Good day, ladies and gentlemen, and welcome to the BioLife Solutions Second Quarter 2014 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder this conference call is being recorded. I’ll now introduce your host for today’s conference, Paul Arndt, Managing Director of LifeSci Advisors. You may begin.

Thank you Ashley and good afternoon everyone. Thank you for joining us this afternoon for the BioLife Solutions conference call and webcast to review the financial results for its 2014 second quarter ended on June 30, 2014. The Company issued a press release and filed a Form 10-Q quarterly report today containing detailed results for the second quarter of 2014. This release is available on the Investor Relations page of Company’s Web site at www.biolifesolutions.com as well as various financial Web sites. As a reminder this call is also being recorded and broadcast live on the Company’s Web site. A replay of the webcast will be available through the same link for 90 days. Before we get started we’d like to remind you that during the course of this conference call the Company may make projections and other forward-looking statements regarding future events or the future financial performance of the Company. These include without limitation statements regarding future operating results, growth opportunities and other statements that reflect BioLife’s plans, prospects, expectations, strategies, intensions and beliefs. These statements are subject to many risks and uncertainties that could cause actual results to differ materially from expectations. For a detailed discussion of these risks and uncertainties that effect the Company’s business and that qualify to be forward-looking statements made on this call. We refer you to the Company’s periodic and other public filings filed with the SEC including the Forms 10-K for the fiscal year ended December 31, 2013, the quarterly Form 10-Q filings and the Forms 8-K filed today. Company’s projections and forward looking statements are based on factors that are subject to change and therefore these statements speak only as of today’s day Thursday August 7, 2014. The Company assumes no obligation to update any projections or forward looking statements except as required by law. With that said I’d now like to hand the call over to Mike Rice, President and CEO of BioLife Solutions.

Thank you, Paul and thank you everyone for joining the call. With me today is Daphne Taylor our CFO. Following our business update and review of BioLife’s second quarter 2014 performance we’ll be glad to take your questions. I’d like to start with an overview. For Q2 we’re pleased with our results for the second quarter. This quarter we reported increased revenue from our core products of 14% over the same quarter last year. This was our fourth consecutive quarter with at last $1 million in core product revenue. Total revenue was down 5% from last quarter and as you know we previously explained in our quarterly revenue is highly affected by fluctuations in orders from our regen med customers who order our products to support their clinical trials. Their demand for our products is impacted by funding and patient enrollment rates in their trials. Our focus on increasing penetration in our three strategic markets of regenerative medicine, drug discovery and biobanking continues to result in more academic clinical centers and commercial companies adopting our best-in-class biopreservation media products. I’d like to update you on our success in the regen med segment by sharing some metrics on customer acquisition rates. In October 2012 we estimated that our products were being used in more than 50 customer clinical trials, this increased to more than 85 in September 2013 to more than 100 by January of 2014 and we now believe in more 130 customer clinical trials. We also believe that the average annual revenue for clinical indication should our customers receive marketing and regulatory approvals and commence large scale commercial manufacturing and be in the $500,000 to $2 million range. This is a really remarkable customer base, represents significant revenue and profit upside for BioLife over the next several years. In…

