'twenty 1.
For the second quarter of 2021 investing cash flow was a negative for $2 million, including $4 million for equipment purchases for the expansion of our IFC manufacturing facility, which is the funded under the NIH Red X program.
We have received cumulative proceeds of $30.9 million and incurred expenditures of $23.3 million, including $21 million of capital expenditures under this program in.
In 2021 through the end of the second quarter, we collected $5.5 million of proceeds under this contract and.
And incurred $11.6 million of expenditures $9.9 million of which are related to capital expenditures.
We expect our cash burn in the second half of 2021 to be lower compared to the first half of the year the.
We expect inventory levels the decline through the second half with the commencement of sales of our new mass cytometry instrument platform.
In addition expenditures associated with the <unk> program will decline as that program comes to a close in the third quarter.
At the end of the second quarter, the borrowing base under our asset based revolving credit facility with $10.9 million, none of which was utilized.
On other second we extended the maturity date of this facility by 1 year to August 2.2023 and obtained a new $10 million term loan facility. The 2.
Non loan is expected to mature in July of the first 2025 and will carry interest only payments through August 12.
2023.
Please refer to the form 8-K, we filed today for more details of the term loan as well as the extension of the preexisting credit facility.
In closing, let me provide some color on guidance.
Base business, excluding COVID-19 testing performed at the high end of our expectations in the second quarter and we are incrementally more positive on the full year outlook for the base business while.
While we are maintaining our full year total revenue guidance, we are revising guidance for our base business and COVID-19 testing revenues and net loss to reflect our revised outlook.
Our current expectation volatile based product and service revenue, excluding COVID-19 of $120 million to $122 million, reflecting a year over year of growth of 20% to 22%.
Total revenue, which includes COVID-19 testing and other revenue of approximately $134 million to $140 million.
GAAP net loss of 62 to 65 million and non-GAAP net loss of $29 million to $32 million.
For the third quarter of 2021, we expect based product and service revenue, excluding COVID-19 testing to be approximately $29 million to $30 million or 16% to 20% higher than Q3.2020.
We expect total revenue, which includes COVID-19 testing and other revenue to be between 29 and $31 million.
Before closing I will note that historically the fourth quarter has been our strongest revenue quarter in the calendar year, and we expect a similar seasonality in 2021.
In addition, the timing of new product introductions are expected to make the seasonality more pronounced this year compared to historical trends as the result, we're maintaining our full year total revenue guidance of $134 million to $140 million and with that we'll open the line for questions operator.
Thank you as a reminder.
If you would like.
Like to ask the question. Please press the Star and then the number 1 key on your Touchtone telephone. Thanks for your question has been answered all your Windstream all the guys tell from the queue. Please breath of the panky. Please yes.
Yes first question is from the line of sung <unk> Nam.
With <unk> your line is now open.
Taking the question.
Maybe starting out with the 5 topics the great to see that there are 7 orders there.
You talked about 2 new customers or customers that are new to.
The size of technology.
Im just curious have been used.
The platform through through outsourcing before or is this the first time day are adopting and kind of curious what motivated them to adopt the system and then also on the on the Biopharma the pharma customers.
I'm just curious kind of as you look at the site of XP platform do you think that more pharma customers would adopt the system outright rather than outsourcing to <unk>.
Moving forward.
Alright, a bunch of questions all rolled in the once because of your horse again some day.
So yes, we are definitely excited about having the equity on the market.
I want to clarify I think I made a comment in the prepared statement. So it's fixed customers 7 systems I think that was clearer of what I think we interchange the use of orders in the system. So the sort of make sure that's clear.
Third of those customers were new to the technology and sort of I think your follow on question to that was okay. So what are some of the motivation behind that.
I am not intimately with each 1 of those accounts for what I can tell you as I know at the high level they were driven by.
By commercial needs, so youre seeing an opportunity of the CRO to go out and bring in additional business, we're seeing demand from their customers or interest from their customers to have those.
In the their studies.
Another was so on the new side I can't tell you if they had.
Experienced the technology are not through another.
1 other venue.
Get back to you with that information. So its noted question, but I don't know all the details of the top of my head.
So if I forget what's the funnel for what was the final part of Africa.
