Genmark Diagnostics Inc
Q3 2015 Earnings Call Transcript

Published: 28 Oct 2015

[Operator:]

Good day, ladies and gentlemen, thank you for standing by. Welcome to the GenMark Diagnostics' 2015 Third Quarter Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded today Tuesday, October 27, 2015. I would now like to turn the conference over to Ms. Jenn Manship of GenMark. Please go ahead.

[Jenn Manship:]

Thank you, Karen. And thank you all very much for joining us today. Before we begin, I would like to inform you that certain statements made by GenMark’s during the course of this call may constitute forward-looking statements. Any statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance are forward-looking statements. For example, statements concerning our 2015 financial guidance, the development and commercialization of new products, plans and objectives of management and market trends are all forward-looking statements. We believe these statements are based on reasonable assumptions. However, these statements are not guarantees of performance and involve known and unknown risks and uncertainties that may cause the actual results to be materially different from any future results expressed or implied by such statements. Important factors, which could cause actual results to differ materially from those in these forward-looking statements, are detailed in GenMark's filings with the SEC. GenMark assumes no obligation and expressly disclaims any duty to update any forward-looking statements to reflect events or circumstances occurring after this call or to reflect the occurrence of unanticipated events. I will now turn the conference call over to Mr. Hany Massarany, President and CEO of GenMark. Hany?

[Hany Massarany:]

Thanks, Jenn and good afternoon, everyone. I am joined on the call today by our Chief Financial Officer, Scott Mendel. And before we start with our typical agenda, I first want to comment on Jeff Hawkins resignation from GenMark. As disclosed in the Form 8-K we filed this afternoon. Jeff recently resigned the position of Senior Vice President of Global Marketing and Program Management to pursue a career opportunity outside the company. Jeff had been a valuable member of our team and a very strong contributor to our success over the past several years. We are certainly disappointed to see Jeff go. But we understand his decision to leave the company and we wish him and his family the best of luck, happiness and success in the future. We are confident that the talented team we built under Jeff over the past few years will continue to deliver strong performance and excellent results. Turning to the normal course of business we have a few prepared comments and then we will be happy to respond to any questions that you might have. Our prepared comments will cover the following topics. First, I'll provide an overview of our performance in the third quarter of 2015. Then Scott, will walk us through our operating results for the quarter. And finally I'll update you on the progress of our ePlex program. So, starting with the high level review of third quarter performance and once again our U.S. commercial team delivered excellent results in Q3. We grew our revenues by34% compared with the third quarter of 2014 and expanded our installed base of XT-8 analyzers by 25 to 616 analyzers. Based on the continued strong momentum of our XT-8 business, we now expect to place more than 90 XT-8 analyzers in the U.S. market this year compared with our previous guidance of 75 to 85. We are maintaining our 2015 revenue guidance in the range of $38 million to $40 million and our gross margin guidance of between 57% and 59% for the full-year. During third quarter we made very good progress towards completing the transfer of ePlex cartridge to manufacturing and achieving the reliability required to support clinical studies and CE launch. I am also very pleased to announce that we recently placed our first ePlex beta system in an external customer site. This customer is in the process of completing an initial alpha study as a precursor to our planned external beta studies, which we expect to complete at a number of customer locations over the next few months. Given the positive results, we believe will be generated from these an additional internal and external studies. We expect to formally lock down our manufacturing process this quarter. And since our initial external ePlex studies we are only recently initiated rather than in the third quarter as previously planned, we now expect CE launch in the first quarter of 2016. And with that I'll now hand over the call to Scott Mendel. Scott?

[Scott Mendel:]

