Nanostring Technologies (NSTG) Q1 2020 Earnings Call Transcript

Nanostring Technologies (NSTG 15.88%)
Q1 2020 Earnings Call
May 07, 2020, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the NanoString first-quarter 2020 operating results conference call. [Operator instructions] Please be advised that today's conference is being recorded. [Operator instructions] I would now like to hand the conference over to your speaker for today, Mr. Doug Farrell, VP of investor relations.

Thank you, sir. Please go ahead.

Doug Farrell -- Vice President of Investor Relations

Thank you very much, Catherine. Joining me on the call today is Brad Gray, our president and CEO; and Tom Bailey, our CFO. Earlier this afternoon, we released our operating results for the first quarter of fiscal-year 2020. During this call, we may make statements that are forward-looking, including statements about financial projections, the impact of the COVID-19 pandemic, existing and future collaborations, future business growth, trends and related factors, prospects for expanding and penetrating addressable markets, our strategic focus and objectives and the development status and anticipated success of recent and planned product offerings.

Forward-looking statements are subject to risks and uncertainties, many of which are beyond our control, including the risks and uncertainties described from time-to-time in our SEC filings. Our results may differ materially from those projected, and we undertake no obligation to update the forward-looking statements. Later in the call today, Tom will be reviewing our financial results. Consistent with our most recent earnings release, we have prepared as a supplemental to our results according to GAAP, selected non-GAAP and adjusted measures that we believe make it easier to interpret and compare our financial results.

This afternoon's press release includes details regarding the definition and calculation of these non-GAAP measures, reconciliation of non-GAAP measures to the nearest comparable GAAP measure, as well as a discussion of the limitations and rationale for using such non-GAAP measures. Throughout this call, all financial measures will be GAAP, unless otherwise noted. In addition to aid analysts and investors in building their models, we've posted an exhibit under the Financial Information tab on our Investor Relations page that includes a presentation of non-GAAP adjusted measures and select other financial data for each quarter and the full-year 2019, as well as the first quarter of 2020. In addition, I'd like to remind everybody, we'll be participating in the virtual healthcare conferences at Bank of America and UBS over the next two weeks and look forward to speaking with many of you then.

So with that, let me turn the call over to Brad.

Brad Gray -- President and Chief Executive Officer

Thanks, Doug. Good afternoon, and thank you for joining us today. I hope that everyone remains healthy and productive in these uncertain times. I am proud of how the NanoString team has rallied to face the COVID-19 crisis.

We have maintained the momentum in our GeoMx launch despite the near-term challenges faced by our nCounter business. While the majority of our staff has been working from home effectively over the last few months, we've been able to continue our on-site research and manufacturing activities, and we have avoided implementing any restructuring measures or furloughs. We quickly adapted to the current environment using digital and online channels to deepen engagement with our customers as they, too, work from home. We remain focused on our strategic objectives and believe that we are well-positioned to capture demand when our customers return to their labs.

I will start the call today by providing color on the current challenges faced by our research customers and outlining how we are adapting to the current environment. I will then update you on recent progress toward our 2020 strategic objectives before turning the call over to Tom, who will cover the financials and our outlook. During Q1, we delivered strong GeoMx DSP bookings and revenue growth despite the disruptions caused by COVID-19. In contrast, nCounter revenue fell short of expectations as customers across Europe and North America slowed the pace of research beginning in mid-March, with the majority of our customers transitioning into a temporary work-from-home mode.

According to an independent market research study of more than 1,000 institutions, by early April, fewer than one in five research customers described themselves as fully operational. The widening COVID-19 pandemic impacted both instrument and consumable sales through a slowdown in orders and reduced ability for customers to receive shipments. Our revenue over the balance of 2020 will largely be determined by the pace at which researchers resume their work. Our team is tracking a dashboard of leading indicators that we believe will help us manage the business through this uncertainty.

Metrics we are tracking include longitudinal surveys of researcher sentiment, customer lab operational status, the volume of calls coming into our own customer helpline and customer requests for consumable sales quotes. While COVID-19 has disrupted our business in the near term, we expect a full recovery over the long term. Our instrument sales funnel and other demand indicators for nCounter remain healthy and interest in GeoMx remains higher than ever. We are navigating the current challenges with an eye on emerging from this situation in a strong position and poised for growth.

With that in mind, I'd like to provide an update on the four strategic objectives that we laid out at the beginning of the year. Our first strategic objective is to accelerate the adoption of GeoMx DSP and translational research, where demand for spatial analysis is being driven by the study of human disease and the search for biomarkers. During Q1, translational research generated the vast majority of GeoMx revenue, which included $6.5 million from the shipment of 27 instruments and about $600,000 in consumables. We generated more than 15 new GeoMx system orders in Q1, bringing cumulative orders to more than 105 systems.

