Q3 2021 Illumina Inc Earnings Call
We're looking statements are subject to risks and uncertainties actual events or results may differ materially from those projected or discussed.
All forward looking statements are based upon current available information and Illumina assumes no obligation to update these statements.
To better understand the risks and uncertainties that could cause actual results to differ.
We refer you to the documents that Illumina files with the Securities Exchange Commission, including aluminum. Most recent forms 10-Q, and 10-K with that I'll now turn the call over to Francis.
Thank you, Brian and good afternoon, everyone Illumina third quarter was another exceptionally strong quarter with 110 $8 billion in revenue up 40% year over year and once again significantly ahead of expectations.
Our customer base continues to expand rapidly and in the first three quarters of 2021, we added 50% more new customers than in all of 2020 or 2019.
Because of this strength across our business, we are raising our full year revenue growth outlook for the third quarter in a row to approximately 36%.
This is approximately double the growth rate and $567 million higher than the midpoint of the range, we guided to at the beginning of the year.
I will talk through the third quarter results for core Illumina as defined as alumina other than Grail, and then I will turn the call over to Bob <unk>, the CEO of our grilled subsidiary to cover the Grail business.
Core Illumina revenue was $1 $106 billion.
As vaccine platform and a recent paper published in science immunology.
Benched up platforms also saw significant growth year over year with the highest number of my seek shipments since Q4 2015.
Seek coupled with our Covid seek 96 sample assay is enabling labs around the world to engage in local pathogen surveillance.
This quarter Mitek placements in both Argentina, and Brazil brought covert surveillance to local communities in conjunction with broader national programs.
Now turning to clinical and research and applied segments.
<unk> testing, our largest market segment had another record quarter.
<unk> is becoming the standard of care and therapy selection, which is driving robust demand for illumina sequencers and our oncology testing customers are rapidly scaling their fleets in response.
Reimbursement for genetic testing for therapy selection continues to expand with over 70% of insured lives in the U S. Now covered for these tests.
Additionally, there are over 60 targeted and immunotherapy treatments currently on the market highlighting the power of comprehensive genomic profiling and matching patients to treatments.
<unk> oncology 500, our research use only comprehensive genomic profiling assay.
Had another record quarter with over 340 customers now using the assay in their labs.
In September we announced the CTX partnership with Merck to develop and commercialize tests, leveraging <unk> 500 content and an HRD status based on myriad my choice in patients with ovarian cancer.
Approximately 300000 women around the world will be diagnosed each year with ovarian cancer.
The fifth deadliest cancer for women.
This partnership will help these patients access additional treatment options with the goal of improving care.
In reproductive health, we saw another quarter of strong year over year growth.
80% of pregnancies in the U S are now covered for noninvasive prenatal testing.
We are working to ensure that families and NICU patients around the world can access these tests.
In the US, Michigan recently became the first state to offer rapid whole genome sequencing too acutely ill infants and children, regardless of insurance and other states like California, and Florida are making progress in this direction as well.
Outside the U S last week, we announced a pilot program in Israel to implement whole genome sequencing for critically ill infant suspected of having a genetic disorder in neonatal intensive care units.
This program will accelerate time to diagnosis for these patients and support rapid clinical decision making.
Turning to our research and applied segments, we saw another strong quarter of sequential and year over year growth.
The 30, plus population genomics initiatives that we support around the world drove growth in the quarter.
The accuracy and scalability of our sequencing platforms combined with our end to end solutions like aluminum connected analytics make alumina an ideal partner for large sequencing initiatives the.
The value of these population programs is expanding across clinical outcomes research and drug discovery.
This traction is generating significant interest and investment for additional programs like our future health the.
The UK is largest ever research program focused on developing new ways to detect treat and prevent disease.
Just yesterday, we announced that illuminate connected analytic solutions are being used by host seek part of the Canadian COVID-19 genomics network.
