NanoString Technologies, Inc.
Q2 2018 Earnings Call Transcript

Published: 8 Aug 2018

[Operator:]

Good day, ladies and gentlemen, and welcome to NanoString 2018 Second Quarter Financial Results 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 follow at that time. [Operator Instructions] As a reminder, this call will be recorded. I would now like to introduce your host for today’s conference Mr. Doug Farrell, Vice President of Investor Relations. You may begin.

[Doug Farrell:]

Thank you, operator. Good afternoon everyone. On the call with me today is Brad Gray, our President and CEO; as well as Tom Bailey, our CFO. Earlier this afternoon, we released our financial results for the second quarter. A copy of the press release can be found on our website at nanostring.com. During this call, we make 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 addressable markets, our strategic focus and objectives, and the development status, timing and anticipated success of recent and planned product offerings. 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 the call today, and we undertake no obligation to update these forward-looking statements. With that, let me turn the call over to Brad.

[Brad Gray:]

Thanks, Doug. Good afternoon, and thank you for joining us today. I'm going to provide a brief overview of our performance for the second quarter and an update on our strategic objectives for the year, then I'll turn the call over to Tom to review the details of our Q2 operating results and to update our guidance. We executed well in the second quarter, and our products and service revenue exceeded the top end of our guidance range for a second quarter in a row. The steps that we've taken to strengthen our team in commercial infrastructure have returned our business to double-digit growth. Meanwhile, we have generated a groundswell of interest in digital spatial profiling that we believe positions us for a strong launch of this new platform in the first half of 2019. Following a successful financing in July, we have the capital we need to continue driving nCounter growth and to launch DSP. In Q2, we generated $20.4 million in products and service revenues, representing 11% year-over-year growth. Our instrument revenue showed strong sequential increase with solid demand from academic customers. Unit placements were approximately flat year-on-year, while mix shifted to our lower priced SPRINT systems, which represented about half of the unit sales in the quarter. Nearly 90% of SPRINT systems went to new customers, helping grow installed base by more than 20% compared to a year ago and laying the foundation for continued growth in our core nCounter business in 2019 and beyond. We’re particularly pleased with the growth of our consumable business, which inclusive of both life sciences and Prosigna generated 16% growth during the second quarter. Consumable pull-through came in at the high end of our guidance at around $80,000 per system on an annualized basis. With life sciences consumables, we delivered 30% growth in panels, which more than offset the anticipated declines in our custom code sets, while Prosigna delivered its strongest quarter yet. Overall, we're pleased with the momentum that's returned or business. Now I'll provide a brief update on our strategic objectives. Our first strategic objective is extending our leadership in oncology research and diagnostics. During the second quarter, oncology continued to be the primary growth engine for our business, accounting for about 60% of new instrument placements in our direct markets. The use of nCounter within immuno-oncology continues to grow rapidly with our best-selling PanCancer immune profiling panel and our newer PanCancer IO 360 panels together posting 40% year-on-year growth during Q2. Nine months after its introduction, the IO 360 panel remains our fastest growing panel launch ever. It is garnering interest from both biopharma and academic researchers. In June, we announced collaboration with The National Cancer Institute to use our IO 360 panel to improve biomarker discovery for immunotherapy. Under the collaboration, researchers will have access to the IO 360 panel for use in NCI-sponsored clinical trials, providing a unique opportunity to use the latest SPRINT scriptured profiling tools to accelerate the development of novel immunotherapies, combination regimens and new diagnostics. Our scientific leadership in oncology continues, as illustrated by our highly successful ASCO conference in June, where there were more than 50 nCounter-based abstracts presented and we generated hundreds of new leads at our booth. Presentations focused on our new Breast Cancer 360 panel and digital spatial profiling platform attracted dozens of thought leaders from academic centers biopharma companies and CROs. We also had a great quarter on the diagnostic side of our business. We achieved record Prosigna revenue of $2.5 million, driven by growth across all geographies. We're seeing particularly good momentum in Europe and Canada following recent positive coverage decisions. For the first half of the year, we generated $4.7 million in Prosigna revenue and we now expect approximately $9 million in Prosigna revenue for 2018, which would put us at the top end of our previously provided Prosigna revenue guidance range. We are working to expand our menu in collaboration with biopharma companies. Our preparations to submit a PMA for our LymphMark PL/BCL assay are well underway, pending results from the ongoing Phase III robust study. In addition, we have recently begun collaborating with a major CAR T-cell developer to discover biomarkers of T-cell fitness and product characterization that can be deployed in the manufacturing process for their product. We believe that our nCounter technology is uniquely suited to