Standard BioTools Inc (LAB) 2014 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Fluidigm fourth quarter and full year 2014 financial results conference call.

(Operator Instructions)

As a reminder this conference call is being recorded. And I would now like to introduce your host for today's conference call Ana Petrovic, Director of Investor Relations.

Thank you. Good afternoon, everyone. Welcome to Fluidigm's fourth quarter earnings call. At the close of market today, Fluidigm released financial results for the fourth quarter and full-year ended December 31, 2014. During this call we will review our results and provide commentary on recent commercial activity and market trends. Following these comments we will host a Q&A session.

Presenting for Fluidigm today will be Gajus Worthington our President and CEO and Vikram Jog our Chief Financial Officer. This call is being recorded and the audio portion will be archived in the investor section of our website.

During the call and subsequent Q&A session we will be discussing plans and projections for our business future, financial results, and market trends and opportunities. Including, among others, statements regarding expectations for the single-cell biology and production markets and our prospects and growth opportunities in such markets, our anticipated product launches and other business strategies, seasonality and product revenue trends and current estimates of 2015 total revenue GAAP and non-GAAP operating expenses, stock-based compensation expense, interest expense, capital spending, and currency related impact on 2015 revenue.

These statements are forward-looking and subject to substantial risks and uncertainties that may cause actual events or results to differ materially from currently anticipated events or results. Information on these risks, uncertainties and other information affecting our business and operating results are contained in our quarterly reports on Form 10-Q for the quarter ended September 30, 2014 and our other filings with the SEC.

Additional information will also be set forth in our annual report on form 10-K for the year ended December 31, 2014, to be filed with the SEC. We advise investors to review these risks factors carefully. Fluidigm disclaims any obligation to update these forward-looking statements except if may be required by law.

During the call will also certain financial information by non-GAAP basis. Reconciliation between GAAP and non-GAAP results are presented in a table accompanying our earnings release, which can be found in the investor section of our website. I will now turn the call over to Gajus.

Good afternoon, everyone. Thank you for joining us today. Fluidigm finished 2014 strong, with total revenue of $116.5 million ending at the high end of our guidance of $114 million to $117 million.

We grew organic revenue for the year by 35%, driven primarily by increased sales of C1 System, a robust consumables demand across reduction genomics and single-cell genomics applications. Our CyTOF single-cell proteomics product line grew 70% sequentially and bookings growth was also robust.

Finally, we introduced several new products including a new high throughput single-cell mRNA sequencing IFC for the C1 and announced our microfluidic cell culture system Callisto. I am proud of the efforts of the Fluidigm team, particularly in light of the challenges we faced with our DVS acquisition earlier in 2014.

I'm pleased to say we have now successfully completed the integration of DVS Sciences and have expanded into single-cell proteomics. This solidifies our leadership position in the single-cell biology market, enables us to shape the future and direction, and helps set the stage for 2015.

The single-cell biology market is vibrant. Compelling science abounds and publications are growing at an accelerating pace. As result the research community increasingly recognizes the requirement to study biology at the single-cell resolution. We estimate the overall single-cell biology market across genomics and proteomics was approximately $416 million in 2014, growing 30% per year to $1 billion in 2017.

We believe the underlying growth indicators of the market point to continued strength. For example, in the fourth quarter Sweden became the fourth country with dedicated single-cell funding. Moreover we announced in a separate press release today that the Science for Life Laboratory has established the Swedish National Center for Single-Cell Biology.

Sci-Life Lab is a collaboration between four Swiss universities, which have established the Swedish National Center for Single-Cell Biology with a goal to implement infrastructure and advanced methods for high throughput genomic, transcriptomic, and proteomic analyses of individual cells. This new center will house multiple Fluidigm single-cell systems. Specifically this new single-cell biology center has purchased six C1 Systems, three CyTOF 2 Systems and a BioMark HD system.

Across the globe we had a landmark year for publications. At the end of 2014, a total number of single-cell publications citing Fluidigm technology reached 251 including 23 C1 publications, 72 publications citing mass cytometry technology, up 58% from 159 total single-cell publications at the end of 2013.

Our total install base at the end of 2014 was 1,325 instruments, of this over 600 systems were designated for single-cell biology research including 275 C1's and over 235 single-cell BioMark units. As a reminder, we had initially communicated back in Q3 of 2012 a goal of approximately 700 Fluidigm systems for single-cell research comprised of C1 and single-cell BioMark systems by the end of 2015. I'm happy to report that we expect to meet or exceed the scope of the end of the year.