Our sequencing in bioinformatics solutions will be used to identify biomarkers that can help predict potential risk of serious disease and support the development of novel Therapeutics to combat COVID-19, we.
We anticipate these types of population programs will become increasingly critical to innovation as their findings translate into greater use of sequencing and clinical workflows and actionable data for drug discovery.
We're already seeing this with the initial data from the UK biobank as the program concludes.
We have experienced in genomics.
He played a critical role in providing the sequencing systems for the human genome project and was responsible for significantly scaling alumina business and more than a 140 countries and enabled the first <unk> shipments.
He has decades of deep expertise Bob is uniquely positioned to lead grill during a time of extraordinary growth in discovery.
I will now turn the call over to Bob to discuss <unk> business updates.
Thank you Francis I'm honored to lead the talented team at <unk> as we advance our mission to detect cancer early when it can be cured.
Pleased to share a few thoughts on our recent progress.
First I want to highlight gallery commercial progress, we see significant pre reimbursement opportunities for gallery and encouraged with the momentum across our three primary channels in the employer channel, we're gaining momentum and expect to announce notable new partnerships technology industrial professional services and transportation sectors were also.
Successfully engaging with key high cancer risk area of public sector employers such as firefighters.
For health systems, we are focused on establishing strategic agreements with influential systems and the medical community to increase awareness and experience with gallery.
Health systems are also strategic partners to generate real world evidence and key patient communities and regions.
We have signed agreements with several health partners, who are planning to start providing access to gallery in the fourth quarter.
We're also in contract discussions with several additional influential health systems that we expect will begin offering gallery at the patients early next year.
In addition, we are excited to see interest from progressive and innovative payers, including Medicare advantage, where we expect to communicate our first partnership soon.
Medical practices are important driver of the gallery launch we have agreements with several of the largest primary care private practice networks and expect to continue to expand in this area.
We're focused on on boarding positions in these networks and see positive prescriber trends.
We also recently partnered with Geno medical and independent health care provider to serve individuals who prefer a telemedicine option. We launched the service several weeks ago on gallery Dot Com and believe this will be an important future pre reimbursement growth driver. In addition, we partnered with PW and health and National Telehealth.
Network to further extend our service capability for some employer programs.
Additionally in September the state of New York granted approval for the Gallery test.
Andrew set by New York State represents one of the most rigorous levels of validation required for library laboratory developed test.
Finally, there is tremendous excitement around the recent start of the NHS Gallery study a 140000 participant real world randomized controlled study that has generated widespread national and international media coverage.
Supplementary data available on our website.
Third quarter revenue once again significantly exceeded our expectations growing 40% year over year to 110 $8 billion.
Driven by core Illumina revenue growth of 39% and $2 million of revenue from Grail.
For the third quarter GAAP net income was $317 million or $2 <unk> per diluted share.
Which included a $900 million gained from our previously held investment in grill as a part of the acquisition and $654 million in day, one compensation expense related to the Grail acquisition.
Non-GAAP net income for the third quarter was $221 million or $1 45 per diluted share.
Which included 19 of dilution from Graham operating losses, and <unk> <unk> of incremental dilution from the nine 8 million shares issued to fund the Grail acquisition.
Our weighted average diluted share count for the quarter was approximately $153 million.
Moving to the rest of the consolidated P&L.
Non-GAAP operating expenses of $528 million increased $57 million sequentially, primarily due to the inclusion of Grail non-GAAP operating expenses of $15 million for the quarter.
And a $7 million increase in core Illumina non-GAAP operating expenses.
Non-GAAP operating expenses increased to $163 million year over year, driven by $58 million of Grail non-GAAP operating expenses.
And $113 million increase in core Illumina non-GAAP operating expenses.
Non-GAAP other expense of $6 million increased $4 million sequentially and was $13 million lower than other income in Q3 of last year as expected.
The year over year decline was primarily due to lower interest income on short term investments as we repositioned our investment portfolio and.
