NanoString Technologies, Inc.
Q4 2014 Earnings Call Transcript

Published:

  • Operator:
    Welcome to the NanoString 2014 Fourth Quarter Financial Results Conference Call. [Operator Instructions]. I would like to turn the call over to your host. [Inaudible] you may begin.
  • Unidentified Company Representative:
    Thank you. On the call with me today is Brad Gray, NanoString President and CEO, and Jim Johnson, CFO. Earlier today NanoString released financial results for the fourth quarter and year-ended December 31, 2014 and a copy of the press release request be found on our website at nanonstring.com. During this call we will make a number of forward looking statements about financial projections existing and future collaborations, future business growth, trends and related factors and their actions with third party payers and their timing and outcome of any related reimbursements, our strategic focus and objectives and the development status and anticipated success of additional 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 today's call. We undertake no obligation to publically update any forward-looking statements. Additionally, non-GAAP financial measure will be referred to during today's call. a reconciliation of these non-GAAP measures is included in today's press release which is available on our website. With that I would like to turn the call over to Brad.
  • Brad Gray:
    Thanks, Lee. Good afternoon. Thank you for joining us today. 2014 was another year of strong growth for NanoString. Our nCounter technology emerged as a leading platform for tumor profiling with broad and growing acceptance in both research and clinical markets. The validation and impact of our platform was underscored by the rapidly growing body of research generated by our customers which averaged 5 new papers per week and now totals about 650 peer review publications, up 70% compared to one year ago. The increase in use of our platform by academic researchers, biopharmaceutical companies and clinical laboratories delivered revenue of $47.6 million for the full year, growth of 52% over 2013. The year finished on a high note and we need meaningful progress across all three core areas of our business, Life Sciences, Companion Diagnostics and Prosigna. Fourth quarter revenue of $15.6 million set a new record and represented 54% growth. Today's call will have three segments, first I will provide Q4 highlights and our three core areas of business, next our CFO Jim Johnson will summarize our financial performance and outlook and finally I will wrap up by outlining our key strategic objectives for 2015 before opening up the call for your questions. In 2014 our core instrument and consumer business remained the primary engine driving our growth. As we substantially expanded our install base at nCounter analysis systems while maintaining a high level of consumable pull-through. We added both research and clinical lab customers, growing our install base by 44% year-over-year ending the year with a worldwide install base of 264 nCounter analysis systems. Many of the trends that we saw throughout the year continued through the fourth quarter. Oncology was once again the primary driver of new instrument placement accounting for approximately 70% of new nCounter systems placed in the quarter. The popularity of our dual use FLEX configuration also continued in Q4 as more than half of our instruments placements were for disconfiguration which we believe validates our strategy of combining cancer research and diagnostics on a single platform. During the fourth quarter we continued to penetrate international markets with more than half of our new nCounter systems sold outside of North America. We now have approximately 40% of our install base located outside the United States with China representing our second largest market globally. We believe these trends in nCounter adoption in oncology research, clinical laboratories and international markets are durable and will continue in 2015. Turning to consumables, the fourth quarter set a new record for consumable revenue with annualized consumable pull through well above $100,000 per system. Highlight of the quarter was the demand for our panel products which more than doubled year-on-year. This was growth driven in large part by the success of our PanCancer panels which we introduced earlier in the year. Our PanCancer pathway panel offers researchers a simple way to investigate the biology of 770 genes in all major cancer pathways. While our PanCancer Immune Profiling panel is unique offering targeted toward the dynamic field of immuno-oncology. Consumable sales to our biopharma customers and our contract research organizations were robust accounting for over 50% of consumable sales during the quarter. This was supported by several large orders from leading biopharma companies running biomarker studies on tissue samples collected during linical trials for cancer. We are especially pleased by the enthusiastic use of our nCounter platform by the biopharma companies as we believe this sets the stage for more strategic relationship in the future. Moving to our second area of focus and growth, 2014 marked our entry into Companion Diagnostics. I'm proud of the results we achieved and our collaboration with a cell gene under which our technical work progressed at a rapid pace and our interactions with the FDA went more smoothly and faster than expected. The robust study of pivotal Phase 3 clinical trial using cell genes Revlimid to treat DLBCL opened earlier this quarter with numerous sites now open for patient screening based on their DLBCL sub type as assessed by our in vitro diagnostic assay. We anticipate the results of this study, this success will be used to support a PMA filing in the U.S. and other international registrations several years in the future. In parallel our work with cell gene we have commenced a new