However, given the broadening of our single-cell portfolio to now include the CyTOF platform, this metric is now outdated. Accordingly, we plan to provide a more informative metric in the future based on our combined single-cell biology install base footprint.

Overall single-cell biology revenue including single-cell genomics and proteomics represent approximately 65% and 60% of total revenue in the quarter and year respectively. Our single-cell genomics sales in 2014 was robust and increased approximately 50% year-over-year. We sold a record number of C1 units in the quarter at approximately 25% of C1 units sold in the quarter were combined with a BioMark HD, consistent with historical trends.

In the fourth quarter we realized commercial synergy between single-cell genomics and proteomics at a customer and sales representative level, which we believe further validates our single-cell biology thesis and strategy. To add to this, we are delighted to report that we had another combined sale of a CyTOF, C1, and BioMark system for the second consecutive quarter.

But it's still too early to report a trend off of two quarters, we believe we are just beginning to realize the potential of our cross-selling opportunities within our genomics and proteomics platforms. We believe our new products will continue to enable a new phase of discovery in single-cell science.

In December of last year, we announced that we will be launching Callisto in mid-2015. Callisto is an integrated high throughput microfluidics platform that enables automated cell culture and combinatorial dosing on a stand-alone device that supports either bulk or single-cell analysis. It will be used upstream with the C1, BioMark, and CyTOF Systems. Current techniques include manually feeding cells and a 96-well plate for robotics, which force researchers to look at a limited number of factors at a time.

Callisto allows for fully-automated, highly complex combinatorial long-term cell culture experiments. Researchers can walk away without re-feeding or changing media because the instrument is programmed to do it for them. Target customers include cell biologists and stem cell researchers looking to develop new culture conditions to explore, manipulate and derive cell populations into specific cell states and functions.

Initial applications include cellular reprogramming and characterization, drug screening and biomarker discovery. In December of last year, we launched a single-cell whole genome sequencing application for the C1 System designed to help cancer researchers discover and define specific mutation profiles to predict cancer susceptibility, meta static development and therapeutic efficacy.

This workflow is optimized to provide robust amplification of DNA templates from 96 single cells without compromising fidelity, in addition to offering greater than 75% savings on sequencing prep costs. Importantly, our solution has a strong performance advantage over plate-based workloads due to decreased reaction sizes with our microfluidics technology.

Traditionally, sequencing of bulk samples has been used to identify new patients across whole populations of cells within diseased tissue. However, it is impossible to associate mutation profiles to specific cells and identify genetic traits responsible for aberrant cell behavior. With single-cell, whole-genome sequencing researchers can get a more complete picture and identify mutations in most regulatory and protein (inaudible) coding regions of the genome. And directly associate them these areas to specific (inaudible) populations.

With the release of this workflow Fluidigm now has complete suite of sequencing protocols that enable researchers to easily pursue whole genome, whole exome and targeted sequencing from individual cell.

In November of last year, we also announced our high throughput single-cell mRNA sequencing application for the C1 System. This is to provide eightfold increase in throughput per run, allowing for studies of 10,000 to 100,000 cells and also includes breakthroughs in IFC design to enable capture and processing of up to 750 single cells per run.

Other advancements include a bar coding step on the IFC with subsequent sample pulling to decrease hands-on time and cost, and optimized reagent kit and software. We believe single-cell research is evolving to require high throughput studies to increase the specific statistical power of the studies and expand the types of samples analyzed.

In addition to broadening the customer base, we believe this application will allow C1 customers to scale their experiments to higher throughput. We will provide more details on pricing and per sample cost once we've launched the new high throughput workflow which is expected in the first half of 2015.

Finally, the early access program for our imaging mass cytometry platform, which closed fully subscribed at the end of the quarter through very strong interest across a diverse customer base, including academia, pharma and clinical diagnostic research. We believe the IMC platform, which allows for ultra-parameter in situ tissue imaging, will enable researchers to move to the next phase with single-cell biology research; that is, to incorporate the effects of the biological niche and context and to preserve the spatial relationships of cells. We expect to launch the IMC platform in late 2015 or early 2016.