And subsequently liquidated our holdings to fund the <unk> acquisition as well as interest expense on the term notes issued in Q1 2021.
The non-GAAP tax rate of 13, 2% decrease from last quarter and year over year due to the tax impact of including Grail in alumina consolidated results of operations.
The decrease in the non-GAAP tax rate year over year was partially offset by discrete tax benefits recorded in the third quarter of 2020.
Related to prior year return adjustments and tax reserve releases.
The record sequencing instrument backlog that is almost double the backlog entering the.
Revenue from COVID-19, surveillance again exceeded our expectations due to the sustained focus on various tracking and surveillance infrastructure scaling and the quarter contributing approximately $40 million in sequencing consumables revenue and $15 million in incremental instrument revenue.
Core alumina sequencing service and other revenue grew 11% year over year to $110 million driven by higher instruments service contract revenue on a growing installed base as well as Joe sample growth.
Moving to regional results for core aluminum.
Revenue for the Americas region was $581 million growing 33% compared to the prior year period.
Revenue growth in the region was driven by record oncology testing shipments and ongoing population genomics initiatives such as all of us.
The regional performance was also driven by covert surveillance strength due to expanded public health network adoption of Mgs in Latin America.
EMEA delivered revenue of $313 million, representing 47% growth year over year.
The 30% in the second quarter of 2021.
Operating margins declined sequentially as expected, mostly due to $20 million of one time patent litigation settlement revenue recognized in the prior quarter.
Transitioning to the financial results for Grill grilled revenue of $2 million for the quarter consisted primarily of gallery test fees. The multi cancer early detection tests that commercially launched in June as well as moderate <unk> partnership revenue.
Grilled non-GAAP operating expenses totaled $50 million for the quarter, which consisted primarily of expenses related to head counts in clinical trials.
As a reminder, grails third quarter financial results are for the period beginning after the acquisition closed on August 18.
Moving to cash flow and balance sheet items for consolidated alumina cash flow used in operations was $272 million, which was an outflow for the quarter due to expenses related to the Grail acquisition.
DSO of 50 days compared to 44 days last quarter driven by revenue linearity.
Expect our non-GAAP tax rate to be approximately 17.5%.
We now expect consolidated non-GAAP earnings per diluted share in the range of $5 50 to $5 60.
Which includes dilution from ground operating loss of approximately one dollar and incremental dilution of 15.
From the nine 8 million shares issued to fund the Grail acquisition.
We now expect GAAP earnings per diluted share in the range of $4 41 to $4 51.
We now expect diluted shares outstanding in fiscal 2021 to be approximately $151 million.
For the fourth quarter of 2021, we expect non-GAAP earnings per diluted share in the range of 35 45.
And GAAP earnings per diluted share in the range of 10 to 20.
We expect diluted shares outstanding for the fourth quarter of 2021 of approximately $158 million.
Now I'll have the call back over to France's for his final remarks.
Thank you Sam.
Our third quarter performance reflects the strength of our business the talent and dedication of our people and the enduring value of our mission.
Before I close I would like to highlight how we're furthering this mission through our ESG work.
Human health and the health of the environment are intertwined.
And hope you're doing well, we'll come back.
Good to have you on the call.
So for Q4 first of all let me talk about the full year. We are as we talked about on the prepared remarks, Dan we are raising our revenue guidance of approximately 36%.
For Q4, I think Theres a couple of areas that you.
You need to keep in mind, one is the conclusion of the UK biobank initiatives. This has been an incredibly productive incredibly.
I would say very important initiative from a population genomics standpoint that we talked a little bit about the outcomes from that and the next steps, but that will likely present $20 million quarter to quarter.
Headwind or reduction in terms of revenues in Q4 versus Q3, So thats one area and then the second area and I think you touched on that in your question with regards to covert surveillance. So COVID-19 surveillance has been strong for the year. We've seen obviously with the continued with the pandemic. The way. It is that there's continued testing and sequencing of <unk>.
