Illumina Inc (ILMN) 2005 Q2 法說會逐字稿

Excuse me, everyone. We will now begin the conference. All lines will be muted during the broadcast. If you should need assistance during the call, please pick up your handset and press star zero, and a coordinator will be standing by to assist you. There will be a question and answer session following the presentation and instructions for asking a question will be given at that time. And today’s call is being recorded. I would like to now introduce the Director of Corporate and Marketing Communications, Bill Craumer. Please go ahead, sir.

Thanks, Melissa. Good afternoon, everyone, and welcome to Illumina second quarter conference call. After the close of market today we released our financial results for the second quarter and 6 month period ended July 3, 2005. During this call, we will review our results and provide financial guidance for the remainder of 2005 following which we’ll host a question and answer session. Presenting from Illumina today will be Jay Flatley, our President and CEO, and Christian Henry, who joined us in early June as VP and CFO. The call is being recorded and the audio will be archived on our website at illumina.com.

During the call we’ll be providing guidance and discussing plans for future commercial activity. Our intent is for these forward-looking statements to be protected under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risk and uncertainty. Actual events or results may differ materially from those projected or discussed. All forward-looking statements are based upon current information available and Illumina assumes no obligation to update these statements. To better understand risk factors, we refer you to the documents that Illumina files with the Securities and Exchange Commission, including forms 10K and 10Q. I’ll now turn the call over to Christian.

Thanks, Bill. Good afternoon, everyone, and thank you for joining us today. I hope that you’ve had a chance to review our financial results that we released after the close of market about an hour ago. I would first like to walk you through our operating results for the second quarter, then follow with an update on our financial guidance for the full year and third quarter, and then I’ll turn the call over to Jay for an update on the Company’s progress.

For the second quarter, we are pleased to announce our 16th consecutive quarter of revenue growth, with record total revenues of $15.8 million. This is in the range of our guidance provided last quarter of $15.5 to $17.5 million. Total revenue grew nearly 38% over Q2 2004 total revenue of 11.5 million. Product and services related revenue grew 42% during the quarter to $15.4 million from $10.9 million in the comparable quarter of 2004. Revenue growth was driven primarily by a strong increase in consumable sales. In particular, sales of both our genotyping and gene expression arrays saw significant growth as our increasing installed based continued to ramp up array usage.

During the quarter, we shipped 18 BeadStations which brings our total combined installed base of BeadStations and BeadLabs up to 82. Of the 18 stations shipped, 4 were sold under lease programs and therefore the revenue was largely deferred. We are pleased with the success of our leasing program as it significantly reduces the upfront capital acquisition costs, enabling more researchers to gain access to these stations and in turn accelerating the usage of arrays. Services revenue increased 53% during the quarter to $2.8 million, compared to $1.8 million in Q2 of last year. Services revenue includes revenue from our custom services business as well as revenue from instrument maintenance contracts. Growth in services revenue is primarily related to the increase in our custom services business. As a matter of fact, it should be noted that Q2 2005 does not include any revenue associated with the HapMat project, while Q2 ’04 services revenue included nearly 950K.

Research revenue was 405K for the quarter and is related to revenue generated under government grants. We expect research revenue to fluctuate from quarter to quarter based on the timing of R&D activities under those grants. Costs of product and services revenue was $4.7 million for the second quarter compared to $3.1 million in the second quarter of 2004. This represents a product and services gross margin of 69.3% compared to 71.8% in Q2 ’04 and 69% last quarter. The reduction in product and services gross margin percentage relative to Q2 ’04 is primarily related to our product mix. We expect that changes in our product mix will continue to drive fluctuations in our gross margin percentages between the high 60s and low 70s for the next several quarters.

Research and development expenses were $7.3 million for the quarter, compared to $5.3 million in the second quarter of 2004. The growth in research and development spending is principally related to the inclusion of CyVera’s research and development expenses for most of the second quarter. Additionally, research and development expenses included a portion of our facilities rent compared to last year as we completed our sale/leaseback transaction in Q3 of ’04.

Selling, general and administrative expenses were $6.5 million during the quarter compared to $6.0 million in the second quarter of last year. Growth in SG&A expenses is related to our continued focus on building our commercial infrastructure, partially offset by lower G&A expenses. G&A expenses were down for the quarter relative to last year, due to the timing of legal expenses incurred in the second quarter of 2004. Additionally, as we previewed in our Q1 call, during the second quarter we recorded a one time charge of $15.8 million for acquired in-process research and development in connection with the completion of our acquisition of CyVera. This is in line with our original estimate of $15.5 million.