initiative to collaborate with biopharma companies on the analysis of clinical trial results using our existing clinical assays Prosigna and the DLBCL sub typing test. Unlike our cell gene collaboration these translational projects do not commit NanoString to develop a companion diagnostic. Rather they are designed to allow biopharma partners to explore whether one of our clinical assays could in the future become a companion diagnostics for one of their drugs. During the fourth quarter we entered translational agreements with two undisclosed biopharma companies one focused on Prosigna and the other on our DLBCL sub typing test. While these of translational projects offer economics that are much lower than a companion diagnostic partnership such as our cell gene collaboration. We are optimistic that they may lead to more substantial companion diagnostic partnerships with these companies in the future. Turning to the our Prosigna breast cancer assay, sales in Q4 were modest consistent with our that uptake will remove limited until official reimbursement is secured. Our attention throughout 2014 was focused primarily on building the install base of Prosigna testing sites and establishing reimbursement and we made meaningful progress on both of these objectives. As of today 37 clinical laboratories across 12 countries have acquired nCounter systems with the intent of offering Prosigna testing services. Since our last call, we have added seven new medical centers across Australia, France, Germany, Italy, Spain, Switzerland and the United States. In U.S. market nine labs are now offering the Prosigna services and another six labs are preparing for launch. Outside the U.S. 11 labs are offering Prosigna services while another 11 labs are preparing to come on line in the months ahead. During 2014 we began establishing reimbursement for Prosigna and have had important lands in both the U.S. and Europe. In the U.S. total covered lives Prosigna are now more than 45 million or approximately 20% of the U.S. patients indicated for Prosigna. In Europe we have coverage in several regions of Spain and the governments of Germany and Switzerland have recently taken important steps toward the reimbursement of genomic testing for breast cancer for the first time. Inclusion in breast cancer treatment guidelines will be a key catalyst for reimbursement and adoption of Prosigna. Earlier this month with NCCN posted on our website a partial update of their breast cancer treatment guidelines. Prosigna was not specifically addressed in the partial update and we look forward to seeing the complete update of the NCCN guidelines when they are available. We expect the positioning of Prosigna and the discussion section of the guidelines will be important to our interaction with the both the Palmetto MolDx team and the largest U.S. private payers. And we believe that the favorable treatment of the discussion section could facilitate positive coverage decisions over the year ahead. In parallel to pursuing guideline inclusion we continue our efforts to build the body of evidence for Prosigna's clinical utility. To that end two particularly important results were presented during the Annual San Antonio Breast Cancer Symposium in December. First our collaborators in Spain presented positive results from the first Prosigna decision [ph] impact study showing physicians in a real world setting used Prosigna to help guide their use of chemotherapy. Second researchers from the UK represented results from the [inaudible] study which rated Prosigna very highly compared to other major breast cancer gene signature tests. As a result Prosigna has been chosen over other tests for use in a major perspective clinical trial which we expect to be enrolled in the U.K. beginning later in 2015. Overall we are pleased with our progress on multiple fronts and optimistic about our continued growth. I would like to turn over to Jim Johnson to review the financial results and provide financial guidance.
  • Jim Johnson:
    Thanks, Brad. The company had a strong fourth quarter. The total revenue of $15.6 million, up 54% versus the fourth quarter of 2013. Instrument revenue for the quarter were $6.3 million up 20% over a strong comp in fourth quarter of 2013. Consumable revenue was a record $7.2 million up 69% and well above our historical benchmark for annualized pull through of a $100,000 per system. The growth in consumables reflected more than the typical volume of large orders from biopharma customers. Prosigna test kit revenue remain modest at $156,000. We recorded $1.4 million of collaboration revenue for the quarter most of this relates to our cell gene collaboration. With modest contribution from an exploratory collaboration with a pharma company involving an ongoing Phase 2 study. During the fourth quarter we received an incremental $1 million milestone from cell gene which brings the total cash received under the collaboration to-date to nearly $12 million, with $2.9 million recorded as revenues since inception in March of 2014. Gross margin on product and service revenues for the quarter was 53% compared to 52% a year earlier. R&D expense was $5.4 million compared to $4.5 million in the fourth quarter of 2013. The increase reflects increased investment in the advancement of our nCounter technology, including the engineering and testing of our next generation system as well as cost related to diagnostic development including the cell gene collaboration SG&A expenses was $15 million for the fourth quarter up from $9.1 million a year ago. The increase versus the prior year reflects the Prosigna launch cost, expansion of our commercial team and increased administrative cost to address the company's growth. Stock based compensation expense contributed significant to the overall growth in operating expenses, it totaled $1.3 million for the fourth quarter of 2014 compared to $380,000 a year