Standard BioTools Inc. (LAB) Earnings Call Transcript & Summary

Well, good morning, everyone. Thanks for starting off day 2 here at the UBS conference. We'll start off this morning with an emerging life science technologies panels, focusing across Genomics and Proteomics. I have two CEOs from the emerging companies. We have Wenbin Jiang, who's CEO of Cytek Biosciences; and then Michael Egholm, who is President and CEO of Standard Biosciences. Welcome, gentlemen. Thank you for joining us this morning.

Maybe to start it off, could you two give us just a briefer overview of your companies, what kind of instruments you have? And how are you positioned in the market?

Do you want to go first?

Yes. Cytek Biosciences is a company that providing cell analysis solution and the products that we have -- we actually provide a broad portfolio of flow cytometers including our full spectral flow cytometer with two platforms, Aurora CLC -- actually, I'm sorry, Aurora IUO, Northern Lights-CLC, Northern Lights IUO. As well as the Aurora CS as a sales order. In the meantime, we also provide imaging flow cytometry, including our Amnis, also the low end of the Guava product plan based on certain manual [ shaft driven ] tools out there to support the proteomics applications as well as general lab tools in the life sciences space.

Good morning, and thanks for having us here. I will actually give you two answers. So I would be amiss if I didn't just give you pits on the Standard BioTools story, which is that -- we believe there's a gap in our field. There are many great technologies, few of them turn into companies that manage to scale. And so together with Viking and Casdin Capital, we put together our management team that's going to go and execute all season operators, all deep believers in Lean and with access to capital. We completed a pipe into Fluidigm, April 4 last year, so a little more than 5 quarters in. And with Fluidigm, we inherited three great platforms. We have a genomics workstations called Biomark X9. For a little more than $100,000, you can get a complete genomics workflow with a technician and [ a pipeline ]. So we're not going to talk about that today, but I will be amiss again, not talking about that. We have another fundamental technology, mass cytometry, which we'll dive into a little bit more later, but we have two manifestation of that. We do 50 color flow cytometry, which sounds pretty amazing it is. And probably most of the focus will be on that here today. And then we have an imaging version of that, where we just launched a new product, which we believe has the highest quality and the highest throughput of any spatial platform in the industry.

Great. All right. Well, maybe just start it off. Let's talk about the flow cytometry market obviously, a pretty well-established market. There are some entrenched players. We have [ CD ] we have Azure and we have Danaher's operating company. I guess -- why don't you kind of help us understand how you're innovating in this market and differentiating for maybe some of the legacy technologies that will maybe start -- and then we'll start with our closest to me and then kind of move forward.

So great. And indeed -- and the flow cytometry [indiscernible] and almost every life science tool labs require at least a few of tools to support their daily needs. Now as the technology proceeds and lots of new demands coming and they moved from a few parameters to 30, 40. And then the industry realize and the typical conventional for cytometry has hit a better and won't go beyond 30 for those fluorescence-based technology. What we have realized is the reason for being so is because the conventional technology and through our information, when they capture, detect the fluorescence, the light information from the fluorescence studies. They flew away lots of side band and capture only the center wavelength, the intensity of the central wavelength. So we feel and in order really to move the information go away beyond the 30, 40 parameters. We need to capture the complete information. That's where we come from is we come up with a technology that captures the entire florescence spectrums with every details not only so we realize, when you use a laser to excite the fluorescence dyes you have -- when on a particular spectrum. However, if you use a different laser to excite the same dye, the spectrum come out from the fluorescence dye are actually slightly different. If you use, let's say, five lasers, you have five spectrum from the same dye, which are all somewhat different in those fine features. If you see them all together, you have a full complete informations. Okay. We capture all of those informations. Then because of this that allow us to utilize all of the fluorescence available. And then that's how we can go way beyond 30 or even 40 parameters. Put all of them into the same sample tubes. And so that's the kind of breakthrough we have made. And -- so that's how it differentiates Cytek technology from many of the other companies, flow cytometers. In addition, we realized conventional flow cytometer have been relying upon those vacuum tube based of PMT. As you know, in the early days, a whole computer workstation occupied, there's a whole room, right and that was pretty much due to the vacuum tube transistor being utilized. That was pretty much the situation of the conventional flow cytometers. We got rid of those things. And the price those vacuum tube with semiconductor technology. So we -- through that we reduce the whole overall volume size of the flow cytometer, and making it also more compact. And then the replacement of vacuum tube also enable us to generally create a tool, which can be standardized. As you know, today, if you do the clinical trial, you would like to make sure this same clinical trial can be conducted across many different labs in different countries, but you wanted the data to be consistent. That's about standardization, vacuum tube won't allow you to do this. And our semiconductor technology, as you know, it's wafer level manufacturing process and all the same and given the tools. That's how we come up with -- how we differentiate Cytek from many of other companies.