The GeoMx ordering patterns that we saw in Q1 were largely consistent with what we experienced in 2019, with oncology translational research remaining the primary application. We are closely tracking several important leading indicators of market demand that suggest that this momentum will continue. The first indicator is interest in our Technology Access Program, or TAP, which allows customers to send samples for processing in our Seattle lab, providing a mechanism for customers to test drive GeoMx and experience the powerful insights of spatial biology before purchasing an instrument. Of our cumulative GeoMx systems sold to date, roughly a third of instrument orders have been preceded by a TAP project, making TAP order volume a nice leading indicator of GeoMx demand.

We booked more than 50 new TAP projects during the first quarter, approximately double the orders of Q1 2019. To date, we have completed nearly 240 TAP projects for about 140 unique customers. The second indicator is the steady stream of peer-reviewed publications that illustrate the power and productivity of the GeoMx system. As the body of publications grows, we expect customers to gain confidence to order GeoMx systems without the need to run their own samples through TAP.

To date, there have been 17 peer-reviewed GeoMx publications, with new papers appearing at a rate that has about doubled the pace achieved during the launch of the nCounter system and similar to the explosion of single-cell genomics publications seen as that field developed beginning about five years ago. In recent weeks, there have been several new peer-reviewed publications on GeoMx, including two papers from the laboratory of Dr. David Rimm at Yale that I'd like to highlight. It's important noting that these are the second and third GeoMx publications from Dr.

Rimm and his colleagues at Yale in just the last nine months, indicating the tremendous productivity of the GeoMx system. In a study in the Nature journal laboratory Investigation, Dr. Rimm's team demonstrated the potential for GeoMx to quantitatively measure PD-L1. Dr.

Rimm's team compared measurements by GeoMx DSP to each FDA-approved PD-L1 assay and one laboratory-developed test. The authors concluded that DSP appears to have quantitative potential comparable to these immunohistochemistry assays and that it's possible for this technology to be used as a PD-L1 protein measurement system for companion diagnostic testing in the future. In a separate paper, published in the journal of Clinical Cancer Research, Dr. Rimm's team identified 12 protein markers associated with the benefit from single agent PD-1 checkpoint blockade.

Confirmation of these findings in additional studies would suggest that future companion diagnostic tests to predict immunotherapy outcomes may require measuring markers spatially, focusing on markers located in particular tissue compartments or specific cell types. The author noted that by utilizing FFPE tumor samples with a relatively simple workflow, GeoMx DSP is well suited for this translational and diagnostic use. Many more positive demonstrations of GeoMx productivity and translational research have not yet been published in peer-reviewed literature. One exciting example is cellular therapy pioneer Carl June's use of GeoMx DSP to study the efficacy of CAR-T in solid tumors.

Dr. June's research will be featured in Advancing Science, a virtual cancer conference sponsored by NanoString and scheduled from May 19 and 20. It is free for all to attend, and we encourage you to join. We already have 2,000 registered participants and plan to use the event to further promote GeoMx use within oncology.

With all of this commercial and scientific momentum, we feel confident that the leadership of GeoMx in translational research remains secure. Our second strategic objective is to expand GeoMx adoption into discovery research with the midyear launch of a next-generation sequencing readout capability. Discovery researchers represent an exciting new community of customers for us, and we estimate that by opening up GeoMx for NGS readout, we will expand our addressable market by approximately twentyfold. We remain on track to begin enabling NGS readout midyear, with shipments of the first NGS-enabled genomics instruments, along with our 1,800 plus gene Cancer Transcriptome Atlas expected during the third quarter.

We're aggressively focused on developing this market and our hard work is beginning to pay off. Since the AGBT meeting in February and throughout the COVID-19 pandemic, we have been educating discovery researchers while they work from home, leveraging digital content such as presentations from our Spatial Genomics Summit. These online events are generating enormous customer interest that is driving new sales leads. We've had more than 3,000 researchers participate in webinars and other events held in March and April, indicating that COVID-19 has in no way dampened the interest in spatial genomics.

As a result of these successful events, NGS-related opportunities now account for about a third of the opportunities on our GeoMx instrument sales model, as well as a third of the TAP orders that we received during the first quarter. One of the hallmarks of the GeoMx value proposition to discovery researchers is its flexibility to measure any target in any region of any sample. In the past, discovery researchers had been limited to the use of fresh or fresh frozen samples. With GeoMx DSP, enormous opportunities for great science open up as archived FFPE samples collected from human patients can be used for discovery research.