Thank you, Hany and good afternoon everyone. We issued our financial results prior to this conference call and we will be filing our Form 10-Q shortly after the call is completed. During the third quarter of 2015, our revenue increased 34% to $8.5 million compared to the third quarter of 2014. The annuity for analyzer in the third quarter was approximately $55,000, up 8% versus prior year. Our average annuity per analyzer over the last four quarters is in the mid $60,000 range. Gross profit for the third quarter of 2015 was $5.1 million or 60% of revenue versus $3.7 million or 59% of revenue in the third quarter of the prior year. Total operating expenses were $16.2 million for the quarter, an increase of $2.3 million compared to the same quarter of last year. Our marketing and sales expenses increased $430,000 to $3.6 million, primarily driven by increased employee-related expenses. Research and development expenses were $9.6 million, an increase of $1.7 as we are in the final stages of transferring ePlex system to manufacturing. And finally, general and administrative expenses increased $160,000 versus the prior year period to $3.1 million primarily driven by employee-related expenses. During the third quarter, we recorded $275,000 of interest expense related to our debt facility. Our net loss per share for the quarter was $0.27 with weighted average shares outstanding of approximately $42.3 million compared with the net loss of $0.23 per share for the same quarter of 2014 when our weighted average shares outstanding were approximately $41.4 million. We ended the quarter with $54.2 million in cash and investments and we expect to continue utilizing our cash balance and additional amounts made available under our debt facilities primarily to complete the analytical and clinical ePlex studies required for the European launch and FDA submission as well as expanding our global commercial organization. Our focus on minimizing working capital requirements continued to deliver strong results with DSOs of 42days and DSI of 71 days. As Hany mentioned, we are reaffirming our 2015 revenue guidance of $38 million to $40 million and our full year gross margin of 57% to 59%. And given the strength of XT-8 placements in the third quarter, we are increasing our guidance to more than 90 placements for the full year. I’ll now turn the call back over to Hany to provide more details regarding our ePlex progress.

[Hany Massarany:]

Thank you, Scott. I would now like to review our progress and expectations towards the launch of the ePlex systems. And as you know, ePlex is a multiplex molecular sample-to-answer system, which integrates sample preparation steps, including extraction and amplification, together with our proprietary eSensor detection technology, and enabled by proprietary digital microfluidics to allow the detection of multiple molecular targets on a single test cartridge. Over the past several quarters we shared the challenges we confronted during the process of transferring the ePlex cartridge to manufacturing. We understand the critical importance of completing this transfer and achieving the levels of production reliability and scale up required to support clinical studies and CE launch. Since our last update, consider both progress was made across a range of transfer and production areas. For examples, our technical operations and manufacturing teams have further optimized automated process equipment on the cartridge manufacturing line as well as to develop additional quality control methods support the required levels of production, reliability and scale up. I am also pleased to report that our R&D teams has confirmed the performance of all targets in our lead assays as well as further refined cartridge microfluidics for achievement of optimum assay performance. In addition, we have tested numerous clinical samples on the ePlex system and we will be presenting results from these studies at The Association of Molecular Pathology Conference in Texas next week. While we are pleased with the good progress we made during the third quarter. We continue to see some variability in test reliability attributable to certain injection molded part of our ePlex cartridge. Specifically, we’ve struggled with the manufacture ability of two components which are required to maintain reliable cartridge fluidics during ePlex operation. And consequently we made modification to the design and materials associated with these parts and we now believe that they are capable of functioning as required to enable reliable performance of the ePlex cartridge. We are very excited about where this work has lead us and are now seeing performance levels that are quickly approaching our targets. So in addition to completing our ePlex external alpha study this quarter we also planned to commence additional internal and external studies as well as lock down our manufacturing process. Based on this we now expect CE launch to occur in the first quarter of 2016. Also in the first quarter of 2016 we plan to initiate external clinical studies to generate the necessary data for FDA submissions, which we now expect to be completed in the second quarter of 2016. We are pleased with the continued enthusiasm of customers about the ePlex system and assays. And we are committed to bring into market the highest quality system we can and establishing the high volume assembly processes and system reliability necessary to support the clinical studies and European launch. We expect to accomplish this within the stated timeline and look forward to a successful European launch early next year. So in conclusion, Q3 was another quarter of strong performance for our company. And we are very optimistic about the remainder of this year and beyond. Our North American commercial team continues to deliver excellent results and we believe we will achieve the projected growth of our revenues and installed base of FDA systems over the next several quarters. Our entire organization is focused on the global launch of our ePlex systems we’ve made solid progress during the last quarter and we expect to accomplish this important goal within the stated timelines. And of course, we will continue to focus on organizational talent, infrastructure and processes to scale up our business and support future growth. We will now open the call to questions. Thanks.

[Operator:]

Thank you. [Operator Instructions] Our first question comes from the line of Tycho Peterson from JPMorgan.

[Tycho Peterson:]

Hey, thanks. I guess the obvious question on the timeline slipping a little bit here Hany. Can you may be just talk just why the test been started little bit earlier and are you still expecting to place systems at the other two beta sites I guess in the next couple of weeks or months how do we think about when those additional beta sites will be up and running?

