Standard BioTools Inc. (LAB) Q1 2013 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Fluidigm First Quarter 2013 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Un Kwon-Casado. Please begin.

Thank you. Good afternoon, everyone. Welcome to the Fluidigm Q1 2013 Earnings Conference Call. At the close of market today, Fluidigm released financial results for the 3 months ended March 31, 2013. 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 version 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, expectations for the development of a single-cell and production genomics market, anticipated new product launches and guidance regarding expected 2013 total revenue, operating expenses, stock compensation expenses, capital spending and cash flow. These statements are forward-looking and are subject to substantial risks and uncertainties that may cause actual events or results to differ materially from currently anticipated events or results. Risks relating to our business and operating results are contained in our Form 10-K for the year ended December 31, 2012, filed with the SEC and will be contained in our upcoming Form 10-Q for the quarter ended March 31, 2013. We advise investors to review these risk factors carefully. Fluidigm disclaims any obligation to update these forward-looking statements. During the call, we will also present certain financial information on a 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. With that, I will now hand over the call to Gajus.

Thank you, Un. Hi, everyone. Good afternoon and thank you for joining us today. 2013 is off to a great start. Q1 was strong for Fluidigm on essentially every front. We grew our total revenue by 33% year-over-year to $14.5 million as the momentum behind single-cell genomics continue to build and more production genomics customers embrace our products. We expanded product margins to 70%. And for the first time in the company's history, I am simply thrilled to point out that we generated little cash even excluding the effect of the sale of our Verinata investment. All in all, we executed well operationally and commercially across the globe. This, in combination with our strategic focus on single-cell genomics and production genomics, helped to drive industry-leading growth in the quarter. Our growth was balanced across instruments and consumables. Instrument revenues were up 34% year-on-year. This was primarily driven by the C1 Single-Cell AutoPrep System. Consumables revenue was up 31% year-on-year due to increased demand from agricultural and clinical laboratory customers. We believe 2013 will be a watershed year for single-cell genomics. This is based on multiple indications from the market, not the least of which is our substantial growth in the sector wherein our revenues nearly doubled year-on-year. The external indicators are also strong. Market enthusiasm for single-cell genomics range from key opinion leader endorsements at high-profile scientific meetings to the announcement of the third Single-Cell Genomics Center at the Sanger Institute in the United Kingdom to a growing publication base supporting high-impact science. Real demand for our single-cell genomics products made this the fastest-growing area of revenue for Fluidigm in the quarter. We estimate roughly 40% of our revenue is driven by single-cell genomics this quarter, in line with Q4 of 2012. This revenue estimate includes our C1 Single-Cell AutoPrep System sales and associated consumables, as well as BioMark HD and associated consumables motivated by single-cell gene expression. This is a fantastic result but I want to remind everyone that we had no revenues from the C1 in Q1 of 2012, as we launched the system in late Q2 of 2012. So we don't expect this kind of growth throughout the year. Our BioMark business also contributed a significant fraction to our single-cell genomics revenue base and to growth too. Approximately 70% of BioMark HD units sold in the quarter were motivated by single-cell gene expression, and 30% of C1 sales were bundled with the BioMark or BioMark HD. With our full workflow solution for single-cell genomics, we have come to market with a solution that fills an unmet need at the right place and at the right time. Our early C1 adapters have been very actively ramping up their single-cell research over the past few months. Some of our customers have begun to publicly share their data. And we know of several publications in the pipeline and the science behind them is fantastic. We're also pleased with the continued growth in trends we see with production genomics customers. Production genomics encompasses very high throughput repeat testing applications typically in industrial or applied setting. These customers include clinical labs, Ag-Bio seed companies, fisheries and bio-repositories. These business is predominantly based on SNP genotyping, but we also have production customers for gene expression with the BioMark system and targeted resequencing sample preparation with the Access Array System. We've experienced increased adoption by clinical reference in LDT laboratories in oncology, reproductive health, immunology and complex human diseases. As we announced last quarter, we sold multiple Access Array systems to a large bone marrow registry screening lab in Germany called the DKMS. We are happy to report that the DKMS has scaled it's NGS-based HLA typing operations to thousands of samples per week which wouldn't have been practical without the workflow, cost and performance benefits of the Access Array. A segment of the HLA typing market focused on high resolution analysis is migrating towards NGS from Sanger-based sequencing. We estimate the size of this market is roughly $60 million today and has emerged as an opportunity for our Access Array System. Better production genomics application with substantial opportunity is sample of fingerprinting in a bio-repository or core lab setting. This is another case where customer needs are well addressed by the benefits of our microfluidic technology. To further enhance our offering, we expect to launch a 96 SNP panel based on our SNPtype chemistry to assess the quality and identity of samples later this year. This panel was developed in collaboration with Andy Brooks from the Rutgers University of Cell and DNA repository. This group has been one of our earliest production genomics customers and has been using our SNP genotyping products for this application for many years. We are very pleased with the evolution of the markets we have chosen to focus on and enable. In the meantime, our commercial and manufacturing operations continue to execute very well, which were part in parcel of our improvement in product margin from a year ago. As I pointed out many times, companies in our space usually don't achieve these kinds of margins until they have a much larger ratio of consumable revenue than we do. We believe our performance is due, first, to the fact that our customers ascribe very high value to our products. And then, that we execute well commercially and in manufacturing. Finally, I want to highlight our cash flow for the quarter. Q1 has always been our toughest quarter of the year as evidenced by our seasonal pattern. So I am simply elated that Fluidigm was able to generate cash in Q1 of 2013. It's a major milestone for us and it occurred substantially earlier than we expected. I wish I could say that this would continue throughout the year but we don't expect it to as we enjoyed the polar opposite of a perfect storm with overachievement in revenues, margins and cash collection combined with better-than-expected operating expense and spending on working capital. In addition, we're continuing to invest in new products in our commercial channels. We expect to breakeven at the EBITDA level at a quarterly revenue approximately $20 million. In summary, we are bullish about our prospects for the remainder of 2013, motivated by a combination of the rapidly growing markets we address in single-cell and production genomics and our strong competitive differentiation. With respect to macro funding considerations, our market strategy is playing out well and is likely expected it to. Single-cell genomics continues to grow substantially despite some concerns about sequestration and the other key area of focus for Fluidigm, production genomics, derives its funding from industrial nonacademic funding sources. Thus, we are reiterating our strong revenue growth guidance of 22% to 26% for the year. I'll now hand the call over to Vikram.

