Ana Petrovic - Director, IR Gajus Worthington - President & CEO Vikram Jog - CFO.

Bill Quirk - Piper Jaffray Peter Lawson - Mizuho Securities Doug Schenkel - Cowen & Company Sung Ji Nam - Cantor Justin Bowers - Leerink Bryan Brokmeier - Maxim Group.

Welcome to the Fluidigm Third Quarter 2014 Financial Results Conference Call. (Operator Instructions). I would now like to turn the call over to Ana Petrovic..

Thank you. Good afternoon everyone. Welcome to the Fluidigm third quarter 2014 earnings conference call. At the close of the market today, Fluidigm released financial results for the third quarter ended September 30, 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 genomics markets including future market conditions and trends and our prospects and growth opportunities in such markets, our future product launches and other business strategies, expectations regarding future sales, revenue, opportunities, objectives and financial performance of our proteomics product line and current estimates of 2014 revenue, GAAP and non-GAAP operating expenses, stock based compensation expense, interest expense and capital spending.

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 such as risks relating to the integration of our recently acquired proteomics product line with our business and operations, the execution of our marketing and sales strategies for our products, intellectual property rights and the manufacturing or supply of our products.

Information on these and additional risks, uncertainties and other information affecting our business and operating results are contained in our quarterly report on Form 10-Q for the quarter ended June 30, 2014 and our other filings with the SEC.

Additional information will also be set forth in our quarterly report on Form 10-Q for the quarter ended September 30, 2014 to be filed with the SEC. We advise investors to review these risk factors carefully. Fluidigm disclaims any obligation to update these forward-looking statements except as may be required by law.

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. I will now turn the call over to Gajus..

Thanks, Ana. Good afternoon everyone. Thank you for joining us today. Fluidigm had another great quarter delivering strong financial performance, new product launches and a milestone commercial achievement. The consistent performance of our organic business reflects broad based demand for our genomics products with sales up by 35%.

This was driven primarily by increased sales of the C1 Single-Cell AutoPrep system and robust consumable demand across both production genomics and single-cell genomics applications. We’re also pleased with and encouraged by the steady progress we are making with the acquired CyTOF single-cell proteomics product line.

Our proteomics revenues and bookings tracked well relative to our expectations for the quarter. And finally, we believe the wave of new products we delivered in the quarter demonstrates consistent execution on our commitment to deliver enabling new tools to our customers.

We expect to finish 2014 with total revenues between $114 million and $117 million versus our previous range of $112 million to $118 million. We now expect our organic revenue range to be between $95 million and $96 million compared to our previous guidance of $94 million to $96 million, representing year-over-year growth of 33% t0 35%.

For the acquired single-cell proteomics product line we’re narrowing our revenue guidance range to $19 million to $21 million versus our previously communicated guidance of $18 million to $22 million based on greater visibility into the geographic mix and site readiness of pipeline opportunities.

Looking ahead, we remain bullish about the single-cell biology market. Interest within the scientific community to conduct research at the single-cell level across both genomics and proteomics continues to broaden. We see this both from our direct experience in the field and our continuing market research.

The trajectory of single-cell publications continues to be very positive. At the end of the third quarter the total number of single-cell publications citing Fluidigm technology stood at 222 including 16 C1 publications and 63 publications citing mass cytometry technology.

Importantly, our single-cell genomics customers are recognizing the need to assess single-cell protein expression and that the CyTOF 2 is really the only tool available for this. As a case in point we’re delighted to report our first combined sale of a CyTOF 2 C1 and BioMark HD system in the quarter, a key proof of principle milestone.

Overtime, we expect this kind of transaction will become more commonplace with a CyTOF, a BioMark, a C1 and access to sequencing technology, a scientist is outfitted with the best single-cell biology technology available.

Overall, we’re pleased with the progress of our commercial efforts within proteomics and happy to report that the business tracked within our expectations in the quarter. During Q3, we cultivated multiple opportunities that are the result of cross selling since our merger.

In fact, we are very encouraged by the pace with which we are finding sales prospects from our existing genomics customer base.