Positive samples across the globe.
For Q3, we had $55 million of Covid surveillance revenue in the quarter that represented $15 million of instruments and $40 million of consumables for Q4, our expectation is that we will have $35 million of Covid surveillance revenue, which represents a modest amount of <unk>.
<unk> revenues about $5 million, and then approximately $30 million of Covid.
<unk> that represents again, another $20 million reduction from Q3 into Q4, so when we think about that sequential.
Force and oncology therapies selection testing and we're seeing our customers.
Expanding their fleets now in terms of how that's playing out you're seeing it play out across all segments, you're seeing some of our larger customers significantly expanding their fleets and expanding their nova seek fleet, specifically because of the demand that they're seeing as well as the anticipated the demand going forward, but you are also seeing new customers and some are <unk>.
Lawler customers get into oncology therapies selection, one of the interesting metrics to look at and and it takes into account more than oncology, but I'd say oncology is one of the biggest drivers of it is if you look at these strengths in the Novaseq instruments you'd see we are placing a lot of nosy instruments and we're having a very strong backlog of novaseq instruments and then.
At the same time, you're seeing really strong pull through in Nova seeks and so that's sort of the the pot of gold at the end of the double Rainbow right because you're seeing you are putting a lot of instruments out there and yet pull through remains high at the high end of the range, we've talked about and so to your question about what's the outlook going forward I'd say that's a.
Really good positive indicator fought where people are experiencing today and what they are expecting going forward.
Great. Thanks scientist.
Thank you Dan.
Now have some questions from the Guy came out from Africa.
Okay. Thanks go ahead, when you're ready.
Hey, guys. Congrats on a good friend Karen Thanks for taking my question.
I just.
I had.
One one question on.
The implied queue for guidance in fiscal 22.
Uhm.
The the.
The updated EPS guidance of 550 to 560 that applies about I think 30 to 40 cents in queue for our.
Five to $3.75 for 2022 that remains the case that has not changed.
But as you heard the backlog is very strong in terms of instruments in the core fundamentals in terms of clinical and research are exceptionally strong.
Sorry, what one clarification, Sam the 225 to 275 dilution from Grill that is not incremental right do you guys have taken $1.15 of dilution in fiscal 21.
So the 225 to satisfy that is included after 115 Uhm. That's total dilution for grill in 2022, that's not incremental that's the total dilution, though we expect $3 25 to $3 75 impact on non-GAAP EPS.
And then 2000 clarifying.
Japan this year from a warehousing perspective.
We put a new warehouse in Brazil. This year and we also continue to invest in strengthening the the transportation links between the between these hubs.
And then we started to build safety stock on the outbound side to make sure that we had enough inventory on site to cope with what we knew was going to be strong demand ended up being much stronger than even we had expected and so for the vast majority of our core consumables now we have safety stock on hand at six to eight weeks of supply and so.
Our team did a really terrific job sort of calling it early and then jumping on it end to end to make sure that we have the capacity to supply the demand coming in.
Yes, so the only thing I would add to that thank you for instance is that.
The the.
Backlog is really strong driven by the demand all of those things that Francis mentioned, our actions that we've taken to ensure there is continuity and the supply chain and we're fulfilling customer orders on time, there have been I would say a few isolated customer instances, where there have been.
Paid out and we expect a decision likely in Q1, so retail end of the year, but more likely in Q1. So it's playing out as we expected in terms of the hold separate.
The older came out and it was consistent with how we thought it would be and consistent with generally consistent with the <unk>.
Hold separate that we put into place ourselves voluntarily in anticipation of how this will play out so in general no real surprises. The process is playing out as we planned now I'll turn it over to you Bob.
Alright, Thanks, Francis and thanks for the question on the commercial build out.
We're looking at.
The demand picture, we see significant pre reimbursement opportunities for gallery, and it's really across three main channels, our employer health systems and medical practices.