Thanks, Mike, and good afternoon everyone. Revenue was 1.2 million in the second quarter. This was an overall decline of 48% than the first quarter of 2013 and a decline of 41% than the first quarter of this year. A majority of this decline is due to cancellation of our contract manufacturing agreement which occurred at the beginning of this quarter. As Mike said, our proprietary solutions revenue this quarter was again over $1 million, year-over-year we’ve seen a 29% increase in proprietary solutions revenue but the total for the first six months of the year of $2.2 million compared to 1.7 million for the first six months of last year. Q2 proprietary solutions revenue increased by 14% over the second quarter of 2013 and was down slightly from Q1 of this year by 5%. This highlights that while overall revenue was growing steadily from year-to-year, we still expect lumpiness based on the progress of our customers clinical trials. Gross margin in Q2 was 45% compared with 36% in the second quarter of 2013, reflecting the value of growing our higher margin core product revenue with most of the revenue in Q2 coming from our core customers. We reported a net loss in the second quarter of this year of $883,000 compared to approximately $283,000 in the second quarter of 2013. This includes the impact of a lost contract manufacturing revenue and some increased spending on R&D sales and marketing and G&A to support expansion of our core business in contract manufacturing services. We ended Q2 with cash and cash equivalents of 11.9 million compared to 156,000 at the end of last year. This quarter we burned cash of about $1 million, we increased the investments in our inventory, we took care of some vendors who supported us prior to our equity raise last year. We believe we’re now well positioned to take advantage of the strategic growth opportunities. And I will now turn the call back over to Mike.

Thanks Daphne. In closing I want to say that I am very optimistic about our future and our ability to execute our growth plan. Just after our last call I bought 20,000 shares in the open market. Team is very solid we just hired a new Director of Marketing and also a very talented researcher from the University of Washington we would be joining us in a fuel application scientist role. Later this we’ll build out the biologistex team ahead of the products and service launch. So for us it’s full speed ahead at BioLife. I want to thank you for your interest in BioLife. And with that we’ll open the call for questions, operator?

and:

Thank you. (Operator Instructions) Our first question comes from Jeffrey Cohen of Ladenburg Thalmann. Your line is open.

So just a few if I may. Could you talk about the SAVSU agreement? Have you started shipping some of the packages and utilizing them on their own or have you started to utilize them with your cold storage solutions as well? Ladenburg Thalmann: So just a few if I may. Could you talk about the SAVSU agreement? Have you started shipping some of the packages and utilizing them on their own or have you started to utilize them with your cold storage solutions as well?

So Jeff the new EVO shipper is not ready, that’s what we’ll be launching in the fourth quarter. You might recall that last year we signed the initial exclusive distribution agreement with SAVSU or not SAVSU but their earlier generation products. And while we’ll still be able to do that our efforts are really toward completing the product development on the backend database development to support the new EVO smart shipper. And then to clarify when we ship our own products to customers it don’t need to be shipped cold, so we ship Amgen.

The 130 customers you referenced, did you talk about change over the past one or two quarters with those numbers? Ladenburg Thalmann: The 130 customers you referenced, did you talk about change over the past one or two quarters with those numbers?

I think you’ll have to go back to the last, the most recent metric that we gave. And so I said in January of this year we were at about 100 and now about 130. And Jeff let’s clarify, it’s not customer just number of clinical trials. So the number of customers is slightly less than that, somewhere more than one clinical trial that’s using our product, okay.

And the composition of Phase 1s, 2s and 3s will that be provided or is that in the Q? Ladenburg Thalmann: And the composition of Phase 1s, 2s and 3s will that be provided or is that in the Q?

It’s not in the Q but it has been roughly, I am happy to tell that now. We think that perhaps 12 to 15 Phase 3, there is a nice bonus of about 60 or so in Phase 2, a little less than that maybe 40 or so in Phase 1 and handful, what we would call our preclinical phase, where we’re doing animal testing and other supplier qualification of BioLife.

And one more if I can, could you talk about any anticipated timing on DuraGraft? Ladenburg Thalmann: And one more if I can, could you talk about any anticipated timing on DuraGraft?

I can’t, I wished I could but we’re going to differ to Somahlution in their own press release, any regulatory approvals that they hope to receive in which parts of the world. But what we know is based in our conversation today and what you may have seen in the press release when we announced the agreement we expect our initial shipments to them to commence in the fourth quarter of this year.

One more, material customer for the quarter were there any in excess of 10%? Ladenburg Thalmann: One more, material customer for the quarter were there any in excess of 10%?

No.

Thank you. Our next question comes from Brian Marckx of Zacks. Your line is open.