In general, we believe the research field will continue to migrate towards the convergence of single-cell proteomics and genomics supporting the key strategic rationale of our acquisition of DVS Sciences and giving Fluidigm substantial room for growth.

Our single-cell genomic sales continue to grow sharply, revenue increased approximately 60% in the first nine months of 2014 versus the comparable period in 2013 and up 50% year-on-year in the quarter. We continue to see strong placements of C1 systems and many C1s sold in combination with BioMark HD systems.

In Q3 approximately 25% of C1 units sold in the quarter were combined with a BioMark HD, a consistent trend since we launched the C1 in mid-2012. As a reminder, during our last earnings call we announced that our installed base of C1 and BioMark HD systems for single-cell research surpassed 400 units.

We plan to update this metric on our fourth quarter earnings call. However, we’re tracking nicely towards our goal of 700 Fluidigm systems for single-cell genomics by the end of 2015. We recently highlighted our Single-Cell Whole Exome Sequencing protocol for the C1 at the ASHG meeting.

This extension of our single-cell DNA sequencing protocols has been highly anticipated by our customer base and we believe this is our most important single-cell product launch since we first delivered Single-Cell RNA-seq. In clinical research, scientists often use bulk exome sequencing to identify the genetic changes that trigger diseases onset.

However, the analysis of single-cell exomes allows for a level of understanding that is unattainable with bulk sequencing. Specifically, with single-cell analysis you can tell how the genetic changes are distributed.

Researchers can now determine precisely which cells contain which mutations or variations whether mutations segregate into specific sub-populations or are distributed more stochastically and if mutations tend to concentrate in highly variant cells.

In addition, our new workflow speeds up the overall process by 3x, reduces the total cell and library preparation time to less than 24 hours and also drops the cost of sample preparation for Single-Cell Whole Exome sequencing from a high of $600 per cell down to approximately $26 per cell.

These are all important contributions to make sequencing of large numbers of individual cells practical. Finally, we’re also pleased to report that we’re on track to launch our Single-Cell Whole Genome sequencing protocol in Q4.

In July, we announced an early access program for our imaging mass cytometry platform designed to provide a limited number of researchers access to this technology in order to help drive new science and awareness of this breakthrough technique.

We believe this platform will help facilitate the next shift within single-cell biology research which will be to address in situ single-cell analysis.

Our imaging mass cytometry platform combines a sample handling module with a CyTOF 2 platform allowing for high parameter, single-cell or even subcellular tissue imaging analysis of over 30 markers simultaneously.

Interest in this program has been very healthy and we are on track to ship early access prototypes by yearend and to broadly commercialize next year.

In our production genomics business, strong growth continued which we believe is a testament to the unique value we bring to this customer base and also underscores the balanced strength across our business model.

Looking ahead, we’re making investments within production genomics both on a commercial front and on our product development pipeline in order to drive growth and continue to gain share. The standout in the quarter within production genomics was the balanced contribution to revenue growth across instruments and consumables.

Typically, it has been dominated by chip consumption but in Q3 we experienced particularly healthy instrument demand. This was from both new and existing customers. In fact, over half of our production genomics instrument sales were derived from repeat purchases from current customers.

We believe our performance in the quarter bodes well for future sustained growth and continued diversification of our revenue base. We’re making investments in production genomics. During the quarter we initiated an early access program for our Juno system, targeting production genomics applications. Customer reception has been positive.

We’ve already begun taking customer orders. What truly differentiates Juno from its peers is that it allows scientists to genotype low concentration DNA samples from tissue, buckle swabs, FFPE and polyploid organisms in less than three hours in a one step, walkaway workflow.

This solution also includes our own complete reagent sets to perform integrated genotyping for both probe-based chemistry and Fluidigm's SNPtype, proprietary SNPtype chemistry. Overtime, Juno will enable additional production genomics applications. Like the C1, it is a platform with extensive flexibility and over the coming quarters.

We will launch other chips and chemistries on Juno that provide simple, high throughput and robust workloads for our production genomics customers. We are also making commercial investments in production genomics.

As we mentioned on our last call, we recently added Sales Managers to our North American sales team who are entirely focused on tailoring and optimizing the sales efforts within production genomics. In summary, the third quarter marked another period of strong performance.