Forget for pharma customers adopting the platform all the other.
The prospects for pharma.
Personally this is Mike.
1 of opinion is.
Pharma is not monolithic youre working with the different groups within pharma and the decisions to in source or outsource I think of traditionally are about 2 thirds of the activities of our outsourced of third is brought in house. These days, partially because of the speed and the need to execute and they don't know the mix of projects exactly so the tend to cause.
On track more externally for quick hit projects.
So I would anticipate that we would see that we've got great exposure were of 9 of the 10 top farmers and at least 1 part of their business. So there is plenty of incremental market opportunity I think we've we partially landscape that in the Investor day event. So we see a significant amount of expansion opportunities of incremental systems, but I think that can go theyre not.
And of federal to 1 another so meaning that the crows.
It will serve a lot of us surge demand or initial demand, particularly if the pharma companies in our experience it's been more around.
They need the project immediately or they need that project for the next 2 months and to go through the process of acquiring the platform installing it.
The developing expertise themselves informatics on that takes a period of time. So thats I think they will tend to do the lot of projects early on true Crows, then bring a portion of capacity in house to service their core repeat local needs and then continue to use crows is surge capacity, but thats my opinion will sales things.
Lay out, but I think thats, a pretty conventional model.
Got it that's very helpful.
And then for the next Gen imaging.
<unk>.
So from that.
But you're going to launch next year is that going to be similar is it going for your module that you attach to an existing site off.
And then just kind of out of if you can talk about that.
But just trying to get a sense of.
With that.
That launch could look like as far as the existing platforms and how customers might adopt that going forward.
Yes.
Clearly, it's going to be really excited about sharing the all the details the operational and capability details of the next generation platform.
You can imagine a lot of the experiences of inputs that we've had that informed our ex key development focus areas will be reflected also in the imaging platform rollout of improvements.
I think 1 of the the trickiest things, we're kind of unique in the imaging space and to discuss this level of nuances that the X T is the detection platform as an analyzer, where the unique platform. The enables both imaging as well as suspension based analysis at this moment in time on the imaging side, we offer of Hyperion.
Our first generation state of the art platform.
Of which the detector engine as a site off for the Helios platform or the third generation detector.
And then on the suspension side of our offering both of the X gene now and then we offer the third generation system both of the market.
Over time, you might imagine that the laser ablation module of imaging modules that will be introduced with the next generation platform will be made it to the XP platform for the next generation platform. So.
Does that clarify.
Yes, that's very helpful.
And then lastly, maybe 1 for Vikram.
Yeah.
Okay.
<unk>.
Think about your guidance.
I know you talked touched on the fourth quarter the seasonality of their.
The significant ramp up.
Sequentially, and obviously of new products driving some of that as well are you factoring in contributions from the the Nextgen <unk>.
Simple to answer Microfluidics platform.
There that you're launching in that equation in the in your assumptions or just kind of curious what the underlying assumptions are.
Hi, <unk> good to hear from me of the major drivers.
For the Q4 revenue cadence.
The mass cytometry product launch of XT instead of specifically.
Also the consumables increasing.
Relative to the first half.
And then the OEM business.
The Microfluidics I would say of those are those are the major drivers for the <unk>.
Q4 of revenue ramp.
Okay, great. Thanks, so much.
Sure.
Thank you.
No further for 1 question.
I am going to turn the call back over to Mr. Chris mentally.
Okay. Thank you.
Have received a number of questions from the online shop. So interest gives us the second the processes and we will come right back to you in the order we're going to tackle them.
Alright, thank you so well.
1 of the first questions. We received is can you talk about the initial site top XT launch relative to expectations.
And the address how the new price point and improved user features of changed or impacted the sales funnel breath in the sales cycle relative to the penetration that we've laid out in the investor day deck.
In short we're really pleased with the early response the sales team is extraordinarily excited to talk about and sell the product.
We do believe that the price point and the positioning of both the Helios system of the entry level products.
And then moving to the upsell to the X T. The latest fourth generation state of the art.
It's very favorable plays to our strength, which is we want to be included in every sales opportunity and average opportunity to pitch of the unique features and benefits of both platforms and then look at the situational of the context of the customer in order to best position the right product for their needs. So from our perspective, we think it has increased.