address major challenges in the CAR T and adoptive cell immunotherapy workflow, including upfront evaluation of starting material, product characterization after expansion, and patient response to treatment. In parallel, we're developing new panel products aimed at addressing the rapidly growing field of adoptive cell therapy, which now includes over 60 biopharmma companies. Our second strategic objective for 2018 is to drive nCounter into new therapeutic areas and applications. We have prioritized immunology and neuroscience, introducing new consumable panels that address major scientific questions in these fields. We are already seeing a positive impact from these initiatives with immunology and neuroscience customers accounting for about 25% of instrument sales during the quarter. Leading indicators of the future impact of these initiatives are also positive, as research area outside of oncology are accounting for an increasing fraction of new nCounter-related NIH brands, with immunology and neuroscience representing the number two and number three fields, respectively. Immunology is already the second largest market of nCounter users, and with more focus on this area we're seeing strong growth. Sales of our immunology panels were up more than 40% year-on-year during the first half of 2018 with products in our legacy portfolio benefiting from the focused marketing. Neuroscience is a field that we've entered more recently through the development and launch of two new panels. Earlier adopters of these panels include both academic researchers and biopharma companies, who primarily focus on neurodegenerative diseases. Like many of our oncology customers, these neuroscientists are most interested in the roles of inflammation in the immune system in their disease. We expect neuroscience to become an increasingly important market for us over time. Our third strategic objective is to initiate the early access launch of our digital spatial profiling platform by year-end. As we announced this morning, we have achieved this objective, opening a limited early access launch, which will place five beta DSP instruments in the laboratories of highly motivated researchers. These early access customers are expected to perform high-impact projects that provide additional feedback to help optimize our full commercial launch, which remains on track for the first half of 2019. We began receiving beta DSP instruments from our contract manufacturer in July, and we've been putting them through our paces in our own lab with the goal of beginning to place them in early access sites during the fourth quarter. Demand for the beta instruments is strong, and we look forward to finalizing and announcing the early access sites in the months ahead. These early access sites will complement a network of three recently announced DSP centers of excellence each of which is committed to pioneering the utility at the DSP platform in a distinct research area. Each center will have an internal consortium of users that will generate data demonstrating the utility of the DSP and will conduct workshops to share their experience and increase awareness. The Broad Institute will explore spatial genomics and single cell biology, utilizing next generation sequencing as a readout for DSP. This program will be led by Aviv Regev, Chair of the Faculty at the Broad Institute, and will connect to pre-existing initiatives, where DSPs could be used to characterize world's rarest cell populations in issue to better understand disease pathology and treatment. Oregon Health & Sciences University or OHSU, will integrate DSP technology with the latest imaging technologies and image analysis algorithms. This program will be led by Sadik Esener, Director of the OHFU Knight Cancer Institute's Center for Early Detection Research. Together OHSU at NanoString will work to extract the maximum out of spatial information from each tissue biopsy with a focus on the field of immuno-oncology and self-signaling in cancer. The Netherlands Cancer Institute will lead our European center of excellence with specific expertise and clinical applications and biomarker development on the DSP platform. This program will be led by Christian Blank, Group Leader of Immunology at the Netherlands Cancer Institute who has already presented DSP data on immuno-oncology at a major scientific meeting. The centers of excellence and early access sites are expected to reinforce the tremendous interest in DSP from both academic and biopharma customers that our commercial activities have already generated. Much of this interest is already being funneled into our Technology Access Program, which allows customers to experience DSP by sending their samples to NanoString for processing using our prototype instruments. This program is expanded at an impressive pace and to date we've completed 55 projects and initiated 18 new projects in the second quarter alone. Overall, we have been successful in generating substantial customer interest in digital spatial profiling, well ahead of our scheduled full commercial launch. And we believe we're well positioned for a successful DSP launch. Our fourth strategic objective for the year is to advance our Hyb & Seq platform toward a commercial launch in 2020. This program remains on track. We are scaling up the Hyb & Seq chemistry and the order-to-right program that we're executing in collaboration with our partners at Lam Research is showing great promise for maximizing the platform's performance. The next public update is planned for the Association of Molecular meeting in the fall, where we plan to illustrate the potential clinical utility of Hyb & Seq's simple workflow and rapid turnaround time. Now I'll turn the call over Tom to review our financial results for the second quarter and update our guidance for the year.

