Interview Transcript

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

When I look at Cytek, my biggest open question is whether they can not just sell good leading instruments, but also build a reagent business around it. I need a better understanding of when, where and why flow state cytometry is used in the research process. I have a better understanding of why Cytek are able to price their instrument so much cheaper than competing technologies. I didn’t have an appreciation for the relative cost of a vacuum tube versus avalanche photodiodes, so that was new to me. I need to establish whether it really picks up better signal of noise and whether, not just the instrument but the day-to-day use, is priced competitively, if not better than competing technologies. If you could tell me a bit about your background and we could dive into it from there?

I’ve been working in flow cytometry for more than 20 years now. The majority of my time has been spent in academia. Only in the last several years did I switch to a pharmaceutical company doing the same thing, teaching people how to use instrumentation, using instrumentation myself, working on maintenance, making decisions on what's next to purchase, to replace aging instruments and just staying in touch with the market and where it's going. Sometimes, in academia, it's less of a gamble because you are not really state of the art. You are always behind since you require an infusion of money coming from grants and so, by the time you make a request, it may take six months to a year – if it's not rejected – before you get your money.

You never have the latest version, unless you pass an agreement be a beta testing site. While in industry, it's a little faster pace. The turnaround in instruments and the lifespan of instrumentation is shorter so you have to be a bit more strategic thinking of what's on the market currently, what is the next generation, which one to go with and so a lot of demos and a lot of word of mouth also from early adopters just to be able to make an educated decision.

I didn’t realize there was a different lifespan of the instrument in academia versus industry. How long do they last respectively in each and why is it shorter in industry than academia?

It's all about money. There's more money, in general, in industry unless you’re a startup and you may have money upfront, but then the funds may be diminishing depending on what you do and how you use them. A big established company usually has enough funds. If you’ve got justification that you need it for your research, you may be able to get the money and log the funds very quickly.

To stay with the latest instrumentation that meets your needs, gets you to the answer faster, provide more parameters, you will be able to unlock these funds and so that's why the turnaround is faster. Based on my experience, I've noticed that we keep instruments for five to seven years approximately in industry; while in academia we're talking about ten, 12 plus years. 10 might be the cutoff but if you don't have the money to replace it, people are sometimes forced – because of a vendor not supporting an operating system – to actually disconnect the machine from servers so they can still operate it and not be vulnerable.

They have to do a lot more workarounds when you are in academia. You're trying to squeeze the life out of an instrument as long as you can. There are, for instance, some people where I worked which had cell sorters which is one side of the equipment. The equipment in flow cytometry is usually split two ways: the analyzers, like the Aurora, for instance; and on the other side you’ve got cell sorters. They do the same thing but also let you sort or separate cells into purified populations and so these ones are more expensive, more advanced; usually it takes advanced training.

I've been in places where they had some machines still running from the late 90s in 2022. It really depends on the place. If it's a big core facility, they might have more means, but if it’s somewhere where they have a couple of machines, it might take a while for them to get their money’s worth and money back.

I understand that all the companies that sell the instruments and machines, they also do service. How often do you need servicing of the instrument and how much does that tend to cost and do you always use the company who manufactured it to run the service?

Usually you get a service contract for instruments; I would say that most people do get one. Some people that are very advanced or have a lot of spare parts in their lab or can order equipment may, eventually, just stop using service contracts, if they don't use the instrument very often. A brand-new machine comes with a warranty, usually a one-year warranty; and after that you pay a service contract. For a service contract, the industry standard is usually 10% of the list price, but some of them are a bit more expensive depending on the lasers that are installed on the machine. Some lasers like UV lasers and yellow-green lasers may be more expensive and, therefore, they cost more to put under warranty to be replaced.

The service contract, by default, is from the vendor but there are some third-party companies that offer services but not for every machine on the market. They might cover maybe the most common companies like BD Biosciences and they might provide the same level of service, meaning sending a technician within 24 or 48 hours depending on the tier you are paying for and with discounted prices, especially if you have more instruments.

The way they get in the market is by beating the prices of the vendor. The vendor, of course, has the inventory so usually they have the monopoly and that's the go-to for most people. For many people, if they have access to the money to pay for the service contract, they don't want fiddle around and look for an alternative. If money is tight at every level, they will find ways to try to reduce it because most academic institutions, the way they work is called recharge, meaning they're looking at how much it costs to operate the machine including the service contract, the potential consumables and the things they replace. They divide that by the number of hours the machine is used and that becomes your hourly price that they charge users or scientists.

