Welcome to the Fourth Quarter and Full Year BioLife Solutions Earnings 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 follow at that time. [Operator Instructions]. I would like to introduce your host for today's conference Mr. Rod de Greef, Chief Financial Officer. Please go ahead, sir.

Thank you, Michelle. Good afternoon everyone and thank you for joining us for the BioLife Solutions conference call and webcast to review the operating and financial results for the fourth quarter and full year of 2016. Earlier this afternoon, we issued a press release which summarizes our results for these periods. This release is available on the Investor Relations page of our website at biolifesolutions.com. As a reminder, this call is being recorded and also broadcast live on our website. A replay of the webcast will be available through the same link for 90 days. Before we get started, I would like to remind everyone that during the course of this call, we will make projections and other forward-looking statements regarding future events or the future financial performance of the company. These statements are subject to many risks and uncertainties that could cause actual results to differ materially from expectations. For a detailed discussion of the risks and uncertainties that affect the company's business and that qualify to be forward-looking statements made on this call, I refer you to our periodic and other public filings filed with the SEC. Company projections and forward-looking statements are based on factors that are subject to change and therefore, these statements speak only as to the date they are given. The company assumes no obligation to update any projections or forward-looking statements except as required by law. Now, I'd like to turn the call over to Mike Rice, President and CEO of BioLife.

Thanks, Rod. Good afternoon everyone. I'm pleased to discuss our fourth quarter and full year 2016 operating results and activities we're focused on to drive growth and increased shareholder value. Afterward Rob will present our financial results and reaffirm our expectations for 2017 then we'll be glad to take your questions. I will start off with a recap of our mission, our goal is to become the leading provider of bio preservation tools for cells, tissues and organs, to facilitate basic and applied research and commercialization of new Biologic based therapies, to achieve our goal we supply best in class tools, our customers use to maintain the health and function of Biologic source material and finished products during manufacturing, storage and distribution. Our Biopreservation tools platform includes optimized proprietary clinical great preservation media solutions and smart cloud connected precision thermal shipping containers engineered to protect time and temperature sensitivity biologic payload. Looking back at 2016 we reached several milestones. First we gained 123 new customers with 65 in the regenerative medicine market. We now supply over 500 direct customers in the Bio-banking drug discovery and regenerative medicine markets. In the region med market our products are used in at least 250 applications with at least three late stage customers having already submitted or expected to submit marketing approval applications in 2017. These are Kite Pharma, Kiadis Pharma and Kolon Life Sciences. Here are some details on each customer. First off to enable worldwide distribution, Kite is freezing every manufactured dose of KTE-C19 using our CryoStor Cell Freeze media. In December 2016 Kite Pharma initiated a rolling submission of their USBLA for KTE-C19, a CAR T-Cell Therapy for the treatment of patients with relapsed refractory aggressive b-cell Non-Hodgkin Lymphoma. Kite expects to complete its BLA filing with the FDA by the…

Thanks, Mike. Revenue for the fourth quarter of 2016 reached a record 2.3 million which represents a 24% increase over the fourth quarter of 2015 and as we just mentioned for the full year total revenue was 8.2 million, an increase of 28% above 2015. In addition to the strong revenue results for the year, sequentially we saw significant improvement in Q4 gross margins, lower operating expenses and a material reduction in our overall operating loss. Gross margin for the fourth quarter of 2016 was 61% when compared to 63% in 2015. Sequentially we gained four points of margin in the fourth quarter as a result of increased production levels compared to Q3. Gross margin for the full year was 58% essentially unchanged from 59% in 2015. Total operating expenses for the fourth quarter were $2 million compared to 2.5 million for the same period in 2015. Sequentially fourth quarter operating expenses decreased approximately $360,000 or 15% from Q3 as a result of reduced expenditures related to the joint venture made an anticipation of the year-end restructuring. For the full year of 2016 operating expenses were 9.6 million compared to 8.8 million in 2015. The consolidated operating loss for the fourth quarter was 627,000 compared to a loss of 1.4 million in the same period in 2015. Sequentially in Q4 we realized $500,000 or 45% reduction in total operating loss compared to Q3. The operating loss for the full year of 2016 was 4.9 million compared to 5 million in 2015. The net loss attributable to BioLife for the fourth quarter was 3.3 million compared to 1.1 million in 2015, for the full year the net loss attributable to BioLife was 6.9 million and 4.2 million for 2016 and 2015 respectively. I'd like to highlight that the net loss for…