[Tom Bailey:]

Thank you, Brad. I am pleased to have the opportunity to discuss our results for the second quarter of 2018 and our updated outlook for the year. For the second quarter of 2018, product and service revenue was $20.4, representing year-over-year growth of 11%. Our second quarter performance brings total product and service revenue for the first half of 2018 to $38.4 million, which represents13% growth as compared to the first half of last year. That’s 13% growth rate is above the upper end of our prior guidance range of 4% to 11% for the year. Product and service revenue for the second quarter included $5.5 million from instrument sales and $12.8 in total consumable sales. Our instrument installed base grew over 20% compared to this time last year and consumable pull through in Q2 was approximately $80,000 per system on an annualized basis at the upper end of our guidance. Life sciences consumables revenue, excluding Prosigna, was $10.3 million reflecting 12% year-over-year growth. Life sciences consumables benefited from growth of more than 30% in panel sales consistent with the trend we've now observed over the past several quarters. Consumable revenue also includes $2.5 million of Prosigna sales, another record Prosigna quarter at an increase of 37% year-over-year. Service revenue was $2.1 million in the second quarter with growth driven by our increasing installed base of system, DSP Technology Access program – projects. Revenue from collaborations was $4.6 million for the second quarter bringing the total recognized year-to-date to $9.7 million. For the second quarter, we received cash from collaborators of $8.2 million bringing our total year-to-date cash received from collaborators to $12.3 million. The majority of cash received and collaboration-related revenue recognized was derived from our partnership with Lam Research with smaller amounts from our Celgene and Merck collaborations. Gross margin on product and service revenue for the quarter was 58% as compared to 55% for the second quarter of 2017. The improvement was primarily driven by increased consumable sales across our larger installed base and the resulting sales mix shift. R&D expense was $14.6 million, an increase of 32% over the prior year. Investment in our Hyb & Seq program accounted for bulk of the increase and was offset by approximately $8 million in program support payments that we received from Lam Research during the quarter. Excluding Hyb & Seq development expenses funded by Lam Research, our R&D expense would have been lower in Q2 2018 as compared to the prior year. In addition, a significant portion of our remaining R&D expense relates to our investment in DSP, our new platform that is now less than a year away from commercial launch. Our SG&A expense was $20.6 million for the quarter, an increase of 11% as compared to the second quarter of 2017. This increase was primarily the result of investments made to expand and specialize our commercial channel. Stocked based compensation expense for the quarter was $2.9 million and we ended the quarter with $50.7 million of cash and short-term investments. This balance excludes the impact of the equity financing we concluded in mid-July, which added approximately $47 million of net proceeds to our cash and short-term investments just after the end of the reporting period. Turning now to our financial outlook. We have exceeded our product and service revenue guidance in the first and second quarters of this year, and we now expect to post double-digit product and service revenue growth for the entirety of 2018. As a result, we are raising our product and service revenue outlook for the full year. For the full year 2018, we now expect product and service revenue of $79 million to $81 million, representing a growth rate range of 10% to 13% as compared to the full year 2017, which is an upward revision as compared to our original guidance of 4% to 11% of product and service revenue growth. This increase in our annual product and service revenue outlook is driven by our confidence that consumables revenue and pull through will continue to trend to the higher end of our $75,000 to $80,000 per system guidance range and by greater than expected growth in service revenue driven by our DSP technology access program. We are also raising our growth margin guidance range to 57% to 59% from the prior range of 56% to 58%, given the positive market trends observed in the first half of the year. We expect total revenues which includes our estimated revenue from collaborations of $104 million to $106 million. Currently, we still expect both collaboration cash received and collaboration revenue recognized to total approximately $25 million for the full year. Note that timing and spending in project activities, which can be impacted by our partners, may shift the exact amount of revenue from collaborations, we may recognize relative to the cash received in any given period. With that backdrop, we are ready affirming our prior guidance ranges for operating expenses and narrowing our guidance for GAAP net loss and net loss per share for the year is detailed in our press release. Moving on to the third quarter – for the third quarter of 2018, we expect product and service revenue of $19.5 million to 20.5 million, which would represent 15% to 21% growth over the prior year. Revenue recognized from collaborations, we expect of approximately $6 million and total revenue of approximately $25.5 million to $26.5 million. Turning to our balance sheet, following the completion of our recent equity financing, we now have approximately 97 million of cash on hand. In addition, we expect to continue to receive financial support for Hyb & Seq through our collaboration with Lam Research for the balance of this year and in 2019. We also have various other financial and business development opportunities that we believe to provide capital resources as we continue to demonstrate growth in our nCounter business and as interest in anticipation around the prospects for DSP continue to grow. Thank you for your time today and your interest in NanoString, and I'll now turn it back to Brad to conclude the discussion.