To try to maintain attractive prices, they try to reduce overall expenses, so in that way they can attract the researchers because if it's cost prohibitive then they might also lose business. It’s kind of a vicious cycle of sorts.

The idea of having an hourly price to charge users is really interesting. Do you have an idea of what the hourly price would be for academia, on average, and what it is in industry?

In industry, usually, most people don't do it. They might try usage just to be curious, also to have information about the usage of an instrument and how long it's staying up versus potential downtime, if it's running close to capacity and therefore that's a justification to buy a new one or to request money for a new one, but in academia you can find prices openly. If you search University of Virginia and flow cytometry, you might be able to find their pricing; same thing with other places across the US.

Sometimes it's straightforward where they do that division and obtain that hourly price. Sometimes they do have to massage the numbers a little bit by calculating. If a machine is quite expensive to acquire and it's underutilized, it would cost you $500 an hour which nobody would want to use and so you're stuck, but if you're trying to promote it and having more people using it to showcase its capabilities, you might need to decrease that and maybe increase another one, but it’s in high demand no matter what. Sometime you see that kind of massaging, but in terms of prices, an analyzer may range from $50 to $100 if it's internal pricing.

Some of the core facility or shared resource laboratory, SRL, may be able to accept outsiders if they’re in the vicinity of where the call is located or the university is located; they might accept people that are not part of the university, of course at a premium. Usually, outsiders pay more and, more often than not, outsiders are industry companies and they can afford more and having not to pay for the machine itself, having to pay for a contract, they just pay to be trained and then to use the instruments or to have a specialist run the samples for them. You sometimes have a difference in pricing if you're going to be doing it unassisted versus assisted, requiring the help of someone to run the sample if you don't have the know-how.

Given Aurora and Northern Lights each cost decently less than their respective predecessors or competitors, has that changed the consideration in academia for replacing machines a little earlier? Has that made the Cytek systems take market share quicker? How do you see the relative costs manifesting in actual purchase and demand needs?

When I speak from now on, you will hear me talk about full spectrum for cytometry which is Cytek’s technology and others on the market like Sony Biosciences, and then you’ve got traditional or conventional cytometry which is just the predecessor. When Cytek entered the market, they had a three-laser instrument. That was the only option; the Aurora three-laser. Then they equipped it with a four and five-laser version to get a more accurate and better resolution and signature of fluorescent dyes that were interrogated by the machine. But when they started up, they were very aggressively priced. They unveiled it at one of the biggest conferences in flow cytometry and they were selling it pretty much as priced for what they cost now.

They were selling like hot cakes, in a sense, and so I think that that already helped them sell multiple units in some places and to really enter in “key” market share very quickly rather than taking a lot of time to do so by proving themselves. They had proved themselves that the machine was working fine and could deliver, but by breaking the price even more so than what you'd expect, that accelerated things for them and I think that was step one for them to really get into the business.

Before that, Cytek had conventional instruments that really were not spread that much. You didn't see many of them in the field but they were also known for being a service provider. They were repairing instruments like we were talking about third-party companies taking care of machines; Cytek was in that business a few years back and so you could enlist them to come service your BD Biosciences instrument. They let that go and then became a fully-fledged player.

It’s still priced at an advantage versus competitors, decently less expensive. Is that correct?

Yes. It's not as much of a difference as it was before. If you look at all of the analyzers, you’ve got some entry level ones and there’s maybe a couple that are several hundred thousand but they don't have the same capabilities as the more advanced ones. The majority of analyzers are pretty much priced between, I would say, 220 to 400. You can sometimes get a discount if you already own instruments from the same company. They might give you a discount or if you buy multiple, of course, you get a price break.

In terms of like equivalent capabilities, in terms of omni parameters, the fact that that full spectrum flow cytometry really opens up the range of detection, it doesn't have a finite number of parameters that you can detect. A lot of machines will tell you max, you can detect 28 parameters. You can do 28 colors, but on a full spectrum process, that doesn't work quite like that. You may have an array of 60 parameters of the APDs that you were mentioning earlier and then currently they're running upward of 40, 45 parameters and if the new reagents come on the market, we might be able to increase that number even higher, but currently that is the limiting factor for the reagents.