Finally, for the second quarter we reported a net loss on a GAAP basis of $18.5 million or $0.46 per basic and diluted share compared to a net loss of $3.5 million, or $0.10 per basic and diluted share in the second quarter of 2004. Excluding a one time charge for in-process research and development, our net loss for the quarter was $2.7 million or $0.07 per basic and diluted share which was within the range of guidance provided on our last quarterly call.

Turning to the balance sheet, we ended the second quarter with $54.6 million in cash compared to $62.1 million at the end of last quarter. During the quarter we used approximately 7.5 million in cash. Primary drivers for the use of cash was a build out of our array manufacturing facility to support our increased array sales and the completion of our collaboration activities associated with Invitrogen as well as the cash used to complete the CyVera acquisition. It should be noted that the build out for Invitrogen was largely completed this quarter. We continue to believe that we are well positioned from a cash standpoint. Accounts receivable DSO for the quarter was approximately 69 days compared to 78 days in Q2 of last year and consistent with last quarter. Our expectation is that DSO will fluctuate based on our quarter to quarter geographic mix of revenue. However, our objective is to maintain DSO between 70 and 75 days.

Finally, our balance sheet for the second quarter includes goodwill of $2.3 million recorded in connection with the CyVera transaction. I would now like to shift to a discussion of our financial guidance for the remainder of 2005. As we closed the CyVera transaction during the second quarter, the financial guidance will, of course, include the effect of that acquisition on our financial statements. We expect total revenue for 2005 to fall within the range of 70 to 76 million, which is lower than our previous guidance of 75 to 82 million. Assuming that we achieve the midpoint of our revised guidance, this will represent top line growth of more than 43% compared to 2004.

We believe that continued demand for our systems will drive both instrument and consumable revenue growth. We anticipate that the recent launch of our whole genome products and expression in genotyping will fuel a substantial jump in revenues in the next 2 quarters. As we’ve indicated previously, we do not expect revenue from CyVera in 2005. Full year earnings per share, on a GAAP basis are expected to range between a loss of $0.55 to $0.45 per basic and diluted share. Excluding the effect of one time charges for in-process research and development recorded in connection with the CyVera acquisition, we expect full year earnings to range between a loss of $0.16 to $0.06 per basic and diluted share compared to our previous guidance of a loss of $0.14 to $0.01 per basic and diluted share. For the full year, research and development expenses are expected to be in the range of $28 to $30 million, which is consistent with our prior guidance. Selling, general and administrative expenses are expected to range between $27 and $29 million, which is $4 million lower than our previous guidance of $31 to $33 million, due largely to the timing of legal expenses.

For the third quarter, we are expecting total revenue to range between 18 and 20 million. Instrument placements and consumable growth will be the key revenue growth drivers in the quarter. Net loss per share should range from a loss of $0.06 to $0.03 per basic and diluted share. I’ll now turn the call over to Jay for additional comments before we begin Q&A.

Thanks, Christian, and good afternoon everyone. First I’d like to add a bit of color to Christian’s comments about our financial performance in Q2 and our guidance going forward. Overall, we were quite pleased with our results in Q2. Comparing year over year, we successfully replaced more than $1 million in revenues derived from the HapMat project in Q2 ’04, delivering an organic growth rate of more than 50% year over year, ex HapMat.

Our order receipt rates were strong in the quarter resulting in a record ending backlog. As Christian mentioned, we shipped 18 BeadStations in the quarter, surpassing the previous maximum of 14 that we shipped in Q3 of last year. We’ve lowered our full year revenue guidance largely due to the loss of two large deals which in combination accounted for approximately $8 million in expected 2005 revenue. These two transactions were very close to being booked, but were ultimately won by two companies working in combination, with partial solutions from each. The requirement to complete these projects before year end with greater than 100,000 SNPs played the key role in these decisions as the buying groups in these institutions acknowledged the scientific advantages of the Illumina approach.

In a number of product areas, we had insufficient product available to meet demand during the second quarter. We have a substantial program underway to build array manufacturing capacity over the next several quarters which will be completed with only a moderate level of capital investment. In the short term, however, our revenue may be limited by our ability to supply the commercial demand we expect and at the same time manufacture the various array configurations required by our R&D teams. Our revised financial guidance incorporates these considerations.

