Good afternoon, ladies and gentlemen and thank you for standing by. Welcome to the BioLife Solutions Shareholder and Analyst Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. I will now turn the call over to Troy Wichterman, Chief Financial Officer of BioLife Solutions.

Thank you, Dennis. Good afternoon, everyone, and thank you for joining us. With me on today's call are Mike Rice, Chairman and Chief Executive Officer; and Rod de Greef, President and Chief Operating Officer. Earlier today, we issued a press release announcing our financial results and operational highlights for the third quarter and first nine months of 2022, which is available at biolifesolutions.com. As a reminder, during this call, we may make certain projections and other forward-looking statements regarding future events or the future financial performance of the company or its acquisitions. These statements are subject to risks and uncertainties that may cause actual results to different materially from expectations. For a detailed discussion of the risks and uncertainties that affect the company's business and that qualify as forward looking statements, 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 of the date they are given. The company assumes no obligation to update any projections or forward-looking statements, except as required by law. During this call, we will speak to non-GAAP or adjusted results. Reconciliations of GAAP to non-GAAP or adjusted financial metrics are included in the press release we issued this afternoon. These non-GAAP or adjusted financial metrics should not be viewed as an alternative to GAAP. However, in light of our recent M&A activity, we believe that the use of non-GAAP or adjusted metrics provides investors with a clearer view of our current financial results when compared to prior periods. Now, I'd like to turn the call over to Mike Rice, Chairman and CEO of BioLife Solutions.

Thanks, Troy, and good afternoon, everyone. Thank you for joining our call. After my remarks, Troy will present our financials for Q3 and nine months of 2022, and Rob will provide an operations update. After that, we'll be glad to take your questions. Turning to Q3 revenue and customer highlights. Despite several macro headwinds also cited by our peers in the life science tools space, our team delivered another strong performance in Q3. Total revenue was $40.7 million, up 21% from Q3, 2021, with organic revenue growth of 18%. A key highlight of Q3 was Biopreservation media revenue growth of 50%. Our growth catalysts and business fundamentals remain intact. And with improved business visibility and reduced COVID-related revenue, we are once again tightening our full year 2022 revenue guidance, which Troy will cover in a few minutes. To make the point on our revenue differentiation with respect to some of our assumed competitors, in Q3, 44% of total revenue was high-margin consumables and 13% was high-margin recurring services revenue. So about 60% is non-hardware related. With the recovery of our ULT freezer platform well underway, with greatly improved quality and no lead times, we look to finish the year strong. Relative to some of our competitors that are offering generic alternatives and mostly instruments, it's critical to note that BioLife is a vastly different company, with hyper growth of our high-margin recurring consumables media revenue as the anchor from which we expect to drive growth in our entire portfolio. We believe our Biopreservation media franchise could easily reach $250 million in revenue within five years, reflecting 30-plus percent annual growth. BioLife remains one of the most highly correlated suppliers to the growth of the global CGT market. In Q3, we sold and shipped products or provided services to 193 new…

Thank you, Mike. Total revenue for the third quarter of 2022 totaled a record $40.7 million, representing a 21% increase over Q3 of 2021. Organic revenue growth was 18%, driven by a 50% increase in Biopreservation media revenue of $16.6 million. COVID-19-related revenue accounted for approximately 9% of total revenue in the quarter. Cell processing platform revenue was $18.1 million, up 57% over the same period in 2021 and organic growth was 50%. Freezers and thaw systems platform revenue was $15.3 million, total and organic growth was down 13% over the same period in 2021. COVID-19 related revenue accounted for approximately 4% of the freezer and thaw systems platform revenue versus 23% last year. Storage and storage services platform revenue was $7.3 million, with both total and organic growth of 56% and over the same period in 2021. COVID-19 related revenue accounted for approximately 40% of the storage and storage services platform revenue. Total revenue for the nine months ended September 30, 2022, was $117.5 million, an increase of 44% over 2021 with organic growth of 44%. Adjusted gross margin for the third quarter of 2022 was 34% compared with 26% for the third quarter of 2021 and 36% for the second quarter of 2022. For the first nine months of 2022, adjusted gross margin was 34% compared with 39% in the same period last year. The quarterly sequential decline in Q3 gross margin was largely due to supplier quality issues impacting yield and customer mix, partially offset by lower warranty costs. We expect to see increases in gross margin in Q4. GAAP operating expenses for Q3 2022 were $52.2 million versus $45 million in Q3 2021. And for the first nine months of 2022, GAAP operating expenses were $212.8 million, which includes a non-cash intangible impairment of $69.9 million…