Thanks, Gajus. I hope you've all had a chance to review our first quarter 2013 earnings release. I'll walk you through the operating results and highlights. In the first quarter of 2013, our product revenue grew 33% to $14.3 million. Our instruments and consumable mix was 55% to 45%. And instrument revenue was $7.9 million during the first quarter, an increase of 34% over the prior year's quarter driven primarily by sales of the C1 Single-Cell AutoPrep System, which was launched late last year in late Q2. Single-cell genomics continues to be a strong growth driver for the company as approximately 70% of the BioMark HD systems sold during Q1 were motivated by single-cell gene expression use. The high level of interest for single-cell messenger RNA sequencing on the C1 this past quarter exceeded our internal expectation and as a result, we have a strong pipeline of opportunity. The C1 now enables full transcription sample preparation from single cells in a completely automated workflow at a fraction of the cost of manual solution. There's a latent demand for full transcriptome analysis at the single-cell level, and we are making this process practical by addressing key workflow bottlenecks and cash considerations. We expect to continue to roll out a menu of additional applications for single-cell genomics on the C1, including micro RNA analysis and whole genome sequencing in the second half of this year. Of the installed base of approximately 720 instruments at the end of the first quarter, analytical systems were roughly 64% and preparatory systems, which includes C1 systems, were roughly 36% of the installed base. Our total consumables revenue, both IFCs and assays, was $6.4 million during the first quarter, an increase of 31% over the prior year's quarter. Chip revenue growth was driven by production genomics customers, including genotyping and Access Array application. Chip pull-through in the first quarter was within our historical range of $40,000 to $50,000 per system per year for our analytical systems and slightly higher than our historical range of $10,000 to $15,000 per system per year for our preparatory system. We also experienced strong growth in our assays business in the quarter. Geographic revenues as a percentage of product revenues for the first quarter were as follows: United States, 49%; Europe, 25%; Asia-Pacific, 13%; Japan, 10%; and 3%, other. Net loss for the quarter was $3.6 million compared to a net loss of $6.7 million in the prior year first quarter. Non-GAAP net loss for the first quarter of 2013 was $3.5 million compared with the $4.9 million non-GAAP net loss for the first quarter of 2012. Our product margins remained strong at 70% in the first quarter, 3 points higher than the year-ago quarter. This increase was primarily driven by sales of the C1 instruments, which has a higher margin compared to other instruments, and sales of assays and reagents. For modeling purposes, I would continue to encourage you to think of our business as a high 60% product margin business. Turning now to OpEx. Research and development expenses were $4.2 million in the first quarter of 2013 compared to $4.3 million in the first quarter of 2012 and $4.3 million in Q4 2012. SG&A expenses were $11.1 million in the first quarter of 2013 compared to $9.4 million in the year ago period, and up from the $10.6 million of expense in Q4 2012. The sequential increase in SG&A expenses was mainly due to increased sales channel expenses and seasonally higher G&A expenses, offset by lower legal expenses. Stock-based compensation expense was $1.3 million in the first quarter of 2013 compared to $900,000 in the first quarter of 2012, and up slightly from the $1 million expense in Q4 2012. Moving onto the balance sheet. Total cash, cash equivalents and investments were approximately $86.9 million at the end of Q1 2013 compared to $83.7 million at the end of 2012, a net increase of $3.2 million in the quarter. We received approximately $3.1 million in cash in the quarter for a minority equity investment in Verinata Health in connection with this acquisition by Lumina, which closed in February 2013. Inventory was $7.4 million, up slightly from $7.2 million in the fourth quarter of 2012. And accounts receivable were $10 million compared to $12.9 million at the end of the fourth quarter. DSO declined to 62 days at the end of the first quarter of 2013, resulting from strong cash collection and was significantly below our historical DSO range in 2012, as well as the range of our plans for the year. Shifting gears towards guidance. We are maintaining our full year 2013 total revenue growth and OpEx guidance initially provided in our last earnings call. We expect 2013 total revenue growth of 22% to 26% growth from full year 2012 total revenue of $52.3 million. Operating expenses in 2013 are projected to be between $63 million and $66 million. Stock compensation expense is projected to be between $5.5 million and $6.5 million. Capital spending is expected to be between $4 million and $5 million. I will now turn the call over to the operator to open it up for questions.

