SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Specialized Disclosure Report
NanoString Technologies, Inc.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)
530 Fairview Avenue North
Seattle, Washington 98109
(Address of principal executive offices, including zip code)
R. Bradley Gray
President and Chief Executive Officer
(Name and telephone number, including area code, of the person to contact in connection with this report.)
Check the appropriate box to indicate the rule pursuant to which this form is being filed, and provide the period to which the information in this form applies:
Rule 13p-1 under the Securities Exchange Act (17 CFR 240.13p-1) for the reporting period from January 1 to December 31, 2017.
Section 1 - Conflict Minerals Disclosure
Item 1.01 Conflict Minerals Disclosure and Report
NanoString Technologies, Inc. (the “Company”) has filed this Form SD pursuant to Rule 13p-1 under the Securities Exchange Act of 1934, as amended, for the reporting period ended December 31, 2017.
The Company has prepared a Conflict Minerals Report, which is filed as Exhibit 1.01 to this Form SD, and is publicly available on its website at http://investors.nanostring.com/corporate-governance.
Item 1.02 Exhibit
The Conflict Minerals Report required by Item 1.01 is filed as Exhibit 1.01 of this Form SD.
Section 2 - Exhibits
Item 2.01 Exhibits
Conflict Minerals Report as required by Items 1.01 and 1.02 of this Form.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
NanoString Technologies, Inc.
Date: May 30, 2018
/s/ R. Bradley Gray
R. Bradley Gray
President and Chief Executive Officer
NANOSTRING TECHNOLOGIES, INC.
Conflict Minerals Report
For the Year Ended December 31, 2017
This report for the year ended December 31, 2017 is presented to comply with Rule 13p-1 under the Securities Exchange Act of 1934, as modified by SEC guidance issued on April 29, 2014 and the SEC order issued on May 2, 2014 (the “Rule”). The Rule was adopted by the Securities and Exchange Commission (“SEC”) to implement reporting and disclosure requirements related to Conflict Minerals as directed by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act). The Rule imposes certain reporting obligations on SEC registrants whose manufactured products contain Conflict Minerals which are necessary to the functionality or production of their products. Conflict Minerals are defined as cassiterite, columbite-tantalite, gold, wolframite, and their derivatives, which are limited to tin, tantalum, tungsten, and gold (3TG) for the purposes of this assessment. These requirements apply to registrants whether or not the Conflict Minerals in their supply chain originated in the Democratic Republic of the Congo or an adjoining country (the “Covered Countries”)
and whether or not they fund armed conflict.
Pursuant to SEC guidance issued April 29, 2014 and the SEC order issued May 2, 2014, we are not required to describe any of our products as “DRC conflict free,” “DRC conflict undeterminable” or “having not been found to be ‘DRC conflict free,’” and therefore make no conclusion in this regard in the report presented herein. Consistent with such SEC guidance and such SEC order, because we have not voluntarily elected to describe any of our products as “DRC conflict free,” an independent private sector audit of the report presented herein has not been conducted.
This Conflict Minerals Report (“CMR”) has been prepared by the management of NanoString Technologies, Inc. (“NanoString” or the “Company”). NanoString provides life science tools for translational research and molecular diagnostic products. The Company's nCounter® Analysis System has been employed in life sciences research since it was first introduced in 2008 and has been cited in over 1,900 peer-reviewed publications. The nCounter Analysis System offers a cost-effective way to easily profile the expression of hundreds of genes, proteins, miRNAs, or copy number variations, simultaneously with high sensitivity and precision, facilitating a wide variety of basic research and translational medicine applications, including biomarker discovery and validation. The Company’s technology is also being used in diagnostics. The Prosigna® Breast Cancer Prognostic Gene Signature Assay together with the nCounter Dx Analysis System is FDA 510(k) cleared for use as a prognostic indicator for distant recurrence of breast cancer. In addition, the Company collaborates with biopharmaceutical companies in the development of companion diagnostic tests for various cancer therapies, helping to realize the promise of precision oncology.
The Company has three categories of products: (1) reagents and consumables directly manufactured by the Company in its Seattle, Washington facility or sourced from contract manufacturers; (2) instruments manufactured by contract manufacturers to the Company’s specifications; and (3) spare parts for instruments produced by either a contract manufacturer or another third party manufacturer.
Based upon the Company’s internal assessment, the reagents and consumables have been determined not to contain any Conflict Minerals as they contain only plastics, water, salts, dyes, nucleic acids and ferrous (iron) particles.
There are three instruments sold by NanoString as part of its nCounter Analysis Systems: a second generation epi-fluorescent microscope called a Digital Analyzer; a sample preparation robot called a Prep Station; and a third generation system called the nCounter SPRINTTM Profiler. All of these instruments are manufactured according to NanoString specifications by contract manufacturers over whom the Company has influence and, thus, fall within the scope of the Rule as products manufactured by NanoString. All three of these instruments have the potential to contain Conflict Minerals as they contain printed circuit assemblies and other electromechanical components that are generally known to contain small amounts of tin, tungsten, tantalum or gold.