Great. Okay. So a more comprehensive, more compact machine with the ability to standardize kind of data easily great. And Michael, I guess, your view on the flow cytometer.

Yes. No, I'll add and piggyback on what Wenbin just said here. Just note that flow cytometry really not consider Proteomics until recently, in fact, fairly unsexy, but with the ability to do many parameters at the same time, we can now justifiably call it, Proteomics. Our technology solves the fundamental problem of fluorescence. As Wenbin just explained, fluorescence is really complicated. You have to do a lot of gymnastics to extract information from each dye and relate it back. We do it a fundamentally different way. We use pure isotopes and use a mass spec. And what you essentially end up with is 50 digital colors. There's no big convolution, and there's no need for running up on to the standard. So you get data you can interpret without any manipulation. And therefore, you get these ultra clean data and is another advantage is that we can see any combination of markers inside and outside the sales, which is really, really important to get biology, so we're not competing with anyone we sit at the very, very high end. Traditionally, we've been limited because it's mass spec, people are scared of it. It's not scary. It's actually simple to use, but it's not the less scary. We used to be more expensive and workflows didn't use to be very easy. So we have cracked all those knot. So same price range, actually a simpler workflow. And where we are really focused now is making immune profiling routine as part of a clinical trial. That's really our laser focus. I believe that pharma companies really should do an immune profile before, during and after administration of any drug, but certainly classes of drugs [ that they ] intact immune system, but virtually any drug does. So that's the huge opportunity here.

All right. Well, one more for me, just since we're talking about it, we'll start with you, Michael, and then move to the left a bit. Where do you see, I guess, from your perspective, kind of flow that market growth, obviously, both of you guys are outgrowing the market and how you see kind of your end market growth and kind of the TAM and the -- and kind of how you would kind of size the opportunity set with your devices? Let's start with you, Michael and...

There's a couple of billion dollar plus research market for flow cytometries, where we play, obviously, longer term because of the inherent quality of the data clinical is not out of the question, but it's a long way away. And one really important thing I just forgot to mention before, it's true we can do 50 color. We actually do five colors better also for the same reasons, but they are now to pay off for the complexity of going to mass spec is not yet considered. But inherently, our data is so clean. You can do it from side to side, you can ship samples. You don't have to run it all the same type of bonds of advances in the clinical market. So eventually, we'll go there. We estimate that about 20% of flow cytometry is high parameter and it grows at a similar rate to the rest of Proteomics, 15% to 25% healthy growth in that market. And certainly, what we are seeing in our business. Fundamentally, we believe, and I'm sure Wenbin will agree with me that more and more will move to high parameter. We didn't do high [ paran ] before because we couldn't. And that there's so much biology buried, there at once. Once you begin to inventory the basic immune cells, you need 20, 25 markets and then maybe 10 functional markets. Before you really get in the game and seeing biology, you see 30, 35 markets easily. So there's I think market is going to keep growing and become a bigger part.

Yeah. As what Michael has indicated, and it's a few billion dollar market. And also it's a growing market, okay, even -- so what we have been doing here with our technology, not only we focus on continue to going up on the perimeter, which we have done very well on that end because our technology is conventional for rapid pace technology, people are familiar with. In addition, our technology also applied to the entry to the middle level, so across the complete pictures and the spectrum. That's what we have been focusing on and on the top and we continue to push the boundary going beyond what conventional for Cytomics you can do for high parameter cell analysis as Michael said, that part of the market continue to grow and more and more users going through the high-dimensional cell analysis and which we can support very well. In the meantime, we also realize and even for the entry and the mid-level, we provide the [ real ] value and the consistency, standardization and cost, all of those kind of advantages to those type of users as well. So that's where we see the opportunity for Cytek to continue to expand to grow.

Great. One more before I hand it over to John, but kind of that 15% to 25% that Michael indicated, does that feel -- how does that feel to you? That market growth.

No, I think that market definitely continue to -- first is the overall market continue to expand, right? Even if we stay with 20%, 25% and that market is going to grow with the overall general market growth, of course, as I agree with Michael, and the high dimensional sales analysis is actually continue to expand way beyond what the overall flow cytometry growth shows up.

