Business context and reporting period
This Form 10-Q is for Fluidigm Corporation, for the quarter ended September 30, 2012, with comparative results for the three and nine months ended September 30, 2011. The filing identifies the registrant as Fluidigm Corporation; this differs from the “STANDARD BIOTOOLS INC.” company name in the request metadata. Fluidigm develops, manufactures and sells microfluidic instruments and consumables for life science and agricultural biotechnology applications.
Financial results and liquidity
Amounts below are in millions of dollars, except per-share data and percentages. The financial statements are unaudited.
| Metric | Q3 2012 | Q3 2011 | Nine months 2012 | Nine months 2011 |
|---|---|---|---|---|
| Total revenue | $12.8 | $10.6 | $36.7 | $29.9 |
| Product revenue | $12.6 | $10.2 | $36.1 | $28.3 |
| Product margin | 72% | 67% | 70% | 68% |
| Operating loss | $(3.9) | $(4.1) | $(14.6) | $(15.6) |
| Net loss | $(4.2) | $(4.5) | $(15.4) | $(19.0) |
| Net loss per share, basic and diluted | $(0.18) | $(0.22) | $(0.73) | $(1.70) |
| Cash used in operating activities | — | $(14.0) | $(15.3) |
- At September 30, 2012, cash and cash equivalents were $66.0 million and investments totaled $23.3 million. Working capital was $92.4 million.
- Total assets were $117.1 million; total liabilities were $14.4 million; stockholders’ equity was $102.7 million.
- Long-term debt was fully repaid by September 30. The company had $1.9 million drawn on its $7.0 million accounts-receivable-backed line of credit; it repaid that balance in October 2012.
- Cash and cash equivalents increased $52.5 million over the first nine months, principally reflecting $56.1 million of net proceeds from an August 2012 common-stock offering. Financing cash flow was $50.0 million.
Material changes versus prior comparable periods
- Revenue rose 21% in Q3 and 23% for the first nine months. Product revenue increased 24% and 28%, respectively, led by consumables growth: 57% in Q3 and 58% year to date. Nine-month instrument revenue grew 10%.
- Product margins improved to 72% in Q3 and 70% year to date, attributed to product mix, increased chip production and improved yields.
- Despite higher revenue, research and development and selling, general and administrative expenses increased. For the first nine months, R&D rose 24% to $12.3 million and SG&A rose 20% to $27.9 million.
- Nine-month net loss narrowed from $19.0 million to $15.4 million. The prior-year comparison included a $9.9 million deemed dividend and non-cash warrant-related items; the 2011 period also included a $3.0 million litigation settlement expense.
- License and collaboration revenue fell sharply as Novartis collaboration obligations were completed in 2011; its option expired unexercised and the agreement terminated in May 2012.
Outlook, commentary, risks and unusual items
- Management expects instrument and consumables unit sales to increase over time, while noting that average selling prices may vary with market conditions, product mix and currency movements. No specific revenue or earnings guidance is provided.
- The company expects continued investment in R&D and further increases in SG&A to support product development, sales, customer support and global expansion. Capital expenditures were expected to be higher in 2012, including for manufacturing, R&D and a new ERP system.
- Management believed existing cash, cash equivalents and investments would meet working-capital and capital-expenditure needs for at least 18 months. It cautioned that weaker operating cash generation or higher-than-expected spending could require additional financing, potentially dilutive equity or debt on restrictive terms.
- Key disclosed risks include ongoing losses and operating cash burn; competition and longer sales cycles, including digital PCR; uncertain adoption of newer markets and products; customer spending variability; reliance on Singapore manufacturing and certain single-source suppliers; manufacturing yield and facility risks; intellectual-property and licensing issues; potential regulatory changes for diagnostic uses; and foreign-exchange exposure.
- On November 6, 2012, Fluidigm filed a complaint against NanoString alleging false advertising, unfair competition and unlawful trade practices. The case was preliminary; the filing gives no clear estimate of potential damages. No legal-contingency amounts were accrued at September 30, 2012.
- Management reported effective disclosure controls at the reasonable-assurance level. ERP implementation continued during the quarter; management said it was not in response to an identified control deficiency.
Important facts for investors to verify
- Confirm the registrant and filing identity: the source is a Fluidigm Corporation 10-Q, despite the different company name in the request metadata.
- Track the cash runway against recurring operating cash use of $14.0 million for the first nine months and management’s stated 18-month liquidity assessment.
- Monitor whether consumables growth and improved product margins persist, and whether instrument sales recover from late orders, competition and longer sales cycles.
- Verify the effect of the October repayment of the $1.9 million credit-line balance and the company’s subsequent financing needs.
- Assess the outcome and potential cost of the NanoString litigation, as well as manufacturing, supplier, licensing and regulatory developments.