NanoString Technologies, Inc.
Q3 2017 Earnings Call Transcript

Published: 3 Nov 2017

[Operator:]

Good day, ladies and gentlemen, and welcome to the NanoString Technologies Third Quarter 2017 Financial Results Conference Call. At this time, all lines are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be provided at that time. [Operator Instructions] And as a reminder, this conference is being recorded. I’d now like to introduce your host for today's conference call, Doug Farrell, Vice President of Corporate Communications and Investor Relations. Sir, you may begin.

[Doug Farrell:]

Thank you, operator, good afternoon, everyone. On the call with me today is Brad Gray, our President and CEO; and Jim Johnson, our CFO. Earlier today, we released financial results for the third quarter of 2017 and a copy of the press release can be found on our home page at nanostring.com. During this call, we may make a number of statements that are forward-looking, including statements about financial projections, existing and future collaborations, future business growth trends and related factors, prospects for expanding and penetrating our addressable markets, interactions with third-party payers, the timing and outcome of any related reimbursement decisions and our strategic focus and objectives, and development status as well as anticipated success in recent plans and launches of products. Forward-looking statements are subject to risks and uncertainties, many of which are beyond our control, including the risks and uncertainties described from time to time in our SEC filings. Our results may differ materially from those projected on today’s call and we undertake no obligation to update these forward-looking statements. I want to remind everybody we’ll be attending the Cannacord Healthcare Conference next week and look forward to seeing many of you there. With that, I like to turn the call over to Brad.

[Brad Gray:]