I want to take a minute to highlight the performance of our services business. As we’ve mentioned previously, we have seen continued strong growth in the demand for genotyping services. Despite having zero HapMat revenue in the second quarter, we grew our total service revenue figure compared to last quarter which included substantial HapMat revenues. Exclusive of HapMat, our services revenue grew 300% in Q2 ’05 compared to Q2 ’04. During the quarter we delivered and recorded revenue for 21 contracts, 4 of which were for Linkage, while 17 were for custom genotyping projects. These contracts included work on 5 different organisms including human, pig, mouse, cow and dog, and were delivered to 6 countries including the U.S., Germany, Iceland, France, Australia and the U.K. We processed 25,000 samples and over 44 million custom assays on our golden gate platform.

On these highly customized projects, our combined accuracy rate was in excess of 99.994%. This performance demonstrates the underlying quality of our arrays, our golden gate assay method, and the high quality of our team. Shortly, we will make our new Infinium assay and Human 1 BeadChip available as part of our genotyping services operation.

Next I’d like to provide additional detail about a few of our recently launched products, our product pipeline, and give you a sense for what the market is saying about our products. Finally, I’ll provide an update on our Invitrogen collaboration. Since our last call, we’ve begun shipping two important new products. The first is a pair of standard SNP panels that gives investigators the ability to study the MHC regions of the genome. The MHC, or major histocompatibility complex, is an area of the genome that is typically difficult to genotype and is directly implicated in inflammatory and autoimmune disorders such as multiple sclerosis and diabetes. On the other end of the multiplex spectrum, we began shipment of our Sentrix Human 1 genotyping BeadChip at the end of June. This whole genome product can genotype in excess of 100,000 SNP low side.

The content of this product was carefully selected to deliver the highest information value at this level of complexity, with 70% of the markers located in or near genes. It is widely believed that these are the most likely places in the genome to find association with disease. Our ability to select and interrogate high value markers at unlimited multiplex levels is made possible by our revolutionary Infinium assay. This assay makes all SNPs in the genome available to our arrays and does not require a PCR step. When used with our Sentrix arrays, the Infinium delivers unparalleled data quality and is available with supporting automation for high throughput environments.

The next product in the family will be our 250K array that can be used independently or in conjunction with the Human 1 to assay 350,000 SNPs. The content has been selected in consultation with an international consortium that we formed and will be made up of so called PEG SNPs identified during the HapMat project. This project will take advantage of the enormous research done by the international community to identify the SNPs of highest value and to avoid genotyping SNPs that are largely redundant. We plan to introduce products with even greater content next year, including a pair of arrays that together will be able to interrogate up to 1 million SNP low side per sample.

In the gene expression market, we’re continuing to gain traction with the whole human genome products. We currently have 32 customers actively ordering arrays and expect that that number will continue to grow quarter to quarter, although we don’t plan to update this number on a regular basis. Additionally, we’re preparing to launch two new BeadChip arrays for mouse. Like the Human products, the Sentrix Mouse 6 will contain 6 whole genome mouse samples on one micro array, while a companion product will analyze REF-C content against 8 samples on one chip. We will follow this with arrays for rat, another important model organism.

So our development pipeline is strong in both the whole genome and the focused content areas. While product specs are important, the true test of a product’s value is performance in the customers’ hands. For genotyping, results are coming in from customers using our Human 1 BeadChip and Infinium Assay. We’re hearing 3 consistent messages. First, customers are getting call rates in accuracy that are as good or even better, than with Illumina’s golden gate assay, the gold standard in the genotyping market today. Second, customers report that the Infinium assay is remarkably easy to use compared to competitive approaches. And finally, lab to lab reproducibility of Infinium data is remarkably high, in some cases 100%. This bodes well for investigators looking to share experimental data and will be a substantial advantage for consortia based studies.

We’re getting equally strong results in the gene expression area where investigators are reporting high sensitivity and reproducibility for whole genome as well as focused approaches. For example, one NIH investigator, noting the concordance of Illumina expression data with quantitative PCR, reports that his lab is “close to not running real time PCR anymore for validation”. An expensive process, QPCR is used routinely to validate small numbers of genes of interest as observed in micro array based experiments.