earlier. Our press release includes the schedule of non-GAAP financial information which shows our operating results as it's all pre-IPO preferred stock have been converted to common stock. On a non-GAAP basis our net loss for the quarter was $9.7 million or $0.53 per share compared to 7.5 million or $0.51 per share in the fourth quarter of 2013. You should refer to that schedule for detailed reconciliation of GAAP and non-GAAP result. We ended year with $72 million of cash investments. Now, I will turn to our financial guidance for 2015. We’re currently projecting total revenue of $58 million to $61 million for the year which includes collaboration revenue of $2.5 million primarily from our existing collaboration with cell gene. Potential new companion diagnostic collaborations represent upside to this guidance. Following the announcement of new collaborations we intend to update our guidance to reflect related revenue impact. Total product and service revenue is projected to be $55.5 million to $58.5 million for the year reflecting growth of 25% to 31% over 2014. We expect this growth to accelerate as we progress through the year due to the impact of new product launches and sales personnel hired in late 2014 and early 2015 we are expected to reach full productivity in the second half of the year. We have included $2 million of Prosigna revenue in our guidance reflecting an assumption that Prosigna will be positively described in updated NCCN guidelines leading to additional reimbursement wins in the second half of the year. In the interim however we expect modest uptake to continue. There are other expected revenue trends that I would like to highlight. With respect to instrument revenue we plan to release the new Gen 3 system in mid-2015 and expect the initial revenues in the third quarter. As a result we anticipate instrument revenue growth will moderate in the third quarter while the funnel for the new lower price system builds. With respect to consumables revenue for the installed base of the current Gen 2 system for the full year we expect to maintain consumable pull through at or near the $100,000 per system we generated historically. However consistent with our experience over the past three years, we expect pull through in the first quarter of the year to be somewhat lower on a per system basis than in the other three-quarters. We expect gross margin on product and service revenue in 2015 to continue to fluctuate from quarter to quarter depending on the mix between consumables and instruments. For the year in total we expect overall gross margin to be in the range of 53% to 55%. On a quarterly basis ignoring the impact of revenue mix we expect it to move upward over the course of the year consistent with the growing scale of our consumables manufacturing operation. As a reminder collaboration revenue is excluded from our calculations of gross margin. After making significant investments to grow our business over the past two years we expect operating expense growth to moderate in 2015 and remain relatively consistent with our fourth quarter 2014 run-rate. We are expecting total operating expenses of $77 million to $81 million for the year which represents an increase 6% to 12% over 2014. We expect operating expenses to include approximately $5 million to $6 million of stock based compensation expense for the year. Our operating loss for the year is expected to be in the range of $42 million to $49 million. Interest expense is expected to be approximately $4 million for the year. However if we decide to borrow any of the incremental $15 million available to us under our existing term loan agreement interest expense would be higher. Finally total capital expenditures are expected to be $4 million to $5 million for the year of which approximately half is expected to be funded by our landlords as leasehold improvements. So with that I will turn it back over to Brad to wrap up.
  • Brad Gray:
    Thanks, Jim. We enter 2015 at a position of strength stemming from the continued traction we have achieved in our core life sciences signs business. Our fundamentals are sound with a growing worldwide install base and strong consumable pull-through. Our entry into the clinical diagnostics market provides the potential for meaningful upside as our Prosigna launch progresses and our companion diagnostic program matures. I would now like to highlight four strategic objectives we will pursue during 2015. First we plan to sharpen our focus on oncology where we believe our technology plays a unique role and provides us with a strategic advantage. We will seek to solidify our leadership in tumor profiling while expanding into the field of immuno-oncology. On our commitment to oncology cuts across all three business areas as we aspire to provide best-in-class products for unlocking [ph] biology from tumor samples and yielding new insights and therapies and improving patients' lives. In recognition of this we recently restructured from two independent commercial organizations, one for life sciences and another Prosigna to a single organization empowered to sell our entire suite of products and targeted primarily toward academic medical centers and biopharma companies. We believe that this approach strikes the optimal balance between effectiveness and efficiency in reaching the leaders in oncology who are our customers and partners. Immuno-oncology is a dynamic field in which we are already engaged via the launch of our PanCancer immune profiling panel. In 2015 we plan to build on our current momentum and relationships, introducing additional assays and collaborating closely with leaders in the field at both academic centers and biopharma companies. We expect immunology to become an important part of our business in the future. Our second strategic objective is to deepen our relationships with biopharma companies including building a pipeline of companion