We’re pleased by the growth of our core genomics product lines and the commercial progress we are making within our CyTOF single-cell proteomics product line. Our conviction behind the single-cell biology market and the convergence of single-cell genomics and proteomics continues to strengthen.

We remain committed to executing upon our strategy of continuing to lead and shape the single-cell biology market and taking market share within production genomics. I will now hand the call over to Vikram for a more detailed view of our financial results..

Thanks Gajus and good afternoon everyone. I will now walk you through our third quarter 2014 operating results and highlights. In the third quarter of 2014, total revenue of $29.6 million was up 62% year-over-year with organic revenue up 35%. Both instruments and consumables delivered solid growth in the third quarter.

Instrument revenue grew 64% year-over-year to $17.9 million. Excluding contribution from the recently acquired CyTOF 2 system, instrument revenue grew 29% 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 60% of the BioMark HD systems sold during Q3 were motivated by single-cell research and approximately 25% of C1 system sales were combined with a BioMark HD system which is consistent with our historical pattern.

Our total consumables revenue, both IFCs and assays including antibodies was $11.7 million during the third quarter, up 64% year-over-year and 48% organically, driven equally by production genomics and single-cell genomics applications.

Our genomics analytical and preparatory pulled through in the third 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 pulled through, tracked within its historical range of $50,000 to $70,000 per system per year.

Total single-cell proteomics revenue in the quarter was $4.9 million. On an as reported basis, excluding $3.8 million recognized before the close of the acquisition, total single-cell proteomics revenue was $12.3 million in the first nine months of 2014.

Our total instrument installed base increased to 1,230 instruments at the end of the third quarter of 2014 with 703 analytical systems including 86 proteomic systems and 527 preparatory systems including C1 systems.

Geographic revenues as a percentage of total product revenues for the third quarter were as follows, United States 57%, Europe 27%, Japan 3%, Asia Pacific 9% and 4%, Other. Geographically, we saw strength across all our markets excluding Japan in the third quarter.

We believe the weakness in the Japanese market was largely due to delays in funding disbursements. Net loss for the quarter was $13.8 million compared to a net loss of $4.3 million in the prior year third 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 third quarter of 2014 was $3.1 million compared to the $1.5 million non-GAAP net loss for the third quarter of 2013.

Please refer to the reconciliation of GAAP to non-GAAP information attached to the third quarter 2014 earnings release for details. GAAP product margin was 61% in the third quarter of 2014 versus 72% in the year ago period.

After adjusting for acquisition related non-cash charges including amortization of developed technology and inventory evaluation, stock based compensation and depreciation and amortization, non-GAAP product margin was 74% versus 74% in the year ago period.

While overall product margins were flat, higher consumables margins were offset by lower instrument margins. Turning now to OpEx, research and development expenses were $12.7 million in the third quarter of 2014 compared to $5 million in the third quarter of 2013 and $11.4 million in Q2 2014.

The year-over-year increase in research and development expenses was primarily driven by the acquisition of the single-cell proteomics product line, headcount additions and project materials. SG&A expenses were $18.6 million in the third quarter of 2014 compared to $12.1 million in the year ago period and $18.7 million in Q2 2014.

The addition of the single-cell proteomics product line contributed approximately 30% of the year-over-year increase. Increased headcount, tradeshows, promotions and professional fees drove the remainder of the increase.

Moving on to the balance sheet, total cash, cash equivalents and investments were $147.2 million at the end of the third quarter compared to $157 million at the end of Q2 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 $12.6 million in the first nine months of 2014 versus $4.8 million in the first nine months of 2013. Accounts receivable was $16.9 million compared to $13.3 million at the end of the second quarter 2014.

DSO at the end of Q3 of 2014 was 51 days compared to 43 days in Q2 2014. Inventory was $17 million, slightly up from $16.4 million at the end of the second quarter of 2014.

Now moving on to our financial guidance for 2014, we are narrowing our 2014 total revenue guidance to be between $114 million to $117 million versus our previous range of $112 million to $118 million. We’re also decreasing our annual OpEx guidance.