We estimate the overall production genomics market was approximately $295 million in 2014 growing 16% per year to $495 million in 2017. It's still early days, but we saw a very favorable reception to Juno in our early access program in Q4. We expect to launch the system this quarter. The Juno Platform allows scientists to genotype low concentration or low quality DNA samples such as FFPE with a fully-automated, high throughput workflow.

Conventional systems that require high-quality, high-concentration samples impose substantial upstream costs on production level testing. Juno alleviate this burden. Moreover, conventional systems limit the types of samples that a high throughput laboratory can test. Especially when high-quality data is a requirement. We're very pleased with the initial reception of Juno and expect to continue to broaden this menu over time.

Based on our trajectory coming out of 2014, the strength and health of our end markets, single-cell biology and production genomics, our confidence in the prospects for the CyTOF product line and the breadth of our new product offerings, we are reiterating our January 13, 2015 revenue guidance range for the full-year of 2015 of $142 million to $149 million. This includes an estimated negative currency related impact of approximately 3% to 4% at the midpoint of the range.

In closing, in 2014 we completed a transformative acquisition of DVS, successfully executed on our organic growth strategy and announced a wave of integrative products and applications across our single-cell biology and production genomics portfolios. We expect significant momentum in 2015 and believe we have a tremendous amount of runway ahead of us as we execute on our single-cell biology strategy while building upon our leadership position.

Finally, while the portfolio of products I highlighted, Callisto, Juno, single-cell DNA sequencing, and the high throughput C1 chip, is extensive, we're not finished. By the time 2015 concludes we expect it will be by far the most productive year of new product launches in Fluidigm's rich history of innovation. I'll now hand the call over to Vikram for a more detailed review of our financial results.

Thanks, guys. And good afternoon, everyone. I will now walk you through our fourth quarter 2014 operating results and highlights. In the fourth quarter of 2014, total revenue of $33.5 million was up 60% year-over-year, with organic revenue up 21%. We're pleased with our growth across instruments and consumables in the quarter.

Instrument revenue grew 72% year-over-year to $20.8 million. Excluding contributions from the recently acquired CyTOF 2 System, instrument revenue grew 17% year-over-year on an organic basis. Single-cell genomics continues to be a strong growth driver for the Company and for instrument revenue in particular.

Approximately 70% of the BioMark HD Systems sold during Q4 were motivated by single-cell research. And approximately 25% of C1 Systems sales were combined with the BioMark HD System, which is consistent with our historical pattern.

Our total consumables revenue, which includes IFC, assays, reagents and antibodies, was $12.7 million during the fourth quarter, up 48% year-over-year and 28% organically, driven by strength across all applications.

Our genomics analytical and preparatory pull through in the fourth quarter tracked within our historical ranges of $40,000 to $50,000 per system per year. And $15,000 to $25,000 per system per year, respectively.

Proteomics analytical pull through tracked above its historical range of $50,0000 to $70,000 per system per year. Total single-cell proteomic revenue in the quarter was $8.3 million on an as reported basis, excluding $3.8 million recognized before the close of the acquisition. Total single-cell proteomics revenue was $20.7 million for the full-year 2014.

Our total instrument install base was 1,325 at the end of 2014, including 645 genomics analytical systems and 584 genomics preparatory systems, with proteomics analytical systems representing the remainder.

Geographic revenues as a percentage of total product revenues for the fourth quarter were as follows: United States, 51%; Europe, 33%; Japan, 4%; Asia-Pacific, 10%; and 2% other. Geographically, all our end markets except Japan were strong.

Year-over-year organic revenue growth rates for the fourth quarter were as follows: United States, 35%; Europe, 24%; Asia-Pacific, 26%; and 6% other. Japan was down 41% and, similar to last quarter, we believe the weakness in the Japanese market was largely due to delays in funding disbursements.

Net loss for the quarter was $10.9 million compared to a net loss of $4.6 million in the prior-year fourth quarter. Adjusting for stock-based compensation, depreciation and amortization, interest expense and other acquisition related non-cash charges and benefits, non-GAAP net loss for the fourth quarter of 2014 was $1.7 million compared to the $1.9 million non-GAAP net loss for the fourth quarter of 2013. Please refer to the reconciliation of GAAP to non-GAAP information attached to the fourth quarter 2014 earnings release for details.