Great. And when you look at expanding that market, just I could start with Michael here, what percentage of your sales today are into biotech or biopharma. And just given the current environment, you've seen some pressures there across broader Life Sciences. Just any update on kind of what macro trends are looking like from your perspective in that markets today, too?

Yes. Unfortunately, it's a very small part of our revenue that's into biotech, pharma, CO, about 20%. I certainly intend to expand that ratio significantly. But all technologies have to go through this cycle and getting validated in academia. We're now just come out of infancy with the technology is fully validated, like 19 out of 20 papers with more than 20 protein markers of the stock we published and [ reviewed ] papers are done with mass cytometry. So we really feel well on how we are positioned. There's a lot we have to do. Macro environment, when you're a micro company, you shouldn't really care about it. So at a $100 million-ish run rate company. I don't permit my guys to think that way. But clearly, we are seeing headwinds in the business, many big companies are cutting their CapEx, and it is a headwind. We use that opportunity to build funnel, while that's going on.

Yes. A few years ago, when we first started to move into the space flow cytometry with our full spectrum technology. At that time, of course, 100% of our business was in academic. But due to our success and in that space, in fact, the CRO pharmaceutical sees benefits, advantages and then we quickly grow into that market. And looking at today, almost close to 50% of our business is in pharma, biotech, CRO that [indiscernible]. And of course, in the last few quarters, we do see some challenges initially started with biotech and gradually got into the pharma space, that's what we have seen here. Nevertheless, the business continues. It's not really what we noticed it just takes longer time. The business is getting lost.

So academic is still a large portion then you have 50% to 80% of revenues across your two platforms there. When you look at the NIH budget, you've seen some slowing in year-over-year there, but some of these new platforms, high-end instrumentation, there still seems to be some demand from there. I guess any color just on what your view is on the academic demand environment now you have near term or long term?

Would be great if the NIH increase their budget more. But what I can talk to, though, is that this plethora of new high-plex platforms also in spatial biology, where we also compete. And there are many new exciting technologies and auto companies are very aggressively targeting new PIs. And even though we don't compete with them remotely, it's still tying up dollars and oxygen. That's really the competition. We have such a compelling value prop, once you get in and discuss the [ virtue ] flow cytometry the imaging solution that there's really no competition, but you got to break through that excitement of what is it NanoString, Visteon, Tenax, [ for Solbio ] and all those guys with new high plex platform is all plays or in the same area. I still believe that very, very defined needs in flow cytometry, again making through routine fast clinical use. Spatial biology as well, discovery, translational research, we said in translational research. Again, it's -- we are so small and so underpenetrated it should really not affect us too much. And again, I don't allow my sales team to think that way.

Yes. In the academic space, we actually look at the numbers, the data during the last few quarters. Actually, we find -- our growth continues. We haven't really seen obvious slowdown in that space. And it looks like partly, we still contribute to the flow cytometry itself being a mature technology being utilized in many high end of the research space and also due to our advanced technology. When they do need to add new tools pretty much it's easier for them to get it into a new technology instead of we just replace their existing one. So that's probably part of the reason why and we continue to grow in the academic space.

Great. I'll ask one more industry-level question, then we can start digging into some more detail on some of the companies. But just can you remind us what percentage of your revenues are in China? And then what's your outlook for the market there?

Okay. So we haven't disclosed that, but we have a healthy share is from China. We have a very strong team in China that continue to execute well we are hearing concerns about where the future funding is coming from, but I haven't seen it yet because the sales cycles and process is very long in China, we have sort of fairly good view on what's happening in the next 3, 4 months. But beyond that, then there may be some uncertainty, but as I said, I'm so pleased with the team I have in China and the way that keep executing again. We're so underpenetrated, and we can really, really help accelerate breakthroughs in human health. So there's no excuses for not going out and selling our platform.

Yes. Overall, our APAC business is about 15%. And of course, China dominates among that 15% and followed by Australia, New Zealand and Japan. And during the last 2 quarters, China actually did very well. And as Michael indicated, the process in China normally is longer than typically we'll see in Europe or U.S. definitely. And what we did the last few quarters probably is due to the engagement we had previously, and the current macro economy may have impact, but it's not showing up yet. We all know in China, government policy definitely plays a role with regarding to how eventually you're going to perform over there. But on the other hand, there's a whole movement in China in the flow cytometry space to going towards a full special technology. They all realize flow cytometry eventually will go to special. And we absolutely have benefited from this kind of understanding. And if they do decide to purchase, that we feel we are going to benefit.