I guess I would have expected operating expenses sales and marketing and G&A to come down given the fact that you knew revenue was going to come down. Can you talk about why SG&A would have went up so considerably in the quarter? Zacks Investment Research: I guess I would have expected operating expenses sales and marketing and G&A to come down given the fact that you knew revenue was going to come down. Can you talk about why SG&A would have went up so considerably in the quarter?

So the basic situation is this, we talked a little bit about this in the last call. If you recall when we raised the funding and we closed the funding, we decided that we’re going to hold on to most of the cash but we’re going to very deliberately and smartly spend perhaps a couple of million dollars in the first 12 months from the close of the raise to expand sales and marketing, hire some additional sellers, go to some additional trade shows. We believe that we’re going to spend a decent amount of money launch biologistex on the other parts of the OpEx, Daphne has done a great job which was up until the raise, a pretty stressful cash situation and so she cleaned up some vendors and got AP squared up, so all things considered that’s really the bulk of the majority of the increase in the spending.

So, G&A went from about 864,000 to about 970,000, so about a 130,000 in Q1 to Q2. I am still trying to figure out why it would jump to that level particularly with the expectation that that revenue would fall close to 50%? Zacks Investment Research: So, G&A went from about 864,000 to about 970,000, so about a 130,000 in Q1 to Q2. I am still trying to figure out why it would jump to that level particularly with the expectation that that revenue would fall close to 50%?

Brian, it’s a fair question but then again our intention is growing the core business. It has been and it will be continue to be. We are very fortunate to have signed this agreement with Somahlution. We think that’s going to be a very meaningful relationship for us for revenue and also reasonable margins but our core focus here and our focus is to grow the core business and see the proprietary solutions adapted and we need to do that by increasing the spend and sales and marketing and other related G&A expenses. Daphne, if you have got anything in the queue that provides any granularity on that then we can share that but if we don’t then we shouldn’t.

We just thought it was due to increase in some corporate costs and we haven’t really provided any additional granularity.

I think the overall question is, it comes down to operating leverage and when are we going to see operating leverage, if revenue was coming down and expenses are going up. And everybody understands that you have to make investments to grow revenue but when you see this level of operating expense increase with the expectation that at least in the near-term revenue is going to come down without any clear idea of when revenues are going to come back up, I guess that is the question of what is in G&A that’s making it go up 130,000 without disclosure in the queue? Zacks Investment Research: I think the overall question is, it comes down to operating leverage and when are we going to see operating leverage, if revenue was coming down and expenses are going up. And everybody understands that you have to make investments to grow revenue but when you see this level of operating expense increase with the expectation that at least in the near-term revenue is going to come down without any clear idea of when revenues are going to come back up, I guess that is the question of what is in G&A that’s making it go up 130,000 without disclosure in the queue?

Fair question, Brian, yes, so to go back and sort of answer your first question, so today on this call we are not going to guide when we think we are going to breakeven. We think that the new sellers at least the new seller and the new biologistex sellers, that will be initial investment, they are going to be recent productive but not right away. So, this is really -- this is a transitional quarter too for BioLife. We are going to be very mindful of overall expenses but without getting into too much granularity about AP and vendor relationships and things like that in this rate related cost. What we can say is that we think we are very judiciously using the funds that we raised and we are going to hold on to most of that cash but this is really -- it’s a sales and marketing showing up operations sort of transition period for the company. I am going to say it again though I think with the launch of biologistex and Somahlution should they get fair approvals which we are hopeful and confident they will, I think in the next three to four quarters and our financial houses going to look at vast improvement from what it is today, and I mean that in the realm of again having significant amount of cash in the balance sheet and more meaningful contract manufacturing revenue, having a biologistex service starting to contribute something that we'll be pretty pleased to talk about.