A sudden explosion in COVID-19 research presents a compelling illustration of the value of flexibility to discovery researchers. In order to reduce the risk of working with an infectious pathogen like the virus, discovery and translational work on these tissues must be performed on frozen and fixed samples. While other spatial profiling methodologies are significantly challenged by fixed tissues -- tissue samples, they are what GeoMx was built for. Over the past weeks, we've been approached by a dozen research institutions interested in applying GeoMx to COVID-19 research.

Most are affiliated with medical centers that have implemented rapid autopsy programs so that they can secure tissue samples that may be used to gain insight into the entire biology of COVID-19, from early infection to morbidity. Some are processing samples via TAP, while others plan to use GeoMx instruments at their sites. These studies include lung, heart, brain, colon and kidney tissue from multiple patients who succumbed to COVID-19. These data are generating ultra-rapid discovery of key biological insights that are being written up as case studies for publication.

The COVID-19 discovery research paradigm requires speed, precision and the ability to work on FFPE samples, all nicely matched to the flexibility of genomics. We look forward to many more examples of discovery research enabled by GeoMx DSP in the future. Our third strategic objective is to maintain the momentum of our nCounter business. This objective is primarily driven by growing our installed base of nCounter systems and expanding our portfolio of consumable products.

In Q1, we grew our nCounter installed base to approximately 880 systems, an increase of 16% compared to a year ago. While consumable sales fell short of our Q1 target, we are continuing to expand our menu of nCounter panels to feed increased utilization when researchers resume their work. For example, in recent months, we introduced our Tumor Signaling 360 Panel that focuses on pathways targeted by oncology therapeutics that are currently in development. And the Glial Panel for studying the complex role that immune cells play in neurodegeneration and neuroinflammatory disorders.

Recently, multiple publications have demonstrated the value of nCounter for understanding the host's response to viral infection in COVID-19 research. We're rapidly developing a COVID-19 specific gene expression spike-in assay that can be used with most of our panel products and custom code sets. We're providing this beta assay at no charge to scientists doing COVID research. And in the first month of availability, almost 50 customers have ordered enough kits to process more than 2,000 samples.

Our fourth strategic objective is to identify the key applications for our Hyb & Seq platform and to pursue partnerships that can support our emerging commercial strategy. We remain engaged in ongoing discussions with potential partners for infectious disease applications for Hyb & Seq. In addition, our researchers continue to explore other potential applications for the unique sequencing chemistry we have developed, which at this time remain confidential, but then we may provide new opportunities for Hyb & Seq based on future products. I look forward to updating you on these developments in the future.

I'll now turn the call over to Tom to review the details of our operating results for the first quarter.

Tom Bailey -- Chief Financial Officer

Thanks, Brad, and thanks all for joining us today. For the first quarter of 2020, product and service revenue was $24.5 million, representing year-over-year growth of 15%. Recall, in December 2019, we completed our transaction with Veracyte, and we now recognize about a third of the previous Prosigna revenue over the same units sold. On a pro forma basis for the effect of this transaction, year over year, product and service revenue growth was 23%.

Our revenue growth was driven by GeoMx. Total GeoMx revenue was just over $7 million, with about $6.5 million of that total derived from GeoMx instrument shipments and $600,000 from consumables. Service revenue growth was also strong at 23% and driven by our GeoMx TAP service. In contrast, our legacy nCounter business was more significantly impacted by COVID.

nCounter instrument revenue was just over $3 million, 23% lower as compared to Q1 '19. And nCounter consumables revenue was $10.9 million, lower by 25% on an actual basis and 16% on a pro forma basis compared to Q1 '19. Recall, our reported consumables revenue is now inclusive of Prosigna. Turning now to margins and expenses.

I'll be providing numbers on a non-GAAP or adjusted basis, which remove the impact of stock-based compensation, depreciation and certain one-time items. Please refer to our press release and the exhibit we posted to our Investor Relations web page for descriptions of how our adjusted measures, including adjusted EBITDA, are prepared. Adjusted gross margin on product and service revenue was 56%, approximately 400 basis points lower than last year. Pro forma for the Veracyte transaction, adjusted gross margin was about 100 basis points lower primarily due to lower nCounter consumable sales.

Adjusted R&D expense was $15.8 million, an increase of 5% over the prior year. The increase was driven primarily by investment in the development of NGS readout for GeoMx DSP and spending for research supplies, which are expected to be heavier in the first quarter. Adjusted SG&A expense was $22.6 million, an increase of 4% over the prior year. The modest Q1 SG&A expense growth was primarily due to higher audit fees, which were driven by Sarbanes-Oxley compliance and related activities.

Adjusted EBITDA loss was $23.4 million, approximately flat as compared to the prior year, reflecting our lower-than-anticipated nCounter revenue. We ended the quarter with about $270 million of cash, cash equivalents and short-term investments, which is the strongest balance sheet position in the company's history. On March 5, we completed a convertible notes offering and raised $230 million. The notes carry a 2.6% coupon, and the conversion premium of 40% reflects an effective underlying share price of about $48.