Spare parts are purchased and used for the maintenance and repair of instruments previously sold to the Company’s customers. In addition to the three instruments referred to above that are currently being sold by the Company, there are first generation Digital Analyzers in service that were sourced from a contract manufacturer different from the one manufacturing the second generation Digital Analyzer. Any spare parts for the two instruments currently being sold by NanoString are naturally covered by the Reasonable Country of Origin Inquiry (“RCOI”) being conducted for those instruments. With respect to the first generation Digital Analyzer, spare parts are not considered to be manufactured by NanoString under the Rule. These spare parts are components made generally available by third party manufacturers who are not under contract with NanoString and, thus, NanoString does not have influence over the manufacturing of the components.
Based on the Company’s assessment, the only products manufactured by it that require an RCOI are the three instruments currently being sold: the second generation Digital Analyzer, the Prep Station and the SPRINT Profiler.
Instrument Supply Chain Overview
The three subject instruments are manufactured by three separate contractors. NanoString must rely upon each contract manufacturer to provide information on the origin of the 3TG contained in components and materials used in the manufacture of NanoString instruments. None of these contractors is directly subject to the Rule.
Reasonable Country of Origin Inquiry (“RCOI”)
The Company’s RCOI process was based on the standard Conflict Minerals Reporting Template established by the Global e-Sustainability Initiative of the Electronic Industry Citizenship Coalition (the “Template”).
All three contractors initially completed and returned the Template and have subsequently provided periodic updates. From the most recent information provided, the Company has concluded that no contract manufacturer sources any Conflict Minerals directly, and none are aware of any Conflict Materials used in the manufacture of purchased raw materials and components originating from the Covered Countries. However, the contract manufacturers are unable to provide assurance that the instruments manufactured on NanoString’s behalf do not contain Conflict Minerals from the Covered Countries.
Each contract manufacturer has contacted each of its suppliers that provide materials or components used in the production of NanoString instruments potentially containing Conflict Materials and has requested that they complete the same Template. As of the date of this report, the responses to those requests are incomplete and continue to be in process.
Due to the complexity of NanoString’s instrument products, the number of suppliers of components for each, the multiple layers of suppliers involved and the understanding that many of such suppliers have not yet completed their own RCOI processes, the Company continues to expect it will require an ongoing effort for the contract manufacturers to verify the origin of all Conflict Minerals contained in the two instruments.
Due Diligence Program
To date, the Company's due diligence program has included the following elements.
The Company has adopted a Conflict Minerals Policy, which can be found on the Company’s website at http://investors.nanostring.com/corporate-governance. A management committee has been formed to oversee the policy and the Company’s compliance therewith. The committee includes the Chief Financial Officer, the Senior Vice President of Operations, and the Director of Supply Chain Management. The committee reports periodically to the Company’s Chief Executive Officer. In the negotiation of future contracts, consistent with the Company’s Conflict Minerals Policy, the Company intends to include provisions to encourage conflict-free sourcing. Given the limited number of suppliers whose products contain Conflict Minerals, other systems, such as codes of conduct, training programs or grievance mechanisms, have been deemed to be unnecessary.
Identification and Assessment of Risks
The Company has established a product oriented approach to evaluating due diligence, enabling the identification of large classes of products (consumables and reagents) which have no risk of containing 3TG, and thus are not subject to due diligence. Due to the small number of remaining products (three instruments), the Company has been able to readily assess the risk of each through the RCOI process described above and conclude that these products and manufacturers require further due diligence.
Response to Identified Risks
The Company is in direct dialogue with the contract manufacturers of instruments and it intends to continue and build upon this dialogue in the future. These manufacturers are reliant upon information provided to them by their suppliers. The Company intends to continue to pursue information regarding 3TG in the supply chain for the three instruments. If a contract manufacturer does not cooperate with the Company’s due diligence efforts, it will be reported to the Chief Executive Officer and potential actions will be considered. If a supplier is identified that is not free of conflict minerals, such findings will be reported to the Chief Executive Officer and, at a minimum, the Company intends to encourage the contract manufacturer to identify an alternative supplier of the related component.
Independent Audit of Smelter Due Diligence Practices
As contract manufacturers are able to trace supplier Conflict Materials to the specific smelters from which they were sourced, the contract manufacturers and the Company reference the Conflict Free Sourcing Initiative (“CFSI”) Conflict Free Smelter Program as a source of independent audit information about these specific smelters.
In compliance with the Rule, NanoString intends to report to the SEC annually regarding supply chain due diligence on Form SD and provide a Conflict Minerals Report to the extent it is required.