[Operator Instructions] Our first question comes from Doug Schenkel of Cowen & Company.

Thanks for all the color on progress being made in single-cell. Gajus, would you be willing to, and I apologize if I missed this, but would you be willing to break out what percentage of C1s are currently being placed with existing BioMark's versus those that are being placed with BioMarks for the first time and what percentage are being placed with -- that is going to be used with next-gen sequencers?

It's Gajus. Thanks for joining the call. We didn't break out those percentages but I can talk to you about it qualitatively. So 30% of the C1s that we sold in the quarter came with the BioMark. And you can more or less assume that the fat lion share of those were new customers, people who did not have a BioMark prior to the purchase? Of the remainder, certainly, a majority is going into our existing installed base of BioMark users. However, the launch of the mRNA seek application has definitely generated interest from users who have no BioMarks. And so that whole segment has opened up to us now and is also contributing to the growth.

Okay, that's helpful. Consumables revenue rebounded pretty nicely relative to what folks on Q4, or what you generated in Q4. And this was one area where in an otherwise pretty strong quarter, I think it raised some questions in terms of mix. Was this really just a one quarter thing? Was there anything specific worth calling out from a pacing or a timing standpoint?

I'll repeat what I said at the time that, during the fourth quarter, you may remember that during 2012, we had quarters where consumables revenue was in the 70% and we advise people at that time, not to -- not to break from our guidance or rather from our historical ranges which we had provided. And when -- in the fourth quarter, I reiterated the same thing, that you can have consumable revenue that rings around that -- those ranges. So really, there was nothing anomalous in the fourth quarter and there was nothing anomalous in the first quarter either. It just was -- it consistent with historical ranges that we provided. What I can say is that when we give you a total installed base of machines, those are machines that we have -- we back out anything that we think is -- has been mothballed or not being used. So the net of all that is that if you look at the overall growth of our installed base year-on-year, that tracks pretty well with the growth of the consumables which gives you a good indication that the installed base is being used.