Approximately $90 million of the proceeds raised were used to repay our senior term loan facility, which carried an interest rate of 10.5% in transaction fees and expenses. The balance of the proceeds will be used to support the launch of GeoMx and other growth initiatives. Transitioning now to guidance. As a reminder, we announced on April 6 the suspension of our 2020 financial guidance.

While we will not be providing guidance today, I'd like to share some color on how we're thinking about Q2. First, our instrument funnels are healthy and indicate that Q2 instrument orders for GeoMx and nCounter should be about flat as compared to Q1. Instrument revenue recognition in Q2 could be negatively impacted in the event that customers are unable to receive shipments due to site closures. GeoMx revenue recognized might also be negatively impacted in the event we slow shipments of new instruments to allow our teams to get back out to customers' sites and install and train customers that are eager to put their new GeoMx systems to work.

At this time, we expect service revenue to remain approximately flat as compared to Q1. Turning to consumables. Like other companies in our space, we expect the COVID impact will be greater in Q2 than in Q1. While it's still relatively early, we have not yet seen a return to usual levels of customer activity.

During April, nCounter consumable orders were down approximately 50% as compared to the same period a year ago. And as of this date, we are planning for that trend to hold through the balance of Q2. Regarding gross margins, lower nCounter consumables revenue will reduce our gross margins as compared to Q1. For operating expenses, we've prepared a range of expense and cash flow scenarios and have already taken steps to manage our expenses during this period of uncertainty.

We expect Q2 total expenses will decline as compared to Q1. With that said, we do, at this time, intend to maintain our investments on the most critical parts of our business, including commercial and product development activities related to GeoMx, so we can be well-positioned as the research activity recovers. Our balance sheet is stronger than any point in NanoString's history. And while we may use more cash to sustain our business in 2020 than originally planned, we are confident we have the resources to drive growth and eventually reach profitability through the course of the GeoMx launch.

Now I'll turn the call back over to Brad for our closing comments.

Brad Gray -- President and Chief Executive Officer

Thanks, Tom. In conclusion, NanoString remains focused on capturing the compelling market opportunities before us. The GeoMx DSP has strong momentum in translational research with a leadership position that grows each quarter. The entry of GeoMx into the discovery research market is off to a great start, with the launch time lines intact and substantial customer interest.

Our healthy balance sheet allows us to weather the current COVID-19 storm and to capture the explosion in demand for spatial profiling that is expected as researchers return to their laboratories. With that, I'd like to open the line up for your questions.

Questions & Answers:

Operator

[Operator instructions] Your first question comes from the line of Casey Woodring with JP Morgan.

Tycho Peterson -- J.P. Morgan -- Analyst

It's Tycho. My first question is regarding academic versus biopharma revenue, if you could give us some color on what you saw in the quarter there and trends moving forward in terms of labs being shut down. Yeah, let's start there.

Brad Gray -- President and Chief Executive Officer

Sure. Thanks, Casey. So both academic and biopharma customers were impacted during the first quarter. With respect to nCounter instruments, we saw strong biopharma demand and relatively weaker academic demand.

With respect to consumables, which was largely just disruptive as people's last couple of weeks of research activity slowed down, we saw approximately equal impact from both academic and biopharma customers. During April, we're seeing a slowdown, especially across the academic laboratories. Multiple market research efforts and surveys that have been ongoing over the month of April indicate that academic research customers are being impacted more than industrial research customers. And that's really what we expect for Q2.

Tycho Peterson -- J.P. Morgan -- Analyst

OK. And then maybe can you talk about -- you just mentioned in terms of opex that you're taking steps to reduce costs. Can you maybe go into what steps you're taking? And specifically, will that affect the R&D line?

Tom Bailey -- Chief Financial Officer

Yeah. I think I can address that. We're taking the steps that are similar to what you've seen from other companies. Obviously, there are significant reductions in travel expenses.

And in addition to that, we've slowed our pace of hiring for both full-time and temporary workers. We haven't entirely frozen our hiring process yet. We've got certain critical positions open, but we have slowed our pace of growth and expansion in our hiring plans. And the cumulative effect of all of those will be to reduce expenses in the coming quarters as compared to Q1.

Some of that expense reduction, Casey, is also a natural -- just a phasing effect. Q1 tends to be a higher expense quarter for a number of reasons in both R&D and SG&A than subsequent quarters. And we've had that same pattern in prior years. So the effect of those and some of the steps that we've taken should cause expenses to be lighter in coming quarters as compared to Q1, including in R&D.

Tycho Peterson -- J.P. Morgan -- Analyst

OK. Thank you.