Great. And then Lisa, do you want to start off with the...

Sure. I'm about to start off. But Cytek not the first. Well, since we're talking about China, let's just talk -- can you talk a little bit -- you both mentioned the sales cycle being a bit longer there? If you could just kind of elaborate on kind of sales trends there? And how you think about that market since it seems like it's a little bit different to kind of execute on the sale.

Yes. And normally in China and -- from the sales perspective, we have [ our deep ] sales force. We have a very extensive sales force in China working with customers, develop opportunities, helping customers to design technology. And those type of process typically takes quite a while. And with regarding to flow cytometry overall and it's not -- people there are not as sophisticated as the U.S. They understand this very well taken -- because of the years of experiences like in the U.S. and Europe. China normally and require extensive support from Cytek engineered scientists to work with customers to develop opportunities, develop applications through that end and the reason why it takes a while, then you start to work with them to work on the budget, work on the funding opportunities. So eventually afterwards on that end and they come to a final tender process and finally either win or you lose.

Okay. That's helpful. Would you say that the -- it's like 2x longer or maybe a month like kind of typical sales versus kind of a sale in China?

Yes, it can be 2x or sometimes even longer.

Okay. Great. Well, let's talk a little bit about the company. So the AML panel, can you talk a little bit about kind of that panel in oncology and thinking more about kind of the oncology and MRD markets and how you're thinking about your positioning there. Let's start there and kind of how you're thinking about panel creation and kind of that aspect.

Yes, yes, sure. We generated AML kind of pretty much focused on the MRD leukemia writing formal MRD applications. Flow cytometry has conventionally been utilized actually for that type of application, but not sensitive enough. At least in people going to an alternative like PCR genomics and then because of sensitivity is far better. But the problem with PCR or genomics that takes longer time, days to get the result. Flow cytometry is fast. Normally a few hours. The problem with the conventional approach is due to the number of parameters being limited with what people have been doing before they have to split the sample into multiple tubes, typically 4 to 11 tubes, depending on which lab you go to. But since we are talking about minimal residual disease, not that many cells. And if you split, then you lose information, lose samples, like lose sales. So with Cytek, now we can combine all of those parameter into a single tube. By doing so, not only you save the time, since it's from a single tube and then you save costs, since you don't need to split into multiple tubes and lots of reagents that have been utilized -- have been used. Now every other sales are in one tube that means you are not going to lose any data. All the sales are over there. And so that's how we come up with -- and we work -- we have been working with many labs to develop what we have come up with and -- so far. And we notice with what we have provided and the sensitivity has improved tremendously from the typical 10^-3, 10^-4, to beyond 10^-5. That actually has really got lots of interest.

Michael, before joining Standard BioTools, you'd been at Danaher in a previous role. And once you joined the firm there, you implemented the SBS system. Can you just talk a little bit about how that's transforming Standard BioTools and improving your funnel on sales?

Yes. So a little bit of a back story. I spent a number of years developing technologies ended up working at Danaher through an acquisition. And I was what inside the lean speak call a knucklehead. But anyway, through Kaizen, I actually saw the virtue of all the processes. I didn't think I needed it, but I actually saw firsthand when I ran the biopharm business there. So firsthand, how powerful a tool lean conversion was not just in the factories, but that was my first aha moment. And then I saw like doing standard work following those processes in everything we did just dramatically enabled higher performance. And that was, in fact, that observation was the genesis of what became Standard BioTools that at this amazing system out there called Lean or Toyota Production System, Danaher fractioned it are the best practitioners of it, one of the best run companies in the industry, I would argue and I really believe that, that kind of mindset, not necessarily the way Danaher does, but that mindset works really well here even on small companies. And that's what we've done here the last year with transforming the company. So we just posted our quarterly results. So very healthy growth in our business that we are turning around, but also dramatic reduction of OpEx and 1,000 bps expansion on gross margins, we actually have a business now. We didn't a year ago. Now we have a business the way you would see it. It's not quite a relatives call, but everybody inside the company lives and breathes SBS. And I was fortunate enough that when I came in, I got over a handful of people, all with prior experience at Danaher way outside my nonsolicit, all that good stuff just for clarity. But no, on a serious note, Danaher is not the only place you can go learn this. But I know, if you survive 3 to 4 years, you're a really good operator and you don't -- you're not going to get your go in the way. And to really use that as it's achieved when you're hiring basically. And -- but it also turned out, we all spoke the same language. So we hit it really hard. And then we use Damon Baker's Lean Focus initially to just come in and have all the resources. Now we have our own trainers. We're training our own trainers, et cetera. And so it lives. And if you walk into one of our factories, you would say that they have been operating lean for years. So I'm really, really pleased on how it's transformed every single aspect of how we operate.