diagnostics. In 2014 biopharma customers drove a substantial fraction of our growth in instruments and consumable and today represent over 20% of our install base. In 2015 we expect to continue growing our product sales to biopharma customers while also evolving our relationships with them to be more strategic and ultimately to become a trusted companion diagnostic partner. While we have not factored revenue from the potential new companion diagnostic collaborations into our 2015 guidance, we are optimistic that we will have the opportunity to enter into one or more such collaborations this year and that over time companion diagnostic partnerships will become a significantly driver of our growth and cash flow. Our optimism stems from our numerous ongoing dialogues with biopharma companies interested in Prosigna and our DLBCL sub typing test as well as the biomarker signatures discovered by some of the more than 30 companies' biopharma who are currently using our nCounter technology. Our third strategic objective is to further penetrate the clinical laboratory market with the FLEX configuration of our nCounter system, our Prosigna breast cancer assay and our elements reagents. We plan to increase our focus on working with hospitals and Cancer Centers where our value proposition of the centralized breast cancer testing resonates most strongly. In addition we’re continuing our effort to demonstrate Prosigna's clinical utility and look forward to presenting the results from several new studies at major meetings later this year. Our fourth objective is to expand our addressable market by launching new products with broad affordability and appeal. Historically we have offered instruments at prices that were affordable primarily by labs which share the equipment across multiple users, as a result the pace of our install base growth has been restricted by capital budgets and long sale cycles. In mid-2015 we expect to launch a lower cost nCounter system designed to meet the needs of individual researchers at a much more affordable price. We expect that this launch will increase our addressable market to two to three times what it is today. We are currently in an intensive internal verification and validation phase and once completed it should allow us to skip beta testing and go straight to full product launch. In parallel we plan to introduce an application allowing researchers to simultaneously profile both the gene expression and the pro gene expression of the sample on a single instrument system. We believe that this multi-omic application will broaden the appeal of our technology to researchers who have traditionally focused more on [inaudible] and provide another distinctive capability not generally available from other technology platforms. Later this week data from this multi-omic will be showcased at the AGBT Meeting in Marco Island, Florida. And we look forward to a beta launch of our first multi-omic at the AACR Meeting in April. Together we expect to launch of our lower cost nCounter and multi-omic applications to broaden the addressable market, further differentiate our technology and build our strategic advantage in the field of tumor profiling. In conclusion these four strategic initiatives are designed to solidify the role of our company and technology at the center of cancer research and diagnostics. We believe that successful achievement of these objectives will drive growth and value creation not just in 2015 but over the long term. We look forward to updating you on our progress against these initiatives in future calls. I would now like to open the line for questions.
  • Operator:
    [Operator Instructions]. Our next question comes from Tycho Peterson of JPMorgan. Your line is now open.
  • Unidentified Analyst:
    This is actually Patrick [inaudible] for Tycho. I guess Brad for you, on the NCCN update can you give us a feel for your confidence level on being included in the next update and then best idea on timing you are kind of thinking mid-March around that?
  • Brad Gray:
    I wish I could provide more visibility into the NCCN process but I can't. As you know the NCCN guidelines are developed in a closed process by a committee of breast cancer experts. And once NanoString submitted it's application last summer we really had very little visibility into the ongoing proceedings. So it's hard for me to a level of confidence about whether it will be described and how in the discussion section. That being said as we said many times we believe our submission was a strong win. It included FDA clearance, numerous peer reviewed publications including head to head study against the tests that’s already included in the guidelines. And we believe it's a strong package that the guidelines committee should be compelled to speak to in their discussion. In terms of timing, what we understand is that traditionally the full guideline updates for breast cancer appeared at about the same time that the JNCCN Journal issued it's annual breast cancer issue. According to the JNCCN editorial calendar the April issue is meant to be dedicated to breast cancer and if continued according to plan we would expect that the full guidelines would be released around that time or as early as mid-April when the -- mid-March when the electronic copy of that issue would appear online.
  • Unidentified Analyst:
    Okay. So the conference level hasn’t changed -- we shouldn't read into the fact that you are including some revenues assuming that the approval is happening your confidence level is the same as it was call it, five or six months ago.
  • Brad Gray:
    Correct.
  • Unidentified Analyst:
    And then I guess just on the nCounter NextGen system, I appreciate the color on, you are going to skip the beta launch. What possible hiccups could happen with the internal review and what's is the confidence level on that kind of midyear target for launch?