You guys have certainly demonstrated that you can run the business and grow revenue and control cost and I think that’s fair. So, thanks Mike for the insight. That’s all I had. Zacks Investment Research: You guys have certainly demonstrated that you can run the business and grow revenue and control cost and I think that’s fair. So, thanks Mike for the insight. That’s all I had.

Thank you. (Operator Instructions). Our next question comes from Vesselin Mihaylov of Newport Coast Securities. Your line is open.

I have a couple of questions, so first of all could you please educate the listeners and readers of the transcript of the conference call, what is the publicly released information about the Somahlution approval process. Is it expected next year, I mean that company must have given some guidance and I am sure you know best from pretty much everybody that’s on this call.

Great question, Vess and we do know Vess because they have told us their geographic areas are seeking approval in their expected timelines but it would be inappropriate for us to convey that without approval from the company. So, all I can do really just relate back to what we disclosed in the press release and what I reiterated in this call which is that we believe that for shipments that are going to happen in the fourth quarter of this year and we are working really hard to complete the process engineering and our material supply chain well-understood and they expect us to ship some products to them in the fourth quarter of this year and that is clearly our goal.

Okay and I understand if it’s inappropriate for you to share non-public information but have they given guidance publicly themselves, can we find this on the internet or are you saying it’s not really publicly announced?

They really haven’t and it would be really helpful if they could because that will be conceited and we could all have a little bit clear picture at least from your guys perspective about what this means to BioLife and how soon that might be material to us. We have a really good sense of what that could turn into based on some communication but nevertheless we have some permission from them to share that information until they actually start to disclose the wrong forecast and unit shipments it wouldn’t be our place to share that now.

Okay. So the kind of revenues that this account can bring, you mentioned that the other people that are using the solution trials you expect the average it’s pretty wide range here between $500,000 to 2.5 million a year I assume, is that correct.

In the regenerate mass and cell base that is out there in this space that’s right.

That’s per year. So the midpoint is I would say $1.5 million, is this customer of potentially that side or its order of magnitude is larger?

We have to look at the intended patient population and I don’t want to disclose any of the forecasting information that we’ve given, but the cabin space in the vascular access surgery space those are pretty good size numbers, some of it certainly has some competition in the space nevertheless they continue to make a real business out of this. So if they are successful and we will be very pleased to report very meaningful revenue in [indiscernible] BioLife.

Now what would the normalize cash flow from operations burn? Obviously I am only looking -- I didn’t see -- look at queue but I saw that cash decreased by about $2 million sequentially, the cash balance now you said that you paid some vendors some accounts that were really due to be paid. So what would you say is the normalized cash burn per quarter going forward, is it 1 million, is it less than that?

There was definitely a couple hundred thousand in there that is I would consider one-time occurrence due to paying back vendors and getting on back to better terms with vendors.

So it’s really not $2 million, it’s cash flow from operations but it’s closer to probably 1 million.

That’s a fair estimate.

And let’s go over a little bit on the shipping service business, the anticipated business model. So I am looking for one of your competitor’s trial report that is basically doing, I mean they are not a direct competitor we’ve discussed this in the past, but let’s say that it was in liquid nitrogen to shift tissues. So the revenues surrounding is about slightly less than 1 million a quarter and the gross margins are now approaching 40% roughly. So I am just wondering you said you are going to launch the product in the fourth quarter. My first sub-question is do you expect any revenues in the fourth quarter or just the launch? And number two, the first full quarter of commercial availability. Do you anticipate having gross margin in that quarter or are the first few quarters really going to be negative gross margins on this service?

Really great questions. I will be somewhat careful on how I answer. So initially your first question is any revenue in the fourth quarter. It’s possible but we are in a stage now where we are conducting customer focused groups and we are really refining the final feature set. The testing pricing elasticity and obviously the other metrics of our pricing in tiers and really the entire offering. So it’s possible we could see some revenue in the fourth quarter. And we are not guiding to that, we don’t want to have any quantification in a range but there is a possibility. And then your second question, so the first few quarters out, what’s that going to look like? The business will be a lower gross margin but a positive gross margin more or less from the beginning and then getting much better over time.