[Hany Massarany:]

Yes, thanks very much for the question, Tycho. Tycho as you know our goal is to launch the best product, the best system that we can possibly launch and bring to the market. And I realize that the delays are frustrating. But I believe that we are doing the right thing to pursue and achieve the required levels of reliability and quality to support, launch and the clinical studies. So during the quarter we had a lot to do and as I state in my prepared comments, we’ve achieved a lot in terms of optimizing some of the manufacturing steps that are key. But also some of the microfluidics tweaking and optimization that we performed on the cartridge itself and then finally we have to rework a couple of parts on the cartridge that were not manufacturable reliably and now we believe that they are performing as required. So with that we are looking forward to performing beta studies over the next few months. So we are planning to do an additional three beta sites or studies in the field. Before, we get go to the analytical studies and then the clinical studies beyond that.

[Tycho Peterson:]

And then can you may be just try to be very concrete on the timeline just when you think you will get the three additional beta sites up and running and then well analytical studies will be done by the end of 4Q or how do we think about that?

[Hany Massarany:]

Yes, so some of this is going to happen in parallel Tycho so certain aspects of the validation studies need to be completed before we start beta studies. But ultimately everything will be completed in time to commence the clinical studies in the first quarter, so that we can submit to FDA by the second quarter, and of course before then during the first quarter we expect to launch in Europe with a CE Mark.

[Tycho Peterson:]

Okay. And then just one last one, I think you had previously talked about three beta sites in total so you’ve added one more, is there anything to read into there or?

[Hany Massarany:]

No, not really it is three, the alpha, the specific customers, that customer who is doing the alpha study will also continue to do a beta study, that’s why we shift beta systems to that customer and then in addition we will do three planned beta sites.

[Tycho Peterson:]

Okay, thanks you.

[Hany Massarany:]

Thanks, Tycho.

[Operator:]

Thank you. And our next question comes from the line of Nicholas Jansen from Raymond James & Associates.

[Nicholas Jansen:]

Hi, guys. Nice job in the quarter. I just wanted to kind of get a better sense of what you are assuming for the flu season this year. Obviously there is some data points out there, but wanted to get a better view of that as we think about RVP sales in the fourth quarter and then on that same topic, your gross margin guidance would suggest a lower performance in 4Q. And I know there is going to be some ePlex ramping, but I didn’t think will be that much to bring down margins given how big usually 4Q is from a margin perspective. So any color there would be helpful. Thank you.

[Hany Massarany:]

So thanks Nick. I’ll comment on the flu season and then Scott will touch on the gross margin question. Look we are expecting a moderate flu season really sort of flat year-on-year. We realized that the flu season in the southern hemisphere well in certain regions were severe, but we are not expecting a severe flu season in 2015, 2016. So we’ve just planned for a sort of a flat year-on-year flu season. And then Scott, in relation to gross margin.

[Scott Mendel:]

Sure. So Nick, year-to-date basis, gross margins running around 59% so at the high-end of the range of guidance that we provided. I think we’ll still see some very strong gross margins in the fourth quarter and it will take us right up to the top of that again, stay at top of that 59% mark maybe a little bit over, but we're not projecting a step down in gross margin in the fourth quarter, because as you mentioned we’ll see some strong volumes. So just given that we are 59% year-to-date I don’t think you will see a lot of variability on a total year basis much above that. And that’s what we maintain guidance at 57% to 59%.

[Nicholas Jansen:]

Okay, and then in terms of the approval for those submission for the U.S. or ePlex still pending second quarter, how long are you expecting the kind of the relationship with the FDA to evolve in terms of the timeline there just wanted to give a sense, if you think that this will be launched in the U.S. by the time 2016 to 2017 flu season rolls around next year? Thanks.

[Hany Massarany:]

Yes Nick, we are certainly hoping to have a product on the market in time for the 2016, 2017 flu season. As you know from previous calls, we’ve been working very closely with FDA to prepare for the submission in the second quarter. We have agreed on clinical study designs, we already have the sites ready, we’ve agreed on a number of samples including the banked samples, which we’ve collected and banked 100% of those samples. So we feel pretty good about the process and preparation that we’ve made in relation to FDA submission in the second quarter. And based on that we hope, we expect that the review process will be efficient and will get us there on time.

[Nicholas Jansen:]

Thanks guys. I’ll hop back in queue.

[Hany Massarany:]

Thank you.

[Operator:]

Thank you. And our next question comes from the line of Brian Weinstein from William Blair.

[Brian Weinstein:]

Hey guys, thanks for taking the question. I just want to make sure that I understood the different components that are going on here. You talked about further refining the flu was excellent and hoping you can maybe shed a little bit of light on specifically what was required there and then was that really related to the modification on the fluidics would cause due to modifying the design and the material for some of the molded injected parts or are those two totally separate issues. Can you just give us anymore kind of confidence and kind of your progress with that?