It's.
More shots on goal for US. It's also been very encouraging and it's hard a little bit the tease this out between the Covid dynamics of the last year in 2020, but we haven't seen an increase in our sales funnel versus the 2020 sort of time period and the XT launch certainly brought new leads and new opportunities somewhat.
I alluded to in the prepared comments, so we've seen really true.
Fantastic response from our target market segments in both the clinical and translational segments. We think we also have positioned the the price of the product to <unk>.
The benefits of accessibility and the and a lower total cost of ownership.
Which increases our competitive positioning against others in the industry.
Let's see so additional question was more details related to the mix of initial XT orders, which I think some GC hit pretty well, but I guess the only of the things I would answer so just don't recollect. The restate again, we had 2 of the 6 orders for.
The 7 systems are 2 of those or a third of the orders were new customers.
I forgot the ulcer mentioned, 1 that was going to focus on vaccine development, which we're extremely excited about that's a European opportunity of European based CRO.
There is a number of actually other.
Okay, I've got a little more information based upon the <unk> question that are expanding their capacity. So the the balance of the orders were around capacity for the people that were known customers to us in the past are about expansion of net.
Of the our ability or capacity to process samples.
So I think thats very thats, a very favorably for how we were thinking about the early adopter phase.
And there was also a question on kind of sales funnel I think it's very early days to make an extrapolation of what is the impact of the <unk> will be on our overall sales funnel, but.
Given that we did very very restricted or limited pre marketing activities before the launch in the second quarter. I think we were I am we are very encouraged by the.
3 of systems that we delivered in the period and the orders that we received almost immediately in the first week from the announcement of the next generation system.
The guests that they were probably looking for capacity expansion already in the and this was a great opportunity to kind of getting off of to jump first in the line on the fourth generation platform.
Let's see.
We had an additional question that came in that address or require some details around the high periods of the compatibility of the second of the Hyperion. So our current imaging platform with the XT platform.
Just to further clarify those systems are separate so the Hyperion is not compatible with the XP the.
The Hyperion is compatible with the <unk>.
The other.
Helios platform as an analyzer platform.
We did have a different question that was not related to mass cytometry.
1 of them was with.
How has the OLED partnership performed relative to our initial expectations.
And how much of the double digit growth projected in our Microfluidics business comes from this <unk> partnership.
Versus the fluidized this next generation biomarker.
I think Vikram you probably hit the back part of that which is we have very little revenue was earmark just now for the next generation biomarker platform, nor the sample to answer solution, that's largely going to be the seeding and partnership strategy for the next generation applications.
So we are quite pleased with the performance of the OLED partnership when we reflect back on to the models that we built a few years ago, we started out in the partnership the for.
Performance over the initial phase of this contract has exceeded our expectations.
We're very pleased with the growing and strengthening relationship with other link and we're extremely thrilled that they are on their project timelines for release of our announcements the earlier announced the signature of 100 products and we look forward to their own public company announcements.
The announcements as far as how the adoption or reception receptivity of that initial system.
We will be and I'll, just remind others regarding the question, but we also have a significant consumables stream. This type of this so we'll be we'll be looking to in the future is not just the signature.
100, our cue 100 sales of units will be those may come first but will be quite focused on the consumable stream that will come later and thats certainly inform some of our optimism around our acceleration in our base business.
Our microfluidics consumables.
Okay.
Yes.
<unk>.
We had 1.
That relates to the Delta and the Delta Covid variance so.
Essentially the question is does the Delta of COVID-19 variance introduce any new revenue streams for the company.
In our prepared comments, we took the our approach has been the to take a very modest outlook on Covid based testing essentially it's almost unforecastabel for us with the variability between vaccination rates and national level decisions on driving testing. However.
The Delta variant is extremely could have a significant impact obviously the say the least on all of US our technology is perhaps the most uniquely suited if that's possible to say suited to do mass scale of variant detection.
Almost simultaneously with Covid standard testing <unk>.
Next generation sequencing strategies have significant tradeoffs theres, a very sort of a relatively limited number of samples that can be processed in a short period of time, there's a multi week lag time between those samples being processed and the answers. So our testing technology has the potential to the almost simultaneous supervised simultaneous detection and identification.