Operator

Your next question comes from the line of Catherine Schulte with Baird.

Catherine Schulte -- Baird -- Analyst

I guess just first, to Tom's comment on flat instrument orders versus first quarter, that seems to be holding in pretty well. But should we interpret this as ex-COVID, you would have seen a pretty nice acceleration here? And any way to quantify what kind of impact COVID is having on orders?

Brad Gray -- President and Chief Executive Officer

Yeah. Catherine, this is Brad. I do think that COVID -- our funnels on instruments published for both nCounter and DSP are the strongest they've ever been. What's being impacted by COVID is creating uncertainty on the pace at which we can actually close those orders.

Obviously, researchers who aren't in the laboratory or have less urgency to go ahead and acquire new equipment, purchasing officers who are working from home are less effective at moving transactions forward. So I think in the absence of COVID-19 disruption, we would have seen sequential growth relative to Q1 in both nCounter and DSP orders. But given what we're seeing in the strength of our funnels, but we're taking a cautious approach on the overall expected pace at which we close those orders in Q2, simply given all of the disruption that we're seeing in the research customer community.

Catherine Schulte -- Baird -- Analyst

OK. That makes sense. And how do you feel about the funding environment for non-COVID-related research as we get closer to the back half of the year? Are your customers concerned about getting extensions on their current grants or having delays in getting new funding released?

Brad Gray -- President and Chief Executive Officer

We have not heard about funding concerns from our customers at this date. Some of the survey results that I've seen from academic researchers suggest that maybe about between 10% and 20% of researchers are shifting toward -- temporarily toward contributing to COVID-19 research. But the vast majority of people remain focused on the important research areas that they contribute in, whether those be cancer or broad immunology, etc. While most researchers don't seem to have made it back into the lab yet at this point in early May as they were on work-from-home orders to start, many of them are optimistic that by the end of May, they'll begin to get back in the lab and back productive again.

In the long term, I think that the renewed interest in bioscience research and in the importance of things like NIH funding will become another tailwind for overall funding of academic research and funding of drug development. So I think when we look out a year or two years from now, I expect the big science is the hero now. I believe that that will be good overall for research activity and for those of us who provide tools that support it.

Catherine Schulte -- Baird -- Analyst

OK. And last one from me. You mentioned you remain in discussions for some potential Hyb & Seq partnerships. Any color on when we could expect to hear more details on those?

Brad Gray -- President and Chief Executive Officer

No, not really in a position to offer much in the way of detail on timing there. I think the type of infectious disease research that Hyb & Seq has contributed to continues to be described in the peer-reviewed literature, including two high-profile papers in the last year focused on antibiotic sensitivity and pathogen identification. And there's a long list of companies that are committed to that, who make likely or possible partners for that platform. But I can't provide you a specific time frame over which a partnership might be announced.

Catherine Schulte -- Baird -- Analyst

All right. Great. Thank you.

Operator

Your next question comes from the line of Dan Brennan with UBS.

Dan Brennan -- UBS -- Analyst

Hey, guys. Thanks for taking my questions. Maybe the first question would be for GeoMx and for nCounter. Did you say what the instrument expectation was in Q2? I know you gave the orders in service.

I guess, you said instruments can be negatively impacted. Was there any color on that? And I guess the question would be, whatever shortfall in placements that occur in Q2, do you think there's an ability to make those up in the back half of the year?

Brad Gray -- President and Chief Executive Officer

Yeah. I think -- no, I'd refer you back to Tom's prepared remarks with respect to orders. I think we said orders are expected to be about sort of flat. Revenue could be less -- there's downside risk to revenue in the event that customers are disrupted due to their ability to receive instrument shipments or due to a need to slow things down on the GeoMx side as we install and train.

So we're not providing formal guidance, but that's kind of here on May 7, what the outlook looks like. With respect to the back half of the year, I mean, I think many of us believe that the second quarter is going to be the toughest of the year as we start that quarter in a work-from-home scenario where many, if not most, academic labs are partially or completely closed. That's something that's likely to improve in the third quarter and the fourth quarter. So I do expect to see demand improve over those periods.

But it's just too early to be quantitative about what the full-year expectation can be at this time.

Dan Brennan -- UBS -- Analyst

Right, right. But I guess, do you think you have the capacity? Let's say your tenants have been short in Q2 these customers there. Would you expect you to have the capacity? Because I know you've been focused on delighting customers and having the appropriate sales force? Would you be able to ideally make up for any shortfalls in placements in Q2 throughout the back half of the year?