[Hany Massarany:]

Yes, of course Brian thanks for the question. Really the refinement of the microfluidics is all software so it’s independent of the two components that we have to tweak the design and change the material and show that they perform as required. But of course along the way we have a lot of control on the microfluidics since we do it with electrowetting and electrical fields instead of channels and layers and so on. And therefore we have a lot of control on the movement of the fluids both in terms of the sample, but also the reagents on the cartridge and that allows us to control timing and so on and so forth. So we have taken the opportunity to further refine the Microfluidics to achieve optimum assay performance while we were also working to rework the components that were required to sort of achieve better performances as well.

[Brian Weinstein:]

So just based on what we heard just a couple quarters ago kind of what the issues were you sort of address those and now we’ve these kind of new situations that have popped up. A tough question to answer I understand, but how confident are you that there is not something else kind of coming around the corner here because it's almost like you pushed one thing down and something else pops back up. I mean you talked about getting quickly to approaching the levels that you desiring for quality and getting to where you need to be, but how confident are you at this point there is not something else that it could pop up around the corner I guess?

[Hany Massarany:]

Yes, Brian while we can't guarantee that there won’t be any other surprises and we certainly understand that it is frustrating to sort of have these delays. I do believe that we are doing the right thing to make sure that we have the best product we can before we commence the clinical studies and certainly before we launch in Europe or anywhere in the world. I feel confident that based on all the work that we’ve done and the fact that we put systems already out there in the first site and the clinical samples that we’ve run here in house as well as externally and will be sharing some of that next week. It is a process that sort of as we advance we have more and more visibility on what’s coming and as I mentioned before the risks are much less and the chances of remaining on the timelines of course will increase a lot. So I can’t tell you 100% that there won't be any other surprises, but based on everything that we’ve done and the results that we are seeing we feel very optimistic about the timelines that we are communicating today.

[Brian Weinstein:]

Okay, then last question on cash, your $50, $70 million in cash today, can you talk about how these delays impact how you want to scale the organization and whether or not without knowing if you'll be on the market in time for the 2016, 2017 season which maybe a challenge, how do you sort of ramp up your salesforce, how do you deal with this sort of marketing push I mean this slight setback change your cash flow thoughts and how should we be thinking about your cash burn over the next several quarters?

[Scott Mendel:]

Right, now I’ll start it off. This is Scott. As you said we had $54 million of cash in investments on the balance sheet at the end of the quarter. As a reminder we still have up to $30 million available on the debt facility and we believe the combination of those two allow us to get to successful ePlex launch from a scale up perspective and how the delays impact our view on that cash position. Obviously a lot of the costs are associated with adding an increase in the sales organization and we can time that as we have these types of movements on timeline. So we feel pretty confident about our cash position and the fact that cash [plus the ability] allows us to get the successful launch and we continue to monitor it.

[Brian Weinstein:]

Okay, thank you.

[Scott Mendel:]

Thanks, Brian.

[Operator:]

Thank you. And our next question comes from the line of Doug Schenkel from Cowen and Company.

[Doug Schenkel:]

Hey, good afternoon guys and thank you for taking my questions. I want to just dig in a little bit more on the timelines and just to make sure we understand what kind of error bars you have built into where we are now and where you hope to get to next year with the launch of ePlex in the U.S. in time for flu season. But before we do that can I just ask is how important would you say it is that ePlex is launched by call it July, August September timeframe is that would say that that is really a meaningful deadline for you to get to the market, how important is that ultimate deadline?

[Hany Massarany:]

Well, I would say it’s an important deadline, if you call it a deadline certainly launching ePlex in the U.S. before next years flu season would be a good thing. So it’s important to catch the flu season and drive volumes associated with the testing that happens during the season.

[Doug Schenkel:]

Okay, so with that in mind, maybe just trying to reverse engineer this a little bit. I guess if the deadline is on the outside let’s call it August, what would your expectation for an FDA review process be, maybe we can just start there, is three to six months a fair estimate?

[Hany Massarany:]

Yes, I think six months is probably too long and we've seen products cleared within three months. So I’d say three, four months is probably reasonable especially since we already have a relationship with FDA, we have cleared eSensor based multiplex panel on the market and we’ve been working closely with FDA to prepare for the launch in term for the mission I should say in terms of like I said before agreeing on the clinical study design and number of samples and so on and so forth, number of sites. Sometimes delays happened when companies don't do all of that through the pre sub process. So we've already done all the pre subs for the platform and the panel and we are on track to commence and complete those clinical studies on time for our Q2 submission and with that we are optimistic that will have clearance in time for the flu season.

