Fluidigm said this week that single-cell genomics and production genotyping continued to be the most important end markets for its gene expression products, helping to drive a 31 percent increase in product revenues amid an overall 22 percent revenue increase in the second quarter of 2012.
In addition, Fluidigm CEO Gajus Worthington said this week that the company has allocated 25 of its new C1 Single-Cell AutoPrep Systems — a key platform in Fluidigm's ongoing efforts to become the industry leader in single-cell genomics — for an early-access program, and that it believed it could place the new systems by the end of the year.
Nevertheless, Worthington also warned investors that it was too early to count on the C1 as a meaningful source of revenue in the near term.
"We've allocated up to 25 systems to the early-access program, which seemed very aggressive to us just a few months ago," Worthington said during a conference call discussing Fluidigm's Q2 financial results. "At the rate we are going, it is possible that all those slots will be filled by year's end. I must caution, though, that filling the early-access program slots does not imply revenue for all those systems during this fiscal year."
Worthington added that the company expects to begin shipping C1s "for revenue" late in the third quarter of this year.
"Our experience is that new products take a while to ramp, and it takes multiple fully commercial quarters to be capable of making realistic projections, so we're not prepared to provide a breakout of revenue guidance for the C1," he said. "When we do update our product revenue forecast, for example early next year for 2013, we may not provide guidance on a product line basis consistent with how we currently operate."
Nevertheless, the C1 launch has thus far "proceeded better than we expected or planned" and has "generated more early enthusiasm than any other product launch in Fluidigm's history," Worthington said.
South San Francisco, Calif.-based Fluidigm first disclosed the new product during a conference call in May discussing the company's first-quarter 2012 earnings (PCR Insider, 5/17/2012). The company introduced the early-access program about a month later at the International Society for Stem Cell Research meeting in Yokohama, Japan (PCR Insider, 6/14/2012).
The system allows users to load a sample of cells in solution into a microfluidic chip using a single pipetting step, then direct the C1 to rapidly and automatically isolate up to 96 individual cells into chambers to extract nucleic acids and prep them for downstream analyses using, for instance, a Fluidigm BioMark HD system.
The company has frequently cited the C1 as integral to its single-cell genomics play, which has grown substantially over the last several quarters.
"One of the things we were looking to see … was that the C1 would also bring along some BioMark revenues with it," Worthington said during the call in response to an analyst's question. "At this point in time it seems clear to us that there are folks who were perhaps reluctant to jump into the field of single-cell genomics, absent a really strong sample preparation front end. With that we should see more people jump into the market and then become BioMark customers too."
Worthington added that about half of the BioMark systems placed during the second quarter were designated for single-cell genomics use. That figure actually declined from the previous quarter, when about two-thirds of the company's BioMark placements were for single-cell genomics. This decline, however, was not a sign that single-cell genomics interest is declining, but rather represents an "uplift in the number of systems that were used for generic high-throughput gene expression applications" in Q2, which was "a bit of pleasant surprise to us," Worthington said.
Two other key aspects of Fluidigm's single-cell genomics play is a relationship it established with the Broad Institute to promote the research field; and a co-marketing collaboration with Becton Dickinson to promote the use of Fluidigm's gene expression platforms with BD's fluorescence-activated cell sorters.
The Broad Institute pact, Worthington said, "kicked off publicly and received substantially more interest from the scientific community than we, and I also suspect the Broad, anticipated. We believe that this initiative will, in the medium and long term, be a strong catalyst and stimulant for important science in this area and for the single-cell genomics market generally." Worthington also noted during the call that the first important milestones from that collaboration will be when researchers from the Broad and collaborating institutes and companies begin giving talks and publishing research on single-cell genomics.
Meantime, Worthington offered no new take on the BD collaboration, but, in response to an analyst's query, noted that Fluidigm did not necessarily expect that co-marketing agreement to extend to the C1 platform. "We're not planning for it, but it would be nice if it did," Worthington said.
Once the C1 begins generating revenues, it may provide more punch to the company's instrumentation sales, which in Q2 were overshadowed by consumable receipts. Overall, Fluidigm's 31 percent product revenue growth in Q2 included 79 percent growth in consumables and 7 percent growth in instrumentation.
"The single most popular item which drove consumable growth was the 96.96 Dynamic Array [consumable for the BioMark platform], which had a very strong performance both in production genotyping applications and in gene expression applications," Worthington said.
Overall, for the three months ended June 30, Fluidigm reported total revenues of $12.9 million compared to $10.6 million in Q2 2011, surpassing analysts' consensus estimate of $12.5 million.
Instrument revenues were $6.9 million for the quarter versus $6.4 million for Q2 2011, and consumables sales were $5.9 million, up from $3.3 million. Revenues from licenses, collaborations, and grants were $180,000, down from $865,000 year over year.
Fluidigm posted a net loss of $4.6 million, or $.22 per share, compared to a loss of $7.2 million, or $.36 per share, for Q2 2011.
The firm said that it expects its full-year product revenues to grow between 25 percent and 30 percent over FY 2011 product revenues of $40.6 million.
Worthington noted that the company was confident in its projections even in the face of growing concern over the potential withering of funding from the National Institutes of Health on the horizon.
"There has been a lot of anxiety in the market over the potential impact of NIH sequestration." Worthington said. "For a company of our size, the relative differentiation and impact of our applications is far more important for growth than the overall budget of the NIH. Whatever happens to the NIH budget, researchers will continue to need to do good science."
As such, Fluidigm believes that researchers will focus their attention on applications and tools that are "highly differentiated," he added.
"We've all seen this before, when certain tools companies have grown substantially when NIH budgets were pressured," Worthington said. "We ourselves were an example of this going back to 2008. We believe single-cell genomics will continue to garner a larger disproportionate share of attention and budget going forward because it is differentiated and because the science is sound.
"So as we look to our own strategic planning, we spend no time trying to assess the potential outcome of budget negotiations; and instead all of our time and efforts to understand how important and compelling our applications are; how to make the workflows more accessible; and how to spread the word."