<unk> for variance.
So if there is national will for such programs and Theres certainly been discussion in Washington that could have a significant impact on our business, but at this stage.
On the Forecastable for us so for conservativism, we've taken it out.
The expectations of Delta variant impact rather on either on conventional testing on variant based detection, but this is part of the promise of our technology of the power of our ability to uniquely do many different samples and look at many different.
<unk> of variance of simultaneously.
Let me give me a second there's a couple more questions have come in any of the process them.
There was a follow up question that came in as I was discussing a link so the follow up question was can I talk in more detail of <unk>.
In more detail.
How we think quantitatively about the consumable streams from OLED.
Maybe between the maintenance the quantitatively versus qualitatively.
On the non commodity this stage of credit group excuse me online real estate debt question, it's still early days yet.
We've just launched.
Or will include all.
All of it because just launched.
The Q1 under the signature program, which is the.
Venue instruments and we.
We still have not had much experience on how the.
Debt.
Will be utilized.
It's fair to say that.
Expectations of strong for the future.
For the year for the pull through but.
The somewhat premature for us to give an estimate at this stage.
It feels like a question, we should circle back to when we once we hear of lengths commercial we need to understand better their positioning of the product and then we can perhaps provide some rules of thumb of ratios of how to think about our consumable streams, including our services contract, which we launched service contracts on these instrument platforms.
Debt.
Fluid on we'll be providing.
So there'll be multiple probably quantity of things we can provide over time, but I think we just need to see what the final and market positioning is.
The consumables pricing and then we can look at the ratio of our products compared to the total pull through the model for each of their losses and communicate to investors and then we can share some rules of probably the relative range of what service contracts are worth for us.
You will find over time that it'll be a disproportionate overtime contribution from those recurring revenue streams versus the value to us on a single instrument placements that we provide we anticipate over time to get of multiple return multiple I think thats fairly soon.
Okay.
<unk>.
I think there was a good question here that relates to.
The impact of the <unk> grant and how it fits into our long term vision for the Microfluidics business I think mass cytometry, we've made a pretty strong case I think I think the microfluidics.
I've got a lot of nuance to it I think the simplest way to respond to this particular investor's question. It is the.
<unk> grants the department of Defense DARPA and Echo program. They have provided a number of leverage points that serve our kind of overall long term ambitions in the in the diagnostic space.
To date, we've received more than $48 million of investments from those 2 entities. What it's enabled us to do in a very short period of time has been too.
To dramatically expand our manufacturing capacity and upgrade our manufacturing capacity to provide the 3 unique manufacturing lines that gives us more of manufacturing flexibility and updated equipment.
With no long term obligations on how we would use that outside of the performance period, which ends in the next 2 months.
I think even more important strategically for us so that basically takes the capacity and capacity investment is of concern off the table for us which is really exciting.
The second is the new product development the.
Funding that has helped enable not only contribute to a portion of our next generation biomarker platform development. It's also helped us with the sample to answer program and given us support for those initial.
Applications that it may be used for and given us.
A subsidy for how to and I'm not sure of subsidy, but to give us investment dollars to parlay into the platform at the same product for the same configuration of the use for many different applications.
Side of infectious disease of resection of covered based on the testing.
For Delta variant testing or any other version and.
And the final which is maybe settlement incredibly important has been the support with the FDA and our regulatory filings and to give us to get our technology and introduced into the FDA and this form factor, which is pretty foundational for what we believe will be of longer term transition to a more conventional 500.10-K approach.
To regulating these diagnostic tests for diagnostic platforms.
No.
We're again incredibly grateful for it continues to give us the pipeline of new demands of our interest that come from the government.
We see many different elements of the strategy that will transcend the outbreak or pandemic response itself.
Let's see.
Sure.
The losses.
Stephen just a second.
Okay.
So I think with that we have approached the end of the time and I think we've all of the questions that have been queued up of hit upon the themes that we've already covered to date, so with that I want to thank all of you for attending our Q2.2021 call. Thank.
Thank you and have a good day.
Thank you Sir This concludes today's conference call you may ask.
You may all disconnect.
Okay.
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