Okay. And my last question relates to Japan. You guys have been working hard to really turn around your business in that geography you for several quarters. Clearly, there's been a lot of concern heading into this earnings call, given the weakening yen and updates from some other tools company suggesting Japan was pretty weak in the quarter. Recognizing it's not a huge base, it looks like you guys grew between 40% and 50% year-over-year in Japan, which I think factors in an FX headwind, meaning you actually did better than that, I think, on an organic basis. Can you just talk about the commercial progress you're making there, both from a competitive, I guess, as well as from a structural standpoint? Was there any stimulus impact and what's the right way to think about Japan from here?

Yes. So first off, Japan is still a work in progress for us. Too much too early to declare a victory there, but we had a very strong quarter in Japan. We grew, as you laid out there, we actually grew over 50% in Japan and that is in spite of an FX headwind which was to the tune of a couple of hundred thousand dollars.

Yes. Literally, $200,000.

Literally $200,000, and Japan would have done even better without that. Definitely, some of that came from the effects of the stimulus in Japan. The other thing that I'll just note, generally, is that we have some very high-profile customers in Japan. Shinya Yamanaka won the Nobel Prize, that are doing single-cell work, those that's been a critical area for us. With all that said, we still got work to do there. So I think too early to declare victory yet, but we made very, very good progress for the first quarter.

Our next question comes from Bill Quirk of Piper Jaffray.

It's actually Dave Clair in for Bill. First question for me, I'm just -- I guess I'm assuming that the C1 is the primary reason why the preparatory system consumable pull-through was above the historical range. I guess, is that what drove it higher and should we expect it to kind of remain above the historical range going forward?

Yes. So I wouldn't infer that. First off, it's still really early in the C1 cycle to have a good sense for what it's pull-through is going to be. But also note that we pointed out on multiple occasions that we turned on a very high throughput Access Array site DKMS to do HLA typing, and that was certainly -- contributed nicely to consumables revenue particularly Access Array consumables revenue. So when we're ready to reset, if we're ready to reset the ranges, we'll certainly let you know but we wouldn't do that until we've seen multiple, repeatable quarters above performance relative to what we've seen historically.

Okay, okay. And I think you kind of touched on this a little bit in your prepared comments, but have you noticed any impact in end-user demand since sequestration went into effect?

So first off, remember, or bear in mind, rather, that on the research side of our business, we focus on single-cell genomics. That said, that is really become what we do, what we live with in all of our research business. So as it relates to sequestration, this is really a U.S. phenomenon and we just didn't experience any change in customer sentiment, ability to garner budget. As I pointed out, 30% of the C1s that we had in the quarter came with the BioMark, which is actually higher previous quarters. And when you add a C1 to a BioMark, you're talking about over a $300,000 purchase. So I can't comment on anything outside of our area of focus which is single-cell genomics. And so within single-cell genomics, we just did not see any effect of sequestration.

Okay, and then just one last one for me. Just hoping if you could give us an update on the competitive landscape? Anything new there?

No, not really. I mean, I guess that things are unfolding more or less like we expected. And in a few calls ago, we said that as this area really heats up, then you get more key opinion leaders saying that 2013 is going to be the year of single-cell and such, it's going to attract attention, and that we expected that some of the vendors of more conventional equipment would start to try to position their products in or around single-cell. We've seen some of that start to happen but it doesn't change fundamental underpinnings of the real requirements due to science in the area. So there's more -- there's certainly more activity and more notice that's being taken of it but no new -- nothing new from a real competitive product perspective.

Our next question comes from Sung Ji Nam of Cantor. Sung Ji Nam - Cantor Fitzgerald & Co., Research Division: So firstly, if you could talk about the type of customers you're seeing for your C1 system. Also, if it's still kind of 1 unit per customer. I'm a little bit surprised at the Sanger Institute only purchased 1 system and if you expect to see multiple system purchases from at least some of the high-volume users going forward?

Yes. Well, there's evidence that these C1s are starting to have babies. And we do have customers now that have -- that maybe started out with one but have acquired multiple C1 systems. And I think that where the Sanger Institute started out is such a great place to start. And depending on where the science goes, there will be a lot of places where that center and the work we do with them could go. Frankly, I'm very optimistic about the science just based on what I know has been done already, what's already been published. So the reaction that we have from our early access customers, as an example, has been really overwhelmingly positive and I have every expectation going forward that we'll have really active customer, the new customers that will, over time, acquire multiple C1 systems. But we're actually very pleased with the level of adoption we see now and -- did you have a question about that customer type? Sung Ji Nam - Cantor Fitzgerald & Co., Research Division: Yes. New types of customers you're seeing that you didn't expect before or is this be kind of typical genomics?