Thank you, Rod. To summarize we believe 2017 can be an inflection year for BioLife, we're executing well and expect to achieve and sustain positive EBITDA by the end of the year. The two catalyst for this expected result are sustained growth and Bio-preservation media revenue driven by increased product adoption in the regen med market and from increased orders from our key distributors and reduced operating expenses resulting from the restructuring of our JV with SAVSU. We're in a really strong position as a critical supplier of reagents of services to the high growth regen med market, we're following this space closely as a few of our late stage cell therapy customers are expected to submit marketing approval applications this year. So it's an exciting time for BioLife and we're focused on execution to drive growth. Thank you for your interest in BioLife. Now we will open the call for questions. Operator?

[Operator Instructions]. Our first question comes from the line of Jeffrey Cohen with Ladenburg Thalmann. Your line is open.

Just a few issues I wanted to see if you would drill down a little bit into [indiscernible], looks like your OpEx got [indiscernible] a little bit maybe as a result of SAVSU down to in-line with 2015. How do you feel about the leverage there, should the revenues do what you are anticipating for '17 or beyond? Is the utilization there the three puts there or available to be there?

Yes, absolutely. Both in terms of the overhead related to the cost of goods, manufacturing overhead. We have significant opportunity there. In addition Jeff you know that $8 million to $9 million OpEx number that I cited as guidance for 2017 that could support 10 million in revenue and it could support significantly more than 10 million in revenue. So in my view we have a lot of leverage.

Okay. And then lastly if you could talk a little bit about new developments or on the R&D front perhaps related that through your current SKUs as far as CryoStor hypothermosol. Are there product add-ons that you see potentially in the pipeline or configurations at all that you could talk about at this point?

Not with a lot of detail, we do have some ongoing R&D and then our partner SAVSU has some really exciting R&D ongoing as well and when we're in a position to share some of that you can bet that we will.

Our next question comes from the line of Paul Knight with Janney Montgomery Scott. Your line is open. Please go ahead.

This is Carolina on for Paul Knight. My first question is regarding your growth rate, it has been tracking growth of your clients [indiscernible] in clinical trials. How about regulatory approval of our [indiscernible] accelerate that growth rate and how should we think about the likelihood of approval for this Phase 3 and Phase 2?

So we estimate that once a customer sees approval and commences full scale commercialization we believe that on an individual therapy approval basis they can add between a $0.5 million and $2 million per year in revenue, again with the caveat that’s fully baked at scale commercialization not right from the initial stage of approval. With respect to your second question as far as the attrition rate of Phase 3 cell therapies that are going to make it or not. We're not the experts I think the best thing to do is look at the individual customers and companies and equity analysts that are following them and but we're not going to be in a position to try to call the winners and losers.

This is Rod, I might add one other thing which is relative to the $10 million of guidance that we put out for 2017. We do not have any regulatory approvals baked into that number so it's just basically the organic growth that we're seeing. So any additional revenue that's generated from customers who receive approval this year would be an upside to that base number.

And then do you have realized mid-teens growth at Bio-banking and drug discovery customers, is that the correct way to think about the growth rate for these segments?

I think the way we look at the growth rates by segment is the bio-banking and drug discovery segments are growing as they have been, regen med hopefully will grow at least 50% like it did in 2016 over 2015 and so I think at least in the near term those are consistent growth rates we would apply to each segment.

[Operator Instructions]. And I'm showing no further questions at this time and I'd like to turn the conference back over to Mr. Mike Rice for any further remarks.

Thanks Michelle and thank you everyone. Good afternoon.

Ladies and gentlemen thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a great day.