Two important committees have recently been formed to enable cross-platform comparability studies between gene expression data sets. As the studies unfold, we’re confident that they will not only further validate the performance of Illumina’s platform, but also enable customers using competitive technology to begin doing experiments on our systems since they will now have the tools for comparing cross-platform data. This may open new doors for institutions that might previously have seen their current investments in systems and data as a barrier to investments in newer technologies.

Finally, I’m pleased to report that our Invitrogen collaboration is moving into its next phase. We’ve just turned over oligo sales, marketing and online ordering responsibility to Invitrogen. The initial collaboration products are being manufactured on our current generation synthesizers. Our fourth generation Oligator DNA synthesizers are currently in the validation process and we expect them to go into production on two base oligos very shortly. In closing, we’re very pleased with the progress that we’re making developing highly innovative new products that provide the research community with the powerful tools to understand genetics and disease. At the same time, we’re making great strides in building out our commercial infrastructure worldwide to enable and support a rapidly growing customer base and market opportunity. I think we’re now ready to take questions. Operator, will you please explain to our listeners the procedure for Q & A?

[Operator Instructions]. Your first question is from Ted Tentoff with Piper Jaffrey.

Great. Thanks, guys. Can you hear me okay? Good. Hi, how are you? Thanks for the updated guidance on the call and the quarter looked pretty good. One quick thing, can you give us an idea of sort of what the magnitude is between genotyping and expression array sales at this point? And give or take, where are the oligo revenues? Are you actually already selling product with Invitrogen?

Okay. In the array application area, it’s still very heavily biased toward genotyping and that’s because we’ve been in that business for many years and we have both the array matrix format and now the BeadChip format in genotyping. Our expression product entries are relatively new in comparison and so the ratio is still dramatically in favor of genotype. With respect to Invitrogen, we are now selling collaboration product. However, what we’ve done is we’ve staged this into a couple of different steps having to do with the types of oligos. The ones that we’re shipping now are a collaboration product that can be made on our existing generation synthesizers and over the next series of weeks, we’ll migrate the rest of the types of oligos onto our synthesizers, then we’ll be complete with Phase I.

Okay, great. Thank you.

Your next question is from Aaron Geist with Robert Baird. Mr. Geist?

Sorry, I’m in a hotel in Orlando trying to navigate the phone system here. Sorry about that. A couple of quick questions if I could. Can you talk a little bit more about the contract that you didn’t win and a little bit more about the lease deals? Is this an opportunity to deliver more instruments than you had anticipated going forward, using alternative finance means?

Sure. Let me cover the leases first. You know, we’ve done a couple of these leases in prior quarters as well, and we did 4 this quarter. And we do view it as an opportunity to accelerate the placements of BeadStations which, of course, is fundamental to consumable shipments. And so we’ve got some, a number of different ways that we can enable customers to lease systems. This particular quarter, we did 4 out of the 18 and of course the revenue for those 4 was therefore largely deferred. Only a small amount of the normal BeadStation revenue was booked to those 4 systems.

With respect to the contracts that we lost, these were 2 fairly substantial contracts. They were ones that we believed were really in our, about to be booked, very close to being booked. And at the very end became competitive, and was not competitive with one company but with two companies that were working together. And they each provided a portion of the solution and they were able to at least assert at this point to the customer that they could have the study completed by the end of the year through the technologies that would generate more than 100,000 SNPs. And that was something we just weren’t in the position to do.

Was it more of a timing issue or a price related issue? It sounds like more of a timing issue.

Much more of a timing issue, yeah.

Next question. Can you provide a little bit more color on the consumables going forward in terms of your expectations for the array revenue starting to kick in?

Well, I can say consumables are continuing to grow as a portion of the overall business. I don’t think we’re in a position to provide a lot more information on the specific differences between BeadStations and BeadLabs in terms of the amount of consumables. The ranges are about what we said before, $1 to $3 million approximately on BeadLabs and in the range of on the low end $50,000 to $100,000 on a Bead Station. And we have some customers that are much higher than that, up closer to $400,000 on a BeadStation.

Thank you very much.

Your next question is from Constance Shia of SG Cowan.

Hi, thank you for taking my question. I apologize, I have a little bit of a cold here. The first question I had actually is just quickly - - Invitrogen announced its intention to acquire BioSource International, and I know that they make at least 2 based oligos. How does that actually affect your collaboration with Invitrogen to supply the oligo?