Good afternoon and thank you for joining us today. Our third quarter results were disappointing to both our investors as well as our employees. NanoString is currently transforming from a small scale single platform company to a fully scaled company with multiple technology platforms. This transition requires that we continue to execute on our existing income or promotional opportunity while in parallel advancing highly differentiated pipeline programs which were expected to drive growth beginning with the launch of our digital spatial profiling platform in late 2018. While we are excited by both our nCounter platform and pipeline opportunities, our first priority is to stabilize our business in the near term and return to growth over the course of 2018. We believe that we understand the key factors driving the recent volatility in our performance and have taken action to resolve them. I am going to focus most of my prepared remarks today on our assessment of these factors and our plans for returning predictability and growth to our nCounter business. I’ll close with a brief progress support on our strategic objectives before turning the call over to Jim to review our detailed operating results for the third quarter. Let me start by briefly recapping our Q3 performance. Our product and service revenue was $16.9 million down 12% year-on-year. Our academic business was the primary source of weakness for both instruments and consumables. Our bio-pharma business was relatively strong and would have grown at a double-digit rate but for a decline of approximately $1 million year-over-year and consumable revenue from a single customer. Instrument revenue was $4.4 million, down 36% with reduced split sales to academic customers playing an important role that multiple instrument orders slipped into Q4. Total consumable revenue was $10.7 million down 6% as growth in Prosigna was offset by weakness in Life sciences consumables. Panel revenue was approximately flat while Custom CodeSet revenue decreased approximately 25% year-on-year. Over the last few weeks, we completed a thorough situational analysis of business trends in the third quarter, including dozens of interviews with customers. When we speak to our customers they highlight three distinctive features of nCounter. The first is speed, the ability to go from sample to publishable insight in days instead of weeks. The second is simplicity; they can run the system and analyze their data on their own without an army of bioinformaticians. The third is content; they love our pre-design panels that targets the biology that narrows most. Academic researchers are publishing nCounter base research at a healthy pace with over 1,700 peer-reviewed papers to date. Biopharma companies, large and small have embraced our technology and many have made it their platform of choice for gene expression profiling, particularly in areas such as immuno-oncology where we believe we are clear leader, however, our Q3 performance does not reflect the satisfaction of our customers or the strength of demand for our technology. So what is happening? Based on our analysis, we have identified three key factors that we believe impacted our performance. These factors are one; challenges in our commercial execution, two, the impact of spreads on our business and three some evolving market dynamics. Through a confluence of circumstances, they combine to substantially impact performance during Q3. We believe that all of these factors are manageable and we have already taken steps to address each issue. Let me start with the challenges in our commercial execution. As a reminder, we identified the need to improve commercial execution early in 2017 and took decisive steps to address these issues, including the appointment of an Industry Veteran to lead our commercial operations, the hiring of new inside and field based reps dedicated to consumables, and a substantial increase in marketing activities. In retrospect, we under estimated these challenges and the actions taken earlier this year will take time to become fully effective. Q3 is always a challenging quarter as the academic sector tends to slow down in July and August, meaning the vast majority of commercial activity needs to happen in the last 30 days of the quarter. This year the substantial pace of change with our commercial organization may have increased our execution risk in Q3. In July, we began our leadership transition from our former commercial leader to our new Senior Vice President of sales and marketing, Chad Brown. Simultaneously, we were absorbing and training the wave of new sales reps who have been hired during the second quarter. Our results indicate while these changes should improve commercial execution in the long run, the actions may have temporarily reduced effectiveness during Q3. We believe that these transitional challenges are largely behind us. Chad has created new leadership positions with inside sales and consumable sales and filled these roles with dynamic individuals recruited from industry leaders like alumina or QIAGEN. Our lead generation efforts are accelerating and we entered Q4 with a largest instrument funnel in company history. In addition, our investment and dedicated fuel based consumable reps is showing results. We are encouraged by the fact that consumable sales in North American territories with field base consumable reps substantially outperformed sales in those territories without consumable reps during the third quarter. Other leading indicators of consumable growth such as the number and size of quotes issued are also increasing. Overall, we expect commercial execution to improve in Q4 and to help support growth in 2018. The second factor is the impact of the low cost SPRINT Profiler, which first launched in July 2015 and quickly grew to accounts of 40% to 50% of instruments sold. It has accelerated the growth in our installed base and helped penetrate many institutions where our researchers had not privy attacks as to encounter them. While each SPRINT system on average has lower consumable pulse within our historical installed base, we believe that the increased number of potential systems were more than compensated. By the strategy of sound, SPRINT has reduced our visibility on the timing of instrument revenue relative to our MAX and FLEX instruments. By targeting individual researches with less certain funding and new customers outside our core oncology business, the instrument sales cycle has lengthened and our visibility has decreased. This increases the risk that SPRINT order slipped beyond the quarter for which they are forecasted as happened in Q3. We are encouraged that many of these instrument orders were closed in October making last month the strongest October on record for instrument orders. That being said, we need to apply our recent insights to increase our forecast during accuracy going forward. This reduces our near term revenue outlook relative to previous expectations. Longer term, our initiatives to increase the size of the SPRINT sales funnel and broaden its appeal by developing panels outside oncology should revitalize SPRINT growth. Finally, let me address some evolving market dynamics that are impacting our consumable trends. As a reminder, we sell Life Science consumables in two primary formats. The majority of our consumable revenue comes from carefully curated panels that are catalog products that are sold at attractive prices and appeal to the broad segment of researches. A good example is our PanCancer Immune Profiling Panel, our number one selling product which has been purchased by more than 400 customers worldwide. The balance of our life science consumable revenue comes from Custom CodeSet [Ph] that are designed to a customer specifications and priced at a premium relative to our panels. Since nCounter launched in 2009 it’s co-existed along other – alongside other gene expression platforms including RNA-Seq an alternative approach to profiling gene expression that runs on sequencing technology and can cover all the genes in the transcriptome. Virtually all of our customers have access to RNA-Seq and use it for experiments in which they are trying to identify which genes of biological importance. In these cases, researchers are willing to accept a more labor intensive workflow, complex bioinformatics, and slow turnaround times. Most customers think of nCounter and RNA-Seq as complimentary approaches. Many prefer nCounter for large experiments focussed on known biology when speed from sample to insight is important or when they want to translate their insights into a diagnostic test. In fact, many of our custom built CodeSet and diagnostic signatures were designed to profile such a gene that were first identified using RNA-Seq. Recently, a new market dynamic has emerged. As a cost of whole transcriptome on RNA-Seq has come there are some lower volume applications for which it is similar cost to ordering a premium priced Custom CodeSet for using nCounter. Some of our existing customers have shifted experiments that would have been performed by an nCounter to RNA-Seq. This market dynamic appears to be primarily impacting our order of Custom CodeSet portion of our business. Our panel products including our PanCancer panels for use in oncology and immuno-oncology research remained a popular endeavour with significant repeat business. The following cost of sequencing is something we’ve anticipated and prepared