We now project GAAP operating expenses to be between $129 million and $131 million versus prior guidance of $134 million to $136 million and expect non-GAAP operating expenses to be between $95 million and $97 million compared to prior guidance of $100 million and $102 million.

Stock-based compensation expense is projected to be between $21 million and $22 million including $9 million related to assumed share-based awards from the DVS acquisition. Substantially all of our stock based compensation expenses is reflected in operating expenses. Interest expense is projected to be $5.3 million.

And finally, our revised capital spending guidance range is now expected to be between $9 million and $11 million versus prior guidance of $11 million to $13 million, 2014 CapEx projections include expenditures related to the move and expansion of our Singapore manufacturing facility and expenditures related to the newly acquired proteomics product line.

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

(Operator Instructions). The first question comes from Bill Quirk from Piper Jaffray..

First question is just thinking about the combined prep and imaging system for DVS, can you help us think a little bit about what some of the price points might be around this? Do you envision this as sort of an add on to CyTOF? Any color around I guess kind of early stab at what consumables might look like, that would be helpful..

Bill, we haven't decided on those things yet. From an engineering perspective, we could engineer the final product to be either a module that would go in the front end of the CyTOF 2 or we could make a fully integrated system that would be dedicated to this application.

There are puts and takes to both approaches both from a market perspective and also from an engineering and overall performance of product perspective. We haven't decided yet and as you can probably imagine that affects the pricing pretty dramatically and as a result, I don't have answers for you for really any of those questions yet.

What I can tell you though is that these are the kinds of things that we’re going to be (indiscernible) out with the early access program.

We will get a better handle on whether or not the performance specifications that we’ve in mind are acceptable really to the customer base and how the use model develops and whether or not it would be, in aggregate, better to have either a dedicated system or a module that you put in front of a CyTOF 2.

We will update you with specifics around that as we sort them out but I wouldn't anticipate that we would have those kinds of things to give to you and your colleagues until probably the middle of next year at the earliest..

And then just flipping over to single-cell research, help us think a little bit about the evolution here. We’re seeing a pretty dramatic increase in the number of publications around single-cell, certainly C1 as well.

I think you made mention of -- I think it was 17 and if I remember correctly it was three all of last year and so how should we think about this rolling into 2015? Is that the year we start to see a lot of larger consortium studies and what not? Do you think we are still a little too early there? Just help us think about how this evolves over the next year or two..

Sure, we mentioned some of these on previous calls but we already have customers who are engaging what we call 100 case studies, that is 100,000 cells.

That compares to -- there are very, very few genomics projects generally that deal with samples in that incredibly high number so certainly what we’re going to see is more researchers around the world doing these large studies.

Now interestingly, whereas studies like that would historically always be the purview of a consortium, multiple sites contributing samples, you just don't have that constraint when you’re in the world of single-cell.

The vial of blood has billions of cells in it and a mouse has many tens of billions of cells so there is no want of the number of samples. It is really about the affordability and the logistical friction associated with processing that number and that is precisely what the C1 of the BioMark enable.

We’re going to see more of these very high triplet studies that get funded and get underway.

The other thing that we think is going to become increasingly important is to incorporate the effects in the context of the biological niche and what I mean by that is that cells exist inside of living organisms in a biological context where they can communicate with other cells, where they can absorb messages, where they can absorb the surrounding environment and tools which allow measurements that can either mimic or incorporate that environment are going to become increasingly important in the science.

So you can probably imagine that is something that we are really excited about. It is something that the imaging mass cytometry platform gets after and it is a real rich area for new science..

And if I can sneak one short one here in for Vikram. Vikram, if we think about Forex, can you just tell us what the impact was in the quarter? How that kind of would have affected the entire year-based on your original assumptions? Thanks..

It is still not very significant but we obviously are taking note of the currency movements expected in 2015 and we haven't quite yet worked out the numbers but the impact on Forex for us is not very significant..

The next question comes from Peter Lawson from Mizuho Securities..

Just on DVS, the growth in Q4 and the guidance it seems there is a decent jump from Q3 to Q4.