I just saw that release and didn’t get a chance to study it at all. We’ve not considered them to be a competitor in the oligo business, so if they do sell oligos, they’re either not in the main segments we compete in, or they were small enough that we never recognized them as a competitor, so I don’t think there’s any impact on our collaboration with Invitrogen. Other than that, I don’t have any comment on the acquisition.

Okay, and then just a housekeeping question. Will Illumina’s brand name appear on these oligos that you’re producing for Invitrogen?

Yeah, the oligos will be co-branded.

And you mentioned a little bit about reproducibility data. Excuse me, not data, reproducibility studies, I guess, that are being conducted at the NIH. People who are using real time PCR. I mean, will we actually see any of this anytime soon?

We certainly hope so. There’s a number of groups that are preparing these head to head, or doing these head to head comparisons, and we’re obviously anxious for that data to be published. We suspect it’s probably 3 or 4 months away at this point.

Okay. All right, thank you.

Your next question is from Adam Chazan of Pacific Growth.

Hey, guys, a couple quick questions. Jay, last quarter you gave us the mix of consumable sales in terms of product sales. Where does that stand currently kind of taking into account the number of leases in the quarter?

I’m sorry, I’m a little confused about the impact of leases. You mean because the revenue - -

Right, relative, right. We’re going to see an inflated consumables number and so I’m just kind of curious if there’s a way to either normalize it or get a feel for the quarter to quarter fluctuation. And then looking out, the feeling or your take on the mix of product going forward, fixed content versus custom?

Okay, well let me give that to you in sort of general [inaudible] quarter to quarter run between 40 to say 60% of the revenues and it varies a little bit quarter to quarter depending upon the strength of instrument sales and the strength of the oligo business. So it’s been in that range, but we see overall trend lines for consumables to become an increasing part of the business. I’m sorry, your second question was what, Adam?

I found one of the circles of hell here in the Orlando airport and I just lost my second question. So, you know, I’m just also curious to find out then of the 21 wins on the services side, can you characterize those at all in terms of the types of services deals that you’ve been able to win relative to competition? Obviously others had opportunities to access competing technologies. I’m curious to find out what the composition of the 21 deals might look like and why those folks would choose Illumina over, again, a competing technology.

I guess I would characterize the service contracts as diverse. They’re across a very wide spectrum and I’d say an increasing spectrum of organisms, so we’re seeing genotyping being done more and more in non human organisms. Geographically diverse as well. And also diverse in terms of the revenue values. Some as small as $50,000 and some over $1 million. And so I think that it’s a wide range of types of contracts that we do. We also are doing them for academic as well as pharmaceutical companies, and so in terms of the type of customer, it varies widely.

And Jay, one last question. Last quarter you had a couple of placements into pharma. Can you characterize where some of the new systems went?

I guess I wouldn’t specifically talk about where they were. I guess overall our mix continues to be biased toward academics. We’ve been saying that about 80 to 85% of our revenue comes from the academic side. Today it’s running about 80%. As we mentioned last quarter, we think that the percentage overall for academic will sort of decrease as the more commercial side increases, but I don’t want to, I can’t give you specific customer wins.

That’s fair. Thanks, Jay.

Once again, if you would like to ask a question, please press star and then one on your touchtone phone. At this time you have two questions in queue. Your next question is from John Sullivan of Leerink Swann.

Hey, guys. Could you talk a little bit more about the SNP region genotyping products? Do these products leverage a particular competitive advantage that you have? And can we expect to see more of these products that bear down on specific regions in the genome?

Yes. I think we have a number of additional panels in development. It leverages the basic power that we have in the golden gate assay which is terrific for doing on the one hand purely custom genotyping, but using that same assay method in areas where it’s either very difficult to do genotyping and therefore, if someone were trying to do it on a custom basis, they’d have to screen a large number of SNPs to get a set that works. We take that burden on, do the screening for them, and can product a standardized set of SNPs in a particular region. So obviously we’ve done that with Linkage and we have an umber of generations of our Linkage panel that we’ve released to the market. We’re now on Linkage 4. This MHC product is a particularly intriguing one both because of the difficulty of assaying that portion of the genome and the high value of doing genotyping there. And we have another set of other panels under development right now.

Great, thanks. And did you say when you are planning to release the 250K chip?