Some of the machines from competitors, like BD Biosciences, might be closer to a 400 mark and therefore Cytek will be priced lower, especially if you want a machine that is conventional but can be turned into a full spectrum flow cytometer; that's a premium that you're going to have to pay. Currently on the market, Sony was the first to develop a full spectrum flow cytometer and then Cytek came in, but Cytek had a different approach. As I mentioned earlier, they had aggressive pricing first and they were able to really get on the market quickly and then other companies like BD Biosciences did use conventional flow cytometers but they retrofitted them, modified some of the hardware on them and a bit of a software to be able to do both, to do conventional and full spectrum if you want.

But they were behind the curve because they were just adapting to how the technology shifted a few years ago. Then vendors like Thermo Fisher Scientific who acquired Propel, the Bigfoot cell sorter is also using both technologies. Moving forward, a new cytometer may be full spectrum from the get-go, but that I can't tell. I don’t know what people would want to do.

When Cytek compares themselves to Sony, they say they can’t do greater than 40 biomarkers per parameter. They say it’s got much lower sensitivity and nanoparticle detection. They say Sony’s footprint is bigger in the lab so Cytek’s benchtop is less than 150K centimeters cubed. They say that the sorting capability of Cytek is significantly better and they say the cost and performance are much lower, so those are the things they say are different. They say the only thing that Sony can do on par with Cytek is a throughput at over 30,000 cells per second. Is this an accurate assessment of the relative capabilities and how do you compare the practicality of the Aurora versus Sony’s leading instrument?

I used the Sony but an older generation where they were using prisms within the machine to split the light. The latter version of the machine is using the PMTs to capture the light, photomultiplier tubes instead of avalanche photodiodes and, in theory, photodiodes have a better linear range. They stay linear across a wide range of gains and so that's the advantage. Sensitivity is supposed to be better, again in theory, so you would have to compare the same panel on the two machines side by side and then really see.

Who is supposed to be better, Cytek or Sony?

Cytek, in theory, has the advantage when it comes to APD versus PMTs but again, that is something to be determined with a real-life example rather than on paper. The latter iteration of the Sony, the ID7000 has more parameters than Cytek. Its capturing maybe more details of a spectral signature. That doesn't mean it translates into better sensitivity, again that’s something to be determined. They're also using different lasers in the machine so that generates a different signature. You mentioned cell sorting; I'm paying attention to that because Sony has a working cell sorter on the market. There are multiple versions, but the current one is the MA900 and it's a work-off.

It’s working very well. It's limited in terms of number of parameters. It can only do 12. What it does, it does it well and I've got firsthand experience with it. It’s rarely going down and we use it regularly. In terms of cell sorting capabilities for Cytek, they don't have a commercial machine on the market. It's only beta versions. It’s only a few sites across the US and maybe in the world have one, but they are still working on the quirks. So yes, theoretically it will be better when it does what it's supposed to do but I don't know, at that point in time, if it's delivering the goods when it comes to looking at what it can do on a brochure versus what it can do in real life.

That part, I would wait a few months to maybe ask people that have an Aurora CS which is the Aurora Cell Sorter. The advantage of it, in theory, is the fact that the optical configuration is identical to an Aurora, meaning you can look at your cells on an Aurora and then you could just run the same panel on the cell sorter Aurora and it should look pretty much the same. Then you can make a decision on which sub-population or population you would like to sort. Again, that is in theory. There are some machines being tested currently. I know a few sites across the US. I haven't used one myself and I don't know if the people testing it right now are happy with it or if it's working as it should.

Taking one step back, today in academia and industry, how often do you do use conventional versus full spectrum? Then going forward how do you think that balance evolves over time?

Based on my experience, we're doing about 40% full spectrum. I see that increasing. We've been acquiring more of these machines comparing to the conventional; the same thing applies across the board according to colleagues I've been talking to. Sometimes it's a bit dependent on adoption, so some places if they've been really open to training people on the full spectrum, on the Aurora for instance, and having good training practices. With a full spectrum flow cytometer, because it's looking at a wide range of emitted wavelengths, you end up with more details. When you are looking in a conventional flow cytometer, you're looking only at the peak emitted wavelength, so a traditional flow cytometer may miss certain things.