And one of the key one of the key elements of working with the team now is to make sure that we can in fact ramp up for.
The commercial scale of the organization.
It really meet the demand that's out there and in addition, just in the commercial side, we're going to have to ramp up the and really the entire operation. So that we have.
The ability to deliver at scale, a great customer experience and so that will come.
Cause cause us to build across a number of functions across the company.
Really excited to be able to take on that challenge because.
Clinical markets and so our strategy starting last year of really focusing on the emerging hospital market is really paying dividends, it's a market that really embracing and not just in IPD, which they embraced early but increasingly also starting to more broadly rollout oncology testing.
Genomic testing and so we are seeing progress there a lot of it is driven by the terrific partner ecosystem that we've built up over the years in China, that's really paying off in addition, we're actually seeing a tailwind associated with some.
Regulations that have emerged that allow the use of ldp's in Shanghai and so that has been that's fairly.
Fairly recent but has already started to pay dividends as you see more labs being stood up to generate their own their own LDP testing capability.
And so that's helped us and it's driving some of the tailwind there, but we're we're definitely excited and optimistic about what's happening in China for us right now.
Okay, and then maybe one on the population sequencing you obviously called out U K Biobank concluded this quarter can.
Can you just update us on how you're feeling about those rolling out and again as we kind of see some data and see the use of UK biobank potential for that to become a bigger piece for you guys.
Yeah, absolutely. So one of the things that has been really great to see is the broadening of the base of population sequencing customers. So we've talked about the fact that we've been cultivating over 50 of these opportunities and we're now at the stage where over 30 of these opportunities are already generating revenue.
So that's really good to see from a diversification perspective, what's also really great about it is a lot of these population sequencing initiatives are driven from a national health perspective, So they arent research projects, what Youre seeing is.
Countries embraced genomic testing as part of a standard of care in a health system and that's terrific first of all because of the very human impact. It allows you to have because you're in the pathway of delivering valuable information to patients, but it also is a place that's very durable right. So it means once you built into the health care system then.
Then you just get ramped up to population scales and it goes year after year and so that's another really exciting thing to see getting thats playing out it was starting to see the emergence of cohorts.
A lot of them involving pharma partners that are looking to generate data from population level data from some of the big data repository is out there around the world like Biobanks, and so thats sort of an emerging.
And then sort of building part of the population sequencing ecosystem right now too.
Yeah.
We now have.
Derik Debruin of Bank of America on the line. Thank you. Please go ahead you May proceed with your question.
Hey, This is my question on for Derik. Thanks for taking the question I've got a couple of quick ones and I'm, just going to focus on the sequencing instruments side of the business.
Called out really broad strength.
Highlighting I think novo seek next week 1000 to 2000 and the <unk>.
That's pretty much the majority of portfolio, but the total sequencing instrument number revenue still declined sequentially. So I'm just wondering.
If you could talk the pricing dynamics on Asps or if there's anything unusual going on there mid year and then I've got follow up on that.
Yes. Thank you.
Thank you Mike.
I appreciate the question listen in General there is really no fundamental change at all in terms of the.
In terms of instrument demand from Q3 or Q2 into Q3.
In general we do have sometimes some ebb and flow between the quarters in terms of instrument revenues <unk> had record revenues for the quarter record placements in terms of doubling the placements that we had last year as we said, we exited the quarter with record backlog in terms of instruments. So.
I would say there is probably some very small movements here and there, but nothing really that's anything significant in terms of why we were slightly down in terms of Q2 versus.
Q3 versus Q2 in terms of sequencing instruments as well for Covid surveillance.
I would say that was a minor factor as well from Q2 into Q3. There was a few less sequencing instruments that were placed in Q3 compared to Q2, so that had a little bit of an impact there as well, but in general demand is exceptionally strong as we talked about with doubling the next week 2000, 1550 placements versus <unk>.