[Doug Schenkel:]

Okay, so Hany, if by that logic which for what it's worth make sense to me. You would need a submission by sometime late in the second quarter at the latest inline with the guidance you described, if we take it to the next step is the assumption that clinical studies can be completed in three months. And then I guess the next question would be is how much time have you baked into these timelines for the transition from beta analytical into clinical studies.

[Hany Massarany:]

Yes, I think you're on the right track in terms of timing for submission and timing for completion of therefore clinical studies. We have [baked up] all the necessary time to achieve that in our plan so we feel pretty good about it so of course as you mean that we don't have any unforeseen sort of surprises. I believe that we have sufficient time to initiate the clinical studies in this and complete them of course in the first quarter and submit in the second quarter and achieve clearance by the flu season.

[Doug Schenkel:]

Okay. And I guess the last question and it really relates to the first thing I brought up which was the importance of launching in advance of U.S. flu season next year. To what degree as the sense of urgency at the company hidden to hit these timelines beyond what was already hide in the urgency given the progress that your main competitors making in the market right now?

[Hany Massarany:]

Yes, Doug we are very focused on launching ePlex as soon as we can, but we are also committed to launch the best system that we can. So we're not going to compromise that the pain associated with bringing a product to market too early and dealing with significant problems in the field and customer issues far exceeds the pain of slight delay. So we are very sort of aware of this and certainly our entire organization is focused on doing the right thing and bringing to market the best product we can as soon as we possibly can and that's what we are working towards.

[Doug Schenkel:]

Okay, thank you very much for taking the questions.

[Hany Massarany:]

Thank you, Doug.

[Operator:]

Thank you. And our next question comes from the line of Dane Leone from BTIG.

[Dane Leone:]

Hi, thank you for the update. It seem I guess line of questions that others have been hitting on, can you just give us a bit more clarity in terms of what CE launch in 1Q 2016 really means. I mean we've worked with a CE launch by year-end 2015 and there is a bit variability between whether the CE launch would be in January versus March. Can you tighten up that timeline for people as we’ve kind of gone through several delays now in 2015?

[Hany Massarany:]

No, I'm not going to tell you an exact month, day, but like I said we expect to launch in Europe in the first quarter which means that we expect to have the ePlex available for sale in Europe in the first quarter of 2016. And as I mentioned to others obviously we are working hard to bring ePlex to market as soon as possible and we feel optimistic, we can't be certain, but we do feel optimistic given everything we know and everything we've done that will be able to accomplish that during the first quarter.

[Dane Leone:]

So if we think about the resolution that still needs be done much a couple of times in terms of that performance level is quickly approaching targets that the remainder – the remaining hurdle to get the performance levels to target is just to clarify your original statement is that based on the software issue itself and in all the hardware manufacturing is completed or is it a combination of the two?

[Hany Massarany:]

So we had sort of described and gave examples of some of the things that we did and accomplished during the quarter and all of those things have obviously got enough closer to the level of reliability and sort of performance that's required. And in addition, I’ve also spoken about a specific parts to components that are plastic injected sort of parts that from part of our cartridge and they have to be redesigned and we have to change the material to make sure that they work as required. And it’s all of those things that are getting us closer and closer to the level of performance required to initiate the external analytical and clinical studies in preparation for launch and submission to FDA.

[Dane Leone:]

So I guess the question that I'm sure everyone the analyst is getting is dial back too earlier in the year, the last conversation we had were the timeline shifted a bit later. If you guys kind of walked us through the different manufacturing issues that you're tackling and the different things that needed to be resolved and then gave us a basis for an updated timeline. And now we are kind of going through the same process again. And I think the other analysts have been fishing this as well – can you give us the point of confidence that the descriptions you've given are giving you a more concrete timeline update that you've given us on this call versus what you gave us on the last call, which again you guys were unable to hit.

[Hany Massarany:]

All right I think you are asking why should you believe us this time. Look he is the answer I mean we - everything we’ve said in the past is was consistent with what we believed at that time and was based on the plans that we had. And therefore and the good news is that the issues that we talk about in the past we’ve resolved and those are the issues that allowed us upon resolving them, allowed us to move forward and continue to get closer to what we need to achieve and to the point where we felt confident enough to put beta systems out there for external studies to commence. So as I’ve said all along what we don't know if there will be additional surprises. But naturally as we continue to make progress, we have much more visibility to what’s coming and we feel more confident about the timeline. So I believe that we’ve allowed for what we believe is coming in the current timeline and we feel confident about it.