It will not be affected by potential differences; while it would be exacerbated on a full spectrum flow cytometer if there’s something different between a control that you use to set up the machine and a fully stained sample, an experimental sample. There's a lot of education around having the right control; something that was not the case before. There was of course importance in adding the proper control but I think we have to take it a step further with full spectrum because, if you are a bit nonchalant with your controls, you won't be able to get good data. You would struggle a lot trying to unmix or deconvolute the different data streams from each control from the full sample.

This is something that is important to look into and if people are struggling because they're not educated properly, that's going to reduce the adoption of this technology. Even for us, having good practices and teaching correctly, we have to repeat it again and again and again, more so than with conventional flow cytometry. If you force people's hand and say, there's no more conventional here in this institute, we've replaced it with this machine, then of course you're going to get adoption. Of course, people may complain but, eventually, they will get on board.

It really depends. Some people are doing it cold turkey so to speak and some may just still provide conventional and add the new machine and say, this is the new technology, come test it, compare your panel on both machines and see if you get better resolution. One of the big advantages of full spectrum flow cytometry is the way it deals with autofluorescence of cells. Some cells have an inherent autofluorescence and if they're highly autofluorescent, there's nothing you can do in conventional flow cytometry. In full spectrum flow cytometry, you can take the unstained cells and get that autofluorescent signature and use that as its own parameter, its own color so to speak, and then you can of course extract it or remove it and that improves resolution on the low end. This is something conventional flow doesn't have.

Is this the industry evolution where someone who’s in university now, studying to be a flow cytometrist, would only learn full spec and so it’s a matter of replacing the older generation with the new generation and there’s a natural evolution to full spec; or are there complexities in that?

In the long term yes, I would say, because even people over in Sony and Cytek are getting into full spectrum. That means eventually, when all the machines are being replaced, full spectrum should be everywhere, but that's long term. As I said, some people are squeezing the life out of their analyzers so it might take another decade before they get rid of these machines; and also maybe not all the vendors in the industry of flow cytometry will go full spectrum. I don't know if everybody can do it meaning, do they have the knowledge with their engineers to design such a machine and maybe without infringing on patents or whatever; it's already out there from the big vendors.

I don't know how complex it would be to get into the market if you are already a vendor of conventional instruments. There will be some sites where they might be reluctant to embrace full spectrum and, therefore, all of the users of flow cytometry at that site will stick with conventional because that's all they have access to. Those will be potential places that impede the evolution of it.

You’ve been doing this for upwards of 20 years now and, in your time, how many evolutions of technology in flow cytometry have you seen and how significant is full spec versus conventional relative to other evolutions you have seen?

I think it's as important as other things we've seen in the past. One of the big things we've seen is evolution in terms of machines that can detect more parameters at the same time. When I started, the machine I worked on could only do four colors. At the time, that's all we had so that was fine. Only years later, they started increasing to 10 colors and the hardware was ahead of the reagents. The reagents were lagging behind and, eventually, when there was a boom of reagents, small companies designing new fluorescent dyes and being acquired by the bigger companies, then the hardware was lagging. It's usually a tick-tock approach. One time it's the hardware that is ahead and then another it’s the reagents.

We've seen other changes like mass cytometry, imaging flow cytometry, so more hybrid technology so to speak. Full spectrum is different than that because the detector RS is the biggest difference and the way the data on the software side is deconvoluted rather than using compensation. The algorithms do unmixing because we're looking at a bigger stream of data rather than just an isolated signal from each detector. So again, these are the differences but it's easier, I would say, to adopt full spectrum rather than mass cytometry.

How long do you think full spec will last as the prevailing technology?

Looking at what's on the market right now, even people working on prototypes of other kinds of instruments, there’s the next generation. We have analyzers that can do full spectrum. We have cell sorters that can do full spectrum, the Bigfoot from Thermo Fisher, now the Aurora CS that you mentioned earlier, the FACSymphony S6 from BD can be upgraded to do full spectrum but most likely next year – only next year – that's when they advertise it to be launched. Then in terms of new technology – maybe not a full adoption – is end of the year/early next year BD Biosciences are releasing the FACSDiscover which is an imaging cell sorter. In terms of hybrid technology, the imaging flow cytometry, it was created by Amnis.

