By Ben Butkus
Fluidigm this week reported a 26 percent increase in fourth-quarter revenue and a 28 percent increase in full-year 2011 revenue driven heavily by uptake of its microfluidic PCR-based products for single-cell analysis.
In addition, Fluidigm executives said that the company's platform for targeted resequencing applications has been its "fastest-ramping" product to date, and that the company expects to capture additional market share in the coming year.
Executives also said that the company's new assay kits for gene expression and SNP genotyping – originally launched to help sell more of Fluidigm's genetic analysis instruments and consumable chips – had a "solid" first six months, and may make meaningful contributions to the company's revenue stream as soon as the second half of this year.
Fluidigm President and CEO Gajus Worthington and CFO Vikram Jog detailed these aspects of the company's business and more during a conference call this week following release of Fluidigm's Q4 and 2011 financial results.
During the call, Worthington noted that the three major application areas driving Fluidigm's growth continued to be gene expression, production genotyping, and targeted resequencing.
Single-cell genomics continued to drive sales of Fluidigm's BioMark HD platform, with approximately 45 percent of BioMark HD systems sold in Q4 designated for that application. Single-cell genomics revenues grew "essentially evenly" between BioMark HD instruments and consumable chips, Worthington said during the call.
Fluidigm said that in Q4, the company for the first time exceeded $4 million in chip sales in a quarter, driven primarily by SNP genotyping applications in agricultural biology and human genetics. Total consumable revenue in Q4 increased 70 percent over the year-ago period, and grew 58 percent in full-year 2011 – a faster growth rate than 2010, Worthington noted.
"Chip growth dominated the increase in sales for production genotyping, including agbio and human genetics applications," Worthington said. "As a result, we had an outstanding quarter for chip sales. We passed through our first $4 million quarter and nearly hit $5 million. The chip sales growth indicates that the instruments that we are placing in the field are being put to use."
Meantime, total revenue for Fludigm's Access Array platform, which prepares amplicons for resequencing without the need for additional library preparation, grew more than 100 percent in 2011 when compared to 2010.
"Our AccessArray system for NGS sample preparation posted another strong quarter of instrument growth against a particularly tough [comparison] in 2010," Worthington said. "In the fourth quarter of 2011, a majority of our Access Array sales in the US were linked to Illumina [sequencing] platforms. Of the remainder, nearly 15 percent of new Access Array sales were for [Life Technologies] Ion Torrent machines. This is a good start."
Fluidigm expects this growth in targeted resequencing to continue to drive overall growth at the company. "To date, the Access Array system has been our fastest ramping product ever, from a unit volume standpoint," Worthington said. "But, to date, we have only captured placements in approximately 10 percent of the installed base of instruments that we believe are [currently] conducting targeted resequencing."
Worthington added that in 2012, Fluidigm expects "to capture more market share, and therefore to penetrate the existing customer base, as well as earn our fair share of placements in front of new sequencers being placed during the year. "
Despite facing increasing competition in this arena, Fluidigm is confident that it will "continue to have substantially lower cost per sample than any other solution, as well as a superior and fully integrative workflow," Worthington said. "And we are the only solution that works across all [NGS] platforms. In 2012, you'll see us continue to broaden our Access Array protocols, and we'll begin some directed marketing efforts."
To that end, the company this week also launched a new product and service for targeted resequencing: the Access Array barcode library for the Ion Torrent Personal Genome Machine, which allows multiplexing of up to 96 different samples in a single sequencing run; and a custom assay design service based on Access Array target-specific primers for high-throughput amplicon resequencing on Illumina platforms.
Finally, Worthington said that Fluidigm's assays – DeltaGene for gene expression and SNPType for SNP analysis – enjoyed a solid first six months. "While we're still early in the development of the market for our assays, the indications are that this will become a meaningful part of our consumable revenue stream perhaps as early as the second half of 2012," Worthington said.
During the call, when asked by an analyst whether he could project growth of the assay kit business beyond 2012, Worthington said that he could not make such a projection at this time.
"I can tell you that the initial strategy behind the release of our own assays was to remove an impediment to new instrument placements," Worthington said, noting that previously customers would often mention the high cost of ramping up reagent usage as a reason for their reluctance to invest in a Fluidigm platform.
"Obviously we were getting lots of sales of the platform despite that objection, but nevertheless we wanted that to go away," Worthington said. Instead, the company has been "pleasantly surprised" by the fact that "a significant portion of existing installed base that had already made a choice of chemistry … is interested in evaluating and switching – and some of those customers have indeed switched now over to DeltaGene or SNPType."
In Q4, Fluidigm tallied $13 million in revenues, up 26 percent from $10.4 million in Q4 2010. Product revenue for Q4 was $12.3 million, an increase of 28 percent over the prior-year period. Net loss for the quarter was $3.5 million compared to a $3.1 million net loss in Q4 2010.
For the full year, total revenue increased by 28 percent to $42.9 million from $33.6 million in 2010. About $40.6 million of this was product revenue, an increase of 33 percent from $30.5 million in 2010. Full-year net loss was $22.5 million compared to a net loss of $16.9 million in 2010.
Fluidigm's instrument/consumable mix was 62 percent and 38 percent, respectively, for the full year 2011, compared to 68 percent and 32 percent in 2010. R&D expense was $13.9 million in 2011 compared to $13.0 million in 2010, an increase of 7 percent.
Company executives said that they expect full-year 2012 product revenue to grow 25 percent to 30 percent from full-year 2011 product revenue of $40.6 million. Fluidigm also noted that it expected 2012 collaboration and grant revenue to be at least $600,000, and said this could be higher depending on the progress of an ongoing collaboration with Novartis Vaccines and Diagnostics to develop prenatal diagnostics (PCR Insider, 12/9/10).
Fluidigm noted that total revenue in 2011 included $1.7 million in upfront and milestone payments from that collaboration. When further pressed on the lower-than-expected 2012 revenue projections related to the Novartis partnership, Worthington said that Fluidigm had "completed all of our milestones as part of this arrangement in 2011, and we're now in the process of negotiating another phase. Negotiations have an inherent uncertainty in them, and so we just don't know at this point in time where that's going to come out."
The company said it expects product revenue in 2012 to experience its largest sequential growth in Q2 and Q4, following historical trends; and that it expects each quarter in 2012 to show year-over-year growth.
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