[Dane Leone:]

Okay. The last one for me is just looking ahead the production volumes that you'll hit in the production confidence that you will hit for the analytical studies. Will there need to be another step up for full commercialization or is that kind of the same ramp up?

[Hany Massarany:]

Yes, we have - we’re working to work this sort of obviously the capacity that’s required to support European launch and clinical studies, but of course as we place more systems and drive volumes there will always be that that will always be an area that we’ll be revisiting, we're already planning an additional manufacturing facility for ePlex, which will - we’re already like I said started planning and will be buildings all infrastructure and so on over the next few months. But at this stage we do have the capacity that’s required to support clinical studies and European launch.

[Dane Leone:]

Okay. Great thanks guys.

[Operator:]

Thank you. And our final question for today comes from the line of Mark Massaro from Canaccord Genuity.

[Mark Massaro:]

Hey, guys thanks for taking my questions.

[Hany Massarany:]

Hi, Mark.

[Mark Massaro:]

I realize we’re in the weeds here at this point in the call. Hany, you talked about plastic injected parts needing to be redesigned to make sure that they work. Do you know exactly which parts you need to order and have you chosen the supplier for these parts yet.

[Hany Massarany:]

Yes, there we’ve already reworked those parts. So we’ve made the necessary modifications to the design of those parts and including the material change as well and we've already molded these parts tested them and there and we believe that they’re now performing as required.

[Mark Massaro:]

Great. And ballpark how far away from you, are you to getting the desired level of accuracy on your test from where you are today is it a significant step function and any commentary on that would be helpful?

[Hany Massarany:]

No we’re very close and approaching it very rapidly Mark as we said before. Certainly, some of the issues that we've been dealing with have not stopped us continue to develop and transfer many, many aspects of the product. So we’ve not been delayed across the board. But it’s important that we get them lock down before we start some of the more formal studies that will be part of our submission to FDA and also that are required to support our European launch. So we’re not by the way, we don't have any concerns about accuracy, I think you mentioned accuracy but its more about reliability and therefore when you have some reliability issues, while they might impact a few cartridges, the vast majority of the cartridges that we’re running with samples both internally and externally continue to perform well and give us the information we need to keep making good progress and that’s been happening.

[Mark Massaro:]

Great. And in prior quarters you talked about your printed circuit board manufacturer. Can you just confirm that those issues have been resolved?

[Hany Massarany:]

Yes, so that’s true. So we have some issues couple of quarters ago to do with the scaling up of the PCB supplies and those have been resolved. And of course we continue to work with all of our suppliers to ensure that we are improving – helping them in improve yield and reduce scraps et cetera as we do here internally as well so that ultimately we can bring the cost of goods down to what will support the 70% plus gross margin that we’re aiming to achieve.

[Mark Massaro:]

Great. And I guess back to XT-8, 25 placements were certainly above my thinking. Can you just comment on what the demand was – was it folks new to GenMark or folks existing customers adding new instruments?

[Hany Massarany:]

Mainly new customers and mainly hepatitis C genotyping and respiratory viral panel.

[Mark Massaro:]

Okay, great. And last question I think a lot of us will miss seeing Jeff Hawkins in your boots. Any further color on his decision to leave the company at a time where you are so close to launching ePlex would be helpful?

[Hany Massarany:]

Yes, look really I can't comment more than what I've already said, so like I said Jeff was a key contributor for several years and he did make a personal decision. He will be missed, we wish him all the best of luck. But as I said we have built a really strong team under Jeff over the past several years and I am very confident that the team will step up and continue to deliver and produce excellent results.

[Mark Massaro:]

Great, thank you and see you next week.

[Hany Massarany:]

Yes, look forward to it Mark. Thank you. End of Q&A

[Operator:]

Thank you and that concludes our question-and-answer session for today. I would like to turn the conference back for any closing comments.

[Hany Massarany:]

All right, thank you very much and on behalf of our Board of Directors and employees I want to thank you very much for your ongoing support. I look forward to reporting our progress on a quarterly basis going forward. Thank you very much for your time this afternoon. Bye-bye.

[Operator:]

Thank you. Ladies and gentlemen thank you for your participation in today’s conference. This does conclude the program and you may now disconnect. Everyone have a good day.