GAAP product margin was 62% in the fourth quarter of 2014 versus 71% in the year ago period. After adjusting for acquisition related non-cash charges, including amortization of developed technology and inventory evaluation, stock-based compensation laws and disposal of property and equipment, and depreciation and amortization, non-GAAP product margin was 72.5% in Q4 2014, which is relatively flat year-over-year.

Turning now to OpEx. Research and development expenses were $11.7 million in the fourth quarter of 2014, compared to $5.8 million in the fourth quarter of 2013 and $12.7 million in Q3 2014. The addition of the single-cell proteomics product line contributed approximately 66% to the year-over-year increase in research and development expenses. The balance of the increase was driven mainly by headcount additions and R&D project materials.

SG&A expenses were $18.8 million in the fourth quarter of 2014, compared to $13.6 million in the year ago period and $18.6 million in Q3 2014. The addition of the single-cell proteomics product line contributed approximately 20% to the year-over-year increase. Increased headcount, trade shows, promotion and professional fees drove the remainder of the increase.

Moving onto the balance sheet. Total cash, cash equivalents and investments were $142.8 million at the end of the fourth quarter, compared to $147.2 million at the end of Q3 2014 and $86.3 million at the end of December 31, 2013. Net cash used in operating activities, excluding cash outflows related to the acquisition, was $14.6 million in 2014 versus $1.6 million in 2013.

Accounts Receivable were $22.4 million, compared to $16.9 million at the end of the third quarter of 2014. DSO at the end of the fourth quarter 2014 was 60 days compared to 51 days at the end of Q3 2014. Inventory was $16 million, down from $17 million at the end of the third quarter of 2014.

Moving on now to our financial guidance for 2015. We are reiterating our revenue guidance range for the full year of 2015 of $142 million to $149 million. This includes an estimated negative currency related impact of approximately 3 to 4 percentage points at the midpoint of the range.

We would also like to remind investors that Fluidigm's product revenues have historically been lowest in the first quarter of the year and highest in the fourth quarter of the year, with product revenue in the first quarter of the year sequentially down from the fourth quarter of the previous year. Although this is not the case in 2014, we expect the historical trend to resume in 2015.

Operating expenses are projected to be between $129 million and $134 million on a GAAP basis. On a non-GAAP basis, operating expenses are projected to be between $105 million and $110 million, excluding approximately $19 million of estimated stock-based compensation expense and $5 million of estimated depreciation and amortization expense. Stock-based compensation expense is projected to be between $18 million and $20 million. Substantially, all of our stock-based compensation expense is reflected in operating expenses.

Interest expense is projected to be $6 million. And finally capital spending is expected to be between $6 million and $9 million.

I will now turn the call over to the operator to open up for questions.

Thank you.

(Operator Instructions)

Bill Quirk, Piper Jaffray.

Thanks and good afternoon, everybody. First question for me is, I guess just do you have any feedback, by chance, from some of the early access users around the high throughput C1 chip for mRNA sequencing? And then, how should we think about additional applications rolling out, much like with what you did with C1 for example?

Hi, Bill, it's Gajus. We haven't started an early access program for this chip yet. We've announced that we're developing it and that it will be available in the first half of this year. But we don't have -- the early access hasn't officially started yet. However, having said that, the need for high throughput single-cell analysis is abundantly clear, so we expect there will be considerable latent demand for this device.

And then, with respect to the menu. The menu of the C1 is going to continue to expand. We're certainly not finished with what we're going to do on that platform. The single-cell high throughput chip is the next thing that we're pointing to, but in the past we've also talked about other types of measurement modalities that might enable on the C1 platform. We're certainly far from done with what we will do with the C1.

Got it. And then as a follow-up, I guess I was thinking about the suite of new product launches that you have here this year. Two-part question. One, how our we think about that in terms of the relative contribution into guidance and -- and then, secondly, Gajus, with so many new products coming out, can you help us think about how you're getting the team to stay on message and on focus and do you need significantly expand the team at all? I guess, just help us think about the managing this process given that you do have an awful lot of new instruments coming.

That's a good operating question, Bill. It's true when you have this many new products coming you got to be very thorough and careful about how you train the sales force, the messaging, the materials, all of that. And you can be sure that we're being both careful and thorough about that. In fact, it started already. Of course we knew that this way of new products with the coming so we've been preparing for it for quite some time.