Well, we continue to be really pleased with the brand. We're still penetrating very thinly into the overall market but international purchases from Asia, from Korea, from Australia, places like that, that's definitely a strong -- a good indicator for us about the global reach of single-cell genomics. The mix of customers is pretty consistently at this point research-based, although, we do see some adoption from folks who are looking at diagnostic applications. So that's a minority. But it's really right now, primarily overwhelmingly research. Sung Ji Nam - Cantor Fitzgerald & Co., Research Division: Okay, great. And then I was wondering if you could talk about your current pricing environment, if it's stable or if your -- even if you're seeing improvement there given you guys are essentially the leaders in single-cell and I was wondering if you could comment on that.

Yes. So BioMark HD ASPs are actually slightly up year-over-year. And then our Access Array and EP1 ASPs were down just a little bit. So overall, it's more or less a wash, and Chip ASPs were flat. Obviously, we don't have a comparison for C1s on a year-on-year basis but we haven't changed the list price which is $150,000. Sung Ji Nam - Cantor Fitzgerald & Co., Research Division: Okay, great. And then lastly, I was wondering if you could maybe comment on -- if there are new Ag-Bio trends or is it pretty much kind of the continuation of what you've seen before and also if you wouldn't mind breaking out percent of revenue coming from that segment.

So we haven't broken out the percent of revenue coming from that segment. We're not prepared to do that. And in terms of trends going forward, I think you said, it's really a roll forward. In that market, there's a really strong need for very low cost, for workflows that require as little expertise as possible in order to run effectively. There is interest broadly in technology, so it's not just SNP genotyping there's also interest in expression and there's also mounting interest in usually utilizing next-generation sequencing for a variety of purposes. So we have a good mix of technologies to offer these customers. So there's really no new trend to report there. And I apologize, we haven't broken out Ag-Bio as a segment but we are thinking about how best to communicate production genomics to investors and that may be something that we do going forward.

[Operator Instructions] Our next question comes from Peter Lawson of Mizuho.

Thanks for the color around academia. So you feel you're past the potential worse hit from sequestration, you don't think it could linger into Q2?

All I can say is that we haven't seen any effect of that. As our market -- our strategy as it relates to academics, I'll just reiterate that, is that we believe this is going back all the way to Q3 of 2011 when these questions first started to pop up that -- and you remember that was when there was a first sort of fears about academic funding. And I'd say that those fears have persisted more or less from that time to now. And during all that time, what we've said is that we believe that the science behind single-cell genomics is no differentiated and important that it will find funding even in an environment where there is either real pressure on budgets or fear about budgets or perceived pressure on budgets. That has turned out to be the case, certainly, thus far and I think that you just can't point to examples that higher profile like the Sanger Institute implementing the first -- third single-cell genomics center worldwide, the first one in Europe, another example of institutions really making an active decision to allocate funds specifically for this area. So that's also, like I said, our expectations and strategy with respect to the market played out like we hope that they would. It's been very, very consistent.

And then just -- I wonder if I can get a breakout of revenues by end market if possible because everything's evolving very quickly with C1 in applied market growth.

Give me just a moment here. Vikram, do you have that?

Yes, sure. Peter, this is Vikram. Are you talking about academia government, pharma biotech, that type of thing?

Yes, however you want to split it, really.

Yes. So I think the academia of government, which include hospitals, I think it's been very consistent with the way we've been talking about this in the past. It's hovered around 50% and continues to hover around that. And the remaining 50% is broken down between pharma biotech, commercial Ag-Bio and they're kind of almost equal, I think I would say collectively accounting for about 10% to 12% of revenue. And then clinical, which we've talked about again in the last several quarters, especially it's hovering around 20%. And then the remainder is aggregation of the type of customers for the remaining 20%.

Just one final question, just around the fact that the quarter sequestration is not impacting you. You got a nice diversified business mix. Why didn't you raise guidance this quarter?

Peter, it's Gajus here. We're really pleased with the growth in Q1 and we feel very good about reiterating our guidance for 22% to 26% for the year, which nearly as we can tell is sort of leading the industry in terms of projections about growth for the year. So we feel very, very good about all that. And it's-- it's early in the year. It said it was just first quarter.