  • Brad Gray:
    Our confidence level is high. The program is going very well so far. We have received manufacturing pilots and we’ve been putting those pilots through their paces. We will be receiving more manufactured pilots and inventory over the weeks and months ahead. That being said, you know, the reason we put an instrument through the so many test is to discover any bug that may be there before it's released into market and there is always a modest risk that something would turn up. Thus far we haven't seen any kind of show stoppers and we remain on track.
  • Unidentified Analyst:
    Okay and last one. I guess on the revenue guidance. You said there is no companion diagnostic, no future companion diagnostic partnerships included. I guess if you got one of those how much upside it could add in terms of revenue for 2015?
  • Brad Gray:
    It is obviously very hard to say in the abstract. These structures, you know, these collaborations can be structured in numerous different ways which have important implications for a revenue recognition. I wouldn't hazard a guess about what the contribution in 2015 from a new deal would be. I think the one benchmark we have is the cell gene deal from 2014 which contributed about $3 million in in year revenue. It's hard to say whether the next accounting treatment of the next collaboration would be similar.
  • Operator:
    Thank you. Our next question comes from Steve Beuchaw from Morgan Stanley. Your line is open.
  • Steve Beuchaw:
    I actually just have a couple of clarification questions on the guidance of 2015 and risk of being uncreative. I will follow up on Patrick's questions on Gen 3 and Prosigna. First let's go to Prosigna. So you guide for I believe you said $2 million a contribution in 2015 which is a fairly substantial step up relative to 2014. So my question what's behind that, if the visibility on the NCCN process for very understandable reasons is still really low and MolDX visibility is of course still really low. Are you taking a view that you can get to that level without the NCCN as function of expanding coverage? Asked another way if you got the NCCN would it drive upside to that figure? How does that number come about? Thanks.
  • Brad Gray:
    Let's talk about what's in that $2 million guidance number for Prosigna. First it split about 50/50 between the U.S. market and the ex- U.S. market and that split represents more or less the revenue split we experienced for Prosigna in 2014. In the U.S. as Jim said we do assume a positive description in the NCCN guidelines and we also assume that that full guidelines will be updated along the timeframe that I just described which would be in the April timeframe and around the time that JNCCN breast cancer issue is expected to appear. We would expect that we would be able to use that guideline update to gain some incremental reimbursement in the second half. But we don't expect contribution from a major positive MolDX decision in 2015. On the other side outside the U.S. on the other million dollars we would assume that we continued our gradual penetration of those regions that we’re already operating in. Some of that will be in regions where we have government reimbursement like Spain and emerging reimbursement in Germany and Switzerland. Others would be private pay business that we have been enjoying since our launch and some of the revenue could be associated with the clinical study I mentioned in the UK that would begin in the second half. So I think it's a relatively modest number overall. It is a step up certainly from our current run rate. We view it as a continuation of the trends and the assumptions that we just described.
  • Steve Beuchaw:
    And then on Gen 3, Jim you mentioned there will be some I want to say volatility that will be over stating it a little bit. In the third quarter as the system comes out. You build the funnel, I would image the sales force needs to redirect it's efforts to some extent. Can you give us a sense for the number one, how much of an impact you are expecting from the Gen 3 launch as it is a bit of a distraction in second half. And then number two, building on your comment that you expect some acceleration in terms of instrument revenue in the back half, how you’re thinking about Gen 3 versus Gen 2 instrument mix as we get to the fourth quarter and perhaps beyond? Thanks so much, guys.
  • Jim Johnson:
    So basically, after the Gen 3 launch we are going to have a segmented product line. We think that Gen 2 should still be the choice of many customers', clinical labs will like the diagnostic capability obviously by our biopharma customers. The FDA clearance and high through put and [inaudible] labs also high throughput, so first of all we think there is a minority of our instrument purchases who would have bought Gen 2 will opt instead for Gen 3. So nevertheless there is going to be a minority fraction of those customers who are going to looking at the new system and at the same time as you know our launch strategy is sort of hard cut over with the new system as opposed to a slow soft launch. And so it's going to take time for that funnel to build. So in the first quarter of launch the dynamic we see is that there will probably not be the rapid uptake of the new system and it will take approximately a quarter for that funnel to build. And at that point we expect that the increased size of the opportunity for the Gen 3 system to make up for that and actually result in higher instrument revenue growth percentages.
  • Operator:
    Your next question comes from the line of Jeff Elliott from Baird. Your line is now open.