But as you point out, it is really important that you have very clean messaging. That you have all the right materials and supporting documentation, et cetera, ready and that in addition you've trained the sales force effectively. There's a lot of detail behind that, which I could get into if you like but, I guess suffice it say for now, that it's certainly a problem that we've been aware of for a while and we've been preparing ourselves for. It's obviously a very good problem to have.

And, I'm sorry the other part of your question was?

How do we think about the contribution (multiple speakers).

Sure. It's certainly incorporated into the guidance, but beyond that, all I can really say is that we're pretty careful about the expectations that we have internally for new products in the first year that we launch them.

Got it. Thanks, Gajus.

Doug Schenkel, Cowen and Company.

Good afternoon, guys. Some really interesting details on the new single-cell high throughput workflow on the C1. And based on some of our recent checks, it seems like there could be some decent, and maybe even rapid interest, from a few populations including CTC researchers. I was just wondering if you'd be willing to provide any thought at this point about how much you think this expands your market opportunity, using really any metric you want. And, I guess, related to that, does this work on existing C1 instruments and is there any enhancement required to those instruments or would this just be a seamless protocol introduced to the existing platform?

Yes, so it definitely expands the market. And from a couple of perspectives. One is that there are a wave of entrants that have not been actively participating in the single-cell market yet, but now want to start doing it. And in order to not jump in as followers but to try to jump in towards the head of the pack or jumping in and wanting to jump in with very high throughput studies.

There are also other researchers for home you really need to analyze thousand or tens of thousands of cells in order to get really good biological data. All kinds of applications, within the immune system for example, require large numbers of cells in order to adequately characterize what's going on at a genomic level. And in fact even at tens of thousands or hundreds of thousands of cells, it's still actually a relatively small number for that application space. So it definitely expand the market.

We don't have a metric for you there on exactly how much it does, but it's incorporated into our projections about the size of the overall single-cell market, which we characterize as growing to about $1 billion by the end of 2017.

And then with respect to how it works with C1, it will work on the existing systems. There'll be a software upgrade, of course, but that will be very easy to either download or install it with a flash drive.

Okay, that is helpful. And then my second question is really on thoughts by geography. And I apologize if I missed this in your prepared remarks, but in looking at the model you had a nice close to the year in Europe in particular. Sales increased about $3 million sequentially, almost $5 million year-over-year. We seem to be seeing that there was some pickup in European academic end-market demand across the tools group in Q4. A couple companies have told us they think there was some funding release that helped in that market.

I just want to make sure you don't think there was any notable pull forward of demand and that you think the momentum can continue into 2015. I guess, turning to another geography, you have a really tough comparison in calendar Q1 in Japan, which is of course the end of the fiscal year in Japan where you tend to do pretty well especially given a lot of the improvements you've made operationally there; but I think it's fair to say across the group there's a lot of concern about what's going on with funding releases combined with what's going on with the yen. I was wondering what is factored into guidance for Japan for this year have you taken a conservative stance given those dynamics? Thank you.

You're correct Europe had a really nice quarter. It definitely benefited from seasonality, which is normal in Europe, end of year seasonality, so it wasn't anything out of the ordinary there. In addition, we also had an effect where several CyTOF Systems that would've been booked in previous quarters turned into revenue in that quarter also. There are a couple things going on, but all in all, I have to say we're extremely pleased with the execution of our European team.

Japan continues to be challenging. And we are very cautious about Japan and that is incorporated into our guidance. We think that the funding release could continue to be challenged during the course of the year and certainly what happened this past year was a surprise. I don't think anyone saw the funding holdup coming. And as you point out, we had a really, really strong Q1 in Japan of last year, and it certainly isn't something that we're expecting this year.

Bryan Brokmeier, Maxim Group.

Hi, good afternoon.

Hi, Bryan.

You really ramped your R&D expenses in 2014, and obviously with all the new product launches it looks like you put the money to good use, does the development of these new instruments work out as you anticipated? Or did some of them -- were any of the timelines shorter or longer than you expected if you look back to the beginning of 2014? And then, secondly, should we expect any significant new ramps in operating expenses and particularly in R&D as we go forward? I think that the 2015 levels are somewhat below or certainly not above our expectations. Was 2014 kind of a one-time thing in order to get all these products out the door this year?

There certainly was a bolus of spending in R&D and, actually, some of that goes back to late 2013 even, when we started to take up R&D spending.