They were acquired by Luminex. It’s a flow cytometer but instead of using detectors like what we discussed before, PMTs and LPDs, it’s using CCD cameras and you are able not only to get a signal but also, you're able to visualize the cells and their potential interactions. One of the drawbacks is it's a bit slower because you need to keep the cells in focus so you can't go too fast so the CCD camera can pick things properly. Even when they released that nearly a decade ago, people can't appreciate anything that is new. They were saying, when are you releasing a cell sorter based on the same technology? They never did, so BD is using a slightly different technology with their new machine.

They published something in Science recently that explains how it works, but they will release the cell sorter that also provides imagery and so that may also use a full spectrum underlying technology, so then they would blend everything together. They would have the capability to self-sort using full spectrum and showcasing images of your cells.

Most likely it's going to be extremely expensive at first but if they can sell a lot of them and they want to get in the market, they might actually drop the price within the first year and that could be the next evolution. A lot of people doing flow cytometry, they rely on microscopy. Sometimes, if they publish a paper or even just for their own knowledge, reviewers may ask, can you prove that using an imaging technology? They might use image process symmetry or microscopy because flow cytometry by itself usually cannot display anything, in terms of images.

What you said about the reagents is interesting. That’s one of the parts I’m most intrigued by and I think is the hardest to grasp with Cytek. How much throughput of reagents do you get on a typical full spec machine? If you could measure it most appropriately, how much do you spend per year per machine in reagents and what portion of that that you run through the Aurora comes from Cytek’s own reagents?

I cannot tell you how much I spend on reagents; I do not know because it's split from different labs. It's not from me so I wouldn't know, but in terms of the portion that comes from Cytek reagents, Cytek partners up with Tonbo usually for reagents; I would say this is less than 10%.

Has that percentage been rising or changing?

No. Everywhere I’ve worked, it’s been about that number. Maybe a reason for that is historical. A lot of people might buy reagents from eBioscience, from BD, from BioLegend or Thermo Fisher and usually, once they’ve got something that works well, they don't change. They stick with it, so for them to switch to a competitor, the competitor has to provide free reagents for them to prove that it's working the same way and they can beat the price and potentially the shipping time.

Some people are not willing to do it because the science is important. They have no time to waste. They don't have spare time to test things, but some may have the time and especially in academia where they would rather use their money somewhere else because reagents are expensive.

Cytek bought Tonbo in the fall, so Tonbo are part of Cytek now. Are there any other companies like Tonbo who are sold with and by Cytek that would give me a lens into any other obvious acquisition candidates?

Not that I know of.

When you used Cytek or Tonbo, I understand you don’t really want to switch but that’s interesting that they’ve been able to establish some use already. What dictates whether you’ll use Cytek or Tonbo?

As I said, if you're starting a brand-new experiment and you don't have any reagents and you're looking at what's available, you might be tempted to go with to Tonbo-Cytek since usually they are cheaper. They might undercut big companies like BD by a lot and so if you don't already have reagents tested, then it's not a question of you changing camp or anything like that. You just want to try something and if it works, that's fine.

I know from years ago when Tonbo entered the market, the biggest appeal was the price. They were very cheap. I don't know if they increased their prices or they’re still on the low side, but that was the big attraction.

When Cytek talks about what they do well in reagents, they have this narrative about how, with conventional cytometry, you don’t need dyes that cover the full range of fluorescence, but their reagents are purpose-built and can in fact cover the full range. Is there something to that or is that a story?

They acquired some smaller companies through the years to get their portfolio of dyes. They also license some from other companies, like the C30s dyes that they have; they come from another company if you look at the fine print on their webpage. As the name implies, they are looking at the full spectrum the dye produces when it's excited by, let's say, the five laser in the machine, while common genome flow cytometry is using only one laser at a time to excite a particular dye. So we are looking only at the emission coming from one laser rather than all of the emissions from all of the lasers stitched together into what we call a signature.

Eventually, when you're building a bigger panel and you add together in the same panel multiple dyes, you are looking at some that are very unique. I don't know all of the regions they have but what they are looking for usually is reagents that provide unique signatures; unique comparing to what they sell or comparing to what's on the market. One advantage is, because they're looking at everything, two reagents may have a similar peak. If you were to look at a conventional flow cytometer, they could not be used together because they would be excited, as I said, by one laser and have the same peak.