Brad Gray -- President and Chief Executive Officer

Yeah. If you're referring to our ability to install and train, we have been thinking very carefully about how to expand our capacity and prepare for a catch-up phase, if you will, on installation and training. We will definitely be installing and training at a faster clip once the labs reopen, but it's just too early to say whether we can make up the full difference at this stage, because we really don't know when exactly people are going to be back in the lab and what kind of social distancing restrictions these labs may impose on visitors to lab, etc. It's just too early to speak to some of those things.

But what we would not expect are our own capacity to be the primary constraint. We would expect our customers' sort of capacity to receive training or receive instruments to be a more important constraint.

Dan Brennan -- UBS -- Analyst

Got it. And then obviously, you referred to like the record funnel, Brad, and you gave a lot of color in terms of the things you guys are watching, including the TAP projects. Like is there any more quantitative measurement you can give about that funnel? So Tap, you said, completed like another 50 this quarter. I think it's about flat sequentially.

Any other color on the funnel?

Brad Gray -- President and Chief Executive Officer

Yeah. I think on the funnel, we can say that the TAP funnel, we built the plan for how we wanted to see the TAP -- sorry, not the TAP, pardon me. We built the plan for how we wanted to see the GeoMx instrument funnel develop over the year. We are ahead of that plan.

We have more instruments in the funnel than we expected to have. I'd say a larger fraction of those instruments in the funnel that we had expected are actually tied to NGS readout, which is something I'm very pleased about as we've only begun to begin -- we've only begun promoting that around late February at the AGBT meeting. The leading indicator for NGS and discovery entry that comes through our TAP program is also at the rate a third of the TAP orders that we're getting, which is, by the way, total twice what we got last year, our focus on NGS readout. So I'd say all those indicators are extremely healthy.

And then we also -- that was a focus on the GeoMx funnel. But our nCounter funnel is remarkably strong too. But for the COVID-19 disruptions to our customers, I think we would have been tracking right along where we expected for the year on our original guidance.

Dan Brennan -- UBS -- Analyst

Got it. And then maybe one other just on COVID since you brought up COVID opportunity both on GeoMx and nCounter. Is there any -- could the research that you're providing and the tools, could these create notable revenue opportunities as we get to the back half here in 2021? Or are they just kind of a nice to have, add some important capabilities to why customers might want to use your products? Because we've had, obviously, across some other companies that are more directly involved with testing. There's been some material benefit they've been able to possibly achieve.

I'm just wondering, if we look back three, six, nine months from now at NanoString's results, might COVID be like a notable driver of growth?

Brad Gray -- President and Chief Executive Officer

I don't think that COVID-19 will be a primary driver of growth for us this year. We want to make a great research contribution. I think at the margin, it may drive some incremental demand for nCounter consumables and GeoMx instrument placements. But it will be secondary to the main areas that we traditionally focus on like cancer, immunology and neurology.

That being said, I mean, COVID-19 and the urgency and the need for rapid results on FFPE tissue that comes with that area is a great demonstration ground for the capabilities of both the nCounter and the GeoMx system. And we are working, especially on the genomic side, along with our partners, Abcam and Bio-Techne and ACD to develop some COVID-specific reagent sets that can make a very rapid contribution and a very important public health contribution with respect to understanding that disease. It will really showcase the capabilities of both GeoMx and our partners' assays. But I do not think that it will become a primary growth driver for us.

Dan Brennan -- UBS -- Analyst

Got it. And maybe one more final one. You said down 50, you assume that continues for the quarter, I guess, presumably were May, whatever, May 7, we think, hopefully, the next six weeks are better than the prior six weeks. But I guess you're just taking a conservative stance on that front.

Like in a sense why taken any improvement right now? So just assume that it's the base case, and we'll see where it goes?

Brad Gray -- President and Chief Executive Officer

Yeah, that's right. I mean, we were watching, as I mentioned, a series of leading indicators, including surveys of laboratories and some of our own stats. And I can share a little bit of color on that. According to some surveys that we've been tracking, up to 40% of academic labs and 15% of industry labs at this stage remain completely closed, meaning people can't get in there to do their work.

NanoString -- among our own customer base when we've surveyed, we think that about 30% of our own customer labs remain fully closed with perhaps another 60% were only partially open at this stage. COVID-19 is appearing to impact reagent purchase patterns more than it is instruments, because of course, if people are not in the labs using their instruments, they're not using reagents. And that's a very steep decline, and we saw that in our actual numbers for April. When we look across kind of how has the indicators changed from, say, the first week of April to the first week of May, we actually see very modest change.

I mean, things are not coming back very quickly. Coding volumes from us have been pretty steady throughout all of April and into May. When we look for a glimmer of hope, and I don't want to say there's not a glimmer of hope, the leading indicators that seem to suggest that May could be better and that June could be better yet would be -- we're starting to see some recovery in the volume of calls coming into our help line, which suggests that people are starting to get back in the lab and pick up where they left off. And we know that surveys of research customers indicate some optimism about being back in the lab in June.