for. We’re pursuing three initiatives that will address this dynamics. First, we are making some tactical adjustments to our discounting policies related to Custom CodeSet that should allow our reps to win more of these projects. Second, we are leveraging our strengthened and expanding consumable sales channel to protect our base and win back business, a strategy that’s already yielding promising results. Most importantly, we are increasing our focus on introducing high volume consumable applications where our competitive advantages are most pronounced. The most important of these are the carefully curated research panels that capitalize on our simple workflow and turnkey bioinformatics. New products such as our IO360 panel and our neurology panels are off to a strong start and we plan to launch multiple panels spanning a variety of applications and disciplines over the next two quarters. Separately, we have expanded our PlexSet offering targeting experiments with large numbers of samples and low number of genes that have traditionally been lined on quantitative PCR and which are not practical for sequencing technologies. We expect that overtime, panels and PlexSet will maintain the vitality of our consumable pull through nCounter represented the lion’s share of our consumable revenues. In summary, we believe we have a clear understanding of the trends in our business. Our Q3 performance reflects the confluence of circumstances and we believe the underlying business fundamentals are stronger than our Q3 performance indicates. We have taken decisive action to improve commercial execution and strengthen our product offerings, which we believe will stabilize the business in Q4 and return us to growth over the course of 2018. I’ll close with an update on our longer term strategic priorities focussing on our diagnostic programs and advancing pipeline technologies. During Q3, Prosigna revenue increased by 47% over the prior year and the number of active Prosigna sites increased to 69 labs worldwide. Most of our revenue continues to be driven by Prosigna adoption outside the U.S. where we are steadily increasing patient access to Prosigna through engagement with national and regional payers. Within the U.S. along with other providers of multi analytic [ph] test we face an unexpected challenge from the updated clinical lab reschedule from the Centers from Medicare and Medicaid services or CMS. In late September, CMS published a preliminary determination of a crosswalk the reimbursement of Prosigna under the CPT code for [Indiscernible] which if implemented would substantially reduce the reimbursement for Prosigna in 2018. This decision was contrary to the recommendation of the advisory panel reviewing the decision. We have taken advantage of the comment period to meet with the CMS staff and to formally comment on the proposed policy. We are encouraged by our discussions and look forward to regaining our successful resolution to this issue. I’d also like to share some developments in our ongoing biopharma collaborations. First, Celgene has completed enrolment in the robust trial and is now following those patients toward an event driven primary analysis. We continue to expect that will be in a position to follow PMA for an encounter base test for REVLIMID in Diffuse Large B-Cell Lymphoma since 2018. Meanwhile the lymphoma subtyping test in algorithm which is the basis for Celgene collaboration will be the subject of 11 different studies being presented at the American Society of Haematology Annual Meeting in December, demonstrating the assay’s growing use in biomarker research. Turning to our Merck collaboration. In late October, we were notified by Merck of their decision to no longer support the development and commercialization of our Tumor Inflammation Signature, or TIS, as a companion diagnose or complimentary diagnostic for Keytruda. We understand from Merck that the decision was based on Merck’s interim analysis but data from its Phase 2 basket trial keynote 158 basket and its conclusion that TIS was not required to select patients for Keytruda in those tumor types. The impact of this decision is that we no longer expect our current collaboration to yield the PMA filing for TIS for these indications. This is obviously disappointing to our team, but we do not believe that this represents the end of our work with Merck or our development of TIS as a diagnostic. Our relationship with Merck and our shared interest in TIS remained strong in parallel to coordinating with Merck to lap up our existing collaboration over the next few months; we look forward to ongoing discussions on potential future research collaboration activities to determine the potential utility of immune related gene expression signatures in various cancer types. While we have not reached any agreement on potential future collaboration, our dialogue with Merck remains constructive and dynamic. Meanwhile, we are continuing to extend our leadership in the field of immuno-oncology through engagement with other researchers and biopharma companies. Under the more open approach that we described in our last call, we have executed non-pilot studies related to our tumor information signature helping expand the number of diagnostic pilot studies to 61 different studies with 36 companies. The fastest expansion in our biopharma pilot program in any single quarter. Sales of our PanCancer Immune Profiling Panel were up 14% in Q3 and are up 22% year-to-date. In parallel, biopharma and academic researchers have responded positively to the launch of our new IO 360 panel, a powerful tool that provides researchers with a 360 degree view of the tumor, the micro environment and the immune response. That began shipping in late September and has already become the focus of a number of new potential collaborations. For instance, last week we announced a collaboration with the NSABP foundation, an academic research organization that is supported by the National Cancer Institute, an industry and which will use our IO 360 panel to panel to analyze NSABP's bio bank of more than 2500 tumor samples. In order to characterise the immuno phenotypes of colorectal cancer. This is an important step in identifying cancer patients who will benefit from current immunotherapies and future combinations. And we are honoured to partner with NSABP. This collaboration is part of our continuing leadership in the field of immuno-oncology which will be on display next week at the Society of Immuno-therapy for cancer conference where we will have a record abstracts being presented including five abstracts highlighting our IO 360 panel. Finally, during the third quarter, we made progress in advancing our portfolio of new technology platforms. We are now just one year away from the plan launch of our digital spatial profiling platform, we are continuing to develop the market by engaging customers in our technology access program by presenting data at major meetings. At the [Indiscernible] meeting next week, we’ll present three DSP abstracts, building on the 10 abstracts presented to date. Our expanded technology access program now includes more than 25 projects including 14 with biopharma companies and 12 with academic and government researchers. We have leading pharma companies and one of the nation’s premier cancer centers that have come back to do follow on projects which we believe is a great sign that researchers find DSP data valuable and a leading indicator of strong demand for this well differentiated technology. We’ve also made great progress on our Hyb & Seq program during the third quarter. On August 8th we announced that we had entered into development collaboration with Lam Research to accelerate the development of Hyb & Seq. Under the terms of this agreement Lam will provide up to $50 million to fund the development of Hyb & Seq and return for a royalty on sales and an equity interest in NanoString. Currently, NanoString retains the full commercial rights to Hyb & Seq leaving us the option to commercialize this powerful clinical sequencer on our own or in partnership with a strategic partner. I’m pleased to tell you the Lam Research collaboration is off to a fantastic start. The teams have great chemistry and the speed with which technical synergies have been identified has exceeded expectations. It's clear that Lam expertise in nanoscale manufacturing and advanced engineering will going to be invaluable in optimizing what we believe will be a disruptive technology. The team is expanding quickly and their progress remains on track. Our next major progress report is planned for AGBT 2018 in February. In September, we presented exciting proof of principal work in liquid biopsy at the AGBT Precision Health Meeting in Scottsdale Arizona. Hyb & Seq simple workflow has the potential to initiate the sequencing of cell-free DNA in a liquid biopsy sample in about an hour. The sequencing of circulating cell-free DNA from blood is a promising non-invasive tool for clinical oncology in this rapidly growing market is estimated to be $17 billion annual opportunity by 2025. The launch of these new instrument platforms will significantly expand our total addressable market and also provide revenue streams that have durable competitive advantage. These pipeline programs are expected to become major revenue drivers in 2019 and beyond. With that, I’d like to hand the call over to Jim to report financial results and update guidance.