Because they're looking at everything else, they may have the same peak, but looking at all the emissions from the other lasers, they will have differences and all of these differences compounded together make it possible, with a full spectrum cytometer, to be run together and that's really one of the big key selling points of Cytek’s full spectrum flow cytometry; the flexibility you have when you are designing a panel that you don't have with conventional.

When you think about fast forwarding five years when all of industry and half of academia should be in full spec except for a few holdouts, how much of a reagent business do you think Cytek can build? Is there an opportunity for them to become a much larger piece of your reagent needs? Is there an opportunity for them to keep expanding there?

I think so. I think if they expand the number of monoclonal antibody clones that they offer to match what other companies are doing – maybe not in number but the most common one at least to start with – because companies like BioLegend have a pretty big catalog, same thing with BD Biosciences but if they can expand that as well as conjugate them with unique dyes, unique fluorescent dyes, that could really spread the word that they are a big player. A lot of the time you’ve got companies like FluroFinder or the Linscott Directory where they have a massive database of all of the monoclonal antibodies that are on the market, or at least the majority of them. A lot of people, when they design their panel, are using these panel builders like FluroFinder and so FluroFinder can do a live query of what's available from other vendors.

Then it's a matter of, if it's identical in theory, you could go with the cheapest one and as I said earlier Tonbo was. I don't know if Cytek bumped up the prices or if they're still very affordable and so that would really help get even more market share. If we can get new dyes that are better than the competition, that are more unique, that can keep the overall complexity meaning the overlapping of the different dyes in a very big panel, a high dimensional panel, that would be another cell. I know that Cytek is also generating pre-made panels for immunophenotyping for some of their assays. I don't remember their names but they have several of them.

They have a 17 or 18 color panel. That is very useful. For some of the scientists, they're turnkey products and they're attractive to many scientists that they want something already made for them. They don't have to reinvent the wheel and then they can also use these as a backbone panel, meaning you've got, let's say, 15 colors, you know they identify all of your key populations of cells. Then you can add additional reagents to these 15 to explore value subsets and so a lot of people like to do that when they're pushing the envelope with the immunophenotyping.

That was very good of Cytek to place themselves on the reagent side with these premade kits. I think that if they continued making some that are specific, either making them bigger or making them more targeted to specific cell types, they might be able to also sell more.

Does anyone else do these turnkey kits and do they work with non-Cytek instruments or do you basically have to have one of their instruments to use it?

No. Usually they have other ones. You can have stuff custom made. BD has custom work, so that's more expensive because it's custom, but already made not custom I'm not sure. Big panels like Cytek I don't know, but if they do exist, usually you should be able to run them on a full spectrum flow cytometer, no problem.

You could use a Cytek kit on a Sony?

You should be able to, but not on the conventional flow spectrometer. It may be possible if it's a 17-color panel from Cytek, but it might not be optimal to run on a conventional machine. It might be possible but this has been designed for their machine, so of course they took the time to curate and craft like a very nice panel that has a signature that are separated enough so you get low complexity scores.

When you buy reagents that are CFluor or Tonbo brand, are you buying them direct from Cytek or are you using a seller like Abcam or something like that?

Usually, we buy them directly from Cytek.

Do you have a relationship with their salesforce where they try to encourage you to use more and where they tell you their advantages?

Usually, when they have new products, they might sell a brochure or make us aware of what's coming, things like this, like other vendors and if we have any technical issues or technical questions usually, they’ve got an engineer, application specialist and reagent specialist that have information that has been tested in-house and they can share that with us and help us.

With Regeneron, when you’re talking about buying a new flow cytometer, which instrument are you buying today? Which one do you want to build your presence around and how do you see that decision changing or evolving over time?

Currently, we're looking at the groups using it. Why are they using it? What do they do with it? What are their needs? If their needs are very basic and simple, there's no need for us to buy a fancy, complex machine. If, however, they're already pushing the envelope with what we have on site, then we're going to be looking at the top tier in terms of machines that can give us more, so then the competition is scarce. Usually, it might be Sony versus Cytek maybe versus a high-end BD instrument.

Sometimes, it depends on who the end users are and what are they currently using? Eventually, we will change that machine again. Do they want to change now to a different technology, different software where they have to relearn things or would they be okay to stick with current software and a machine with more capabilities? So that also weighs into the scale to make the decision.

Five years from now, what percent of the instruments at Regeneron do you think will be Cytek, Aurora or the Northern Lights versus other manufacturers?