But that being said, we just don't know if that optimism will be realized at this stage. So we are planning for and we'd encourage you to expect that the trends in April, which is a 50% drop in consumable revenue, to continue throughout the second quarter. I'd say there's more upside to that estimate than downside, but I would not get too far ahead of myself on that.

Dan Brennan -- UBS -- Analyst

Got it. Thanks, Brad. Appreciate it.

Operator

Your next question comes from the line of Dan Arias with Stifel.

Dan Arias -- Stifel Financial Corp. -- Analyst

Thanks. Brad, I wanted to dig into the pull-through on GeoMx and some of the inputs that at one point or another were baked in there. Can you just talk about how you feel about price per experiment on the assumption of $500 that you've mentioned prior, maybe particularly in the context of the Whole Transcriptome product that's coming on down the road, at which -- it looks like it's going to be at a meaningful premium? And then on the other side of the equation, the number of samples per year, which I think you kind of penciled in as 150 on average, it seems like that will be a challenge this year. But do you feel OK about resuming something close to that as an exit rate maybe in the back half of the year if we don't go round two on lab closures.

And can this kind of roll up to 2021 being the year that's sort of back on track with the way that the model was set up initially?

Brad Gray -- President and Chief Executive Officer

Yeah. Thanks for the questions, Dan. So let me talk about sort of the pull-through experience so far, the actuals, and how we're feeling about that, and then I'll talk about how it's going to evolve over time based on the new assays in our road map. So our guidance had going into the launch was that nCounter readout customers, we would expect to run about 150 samples in the year at about $500 a sample.

So far, our realized assay price per sample is probably a little north of $500, which we're happy about. It turns out that our customers are using that modular format that we've developed to buy up a little extra content on the protein side beyond where we had estimated they would. So that's a good thing. That's a good thing long term.

As you said, it's just -- it's not only disrupted by COVID-19, but it's also just too early in the growth of our installed base to understand what the run rate of samples per system per year are likely to be. COVID-19 doesn't help, but it's also true that very many of our sites have just become trained and we're just beginning to use their system when COVID-19 hit. So it's really too early for me to validate or change in any way that 150 samples per year. But there's really nothing that would have us change that number at this point.

You're right that as we move into the discovery research market, with NGS as the readout modality and much higher flex assays, that pull-through number could very easily change. Certainly, the cost per sample will go up. So our Cancer Transcriptome Atlas assay, which we described at the AGBT meeting, is going to be priced at $1,250 per sample, so more than 2 times what the average price was expected to be for the nCounter readout. So if people run large numbers of samples or a similar number of samples, that could be a very high pull-through assay for us.

It's a little too early for us to speculate on the volume of samples per system that we run, but I think there's upside to our previously described pull-through estimates. As you pointed out in your question, Dan, that will become even more true when we launch the Whole Transcriptome assay in 2021. That would be expected to be priced at a premium to the Cancer Transcriptome Atlas assay and similarly to drive pull-through upward. So in conclusion, I would say there is nothing we've seen that makes us worried about the guidance that we've provided so far at that $75,000 to $80,000 per system per year.

There are some reasons to believe that as we move into a more NGS-enabled installed base in 2021, there could be upside to those estimates.

Dan Arias -- Stifel Financial Corp. -- Analyst

OK. That is some really helpful commentary. And to your point on the transcriptome work, on the new TAP projects that you're taking on, are you doing transcriptome work for some customers there on either the cancer or the Whole Transcriptome assay ahead of the product launches? And is there a chance that we see some publications around the launches themselves? You obviously had good data at AGBT. Just wondering about the publication flow, like what that could look like as you do get to the point where these are going to be going to customers.

Thanks.

Brad Gray -- President and Chief Executive Officer

Yeah. So on the Cancer Transcriptome Atlas, which is the 800-plus gene assay that includes cancer and immune system genes, that accounted for about a third of our 50 TAP holders in Q1, so probably 15 to 20 of those orders. So we'll begin delivering those results now and shortly, and we certainly hope that they'll give rise to peer-reviewed papers as maybe late this year or beginning next year. We're not currently offering the Whole Transcriptome Atlas assay under our TAP program.

We would expect that to begin late in 2020. But we -- as we presented at AGBT, we have had customers run the Whole Transcriptome Atlas assay. Several of them presented their work last year -- sorry, last February. And we do expect some of that work to come out in the peer-reviewed literature.

I will say, some of our COVID-19 work is also leveraging our Whole Transcriptome Atlas assay. As you can imagine, we're looking -- we and our collaborators are looking great to bring to bear every technology solution that we have, whether it's in prototype form or full commercial form to help in that fight. And so there's a possibility that some of that data could come forth as well.