What makes you comfortable with that ramp and how should we think about the seasonality of that business?.

One of the things, the main thing that gives us a lot of confidence in that is bookings which differ from revenues and I explained some of this in a previous call that with an instrument like this, you can't always turn bookings within a quarter into revenues within that same quarter for a variety of reasons and we had a very nice sequential growth in bookings going from Q2 to Q3.

More generally as I mentioned earlier, we’re seeing a lot of traction within our existing genomics base.

Our legacy genomics sales people have been generating opportunities but it is really a combination of things in conjunction with the health of the market generally that give us confidence in the guidance that we put forth, the $19 million to $21 million for the year..

(Indiscernible) that was within the range this quarter. It looks like it dropped versus last quarter.

Do you see any bounce back in that in Q4 at least around seasonality or the installed systems?.

I don't really think that there is as much of a seasonal affect there. In fact, if you were to bet on seasonality you would probably bet that Q3 would be low because typically we see a lot of people go on vacation during the month of August and some people putting their pencils down for a while.

As you probably noticed, Peter, over the years our genomics pull through has a tendency to bounce around a little bit and this is of course right within the range that we previously described.

We don't anticipate going forward that it will be any different from the range that we previously provided and if there is a meaningful shift and that is consistent and for reasons that we understand at that point then we will revise the range but the pull through range remains. We expect the pull through range to be consistent..

The next question comes from Doug Schenkel from Cowen & Company..

My first question is really just on prep systems and really just trying to get at the outlook for C1s, C1 placement.

So I guess this is how I'm thinking about it and hopefully this makes some sense, you have really good year-over-year of growth but the last four quarters it has been great but placements have hovered between I think somewhere in the low 40s and the low to mid 50s per quarter.

So you’ve settled in a nice range year-over-year, but in a range that has moved a little bit more gradually up to sideways over the last few quarters. So with that in mind, in your prepared remarks again you talked about the Exome [ph] kit launch.

You reaffirmed plans for the launch of the whole genome protocols in Q4 and then you talked about in response to a previous question, these 100,000 sample projects.

Is it your expectation that the launch of the exome kit, the full genome kit as well as the anticipation of these 100,000 sample projects will drive another leg up of C1 placement pacing? And related to that, how do you think the launch of these new kits will impact utilization per instrument?.

All of these launches are planned. They are things that we’ve talked about going back to the beginning of this year and I think even maybe late last year we announced our plans to do single-cell DNA sequencing generally.

So things have gone according to plan so in other words, our guidance for the year assumes the effects that we anticipate around the Single-Cell Whole Exome launch and as it relates to what happens going forward, we’re not in a position yet to comment on growth for 2015 and what might happen with the C1 and what happen with revenues generally.

We will do that on our next call which is in about three months' time but just maybe think about several vectors. The market remains very, very healthy. I think that we have seen as much activity, as much growth in activity as ever in this past quarter and as we’ve mentioned a bunch of times.

We designed the C1 at the beginning to be a highly flexible system that would allow us to continue to layer on additional chips and additional applications to broaden its applicability and there is no question that with the launch of the single-cell sequencing protocols and in particular, Single-Cell Whole Exome that it puts us in a position to access a customer base that we haven't accessed historically.

There are definitely folks out there who are specifically interested in DNA as opposed to RNA or proteins or what have you and until the most recent launches that hasn't been a customer base that has been accessible to us..

My second question is regarding DVS, maybe I'm reading into it a little too much but in your prepared remarks, Gajus, you said a couple of things that made me feel like maybe you were feeling a little bit more confident in the outlook there. You did talk about making some progress in cross selling. You referenced build in customer preparedness.

The guidance for the year isn't and I guess what is implied in Q4, isn't necessarily drastically different from I think what we were all expecting but I'm wondering again looking a little further out, are you feeling like maybe the funnel is a little bit better or put differently, you are a little but more confident in the funnel heading into yearend and maybe that demand is broadening a bit due to some of the commercial changes that you, if anything accelerated over the last couple of quarters?.

There are several things I can comment on. First off is, as you mentioned, we tightened our guidance range from $18 million to $22 million to $19 million to $21 million so that obviously signals our confidence in the product line. In addition, we’re very pleased by the revenue performance in Q3 as well as the bookings performance in Q3.