And that is fantastic because as you can see the market is being basically about the 30 million -- in excess of 30 million enterprise value for that company and it is losing much money but it’s doing about 1 million a quarter and has about 40%, let’s call it 35% gross margin. So here is the value that can be unlocked. If you properly execute and properly communicate all these achievements to the investment community. That could be a huge future unlocked value. And I had one last question. You announced a few months ago the granting of patent in the blood storage area. And I was meant to ask this question but I think this is the time because you mentioned blood storage and biobanking. What are these patents really about, are they -- is this -- do you have like a better [indiscernible] solution for blood storage or something that is going to come out of (less fuel) [ph] that is unexpected to you. Is it some really foundational pattern that we got here and you are going to work on or is this just incremental business that's going to come from this?

Really great question and thanks for bringing that up for the Group Fest. So the blood storage, the patent that we were granted to improve the isolation preservation of cells isolated from whole blood. It does have some utility, it doesn’t come without some pretty significant regulatory investment and hurdles should we intent to market HypoThermosol or some other variant of HypoThermosol as an approved storage or additive for blood. And so we’re in the process of sorting out what might be the best way to unlock the value from the patent. We have many customers today using HypoThermosol to store and to ship cells isolated from whole blood which is really great and they are doing that just because they can buy the solution from us, they test it, they see better results and they use it. So in one sense, we could further market that and just expand the number of users using that application. From other sense, it’s just a nice addition to the patent state, but the big home run would be with some additional testing, could we actually see a way to commercialize and then get approval for a next generation blood storage solution. And that’s a fair amount of work considering the meaning of the methods that are out there today and the cost structures and the various deals that folks get today and looking various other additives that are like.

So this is best as necessary, hypothetically you could basically create a solution to address the entire blood banking market, why spread use of potential of HypoThermosol, is that what is the opportunity down the road?

It’s a potential opportunity but consider the cost and the pricing sensitivity, the number of alternatives out there today and also the percentage of deals improvement or expense of storages or shelf life you have to be able to show to actually make a meaningful difference where you could capture a significant spend of that market. And we understand the players and we understand the dynamics and the various performances that are out there and that would be a lot of work to get into the point to describe sort of the home run application that you just described. But certainly something we’re thinking about and it's a research, but I don’t want to underestimate the work involved.

Understood thank you very much. Thanks for putting this conference call and just please keep guiding us as much as possible in future press releases about once the firmer footing is established in terms of anticipated revenue growth and so on. Thanks.

We'll do that and great questions. I am hitting the road next week again another series of meetings with potential investors and analyst and fund managers so on and so forth, so again we’re going to just continue to be very active with the investment community and we’ll try to tell as much as we can and make sure that people know what we’re up to.

Thank you. Our next question comes from David Musket of ProMed. Your line is open.

Just a follow-up on questions earlier about SG&A for you and Daphne, are expecting specially going to be at about this level now for the remainder of the year or do we have some additional investments spending that we have to do in front of BioLogistic point?

Great question, Dave, I’ll let the Daphne that.

Well, that’s a two part question. So included in the number for this quarter we have the couple of onetime item are not going to recur, but we think that we’re going to do some investing of resources to give BioLogistic launch this before the end of this year maybe not be in Q3 maybe in Q4. We don’t have an exact number for that but as you can imagine there is some ground work that has to begin before the launch and we’re going do that.

Okay great, so the point being that or the conclusion being that you have some usual expenses in this quarter, you will have some additional unusual expense for the remainder of the year, so it’s probably going to be about this level the next two quarters?

That’s a reasonable assumption.

Okay with respect to those expenses, are any of this tied to some comparison studies that we might see on BioLogistic that would be similar to the publication that you just put out with respect to class?