I would say definitely crossing the 50% mark.

That’s Cytek specifically?

Yes, I would say we might get there.

What percent is it today?

Today, I would say 25% with everything.

With a five-year replacement cycle, nearly three fourths of the flow cytometers you’re buying today are Cytek then?

Yes. It seems to be heavier on the full spectrum side just moving forward than currently.

How many would you say are in industry and in academia?

What do you mean?

How many cytometers are active in the field today?

I have no idea. There's so many core facilities, even things you've never heard of. There's labs within a university so often you have a university and in a perfect scenario there's a central specialty lab called a core facility that has all the machines, but that was the model several years ago. Some of the hardware has dropped in price and, as I said, there's $700,000 pieces of equipment.

Also some fancy professors might request to have money set aside for instrumentation when they join the place; they might get their own machine and so now it's more scattered, what we call rogue instruments. Instead of being in a core facility, you may know the University of Minnesota and they have a core facility, but they also have competing labs around with one or two machines. It would be very, very hard to quantify, without having the data from each vendor, how many they have in the US for instance to qualify thinking about how many could there be out there versus how many could there be in there?

Do you have a rough estimate? All I have to work with is I know Cytek has placed a little over 1,200 instruments. Are there 10,000, 100,000 in the field? If you had to ballpark a guess for how many are operational out there in the field?

Definitely not 100,000, but maybe 50,000 in the US? That seems high. A core facility often has 10 or 12 instruments. That's not unheard of. I’ve worked in places with a dozen instruments. Some have only a couple but then there's also all these labs that I mentioned and sometimes in the same academic institution they may have 20 or so individual ones just placed across different labs and that's just one place.

If you were to assume 10 per core facility, I don't know how many core facilities we have in the US but there's quite a few; and then industry is a bit different because you’ve got all sorts. It's closer to some labs. Some of them are startups and some are very big and they compete with the core facilities in academia. Pennsylvania for instance, they have one of the biggest core facilities and it's split in three I think; we’ve got three sites and I think they may have 30 machines or something like this.

They should have plenty of opportunity to sell a lot more instruments if they’ve only got 1,200 placements already. The last question, would you say you’re pretty optimistic on the commercial future of Cytek as a company?

Yes, I am. They they've been doing something that distinguished them from other vendors, particularly Sony. They've been more open and more transparent or at least that's the way it looks. When they release their machines, they were not saying we have all the answers. They were saying this is how it is. That's what we’ve designed. We know a lot of things. Of course, we are the experts of our own machine but also we are relying on the community to share their experience and the type of sales they're working with and the results they may get.

Sony has been more hush hush. They had webinars and everything like this, but it's a lot more strict where they don't talk about it as openly. For instance, one time I requested from Sony a user manual from one of their machines that they currently sell and they said no, we only give them to the people that buy the machine; while the Cytek one is floating online. You can download it wherever you want.

Even something small and basic like this. It’s no state secret. It's just telling you how to use the machine and I was just curious about a couple of things if it was different than the Cytek one so that's why I asked, but they told me no. Cytek created a community. It's not a blog, but part of their website you can create an account and post some questions and either Cytek or other users will reply and give you their two cents and help you with your research. They also do a lot of user webinars or user conferences, like a one or two day bootcamp of sorts, educating people and sharing the latest they've come up with.

Especially recently, with autofluorescence, they've been doing a lot of talks surrounding that just really to showcase that part of full spectrum. I find them more aggressive in a good way with sharing the information and so that has been really refreshing comparing to what we've been used to in the past. The more they talk about themselves, the more we know who Cytek is because we hear about them and what they can do regularly, so they hammer it home.

Do you think they will remain an independent company for the long term or do you think Thermo, Beckton et al will have to acquire them to stay relevant with technology?

That I don't know because Thermo has been such a giant and, for the last five years or so, they've been saying that they wanted to be number two for a while. They have a tremendous portfolio of reagents they've been acquiring to be in the sorter realm, so they got the Propel cell sorter. They’ve got the XD acoustic focusing analyzers and so I don't know how much money that would fetch to purchase Cytek, especially now that they're quite a hot commodity.

Nothing is out of the realm of possibilities. I could be completely wrong but, right now, they look more like a fully-fledged player with the other ones and maybe not one that would be acquired but I don’t know.