[Jim Johnson:]

Thanks Brad. Total revenue for the quarter was $27 million, up 13% versus the third quarter of 2016. Total product and service revenue was $16.9 million, 12% lower year-over-year. Foreign exchange rate fluctuations impacting product and service revenue positively by approximately one percentage point. Instrument revenue was $4.4 million, 36% lower than in the third quarter of 2016, and most of the decline related to the academic and government market segment. Total consumable pull-through for the quarter was $10.7 million down 6% year-over-year and below our historical benchmark of $100,000 per system on an annualized basis. Life sciences consumable revenue which is the largest component of system pull-through was lower than anticipated at $9 million, down 12% compared to the third quarter of 2016. The softness was across all customer segments, however biopharma was relatively strong except for the purchases by one major customer that declined by approximately $1 million versus the prior year. For Prosigna IVD kit revenue is the other component of pull-through and it was $1.7 million for the quarter, up 47% year-over-year, the next U.S. markets continuing to generate the majority of sales. We’ve recorded $10.1 million of collaboration revenue for the quarter compared to $4.8 million in the third quarter of 2016. The increase largely resulted from a reduction in the scope of future regulatory activities for the esophageal cancer indication in our Merck collaboration. This change resulted in an increase in the project completion percentage as of September 30. Additionally, we began to generate revenue from our new Hyb & Seq collaboration with Lam Research. Gross margin on product and service revenue for the quarter was 57% compared to 58% in the third quarter of 2016. Gross margin was slightly lower in 2017 primarily due to changes in consumable product mix and reserve for slow-moving inventory. R&D expense was $11.4 million for the quarter, up 30% over the third quarter of the prior year. The increase was driven primarily by increased investment in new technology and product development programs in particular Digital Spatial Profiling, and Hyb & Seq. SG&A expense was up 18% year-over-year to $18.4 million for the quarter and the increase largely reflects added staffing to support the company's growth most of which went toward the scale up our sales and marketing effort. Stock-based compensation expense was $3.1 million compared to $2.2 million for the third quarter 2016. Our net loss increased to $11.4 million or $0.45 per share from $10.1 million or $0.51 per share for the third quarter of last year. We ended the quarter with approximately $90 million of cash and investments. So, now I’ll turn to an update of our 2017 financial guidance. Based on our lower-than-expected third quarter results together with our current fourth quarter outlook we’re reducing our guidance for total product and service revenue to $68 million to $71 million. Previously it was $81 million to $85 million. We now expect for Prosigna revenues to be at or slightly below the low-end of our previously provided range of $7 million to $8 million. The implied Q4 guidance for product and service revenue is comparable to last quarter at the low end of the range and comparable to Q4, 2016 at the high end. We’re lowering our total revenue guidance to a range of $109 million to $112 million for the year which corresponds to revenue growth of 26% to 29% versus 2016. Our previous guidance was for 114 million to 118 million in total revenue. And the decrease reflects the reduction in product and service revenue partially offset by an increase in collaboration revenue from approximately $33 million to approximately $41 million. This increase reflects acceleration of revenue recognition under the Merck collaboration due to lower forecasting future costs related to regulatory activities, as well as our updated outlook for our collaborations with Celgene and Lam Research. We’re reducing our guidance for gross margin on product and service revenue to approximately 56% for the year in light of our revised revenue guidance. Previously, we had expected gross margin in the range of 57% to 58%. We are reducing our operating expense guidance to $119 million to $121 million for the year to reflect the impact of cost control measures. Previously, we guided to $123 million to $126 million for the year. We expect stock-based compensation expense near the high end of our previous guidance range of approximately $10 million to $11 million. As a result of changes to both revenue and operating expense guidance we now expect our GAAP operating loss for the year to be lower in the range of $38 million to $41 million from the previous $42 million to $46 million. We continue to expect interest in other expense to be approximately $6 million for the year. And our GAAP net loss for the year is also expected to be lower at $44 million to $47 million compared to $48 million to $52 million previously. On a per share basis, we’re now expecting a net loss of $1.86 to $1.99 per share compared to previous $2.03 to $2.20 per share. There is no change to expected capital expenditures at $4 million to $5 million for the year. So, with that I’ll turn back over to Brad to wrap up.