Prior years, not just last year, but prior historically, what we used to placement in the mid throughput category and then the <unk> demand is exceptionally strong.
So to reiterate what Sam just sit around and look we are walking into Q4.
Having.
With a record instrument backlog right. So a really strong place to be we had record instrument shipments in Q3 for <unk>.
And the pull through on <unk>, even with all the instruments. We just placed and you expect a lot of them are still in their ramp up mode, where they should be at the low end of pull through but even with that.
Total average pull through on <unk> is at the high end of the range. We've talked about so it's impact there and so there's just a lot of activity happening on our novus seeks out in the field and thats, causing customers to place. The orders that are driving the record backlog that we have walking into into Q4, and so we really feel that it's already.
Fantastically strong position to be.
Thank you.
We now have any shadow of SDB leerink on the line side Cooney.
Please go ahead when you're ready.
Thanks.
Thanks for taking the question so.
First one on grill and actually maybe the support Francis and some for Bob just in terms of.
The trials that you have to conduct at this point in time, you mentioned that you can it's just trial ongoing obviously youre committed to grill and taking on the dilution, but in terms of the overall.
The trials that you need that are.
Prospective registrational trial that FDA needs to look at that are prevalent reflecting trials.
In order to get.
Screening assay approved on the market.
If you could walk us through that.
What are what are you doing to progress towards that what's the timing of that what does that trial as you can adjust that trial or is it.
Any other trial or banked samples that you have already.
Collected that you can potentially run and submit that data. So I'm just trying to understand in terms of the sort of the <unk>.
More than 50000 100000 patient trial that is needed in order to get an FDA approval and then eventually reimbursement and guideline inclusion.
Yes, maybe I'll start and then turn it over to Bob I would say look what we said before continues to be.
<unk> continues to be true today, which is in the U S. This test is going to be has been rolled out as an LDC and it doesn't need anything more is on the market today. Its a self pay test you can order today. Some employers are already covering it there are some health systems that are looking to roll it out and if it's a <unk> system. It could be for example.
Part of the subscription model or are the models and so nothing in the U S. As needed for the test to continue to be on the market. It's been on the market since June and nothing on the nothing in terms of trials are needed for the existing revenue sources that Bob talked about to be rail. So everything in terms of studies and data is all out there in fact, the <unk> studies that will probably show.
This year, just reinforced already the huge amount of data that's been put out onto the market. So far so nothing more is needed there and what we said about the NHS is the NHS is sort of a self contained trial in the sense that it has designed the milestones and the progress that would get it comfortable rolling it out at a population scale and they were the ones who rolled out the path.
A good start of the 140000, then scale up to a $1 million in the next couple of years and then go population scale and so it's a fully self contained process they've identified what they need to see their partnering with Grail and so that's what we've said before and that's what we continue to see and I'll turn it over to Bob.
Thanks, Brian.
Yes, maybe a few other comments on it.
Really three key elements driving towards that one the NHS study that we've talked about with 140000 participants and then that expanding over the years.
So thats, we will provide an enormous enormous set of data. We also have the Pathfinder study.
Which.
Which will conclude in the middle of next year.
So far the data to date has shown generally consistent with the early validation data. So that's been very very positive to this point and then also a reflection of the gallery reflection, a registry study, where we will look at the experience and clinical outcomes of 35.
Screening eligible patients over the age of 50.
Who are prescribed the tests from a health care provider.
That enrollment began this quarter and that will also provide significant data on the on the March to all reimbursement one.
Amplify also where France have said, though is even without reimbursement there is a tremendous amount of free reimbursement.
Activity in pre reimbursement opportunity for.
Poor gallery, and so while while the.
March to reimbursement is incredibly important it's not the only factors too to look at.
Okay.
Thank you.
At that time, our last question comes from Karl Nicholson of kind of Cowen <unk> co. Please go ahead.