[Brad Gray:]

Thanks Tom. In closing, I'm pleased with our execution during the second quarter and believe that the enhancements that we've made to our commercial infrastructure will continue to drive double-digit growth in our core nCounter business through the balance of 2018. We're experiencing a groundswell of interest in DSP, which positions us for our next leg of growth, following full commercial launch next year. With our financing behind us, we have the capital we need to continue driving nCounter growth and to launch our DSP instrument. Now we’d like to open the call for your questions.

[Operator:]

Thank you. [Operator Instructions] And our first question comes from Tycho Peterson with JP Morgan. Your line is open.

[Tycho Peterson:]

Hey thanks. Brad, I guess, I'll start with DSP and as we think about the early access launch and then ultimately the full commercial launch, can you talk a little bit more about how you see the use cases for displacing IHC? I know you gave kind of the three examples for Broad and OHSU, but I'm just curious, how you think about other customers using the technology? And any channel investments that you need to make ahead of the launch that we should be thinking about too?

[Brad Gray:]

Thanks, Tycho. So DSP is really opening up a whole new field of spatial genomics. We have developed DSP in response to a tremendous outpouring of demand that we felt from our biopharma and academic customers to understand not customers to understand not just how protein and RNA expression varies on average across the tissue, but how that – those changes in expression can be localized to different parts of the tissue. We do not, to be clear, think that we are going to be displacing immunohistochemistry, which is a well-established technology both in research and the clinic. But rather, we think that we'll be complementing it. Today, immunohistochemistry is limited to, generally speaking about four markers for every slide that is made. And that means that a researcher wants to look at 16 different markers they need to use four slides. So we see DSP addressing an issue where in those special cases, where researchers want to look at a large number of proteins, that they would complement a traditional IHC with high flex protein expression on DSP. The use cases specifically that we're seeing in our customers have, so far, centered around biomarker research in immuno-oncology, which is an area of high interest, and where the spatial infiltration of immune cells into the tumor is really informative about the type of therapy that a patient is likely to respond to. It matters not just how many immune cells are there, but really how far they've made it in penetrating into the tumor. And that's something you can only get through spatial profiling. A second use case that we'll be capitalizing on it at the time the launch is in neurology, where the wiring of specific neurons and their adjacency to specific immune cells is highly informative about what's going on in neurological disease. And so we'll come to market with both consumables targeted at immuno-oncology and neurology upon the full commercial launch in the first half of next year. In terms of channel investments, the great news is the DSP appeals, primarily and initially, to the same research, biomarker-focused researchers that we address with nCounter today. So our – we will be selling DSP through our existing instrument sales reps and we'll only need to invest in complimenting them with a small number of DSP product specialists, some of which whom we've already hired this year. So overall, we do not expect a major wave of SG&A increase upon the DSP launch, rather we expected to get operating leverage as we continue to sell into the same primary customer base.

[Tycho Peterson:]

Okay, that’s helpful. And then for a follow up, just can you comment on how you think about the revenue opportunity both for the Car T collaboration? Does this have any front-end loaded economics for you and then also the NCI IO 360 opportunity, how should we think about the revenue potential there? Thanks.

[Brad Gray:]

Sure. So on the Car T collaboration, this is a collaboration that I would characterize as a research collaboration that's very modest in scale by comparison to our classic companion diagnostic collaborations. It will not generate a material amount of revenue in the near term with just, probably, six-figure type revenue per quarter in the collaboration revenue line for us in the next couple quarters. More importantly though, that the work in there important and rapidly growing field of Car T cells could allow us to develop generally appealing panel products that are beginning in 2019 could have a contribution and our consumable revenue line, as those become things that we can sell into those 60-plus biopharma companies who are working in that field. So really that is the primary motivation for the collaboration for us, and so the impact we'll begin to feel, still next year. On the – the other question was – alright. So I guess I would characterize the opportunity for the NCI collaboration in much the same way. The demands that were able to unlock by giving special access to NCI-sponsored researchers will show up in our panel revenue line and continue to enhance the sales of, what is already our fastest growing product, the IO 360 panel. So you can expect to see that a consumable pull-through in the second half and heading into 2019.