[Brad Gray:]

Thanks Jim. In summary, we’ve experienced growing pains as we transform from a single platform company to a large scale enterprise on multiple platforms. We understand the factors that have increased the volatility of our business over the last several quarters and we’re laser focused on returning our core business to grow. Our nCounter platform has a strong value proposition and offers unique capabilities; we believe that our investment and new consumable panels and expanded commercial channel will return us to grow in 2018. In the mean time we continue to advance our portfolio of Novel technology platforms that should be an important growth catalyst beginning next year. I look forward to updating you on our continued progress.

[Doug Farrell:]

Operator, we are ready for any questions.

[Operator:]

[Operator Instructions] Our first question comes from Doug Schenkel with Cowen. Your line is open.

[Unidentified Analyst:]

Hi, guys. This is Adam on for Doug. Thanks for taking my question. You had a pre-material cut to your products and service guidance for the year even considering the mess in Q3, could you provide any more color on what your Q4 guidance embed in terms of an improvement in number of many instrument placements or pull-through relative to last quarter or maybe Q4 of last year? Thank you.

[Brad Gray:]

So, I’ll take that and Jim you can add some color and fill in the blanks. Obviously we describe three major challenges to occur in business that we experienced in Q3. Around execution, around the impact of our low cost sprint profile both on instrument revenue and consumable pull-through and the emerging dynamic in our custom code set business. If you look at our Q4 guidance, what you’re really seeing is that, we’re looking to stabilize the business in the quarter – in the current quarter. The bottom end of the guidance range is effectively flat sequentially from Q3, so assuming that many of the same trends that we’re experiencing are slow resolve over the weeks ahead in this quarter. And the top end of the guidance range is basically flat year-on-year compared to last year’s Q4, sort of indicating that we make some recovery in the current trains, but the things take time to resolve and stabilize. As I described, given our experience on the instrument side of things with an experience that Sprint instruments are slower to close then our MAX and FLEX instruments, we’ve begun to apply that observation into our four type capping methodology and that is embedded in part of our Q4 guidance. In addition, I think we are continuing to assume consumable pull-through on par with what we’d experience so far this which is more in the $80,000 to $90,000 per system range. Again, totality including Prosigna compared to our historical benchmark of a $100,000 per system per year one. So I think we’re viewing and managing Q4 as a period of stabilization on our way back to being able to guide to growth over the course of 2018.

