Greetings. Welcome to the Bionano Genomics Fourth Quarter and Fiscal Year 2019 Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Ashley Robinson from Investor Relations. Please go ahead.

Thank you, operator, and good afternoon, everyone. Welcome to the Bionano Genomics Fourth Quarter and Year-End 2019 Financial Results Conference Call. Leading the call today will be Dr. Erik Holmlin, CEO of Bionano. After the market closed today, Bionano issued a press release announcing its financial results for the fourth quarter and year-end 2019. A copy of the release can be found on the Investor Relations page of the company's website. Before we begin, I would like to remind everyone that certain statements made during this conference call may contain forward-looking statements, including statements about our strategic and commercialization plans, 2020 sales pipeline, anticipated benefits of improvements to the Saphyr system and the advantages of the Saphyr system over current technologies, our expectations regarding timing and content of study results and anticipated benefits of these studies in driving adoption of the software system. Such forward-looking statements are based upon current expectations, and there can be no assurances that the results contemplated in these statements will be realized. Actual results may differ materially from such statements due to a number of factors and risks, some of which are identified in our press release and our other reports filed with the SEC. These forward-looking statements are based on information available to Bionano today. And the company assumes no obligation to update statements as circumstances change. An audio recording and webcast replay for today's conference call will also be available online in the Investors section of the company's website. For the benefit of those who may be listening to the replay or archived webcast, this call will be -- this call was held and recorded on March 5, 2020. And for reference, the webcast link provided in today's press release includes slides to accompany Erik's remarks. With that, I'll turn the call over to Erik Holmlin. Erik?

Great. Thank you, Ashley, and good afternoon, everyone. I'm pleased to have you join us today for this update on our progress in the fourth quarter and over the course of 2019. After the remarks that I have prepared, we'll open the call for a question-and-answer session. And as Ashley mentioned, there are some slides to accompany my remarks, and you can follow along with those slides by accessing them through the link to the webcast. So I will go over to the third slide in this presentation, and begin by saying that 2019 has been a year of significant progress for Bionano in the platform and it's really a very exciting time for us. We've had a record expansion in the installed base of our Saphyr instruments and the use of consumables by our end users has also been at all-time highs. Importantly, 2019 was also a year in which our customers took the very first steps toward expanding their adoption beyond really the halls of academic research and into clinical applications for oncology, including solid and liquid tumors as well as inherited genetic diseases. We had a record number of publications with Bionano data. There were 80 of them. There were multiple presentations given at conferences and scientific meetings, describing very innovative, cutting-edge use of Saphyr for research. And importantly, we've been completing validation studies that demonstrate the utility of Saphyr for an application in cytogenetics, we call digital cytogenetics. So I want to start, before I go into some of the detail regarding our progress by reminding everybody about the remarkable capabilities of our platform, the Saphyr system. It's the only system for genome analysis that is capable of an unbiased and genome wide analysis of structural variation and it does this with unparalleled sensitivities and false-positive…

[Operator Instructions] The first question is from Jason McCarthy of Maxim Group.

Erik, just a couple of questions. So just first touching on the revenue, the 4Q revenue. Is it more of -- more representative of a shift in the commercial strategy to the lease rental versus buy with a large percent of your user base really, on the academic and research side is making it more amenable to them to have them placed on a lesser upfront payment, but then enticing them to use more of the consumables? And how is that going to impact revenue do you think or the number of Saphyr placements in 2020, particularly, now that grants have reset for the new year?

Sure. So with regard to the first question, I think the impact of the shift in model is felt on the revenue line. So what we would -- had in the past was that all of those 11 systems that went out, would have brought in revenues tied to a capital purchase. But that's not the case. In this quarter, there was a mix of deals that went out. And in fact, that was the case over the whole course of the year. I do believe that over time, that will begin to settle out. But our approach to make this type of deal available to the market is really to accelerate the time that people go from being technically sold to utilizing because that's the most critical step for us. And as they utilize chips, that's the long-term profit driver for the company. And so we're comfortable taking that short-term hit, if you will, in the interest of long-term progress and acceptance of the data type. Secondly, with regard to -- on a go-forward basis, as we go more and more into the clinical arena, we see that this reagent rental model is very much the norm. And so I think that whether we had intended to make this transition or not, we would have made it because that's how these labs adopt systems. And our distribution of academic research sites versus clinical is going to be more and more skewed toward clinical as we go forward. So I do think that there will be a reflection of that transition in 2020, but we do expect the installed base of Saphyrs to continue to grow. It grew 22% on a year-over-year basis, and we would expect that growth, maybe, even a little bit more in 2020.

And then going over more on the data side, you had mentioned Mayo Clinic is involved with the blood cancer work, but also on the neurodegenerative disease side. When do you think, and maybe it's up to them, maybe it's not, would we see any updates or data or publications, because that space, particularly around some things like Alzheimer's in the last year, as you know, have become very, very, very active, once again, and we saw some high-profile sales and a lot of that may have been tied to initial diagnostics. How do you see the relationship with Mayo Clinic in the neurodegenerative disease playing out over the next year, maybe 2 years?

Yes. So importantly, there are multiple Mayo sites, and we're working with both of them. The Minnesota site, Rochester, Minnesota site is participating in our trials around hematologic malignancies. And the neurodegenerative work is being conducted in Jacksonville, Florida. And that's where Dr. Mark Ebbert is leading the program. And he has a very large study that is being designed, and he's seeking funding for that, of course, but I understand that, that process is progressing well. And so once that study is designed, they will begin to process multiple hundreds of samples on the Saphyr system for the very specific aims that you cited, and that team is extremely excited about Saphyr and its utility and the data that he presented at ASHG were representative of the pilot study he conducted to justify the bigger study. And so for him, the justification is there and is a matter of kicking that study off.

Just last real quick question. I feel like I have to ask it, just given the company's exposure to China and international markets or placing Saphyrs in business, is there any impact with what's happening with coronavirus?

Yes. I mean, I think that for most companies, they have felt a bit of a slowdown with regard to the China business overall, and we have seen that. Now as everybody should remember, our business is highly seasonal, and it's slow in Q1. And in fact, China business is almost always slow in Q1 because of the Lunar New Year, but we have experienced some friction in China that we believe to be due to coronavirus. However, our contacts there are progressing well, and we expect things to pick up. In addition to that, the opportunity to do research in key areas, including this disease susceptibility has manifested as a result of coronavirus. And so we're working with a number of hospitals and commercial service providers in China to support those studies. And so in the long run, I think that there will be a benefit that we'll see as a result of this.

This concludes the question-and-answer session. I will now turn the call back over to Erik Holmlin for closing remarks.

Great. Well, I want to thank everybody for dialing in. And we hope to speak to you again soon on our first quarter earnings call.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.