Our next question comes from David Ferreiro of Oppenheimer. David Ferreiro - Oppenheimer & Co. Inc., Research Division: Most of them actually have been answered, but I was wondering if you can expand on an answer to a prior question on type of customers you have for the C1. You mentioned some adoption by diagnostic customers. What type of diagnostic allocations are you seeing from them and what do you think the long-term opportunity is in that market with the C1?

Sure, Dave. So one is cancer, and I'd say specifically, circulating tumor cells. There's a lot of interest in that area. There's actually a really nice series of publications in this past quarter, one by Dan Abraham [ph] and Mehmet Palmer [ph] delineating some nice technology for isolating circulating tumor cells and then in the publication, they actually had a bunch of BioMark data in that as well. That's a good example of an area that where the C1 can really contribute. A lot of the technologies that are used to isolate curative circulating tumor cells don't isolate them individually, isolate in them inside a tube, and then there's still questions about whether or not the circulating tumor cells, what they really tell you about the disease. For example, tissue of origin or the state of evolution or what mutations might be present that would make the disease vulnerable to or treatable by different therapies. So that's definitely an area that's piqued interest. And I'd say that there's -- it's eventually going to work. There are still questions about the biology that have to be answered and there's still questions that need to be answered about exactly what do the signatures mean and how do you relate them to, I think, really the home run is really the state of the cancer. Is it metastatic or not, as an example. And that science still needs to be done. I'm not optimistic that it's going to happen and I think the C1 is going to play an important role in figuring out the science and I think that we're in a good position as that rolls forward to a diagnostic. Another area that I'm pretty keen on is -- that these are immunological things. So for example, there are ways to profile, potentially, to profile HIV patients at a single-cell level to ascertain what kind of drug cocktail they should be on. And there are also some very early but very provocative results about understanding the efficacy of a potential HIV vaccine that are not 100% effective but managed to inoculate some portion of the population. Those are longer term but clearly, very high impact. So those are some examples. And what I'd say is that right now we're still in the science phase. I'm optimistic that we think we have really good line of sight to these applications are -- or some set of these applications becoming diagnostic ultimately and it will be just a matter of time. And obviously, we're in a good position there when the science is done and they're ready to move towards the clinic.

[Operator Instructions] Our next question comes from Dan Leonard of Leerink Swann.

Gajus and Vikram, could one of you comment on the sequential trends for the C1? How placements turn versus what you accomplished in the first quarter?

Dan, Vikram. We actually didn't breakout C1 placements in Q4. I think what we had said was the second half placements. I think, I believe, we have said 36 C1. And we don't intend breaking out specific placements for C1 on a quarterly basis.

Okay. And then my follow up, motivated I guess by the communication that consumables pull-through for your production or your prep customers was higher than range. What does the range look like amongst your customer base? The comments you made about the HLA Lab in Europe, they're doing thousands of samples per week. At $10 a sample, they're obviously blowing through that range many times over. So what does that look like and asking to try to think about what it could go to?

Dan, this is Gajus. So you have to remember that we have systems that are placed in academia and then systems that are placed in production environments. And a pull-through from those 2 can be very radically different. We have production sites, not a small number of them that average well over $100,000 per system, per year again depending on the technology. And then we have academic sites that are a lot, lot less. So it is a very broad range and I know that doesn't help you a lot better but the production customers, which, I think, for the Access Array in particular, we are increasingly focused definitely have a higher pull-through than the academics do. There are fewer sites in production than there are in academia as well. So it's -- it becomes more of a consumable mix business than perhaps it is a mix business.

Yes, and Dan, I'd also like to add while it's too early to call it a trend, the initial indications are that our C1 pull-through is as where we were expecting it to be between somewhere between our prep pull-through and the analytical pull-through. So by definition, since C1 is part of our prep base is going to fill up the average that we have talked about previously. But as Gajus mentioned earlier, we want to let a few quarters go by before we thought about some kind of initial number for that.

And at this time, I'm not showing any further questions. I'd like to turn the call back to Un Kwon-Casado for any closing comments.

I'd like to thank everyone for attending our call today. A replay of this call will be available on the Investor section of our website. As a reminder, Fluidigm will be presenting at the BofA Merrill Lynch Conference in Las Vegas on May 15. This concludes the call. We look forward to the next update following the close of the second quarter of 2013. Good evening, everyone.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone, have a great day.