[Unidentified Analyst:]

Okay, great. And perhaps my second question related to the first. You noted as you mentioned, the instrument funnel is bigger than it’s ever been, but the spread instruments have these lengthened sales cycles and an increased uncertainty of revenue compared to your other instruments. Acknowledging, you just outline a pretty comprehensive sales strategy, could you provide any specifics on the steps you’re talking to ensure that instruments in that funnel actually be convert the revenue? Thank you.

[Brad Gray:]

Sure. So, the way we’re revitalizing instrument growth, really starts with recapturing the slip systems from Q3, which I think the team has done a good job of making progress on in a month of October, and we take that as a promising sign that indeed the deceleration in instrument revenue that we saw in Q3 was a consequence of the way we’re experience of execution and the Sprint dynamic rather than some thing competitive. The second thing we need to do is of course increased – improve our sales execution, really through steps that we’ve already taken over the course this year. You’ll remember that when we took a step to expand our sales channel will included dedicated consumer risks, we thought that one of the benefits of that would be able to allow our incumbent risk to spend a larger fraction of their time focusing on closing instrument – cultivating and closing instrument opportunities. And that’s going to be continue to become more effective as these new sales reps become more season in their lows. The third thing that we’re doing is continuing to develop applications, specifically panels that appeal to the type of customers that we’re targeting with Sprint. In some cases these are new oncology panels like the IO 360 and in the other cases they’re new non-oncology panels, like the neurology panel that we launch and in the FLEX set application that we launch that really broaden the appeal of the Sprint platform and make it just as compelling to a non-oncology customer as it has been to an oncology customer. So those are the main tactics. Some of those are going to happen soon -- sooner rather than later in terms of commercial execution improvement, others will take time like the introduction of non-oncology panels.

[Unidentified Analyst:]

Very helpful. Thank you.

[Operator:]

Thank you. [Operator Instructions]. Our next question comes from Catherine Schulte with Baird. Your line is open.

[Catherine Schulte:]

Hey, guys. Thanks for the questions. Can you just quantify the dollar impact that you think was from instrument just slipping in to the fourth quarter?

[Brad Gray:]

Yes. I think, when we guided for our instrument – our total revenue back in August, we had visibility to the instrument portion of that revenue over time. When we preannounce our we characterize the miss as which is about $3 million to $3.5 million that are at our mid point is about half instruments and half consumables. So that would suggest that the instrument niche was about $1.5 million. Really, we would characterize that almost entirely has slip, now some of that will slip into the fourth quarter and be recaptured, a portion has been recaptured in October. Some of those slip we believe could go into subsequent quarters. So -- but virtually none of it was lost to competition or fell out of the funnel. So, I guess in that sense I characterize the slip itself is a $1.5 million approximately, but I would not want to miss characterize that as all being captured in the month of October, really a portion was and a portion really remains out there to be captured. And that uncertainty of the time line of when and how we’ll capture that slip is embedded in the guidance that we gave today for Q4.

[Catherine Schulte:]

Okay. That’s helpful. Thank you. And then, one of your app corporate workshops talks about using a blood base signature for lung cancer and sarcoma test. Can you just elaborate on what that’s referring to?

[Brad Gray:]

Yes. I believe that workshop is going to feature some of our customers that the company occupies [ph], who are developing a lab develop test for -- the indications you described using our nCounter elements platform, nCounter element is a general purpose reagent traditionally and it is being use by a few commercial and even more kind of academic clinical labs, develop lab, develop test and that’s an audience who they aren’t meeting really speaks to.

[Catherine Schulte:]

Great. Thank you.

[Operator:]

Thank you. I’m showing no further questions in queue. So I’d like to turn the call back over for closing remarks.

[Doug Farrell:]

Thanks very much operator. If you did miss any portion of the call there will be reply up within a next couple of hours. You can access that by dialing 855-859-2056. Please use the pass code, 8833-1168. And with that, thank you for joining us today.

[Operator:]

Thank you. Ladies and gentlemen, that does conclude today conference. Thank you for your participation. You may all disconnect and have a wonderful day.