  • Jeff Elliott:
    First one here is on NextGen, any update on the list price or pull through you’re expecting on an instrument?
  • Brad Gray:
    Not at this time, Jeff. We will plan to provide some more the update on that obviously at the time of launch.
  • Jeff Elliott:
    And Jim, looking at guidance, what do you assume for FX, it's pretty relevant this year just given the growing international install base. What is your revenue on the margin side for FX?
  • Jim Johnson:
    I know that’s a question that is on people's minds these days. For us fluctuations in foreign exchange rates had a negligible direct effect on our revenue. It's historically less than 10% of our revenue has been billed in foreign currency. So when we are looking at guiding for 2015 we didn't really make any specific assumptions for FX changes on our 2015 revenue guidance. But indirectly, of course, continuing strengthening of the U.S. dollar could indirectly impact demand for products and discounting the products in foreign markets. But I think that’s implicit in our guidance.
  • Jeff Elliott:
    So let me clarify, Jim. Do you mean your guidance assumes rates where they are today hold constant or you haven't made assumptions for any FX change whatsoever?
  • Jim Johnson:
    Roughly speaking, roughly unchanged from where they are today.
  • Jeff Elliott:
    I appreciate color there, I think [inaudible] you could update the models. Hypostatically assuming you don't get the NCCN commentary that you’re hoping which I do think it's unlikely. But if you don't get that how should we think about OpEx in that scenario. Is there something that would you kind of dial that back for the rest of 2015 if that were to happen?
  • Brad Gray:
    I think it is early to discuss what we would do operationally in the scenario where we don't end up in the description of a NCCN guidelines. Obviously at all times we are looking at the best and highest use of our operating expense dollars and we have to think about investment in both Prosigna versus our other product lines and then within Prosigna the investment in clinical data versus commercial activity and reimbursement. Today, we have really focused our investment on the activities that we think are most important, instrument placement, new Prosigna sites as well as reimbursement activities and part of the efficiency we sought in the commercial reorganization we described was a more focused on those two activities really dialing back some of the straightforward promotional and detailing activities direct to oncologist. So we’re cognizant of the need to constantly look at the mix of our commercial expense in investment and you know we won't be specific at this point in time about how we would manage a situation without guidelines, but we would plan to update you at that time.
  • Jeff Elliott:
    One last one for me here, on the 20% you do have under coverage for Prosigna, what level of reimbursement are they covered at?
  • Brad Gray:
    Our understanding is the last who are receiving reimbursement under those policies are receiving at around the same rate that the other genomic tests for breast cancer are being reimbursed which is nearly $4000 per test.
  • Operator:
    [Operator Instructions]. Our next question comes from Justin Bowers of Leerink. Your line is now open.
  • Justin Bowers:
    Brad or Jim, could you just thinking about the Gen 3 box a little differently. What is the contribution maybe as a percentage of instrument growth or revenue growth next year that you have factored in the guidance?
  • Brad Gray:
    We are not currently breaking that out at this point. I think that we were pretty clear on the kind of timing of the launch being midyear and therefore revenue contribution starting in Q3 and Q4 and building in Q4 as the funnel grows. I think you can do some -- it's obviously a minority of our overall instrument revenue. I don’t think we’re going to be any more specific than that at this point in time.
  • Justin Bowers:
    Okay. And then just in terms of the commercial changes you made. Could you talk about maybe just elaborate a little there on the restructuring and then did you add any sales coverage in the fourth quarter?
  • Brad Gray:
    Sure. Yes, on the restructuring. What we kind of realized over the past year that oncology has really become the primary market we serve. And the same time the lines between the traditionally demarketed research and clinical testing have really bordered. It's also become clear that at this stage of our Prosigna launch the most critical commercial activities are those geared towards establishing new sites and reimbursement. So we took a look at what we thought would be most efficient and effective commercial channel and decided to move from the two independent commercial channels, one to life sciences and one to diagnostics to a single one focused on academic centers, clinical labs and biopharma companies. And so that we think is the right mix for us today. Taking advantage of the power of our technology to decentralize testing into these hospitals and academic centers and foregoing increased investment in detailing to oncologist at a stage in a Prosigna product launch where reimbursement is not yet widespread.
  • Operator:
    Thank you. I'm not showing any further questions at this time. I would like to turn the call over to management for closing remarks.
  • Brad Gray:
    Thank you for taking time this afternoon to hear about our Q4 and full year results. We look forward to seeing you at AGBT and other conferences coming up soon. Thank you.
  • Operator:
    Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. And you may all disconnect. Everyone have a good night.