On your question about timelines, whenever you're trying to do something that is innovative and aggressive in terms of a new product, there's always some amount of unpredictability associated with that. If you're try to engineer something that is an extension of an existing product line that can be done with a high degree of predictive accuracy, but whenever you're try to do something truly innovative, like Callisto or even like high throughput MRAC chip or Juno, there are always surprises. And sometimes they're good and sometimes they are bad.

But all in all I'd like to give a shout out to our R&D team who really did a phenomenal job of wrestling the various problems to the ground and delivering us with a really rich, rich set of products that we have the opportunity to sell in 2015.

And then to your other question, our spending on R&D that we expect is incorporated into the OpEx guidance that Vikram provided.

Dan Leonard, Leerink.

Thank you. I was hoping, Gajus, you might be able to offer list prices for the new instruments like the Juno, the Callisto, and maybe it's too early, but if it's not, the imaging CyTOF.

Yes, some of that is too early I'm afraid. The Juno will be in excess of $100,000. We're a little bit too early to offer up list prices on Callisto. And for the imaging platform, it depends entirely on a decision that has yet to be made and that is whether or not it is a single system that is a CyTOF together with an imaging module or an imaging module that is separate from the CyTOF and, as you can probably imagine, those would be at very, very different price points. So unfortunately, Dan, that's a lot of specific information to give you there, but I promise we'll be clear about that as we get, really, closer to the product launches.

Okay. And then my follow-up, Gajus, could you offer more color on CyTOF bookings. You mentioned they were strong, but I'm trying to determine is this a product line that grows at, above or below the corporate average in 2015?

We're not going to be making a forecast around an individual product line going forward.

What I can say is that we were very pleased with the trajectory of bookings in the second half of 2014, that is for both Q3 and for Q4. And that in combination with really nice development of the pipeline, the commercial team really starting to find its groove together, the very good feedback from customers and a pretty dramatic increase in the number of publications, particularly in the second half of -- pardon me -- of 2014. All of that gives us confidence that we're in good shape with respect to CyTOF going forward.

Okay thank you.

Peter Lawson, Mizuho.

Gajus, I'm just wondering if you could talk further about the imaging mass spec product. Just where it's being released and what it's competing against. Thank you.

Sure. So it hasn't been released yet. What we have done is we've opened up an early access program to a very limited, less than a handful really, of potential participants and that received interest from Europe and the US, even parts of Asia. And we selected -- and build that program with groups that span academia and more translational medicine.

When we launch it, it will be worldwide. It will be through the full Fluidigm commercial channel, which we're direct in the major markets and Europe. We're direct in North America. We're direct in China and Japan, and also we have an extensive distributor network that reaches most of the rest of the globe. So when we launch it, which will be at the very end of 2015 or early 2016, it'll be through that, it'll be global.

In terms of what it competes with, it is, we believe, really it's a game changer. It increases the number of parameters that one can analyze simultaneously from about six, which is the current high-end of imaging, up to mid-30s or 40s so it's nearly an order of magnitude change in the amount of data that you can get and the richness of the data and the completeness of the picture, literally, that you can get at a single-cell level. So as far as we know, there isn't going to be anything like this out on the market. And as a result, its kind of the definition of something that's really disruptive.

Thank you. And just thoughts on the use of cash it sounds more like it's inorganic growth, sorry organic growth versus acquisitions.

Yes, we're very focused right now on executing on our strategy that we've laid out and continuing to ensure that the integrated proteomics product line does really well. That said, we're always aware of new technologies and will remain interested in things that could potentially be synergistic. But it's certainly not a priority for us right now.

And just one quick question. Just, Vikram, it looked like the gross margins ticked down in the quarter. What was behind that?

You're looking at the sequential decline from Q2 to Q4?

Yes.

Yes. So this is within the range that we had previously provided for modeling purposes in the low 70s. Specifically, we have an acquired business that DVS that is at a much earlier stage of growth than the legacy Fluidigm business. And has consequently a lower margin compared to our legacy business. So that's one factor. And as you can see that business has grown pretty substantially sequentially from Q3 to Q4.

The other factor is now, we are fully occupying our new larger facilities in Singapore and, as we have indicated before, it will take us a period of time, maybe several quarters, maybe a couple of years, for us to grow back into a larger facility. So in the initial stages of occupying that facility, there will be some decline in margins.

And lastly, mix plays a role as well as to the extent our instrument -- the portion of our revenues represented by instruments grows that has a negative effect on margins because we do have lower margins on instrument compared to the margins we generate on consumables.