We’ve not given a date on that. We have said that by the middle of next year, we’ll have 2 chips. We expect to have 2 chips with 500K on each, and so the 250K will obviously be a step to getting to that pair of 500K chips.

Thanks very much.

Okay, your next question is from Constance Shia.

Hi, thanks. Sorry, just one more quick question. In terms of the number of genotyping centers around the world that might actually be a BeadLab customer, how - - I think I heard something like 30 around the world and you guys have about 10 placed. I’m just wondering exactly how many BeadLabs, because I’m not sure if it’s just one BeadLab per site or is it multiple BeadLabs? Can they order actually BeadStations sometimes? How does that all work?

Sure. A BeadLab is typically ordered as one complete system and the characters that define something that we call a BeadLab is that we have our lens capability that ties together all the pieces. And so the typical configuration would include one or two BeadStations as readers coupled with automation and lens. And giving that set of components, we would call that a BeadLab. Customers can today start with a BeadStation at the low end and then gradually add modules to get to build up a BeadStation all the way up to a BeadLab. The lines of definition or demarcation between these systems is therefore going to continue to blur over the next couple of years as we find people in these sort of intermediate type configurations. We’re also finding now that customers that have owned BeadLabs are adding additional equipment onto their BeadLabs, so they might have started with 3 robots and 2 scanners and now they might add a few more scanners and some additional automation as their usage rates increase and they gear up to do very high throughput genotyping on the whole genome product line. In terms of the overall market size, we’ve always said that we think there’s about 20 potential sites for BeadLabs and we now have about half of those.

Okay, so roughly how many instruments per BeadLab then would you say? I mean, how many scanners or BeadStations does it have?

A typical BeadLab would include two BeadStations. The small one includes one, the large one includes two.

Okay.

So on average I guess you’d say 1.5.

That’s when they place the order, but I mean, on average would you say they’re holding more than that?

The average is a little higher because we’ve had a number of them already upgrade to additional scanners.

Okay, great. Thanks.

At this time we have two questions in queue. Your next question is from Adam Chazan.

Jay, can you just elaborate a little more on the capacity constraint on the array side? What transpired or what did you find out through the quarter that kind of had you in this position and then are you building backlog?

What basically happened is that we were ramping up our capacity pretty much on track with what we thought our order rates were going to look like. We were anticipating these 2 large orders that I talked about so we were building capacity in line with our expectations to produce those chips. When we lost those 2 orders, we slowed down a little bit and then in the last month of the quarter, our order receipt rate went extremely well. And so we’re now at a point where we’re turning the faucet back on a bit in terms of building capacity. A nice thing about the way our manufacturing works is that we can do this quite incrementally by adding the decoding stations and so we just go a little faster or a little slower, building incremental capacity depending upon what the order receipt rate looks like. So over the next couple of quarters we’ve decided now to accelerate that a bit to make sure that we have enough capacity to make the chips. During this quarter, we actually ran out of a number of the array formats and so we could have shipped more had we had additional capacity in manufacturing.

And so is there - - you know, are we taking backlog? Are you going to offer up kind of a feel for a product that might be sitting in some kind of backlog?

Well, I mentioned in my remarks that backlog has hit a record, moving backlog. [Inaudible] days, and so that’s sort of the ideal and depending upon how order receipt rates go, and capacity building will fluctuate on a little bit either slightly below or slightly above that. I don’t think anyone should read the comment about capacity as a major, major issue for the company. This is really just modulating our ramp up rates.

Your next question is from Ted Tentoff.

Great, thank you. Can you guys hear me okay? Just a quick question. I mean, obviously Accumetrics is making a lot more noise in genotyping right now. What is sort of the market growth rate that you’re seeing there and where would you guys take your expectations for the genotyping side of the business?

We believe that the whole genome genotyping segment is far and away the fastest growing segment of the array market right now. It’s growing multiple times as fast as any other segment. So we have a very clear focus there, as does our competitor, and so I expect there’s going to be a whole series of major deals that will happen in this market space over the next couple of years. And that there’s going to be an enormous amount of work done in associating genotypes with disease and that my prediction is that the size of this segment alone is going to be a few hundred million over the next couple of years.

Okay, and at this time there are no further questions in queue. You may continue, Mr. Craumer.

Operator, if there are no further questions, I guess that’s all that we have from our end. I’d like to thank everybody again for joining us again and we’ll look forward to speaking with you next quarter. Thanks.