Hi, Thanks for taking the questions. So I just wanted to kind of lump into here on <unk>. So first on timelines I know this is alluded to earlier, but.
The pause you investigation, it's been resumed that does disrupt in early February now.
Honestly most of its citizens for trials and reviews are kind of a flat in first quarter of 2002. So just want to kind of ask how much clarity will be provided when these events conclude and obviously, it's been a pretty polarizing topic I just think it'd be helpful to understand the level of visibility regarding.
I guess the regulatory outcome that you expect to have beyond the first quarter of 2002, and just one other thing to tack on here the Grail revenue.
Performance in the quarter it looks like it was maybe $5 million or so will be kind of spread out throughout the three months at annualized 20 million I just want understand what the maybe test volume trends are and maybe even reimbursement as well would be helpful. Thanks.
Yes, so maybe I'll start and say look as we think about Grail instead of the <unk>.
<unk> intensive with clarity I know, it's been a question that.
Investors have asked and so our perspective is obviously, we're going to continue to work through the trials process and I'll give you an update on that.
But what we wanted to do is make sure that grill continues to to create value because what that means is that no matter what scenario plays out.
The event that we get done and we have Grail, and we can grow and thats a huge huge success, obviously in and hugely valuable for our shareholders, but we know that if we create a lot of value in Grail and no matter what the regulatory outcome is it's still a big win not only for people who are getting screened but also for our shareholders. Because we will have an asset that's.
<unk> appreciated and even if you look at the progress that's been made at <unk> since we announced the deal right. So since we announced the deal.
Published some of their study results they have launched a product on the schedule. They said in June they have initiated not only signed the NHS deal, but started the rollout to 140000 customers and signed up some other health care systems and employers in the U S. So it's clear the business has created significant.
<unk> value from.
Maybe 12 15 months ago, when we announced the deal and so our focus is going to be partially also just to make sure that Bob and his team have everything they need to go create a hugely valuable business and what that does is it ensures our shareholders and somebody say no matter what the outcome is it's a win for our shareholders. So I want to make sure that.
You were very clear that that's continuing to happen, while we talk a lot about the trial from a trial perspective, we expect.
The decisions, we expect that in Europe come on two fronts right. So as you pointed out the phase II results right. Now. The date is February 24th it may slip a little but we expect the results from phase two around that timeframe. So late Q1, maybe early Q2.
We are also looking for a date in the trial.
Around jurisdiction in Brussels, and Thats also a first half thing maybe sort of maybe Q1, maybe Q2 should.
Should we prevail in either of those then we are done with the with the.
The regulatory process in the European Union, if we don't then depending on which one there sort of an appeals process that you go through.
And then similarly in the FTC, we expect a decision as I said in Q1 around the administrative process.
There'll be a rearview or an appeal to the commissioners after that and then you go if you if we don't prevail on any of those steps then we go to district Court.
Probably in the back half of next year. So that's the process and I'll turn it over to Bob for any other color.
Yes, just on the on.
The revenue question, yes, so grow revenue represents both revenue recognized from the sale of our gallery test as well as our revenue is generated from our <unk> collaboration agreements with biopharmaceutical companies. We expect the MRM Pdx collaboration income will continue as an important component of gross revenue and has an attractive.
Future growth element of our business, we do expect the mix of the Grail pharmacy pharma revenue.
Components during the early launch phase to be variable quarter to quarter.
So.
The overall revenue is not really.
Because of the mix of pricing and that the overall revenue is not a real great indicator of sample volume.
Thank you as you have no further questions and the time I will hand, it back to Brian blanket.
For some closing remarks.
Thank you.
As a reminder, a replay of this call will be available on the investors section of our website as well as through the dial in instructions contained in today's earnings release. Thank you for joining US today. This concludes our call and we look forward to our next update following the close of 2021.
Thank you again for joining today's alumina key 2021 earnings call today's call has now concluded.
May now disconnect your lines and have a lovely day.
Okay.
Okay.
Okay.