Indeed, our genomics sales force and the folks that joined Fluidigm from DVS have been effective in the third quarter in generating new opportunities. Those are all things that factor into our revised guidance..

And if I could just sneak in one more, just a geographic question, APAC has been doing a lot better over the last several quarters and it was still a very nice growth quarter in APAC but if you think about it sequentially, APAC went from $2 million in Q1 to $4.7 million in Q2 to I think it was around $2.7 million in Q3.

I'm just wondering as we model things over the next few quarters, is there something specific to that geography that is going to especially given I think there is a lot of maybe disproportionate amount of production genomics that is going to make that maybe a little more lumpy quarter to quarter at least for a little while?.

I wouldn't say that it is a preponderance of production genomics as we had single-cell demand really worldwide. In general, as you point out those numbers are small relative to North America, relative to Europe. So frankly, it is easier for a couple systems at $600,000 a piece or a couple bundles at $400,000 a piece to make a bigger wiggle in that.

So I wouldn't say there is anything specific about those geographies but we have seen some lumpiness in them. However, in general as you point out, APAC has done very well..

(Operator Instructions). The next question comes from Sung Ji Nam from Cantor..

I was wondering, I know it is your first customer in terms of combining the CyTOF and the single-cell genomics platforms but could you maybe talk about what type of customer this is, how come they were able to do this? Or they were ready to adopt the combined platforms? If you will and if you might be able to characterize what they saw in buying both systems versus others that might not be ready or still kind of exploring the opportunity further..

I can't give you a lot of specifics about this individual customer. I can tell you it is an academic site.

I also can't tell you what kind of science they are going to be doing because frankly what they have done gives them a strategic advantage amongst the competitive field and so it would be inappropriate for me to tell you what they are doing which is beautiful but I can tell you a bit about some of the dynamics here.

One of the dynamics is you have institutions -- again in a very competitive environment, who are trying to distinguish themselves from the field and this is in order to be able to position themselves to get more grant funding in order for their researchers to publish with greater frequency and higher quality journals and just in general to carve out some territory where they can help lead and single-cell biology is an incredibly rich area in which to invest if those are your considerations.

We’re just scratching the surface of the kind of really impactful science that can be done, that needs to be done that will be done in single-cell biology and institutions set aside funding, strategic funding for these kinds of opportunities that don't come along very often but in this particular case they saw the power of the combined platforms and allocated funding for it.

Generally, the kind of science that is enabled by this is the ability to move from a more broad characterization of what is going on at a single-cell level by using the C1 in conjunction with sequencing to then find more precise signatures that can help you understand the importance of the cellular heterogeneity to look at that over a larger number of cells with a BioMark, but then to do something which has been done very rarely, actually which is to look at the functional implications of that work and that is to assess what is happening at a protein level and proteins as you probably know, do all the work in cells generally but to be able to show that the transcriptional profiling that was done with RNA indeed has ramifications, real ramifications in the actual cellular function and this is a whole new area of science right now.

These kinds of progressions from DNA nucleic acids to proteins have not really been done at a single-cell level.

So the folks that are jumping in early have a huge advantage from a publication perspective and from distinguishing themselves competitively, that is one of the reasons why I said in the prepared remarks that we think that this kind of transaction is going to become more commonplace because there is so much work that can be done with these systems in combination with one another..

And maybe one for Vikram, could you maybe talk about what the biggest driver is for the reduced operating expenses for the year? Is it largely R&D -- on the R&D side or SG&A?.

It is primarily headcount related. There is no one particular area that I would want to highlight. It goes across all our functions, sales, marketing, R&D. So it is just to reduce the headcount projection as we approach the end of the year..

The next question comes from Dan Leonard from Leerink..

This is Justin on for Dan. I want to focus in on tech development in proteomics and then also in Juno.

What should we look for through the end of the year and next year in timing as well?.

Within proteomics, one of the big things is obviously the development of the imaging mass cytometry platform which we feel is going to be transformative. We think that that system is completely unique in the world of cell biology and is a frankly a new category of instrument.