Great. So I think we're now at triple-digit placements for the Aurora. It would be great to kind of talk about your outlook maybe more specifically back half of this year into 2024. And also talk about kind of the sales funnel and demand building and kind of how you're seeing kind of placements? And is it how -- is incremental placements just gaining more traction? Or how you're thinking about kind of placement traction in that part of the market?

Yes. And as you can see, in a very short period of time, we have grown our insta,lled base to more than 1,800 with our full spectral technology. And that just shows kind of momentum. And in the flow cytometry space, everybody has realized full spectrum is the way to go, is the future of the flow cytometry right? And -- but on the other hand, if you take a closer look at the annual revenue in the whole market, Michael just mentioned, a few billion dollars, which I agree -- and we are still a small fraction of the total, right? That just shows the opportunities continue and a long way to go for us to become a true dominant players in the whole flow cytometry space. And we see great opportunities and even looking at our funnel over the next few quarters, we do see that. And clearly, total opportunities definitely continue to grow for Cytek. And so we basically -- we focused on and continues to turn those opportunities into real POs. And we feel, of course, in this current macro economy that may take more effort, more time. But -- the opportunity is there, definitely, and people continue to buy, and we just want to make sure and when they do make a decision, they come to site.

So, just to clarify. So did you guys have kind of a KOL-like approach, when you thought about the initial placements? Or has it just been that demand has really been there? And so for you guys, it's just word of mouth is kind of really driving incremental demand?

It's not just a word of mouth. We utilize all kinds of marketing opportunities. And of course, involving and not only -- we work with the existing customers, existing users. And we also work through various channels and we develop new opportunities. And we work closely with those key opportunity leaders, and we also work very closely with those we have already penetrated into to expand beyond where they are today. And definitely -- and if you look at the usage in many of the organizations, normally, they don't just buy one. And the first one is that can be an opportunity either question is how you turn 1 into 10 and from 10 into multiple 10, right? So that's what we have been focusing on.

Good strategy, John.

So Michael, this has been an instrument heavy year with the multiple product launches. Any color just on reagents and consumables. Have you provided any near-term or long-term targets and how you see that business -- part of the business growing?

Yes. We did provide guidance in our -- in our Q1, and we haven't changed that. There's a lot of things going on underneath our business. But as you could see in our last quarterly results, we have a very healthy rate and pull through both on the genomics platform and on the proteomics platform. So we are really focused on placing new units that is both an upgrade cycle and then getting new customers on board. And then we're driving usage by launching more panels. We increased the rate with which we launch new panels by 5x, again, by the use of SBS it applies to every aspect of what we do including a product development. When we came in a little more than a year ago, we were in transitioning -- we were building a new instrument which we, again, with SBS, got out a lot soon and a lot higher performance and quality. So we're now selling that. And then we had to fix our CyTOF XT is a fantastic platform, but there were things that needed to be done before we could go full out. And now that's what you're seeing here. And I'll take it. But what we are pointing investors to is don't judge me on any one quarter, just look at instruments, reagents, services, gross margin OpEx. It's a very simple equation. And selling a couple more instrument in 1 quarter look like a genius and whatever the opposite of genius is, if I sell a couple less, but just look at the underlying business really, really healthy. We are bringing on new customers that are new to CyTOF. So maybe just piggyback on what Wenbin said on, I agree that high parameter flow definitely is -- that's where everything is moving. You see all the big old players are coming this way. We love it because our technology is so much better on the high end. So there's some education here. So I think they complement each other, but love the education and the free marketing here. We -- again, when we came in a year half ago, it's not a -- it's not a comment on anyone the old team. I think many of the companies out here are not very targeted in the marketing approach. We did. We sold innovation. That's what I was stating in our work set for our website. And I don't know anybody buying innovation, you buy solutions. And so we are really focusing in on what it is we can do and the messaging. And hopefully, you see it getting sharp. But still the way I want it, but it's a lot sharper than it was a year ago and next year, it will be even sharper.