Yes, super question, Dave, so we definitely have planned an entire series of data studies to first just convey the performance of the shipper against other shippers in a drive payload situation then against the classic ISTA winter and summer profiles, but we also intent to actually storage, ship the number of cell types and some of the testing here and some with some collaborators where we can completely correlate temperature stability to cell viability and actually move cells ship them around and really just better articulate and sort of clean up what’s going on in the space of small form factor shippers. If you follow the space, you’ll get in to the marketing materials from what would be our various competitors. I say that there is less than complete marketing approach by several companies. Some stake a claim on our value installation use in the shipper, others have some data graphs which show great performance of the payload, but they omit, they don’t you in the graphs what the outside temperature is, so we’re just going to clean that up and take the high road and so we’re going to be doing all that. To answer your question, but how much that’s all that’s going cost, there is a little bit of cost in there, but I don’t want to say its material amount okay.

When we some of that prior to the launch Mike or is that something that's going to happen next year and when should we just see something?

I think just prior to the launch, we’re going to have white papers and we’re going to have some dedicated website and then just a complete integrated marketing solution around that, so we’re not going wait until the actual launch [indiscernible], but first things first, the final form factor of the shipper is just about done, once that’s done, then we’ll put that shipper in these temperature stability chamber and we’ll start to run the basement analysis then we’ll get the competing devices and do the same thing and again move to the -- but I think it’s the really important phase of data collection and that is not what the drive payload with actual sales of interest that will be used, and clinical relevant cells, so you bet, the idea is to just get the product development completed, get the backend data base, square it up, use again the portal and then start to unveil the data performance. There could be cases where a competing shipper might work almost as well which is to say it might hold the temperature almost as long but nonetheless we think that the premium that we can command we’re having a smart shipper have customers have access to this various payload environmental and location data. It’s going to be pretty well received. But first and foremost it all starts with the shipper and installation material. So I am glad you asked that and it’s clearly a big part of our marketing and our customer and education program.

It seems like there could be a sweeper I don’t think I for one don't have a full appreciation of that opportunity. But do you have to hire any additional people to now launch this product?

We do.

We’re going to hire sellers we’re going to have some order fulfillment people, some customer service/tech support people and we have a reasonable sense of how many and how fast. A key facing item for us will be the conclusion of the data group sessions and the customer folks group sessions so we can really complete definition. In the meantime everything on the manufacturing side continues to track along with our partner [Sasa] and then we’ll be doing a lot of work on the database side and the floor side so we have a just a really robust customer experience when they log into the portal. We’re planning some not at large but we’re planning some post launch smartphone applications where customers will have some fit for a smartphone interface some functionality to interact with the portal, the database, do some command and control of the electronics and the cellphone and interrogate the device, see where it is understand the payload parameters and so on and so forth. But yes there is a whole headcount kind of scheme that we’re thinking in its ranges and it really depends Dave on how fast this ramps. So we think we’ve got a sense of -- if the number of transactions, the number of shipments is X then we need Y people to support it, if it takes off faster than we think then we’re ready to scale appropriately.

I assume you’ve already had the conversations with your existing customer base on this. Do you have any sense of what kind of conversion you might get?

It’s a great question we talked to many, many customers and in that space they’re all preapprovals so they’re buying shippers from various companies they’re shipping these things around in clinical trials and all I can tell you is this the interest level is just really phenomenal. And I say that with complete confidence that if this was available today and we had really good problems to solve here.

Thank you. That’s all the time we have for questions today. I’ll hand the call back over to Mike Rice for any closing comments.

Great. Thanks Ashley. So, in closing just let me say again thank you very much for joining us. Really looking forward to speaking to you in the future and keeping updated on the progress of the company and remain completely optimistic and confident that the BioLife is in the right place, the right time with biologistics. The core business continues to grow and all things considered really happy with the way things are going and the team that we’ve built. So thanks again. Appreciate your interest.

Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program. You may all disconnect. Everyone have a great day.