[Tycho Peterson:]

Okay, thank you.

[Operator:]

Thank you. And our next question comes from Catherine Schulte with Baird. Your line is open.

[Catherine Schulte:]

Hey guys thanks for the questions. You talked about taking a more disciplined approach when it comes to guidance this year, which seems prudent. So as you look at the back half of the year, just wondering what your level of comfort is there? Is there any areas, where you feel like you've baked in extra conservatism?

[Tom Bailey:]

I think that as we’ve talked about many times since the beginning of the year, Catherine, we've set our guidance ranges to strike a balance of discipline and confidence. And I think that's the way that we characterize the updated guidance we gave today. We're in the top end of the range, would imply a 13% growth rate for the entirety of the year, year-over-year and double-digit growth in every single quarter as compared to 4% year-over-year last year. So I think we feel good about the guidance range that we provided and about the growth in the first half of the year. With that said, I think that we're taking a prudent approach, as we have, since the beginning of the year, to setting guidance that we feel comfortable that we can meet and sometimes exceed is the terminology that we've used and I've characterized the outlook that we provide today as consistent with that approach.

[Catherine Schulte:]

Great. And then given the results you've posted so far for consumables pull-through, it seems like your addition of the consumables focus straps has been paying off. But just curious if you could give us some qualitative remarks on how those reps have ramped so far and how that reorganization is going.

[Brad Gray:]

Yes this is Brad. It has been an absolute success to have invested in consumable-focused sales reps both based in the field and based on your telephone-based inside sales reps. I think we're seeing one, a higher degree of predictability in our consumable sales. And that's probably hard for you to see that outside the company that the visibility that we have, having created people who are accountable every day for thinking about consumables and consumables only has really changed our confidence level on a week-to-week basis in the trajectory of the business. It's also increased the linearity of consumable bookings through the quarter, where we have a steadily applied sales effort, and therefore a lot more linearity in the business. We're also seeing a spillover effect on the productivity of our instrument reps. In those geographies, where we have gone ahead and invested in the field base consumables specialists, we're actually seeing that it's making our instrument reps more productive by unburdening them from the need to spend days out of their week managing the consumable sales of our existing installed base. And so especially, as we head into 2019, where we'll be asking those same instrument reps to take on a new instrument in DSP, we think we feel good about the investment we've made in the consumable channel in that it's set us up for a long term success.

[Catherine Schulte:]

Okay. And last one from me. Just wondering, if you could give us an update on your DSP customer interest funnel. How many grants have you quoted so far? And how are you thinking about the pace of the initial ramp after a full commercial launch?

[Brad Gray:]

Yes, so we're absolutely delighted about the level of interest that DSP is receiving. Early in the year, at our national sales meeting, we asked our existing reps how many of our current nCounter customers had already expressed interest in DSP. And at that time, which was late January, already 20% of our nCounter customers were expressing interest. Since that time, when we go to major meetings like AACR and ASCO, approximately 50% or half of our booth leads and booth traffic are DSP-focused. We have quoted dozens of instruments to researchers in the academic world as well as researchers in biopharma companies, who want to get quotes for the instruments that they can either write grants or budget for an instrument purchase next year. As we described in the last call, we have been quoting at $295,000, which is really a premium priced instrument compared to our – the rest of our lineup. And we've really had no push back at that price point. So we feel really good about the overall funnel that's building. Certainly it's a great deal more than it's ever been done in prelaunch marketing and funnel development here at NanoString.

[Catherine Schulte:]

Great, thank you.

[Operator:]

Thank you. [Operator Instructions] And our next question comes from Steve Beuchaw with Morgan Stanley. Your line is open.

[Steve Beuchaw:]

Hey thanks for the time here. I'll keep us focused on DSP first. One is, I wonder if you've seen there, in-house, any beta hardware and if you have any reactions to what you see in the hardware, how that makes you feel about the pacing of the launch in the first half? And then I think – I want to remember that, one of the neat things about DSP is that it allows a customer to read out on an nCounter. Is it reasonable to think about the DSP launch in 2019 as an incremental driver of better hardware or consumables for the existing nCounter franchise?