Based on the reaction that we’re getting from our announcement of the early access program, we feel that our enthusiasm is well justified for the scientific applications there. In addition, on the proteomic side, something that we have talked about before, we’re making investments and increasing the number of assays that we have available.

We’ve a good number available that are already on the shelf but as the application space for single-cell protein expression moves from something that historically has been more focused around immunology to cancer biology, neuroscience, developmental biology, stem cell biology, a different set of assays are needed and so we’re investing pretty heavily and increasing our menu there.

That will be ongoing activity through the remainder of this year and then well into next year. On the genomic side or maybe something that straddles both genomics and proteomics for years we have been looking at the advantages, the enabling advantages of doing cell culture at a microfluidic level.

Cell culture has been really devoid of any major technological contributions for a long, long time.

So it is really ripe for something that would be very different and enabling and we feel that microfluidics is a great way to potentially address that, that is to allow for much more sophisticated and precise control over cell culturing environments and cell culture has everything to do with what I was talking about during the prepared remarks and that is the control over the biological niche and the effects of cell communication, the effects of the surrounding environment on what individual cells actually end up deciding to do.

That is an important area that we have been investing in. And then as we move to genomics, we’ve been looking at higher throughput devices that would allow us to process lots more cells than what we currently can process on the C1 and this general theme of incorporating the effect of the biological niche.

We think that is going to be very important in the coming years..

And then just on Japan, historically it has been a little lumpy but any visibility on the funding environment there and some of the changes that are ongoing?.

The Q3 results we believe were really impacted by the funding release by the Japanese government. You’ve probably seen that in a number of our peers that have announced already.

The visibility that we’ve is limited to the public remarks that they are available to essentially everyone by the Japanese government which indicates that funding will be released but at a slower pace I think through the middle of 2015, that does provide us some visibility.

At the same time, I think what it signals is that Japan could continue to have a more challenging funding environment for some time..

The next question comes from Bryan Brokmeier from Maxim Group..

Any early feedback from customers that have been using the C1 for single-cell exome sequencing and do you still expect to introduce the traditional application for single-cell genome sequencing before the end of the year?.

We do have some early feedback and it is one of the reasons why we think this is such an important product launch particularly in applications like cancer.

It is well known that cancer is highly heterogeneous, but what has not been well understood is actually how those mutations which drive evolution of disease responds to therapy are distributed whether or not all the cells have some of these mutations or what kinds of cells have the quote, unquote rare mutations.

Are these really highly variant or jumbled cells that contain mutations all through their genome or do they acquire very specific ones? What is clear though is that those cells that do acquire rare mutations that are therapeutically relevant end up driving disease.

So being able to understand how the variants are distributed such that you can divide the cells into subpopulations has a huge effect on their understanding of the progression of disease and cancer generally, that is work that has been going on already. It is very exciting and it is the kind of insight that you could only get with single-cell work.

There were some efforts some years ago, about a year and a half, two years ago to do this with software in bioinformatics but it just didn't pan out.

The other thing that this application enables that is something that we’ve been excited about for a while is what is called haplotyping and that is figuring out which mutations reside within individual cells and which molecules they reside on.

That is information you also can't tease out any other way and it is really critical to understanding how genes are compromised by these various mutations. There has been early feedback. It has been really positive and it is one of the reasons why we’re so excited about this product launch. And then your other question, yes.

We’re expecting to launch single-cell whole genome sequencing; it is in the fourth quarter..

One other question is I think there has been more of a focus on the Juno since you made that announcement.

I don't know if I missed this, did you provide any update on the mass cytometry imaging platform that you announced about a quarter ago?.

What we said is that the response to our announcement of the early access program has been very healthy and very encouraging and we are on track to deliver two of the -- a couple of these prototypes to whichever partners we end up selecting by year's end..

At this time I'm showing no further questions. I would now like to turn the call back over to Ana Petrovic..

We would 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 updates following the close of the fourth quarter 2014. Good evening, everyone..

Ladies and gentlemen, that does conclude the conference for today. Again, thank you for your participation. You may all disconnect. Have a good day..