STANDARD BIOTOOLS INC. annual report, FY2020

Business context and reporting period

Fluidigm Corporation (ticker FLDM; the filing identifies the registrant as Fluidigm, not Standard BioTools Inc.) filed this Form 10-K for the fiscal year ended December 31, 2020. It develops and sells life-science instruments, consumables, reagents, software and services, principally for mass cytometry, imaging mass cytometry and microfluidics.

Financial results and liquidity

Revenue increased 18%; product-and-service gross margin improved to 55.3% from 54.6%. The filing reports no overall gross margin covering development, grant and license revenue. Research and development expense rose 15% to $36.5 million; selling, general and administrative expense rose 16% to $97.9 million. Working capital, excluding deferred revenue, was $76.9 million. Notes had $56.1 million aggregate principal outstanding and $54.2 million net carrying value; the $15 million revolving facility was undrawn. Management said available cash and investments were expected to fund anticipated needs for at least 18 months.

Material changes versus prior periods

• 2020 revenue growth was driven by microfluidics COVID-19 testing and related instrument sales, development revenue, and grants. COVID-19 diagnostic revenue was $22.4 million.
• Mass cytometry instrument revenue fell 31% to $28.5 million, principally amid pandemic-related lab closures and delayed orders. Microfluidics instrument revenue rose 102% to $17.1 million.
• Consumables revenue increased 20% to $54.4 million; service revenue rose 6% to $22.6 million. Development revenue was $8.9 million, grant revenue $3.6 million, and license revenue $3.2 million; these were absent or substantially lower in 2019.
• Fourth-quarter revenue was $44.6 million versus $32.4 million a year earlier; quarterly net loss widened to $18.0 million from $12.7 million.
• Operating cash use decreased from $35.2 million to $15.4 million. The company raised approximately $20.1 million net through its ATM stock offering and received $25.4 million under the NIH contract.

Outlook, risks and unusual items

No numerical 2021 revenue or earnings guidance is provided. Management expected pandemic effects and customer budget reallocations to continue causing quarterly variability; recovery timing remained uncertain. A post-year-end NIH contract modification added development of a cartridge-based COVID-19 assay and extended performance through September 30, 2021, without changing the potential contract value of up to $34 million. Funding depends on milestones, and NIH may terminate the contract.

The COVID-19 assay received FDA Emergency Use Authorization in August 2020; authorization is tied to the public health emergency and may be revoked or end. Other products are generally research-use-only. Key risks include ongoing losses, competitive and demand pressures, dependence on sole-source suppliers and concentrated manufacturing, international exposure, debt and possible dilution, and uncertainty around the COVID-19 market. A securities class action seeks unspecified damages; the company says it intends to defend the case and has not accrued a liability. The 2020 results included $3.1 million of license revenue from an intellectual-property settlement and significant NIH-related grant funding.

Important facts for investors to verify

• Whether COVID-19 testing sales, NIH milestones and new assay development translate into sustainable revenue and cash generation.
• Whether mass cytometry instrument demand recovers and consumables growth offsets instrument declines.
• Cash runway, capital spending and the ability to meet convertible-note obligations; $0.5 million of 2014 Notes was repurchased in February 2021.
• Terms, milestones and accounting for NIH funding, plus the continuing validity and commercial contribution of the assay EUA.
• Exposure and potential costs from the securities litigation, supplier concentration and manufacturing disruption.