[Tom Bailey:]

Yes. Great question. So first on the beta hardware, we have received our first round of beta systems. They've began coming in during July. We've been very pleased with the hardware. We have been putting them to their paces here inside the company with a goal of getting them ready to begin shipping to outside customers in the fourth quarter. Obviously, some of those betas are earmarked to stay here at NanoString and to be put through our verification and validation approaches prior to full commercial launch and another – and about half of them are earmarked to go outside. In total by the end – we've earmarked eight beta systems per placement at our centers of excellence and our early access customers. In terms of the second order effects of the DSP launch, I do think – I guess I think about it this way. The first group, who are likely to sell the DSP into our existing nCounter users, many of them are already focused on exactly the kind of biomarker problems in the field of immuno-oncology and neurology that the DSP is going to be so well equipped to address. So I would expect that to be the first wave. I do however agree with you that there's a possibility that DSP pulls through incremental nCounter placements. And I'm sure that at the time of launch we'll be developing bundles that will make it affordable for people to buy DSPs and SPRINTs together. People who are not our current customers today. And I do think there's an incremental replacements we may experience. But finally, I point out what's may be the most exciting aspect of our DSP launch strategy, which is that for the first time, we've opened up an instrumental launch with a readout on next generation sequencing. And if you think about the potential addressable market, while today, if we were to launch DSP, we'd be into about [indiscernible] nCounter instruments we’d be launching into 15,000 next generation sequencing instruments. And many of those NGS users out there have already begun to embrace the idea of sophisticated single cell based sample prep – solutions that can be read out on NGS. And DSP is basically a spatial version of single-cell biology. And that's really why the Broad Institute's center of excellence is so critical to our strategy. There's probably no larger single-cell researcher in the world than the Broad Institute. And by incorporating our technology into single-cell research with an NGS read-out very early on, we hope to introduce that science to a much broader audience as the DSP launch matures. So really, I think we have all three of those opportunities. Selling into the nCounter installed base that exits; driving the growth of the nCounter installed base for people who want to read out our new instruments; and maybe most importantly, selling into the NGS market opportunity.

[Steve Beuchaw:]

That’s great. Thank you Brad. Just one more it's on the forward trajectory for the SPRINT business. It seems like, as you pointed out that the SPRINT has become a little bigger piece of the mix. I wonder is that mainly a function of the initiative to get into some new categories like in immunology and neuro? And if you think about the future for applications that you want to go after how do you think about that tail? Are they similar, these incremental applications whatever that might be the next wave to immuno and neuro and others also more SPRINT-centric?

[Brad Gray:]

Yes I mean, we're delighted to see the strength in SPRINT. I think it has been actually generated both across oncology as well as the new therapeutic areas and applications. Within oncology, we're seeing a lot of SPRINT demand from, what I'll call, smaller biopharma companies that are not – that are maybe recently public or well financed into venture capital realm, who are just are – whose capacity needs are not nearly as much of large pharma company's would be. So we're seeing good SPRINT demand across both oncology and non-oncology. But I do think that new applications like neuroscience and immunology are important for driving SPRINT into the primary user base for which it was developed, which is the academic field. We're really delighted to see that growth in immunology and neuroscience focused NIH brand applications. I think that's a nice leading indicator for incremental SPRINT demand and the U.S. academic market. That being said, I think part of your question was, will there be a lot more new therapeutic areas that we'll be talking about in 2019 beyond immunology or neuroscience? And I guess what I'd say is, from now, we think across those three, we've covered three really big important markets for genomics. I don't think it's likely that we'll be adding areas four, five and six as we enter 2019. I think we'll be focused on continuing to penetrate those substantial markets and then turning our incremental commercial energy towards the DSP launch.

[Steve Beuchaw:]

Thanks so much guys.

[Operator:]

Thank you. And I’m showing no further questions. At this time. I'd like to turn the call back to Doug Farrell for any closing remarks.

[Doug Farrell:]

Thanks very much for joining us today. If you did miss any portion of the call, there will be a replay available in the next couple hours. Domestic callers please dial 855-859-2056. International caller please dial 404-537-3406. The conference ID numbers are the same for both, it is 526-75-68. So with that thank you for your time.

[Operator:]

Ladies and gentlemen thank you for participating in today’s conference. This concludes today’s program. Your may all disconnect. Everyone have a great day.