Dan Arias -- Stifel Financial Corp. -- Analyst

OK. Thank you, guys. Appreciate it.

Operator

[Operator instructions] Our next question comes from the line of Doug Schenkel with Cowen.

Chris Lin -- Cowen and Company -- Analyst

Hi. This is Chris on for Doug today. Thanks for taking my questions. Just starting with one on the impact of COVID-19 on consumable utilization.

Should we expect there to be a bolus to catch up and utilization once labs start reopening? Or should we think that a lack of utilization in the current environment is largely lost? Is there anything you could share based on your conversations with customers?

Brad Gray -- President and Chief Executive Officer

Yeah. I do not expect a bolus of catch-up to occur on consumable utilization. Systems -- people can only work five or seven days a week when they come back. So I'm sure they will be eager to move forward quickly.

But it just takes a certain amount of time to design a project, execute a project and then begin to order consumables again. So I expect that we should plan for most of that time to be lost with respect to consumable pull-through. As we're saying that instruments may be quite different, I mean, instrument purchases are different. You can make up for lost time there by coming back and saying, well, I plan to have that instrument later in the year.

I'm still planning to have it later in the year. Let's move forward with the purchase. So instruments, I don't necessarily think, are lost. I do think there could be more of a catch-up period on instrument orders, but then there will be on consumable orders.

Chris Lin -- Cowen and Company -- Analyst

OK. That's helpful. Thank you. Maybe to build off an earlier question, can you share how you're generating more leads in building the order book for GeoMx from new customers? You've currently given that there hasn't been the same opportunity to detour customers in person.

I know you mentioned the TAP program. But anything else you could share on how you're adapting your commercial strategies?

Brad Gray -- President and Chief Executive Officer

Yeah, I'm happy to. One thing we found is that as researchers leave the laboratory and begin working from home, they are hungry to continue to feel productive. Many of them are spending time educating themselves about new technologies, engaging in online seminars and educational activities more than they normally would in their busy laboratory-based lives. We started a program that we call [Inaudible], which is a very aggressive seminar series using tools like Zoom to engage researchers who are working from home and both through novel content that we've developed directly for the purpose and through replays of some of the kinds of seminars that we've had, say, at AGBT and otherwise.

If you go on our website under seminars, you will find almost an event a day that we're hosting right now through April and May. And as I said in my prepared remarks, we've had 3,000 people participate in these events so far, most of them geared toward GeoMx. I've jotted down just a few that I'm excited about coming up soon. On May 12, we'll have a webinar by David Rimm from Yale, who's now got three peer-reviewed papers on GeoMx.

On May 15, we're jointly hosting an online seminar with Illumina to talk about the pairing of GeoMx and their sequencing platforms and sort of the upcoming explosion and expected spatial genomic demand. On May 19 to 20, we have CAR-T cell therapy leader, Carl June, who will be presenting on some unpublished work that he's done related to the use of GeoMx to study cell therapy in solid tumors. And then on June 2, we have a researcher named Peter Old Tool from York University and the U.K., who's talking about his use of GeoMx to study the interaction of host and pathogen, pretty similar in concept at least to the type of things we're doing in COVID-19. And those are just the taste.

There's actually many more ways of interacting. And so we find that this -- that researchers find that's a great use of their time and energy while they're trapped outside of the laboratory. And we've had really exciting dialogues and engagement with them during this time. So it's really interesting.

I think the commercial team at NanoString here has done a wonderful job adapting to the use of digital channels. And some of the programs that we started here under crisis will probably be things we continue in the long term.

Chris Lin -- Cowen and Company -- Analyst

Great. Thanks for taking my questions, and hope everyone [Inaudible].

Operator

And there are no further questions at this time. I'd like to now turn the call back over to Doug Farrell for any closing remarks or comments.

Doug Farrell -- Vice President of Investor Relations

Excellent. Thank you, and thanks, everybody, for joining us today. There will be a replay of the call up in the next couple of hours. If you did miss any portion of the conversation today, you can access that by dialing (800) 585-8367.

International callers, please dial (416) 621-4642. The conference call ID for the same is 4699305. So with that, we'll sign off and look forward to seeing everybody when we get back into a normal operating routine. Have a great day.

Operator

[Operator signoff]

Duration: 51 minutes

Call participants:

Doug Farrell -- Vice President of Investor Relations

Brad Gray -- President and Chief Executive Officer

Tom Bailey -- Chief Financial Officer

Tycho Peterson -- J.P. Morgan -- Analyst

Catherine Schulte -- Baird -- Analyst

Dan Brennan -- UBS -- Analyst

Dan Arias -- Stifel Financial Corp. -- Analyst

Chris Lin -- Cowen and Company -- Analyst

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