Great. So I believe there's an acquisition announced earlier in the year. It would be great to get an update kind of on acquisition, integration and then just kind of how you're thinking about capital deployment in this market, just given valuation or probably for some small -- from some of them unprofitable life science tools companies might be increasingly attractive and kind of how you're thinking about capital deployment?

Yes. I think first is early this year, we acquired the assets from Luminex for the conventional. Their imaging flow cytometry as well as the [ micro capitally ] based product lines. And those are actually 2 very distinct product lines. And also within the mix, they were from different divisions managed differently. I think the imaging product lines is -- the integration is pretty much complete because it has always been a stand-alone managed business operations and so integration kind of a straightforward. So we have now taking over the complete management as well as operation and all of those things are all done basically on the Amnis Imaging Cyte. This business has been based in Seattle and continue to be that way. The second part is the micro capital-based Guava product plan that one was actually invested in the Luminex operation and require us to carve that out and transfer into Cytek's facility. And that part is almost done right now, and I think that we are getting to the finish line. So that's a good sign and so far have been doing well. And our focus, of course, going forward is really to cost down that product unlike Amnis, which enjoys a similar profitable -- profitability profile like Cytek products, Guava definitely is challenged from that perspective. But with this product being transferred into Cytek facility, we do see an opportunity going forward. We'll continue to assess and to work on that subject. That also give us an opportunity to integrate that technology into Cytek's technologies merge together and for the future generation of entry-level product just like Guava to serve for that part of the customer base. Now from overall capital perspective and the market perspective, we know most of the life science tool companies are not profitable. They burn a lot of cash. Actually, in today's environment definitely is very difficult for many of them. And Cytek is very different. And we always pay attention to the profitable growth is always our focus, right? We are not trying to grow at any cost. And -- still we not only we maintain the high top line growth, we make sure Cytek will continue to be profitable and but that gives us an opportunity to assess all of those other companies available out there and opportunity for us to expand from where we are today. But we scrutinized very carefully with regarding to what to pick up. And we want to make sure whatever the technology not only has a synergy with what we are doing and in the same sale analysis space at value, we also want to make sure any technology products. There's an opportunity to turn into a profitable business. And so that's what we have been focusing on.

So it sounds like -- and I don't want to put word in your mouth though, please correct me. But obviously, you're continuing to scrutinize kind of capital deployment opportunities. And I would -- it seems like the pipeline continues to be full, and there's a series of opportunities for you guys to continue to look at in this market, you would say?

Absolutely. We have about $300 million cash, right? And how to deploy the capital and -- effectively. And so that's an area of focus for us.

Michael, a similar question just with that the pipe and then the formation of Standard BioTools and you look at your portfolio of both the proteomic side and then the genomic side and the spatial. I guess is this the right portfolio of assets. Have you given any targets on where you would be deploying capital? What could make sense from inorganic opportunities?

No. Thanks for that question. We will build as a for purpose M&A acquisition vehicle, we used what was Fluidigm as a chassis. And just, again, piggyback on Wenbin here again, aim and to profitable growth. We had $143 million cash short-term equivalents at the end of Q2. Our operating cash burn is now down into the single digits, which is a milestone in itself. Certainly not the goal, but we are in a light pad here over the next several quarters to get it down to nothing and eventually start crank out of business. That OpEx spend, though, is net of investments in a management team. So I've top-graded the entire layer and also deeper into the organization here. And so all this spend -- and this is net of that. In fact, I would say, I've overinvested and have our eyes built on bigger things. And now that we have what was Fluidigm on a really good trajectory. We are sort of stumping at the bit to go for the next thing. What are we looking for? We are looking for highly differentiated assets and all three technologies, by genomics platform, flow, imaging, highly differentiated. Nobody can do what we can do. It doesn't mean it's a business. That's the distinction. But being highly differentiated, is a really good start and not being a commodity business. We're not looking to do science experiments. So we're not going to take technology risk, but we will take market risks. And any asset we look at, God, I have the right gross margin profile or at least we -- they may not have it today, but we've got to be able to see it. you cannot slug around selling -- like even if you send tens of millions of dollars of instruments, if your gross margin is 40%, there's no business there. So in life sciences. So got to have the right gross margin profile. And then finally, but maybe most importantly, you got to be pointed at the translational research space that into pharma. So we can piggyback on all the auto technologies we have.

Great. Well, with that, we're basically right up here out of time. Wenbin and Michael, thank you very much both for joining us today, and thank you for listening in the audience.

Thank you.

Thank you for having us.