Great, thank you so much.

(Operator Instructions)

Sung Ji Nam of Cantor.

Hi, thanks for taking the questions. Maybe a follow-up to Dan's question. Recognizing it's early, was wondering if you a sense of what kind of consumable pull through you might see for some of the new products you're launching like the Callisto and the IMC platform.

Yes, it's really pretty early. We have a spreadsheet and you may remember when we launched the C1, we answer questioned like this very similar. We think it's prudent -- you have a model but until you actually start getting data back from customers and you have several quarters of that it's really tough to say. So give us a bit more time here to get through some early access data from customers and maybe initial phases of the product launch, and we can be a lot more fulsome about the pull through on these platforms.

Okay. Sounds great. And then I guess for the Callisto platform, was wondering if you anticipate that to kind of pull, if you will, purchases other systems just as C1 did when you guys launched that?

Yes. We expect that it will. The amount of that is really hard to say, but every time we launched new platform that's part of an overall workflow, we see that happening. And part of our thesis and the acquisition of CyTOF product line was that was going to be -- we would generate sales from the CyTOF from folks who were interested in genomics and vice versa and that's already happened.

As you may have heard, we've had now two bundled systems that were CyTOFs, BioMarks and C1 altogether. Those are examples of what I'm talking about. So we do expect some of that will happen at this point. I just really can't say how much though.

Great thank you.

Bill Quirk, Piper Jaffray.

Great thanks for taking the follow-up question. Just a couple of quick cleanup ones. Gajus, you mentioned that the early access in Juno was positive, and that we're obviously going to be fully commercializing here it in the first quarter; so is it reasonable to assume the number of Junos you placed was kind of in the low single digits?

We didn't break any of that out. Sorry, Bill.

And staying on the topic, can you talk a little bit about the trends in the production genomics franchise?

I think one of the really important ones that we have observed now for years, which Juno addresses, is this problem of limited sample. And sometimes customer don't even know how bad the problem is. And I run to very high throughput customers now, pretty routinely, who have had to implement a substantial amount of infrastructure and then suffer the attendant cost in order to deal with variability in samples, degraded quality, if you have a buccal swab that's been mailed from different places, the amount of RNA or DNA that can vary dramatically and it's quality can vary dramatically.

We think that one of the really important trends in production genomics, generally, is a need, sometimes latent, to be able to get really good high-quality data off of a wide variety of sample quality and sample quantity. We're at the very early stages of tapping into that, obviously, with the launch of Juno. But from a use model and technological point of view, I think that's an really important trend in this market.

And then one for Vikram, as well. Vikram, you mentioned what the Forex impact is going to be for 2015, can you just remind us what it was in the fourth quarter and maybe for the full-year?

You mean Q4?

Yes.

Approximately 3% of revenue.

And do you have the full-year number for 2014 by chance?

I do not, but we really didn't have any substantial FX effect until Q4. As you know currencies really started plummeting versus the dollar, primarily in Q4. I mean, we've had this question, I think probably in every earnings call, but it's been very, very minor until Q4.

Got it. Thanks, Vikram.

Bryan Brokmeier, Maxim Group Thanks. Could you provide some color on the breakdown of your revenue by end market?

You mean other than the percentages or what exactly are you looking for, Bryan?

By biopharma or clinical, industrial, applied, academic.

Let's see here, in the fourth quarter about 65% of our business was academia or government. About 12%, biotech pharma; 17% was commercial labs and commercial lab bio, which we categorize together. The remainder is a mixture of things.

And with in the clinical applications, what types of diagnostics are your customers most involved in?

I'm not sure there's any most, actually. It's quite varied. There are things like HLA-typing, which isn't exactly diagnostics but certainly part of an important medical procedure, that is bone marrow transplants or organ transplants. There are cancer tests. There are tests for things such as pain management. There are carrier screening tests. It's actually -- it's quite varied. There isn't any one thing or one area that dominates. We are frankly pretty surprised and amazed by the creativity, really, of a lot of these laboratories and how they are using genomics.

Okay thanks a lot.

I'm not showing any further question at this time. I'd like to turn the call back over to Ana Petrovic for closing remarks

We'd like to thank everyone for attending our call. A replay of this call will be available on the investor section of our website. This concludes the call and we look forward to the next update following the close of the first quarter 2015. Good evening, everyone.