Thanks, Troy. It's been a year since I moved into my current role. As I reflect on the last 12 months, I'm pleased to say that significant operational progress has been made, not just at Sterling, where we had some very acute issues, but across other product platforms as well. The efforts of our operations, quality and customer service teams throughout the company have positioned us for continued strong execution in 2023. The operational metrics at Sterling continued to improve, positively impacting gross margin through lower warranty utilization this quarter compared to historical levels. Our previously announced plans to move the manufacture of two of the three ULT products from an existing CMO to our Michigan facility are well underway, and units are expected to be built in-house by the end of Q1 of next year. Our Athens facility will continue to focus on increasing production efficiencies on the 780XLE freezer and prepare for the launch of the next-generation large capacity freezer. In Q3, as we continue to focus on overall gross margin and operational improvements, we also made the decision to relocate all of our EVO production, quality and logistics activities to our Michigan facility, keeping customer service and engineering activities in a smaller Albuquerque facility. We expect PV10 production to begin in Michigan in Q1 of next year. In addition to bringing the EVO and two ULT production lines into our LNT freezer facility, we have been finalizing the validation of a second source for a key component used in our LNT freezer line and expect to begin shipping products using this new supplier before the end of the year. This new supplier relationship mitigates consistent supply constraints, which have had an ongoing negative impact on revenue in recent quarters. And it also yields cost savings, which positively…

Thanks, Rod. Now, I'll summarize our key takeaways from Q3 and for the rest of 2022. First, BioLife Solutions is a critical, highly trusted tools and services provider to the cell and gene therapy industry. We've built a valuable portfolio of risk mitigating solutions that help CGT developers increase their likelihood of success. Second, demand for our portfolio of classifying bioproduction tools and services remain strong. We expect full year 2022 revenue to fall within the guidance update we just issued. Our high-margin proprietary media business is booming, and let's all remember that we're still in the early innings of CGT approvals and we have hundreds of shots on goal. This is really sticky, recurring consumables revenue with the traditional home brewer alternatives becoming much less often considered and selected. Number three, our Sterling product line is notably differentiated and we expect to drive demand and capture share in the high-growth CGT and global pharma segments. And lastly, we remain very confident that we will achieve our Q4 2024 run rate aspirational financial goals of $250 million in revenue, 50 points of adjusted gross margin and 30 points of adjusted EBITDA. Fast forwarding to today, I'm pleased to say that overall product and services demand so far in Q4 is strong and we're looking forward to sharing our full year 2022 results. Before I turn the call back over to the operator to manage the Q&A portion, I need to take a minute to recognize Rod's contributions to BioLife during his long association with the company. With his retirement coming at the end of the year, this is Rod's last earnings call as he transitions to joining our Board of Directors. We're so fortunate to leverage his experience and guidance to help us take BioLife to our next level of growth on overall solid financial performance. Thank you, Rod, from the entire team. We wish you the best in your much deserved retirement. And this time, we mean it. Now, I'll turn the call back over to the operator. Dennis?

[Operator Instructions] Our first question is from the line of Paul Knight with KeyBanc. Please go ahead.

Yeah. Thanks, Rod. Rod, thanks. I think our years together approach is almost double-digits as well. So hope you enjoy this next round of retirement.

Thanks, Paul.

And the questions I have, Mike, are how many CGT approvals do you expect again next year? Secondly, Troy, regarding the storage and COVID contract, is that being replaced by other modalities, or do you think that, that COVID number has to come down? And then lastly, Mike, on the per revenue per approved therapy, why do you think it's stickier than ever. You expressed this comment and -- your finishing comments about home-brew, kind of, less and less of an alternative, but why is that? Thanks for those three questions.

Yeah. Hi, Paul, thanks. Really good questions. Next year, perhaps 10 additional approvals that our media is baked in. And that's a combination of US and outside the US, predominantly Europe. I'm going to answer your last one, and we'll go back to Troy to take the middle part. So what gives us confidence that the estimated range of annual revenue of an approved therapy of $500,000 to $2 million per year can hold, a lot of anecdotal data and looking at revenue from our customers who have approved therapies. Some of them are doing clinical trials as well, but it's patently clear to us, Paul, that the revenue range that we're talking about here is fully supportable. And look, I'll go out of the limit a little bit to say that with a little more time, my sense is we're going to be increasing the high end of that range. Too early to do that today on this call, but at least looking at the revenue track from our approved customers, they are rocking. I mean they're buying lots of media. And we know that most of that's going to the approved therapies for production, the remainder going to the clinical trial candidates that they're also using our media. So Troy, why don't you speak to our confidence about replacing that COVID storage contract with non-COVID revenue for storage?

Exactly. So thanks for the question, Paul. As mentioned before, we have built out that infrastructure; a lot of that infrastructure was using the Stirling freezers. As a reminder, that goes from negative 20C to negative 80C, which is the perfect temperature range just for other therapies. So really, it's about replacing that COVID contracts with other therapies and modalities. And as I mentioned in my remarks, the big contract we have in the Netherlands that extended into 2023 has already been replaced by a different modality that we're currently storing there, and we expect to expand that capacity to with that current modality we're storing now.

Thanks very much. Congrats on the quarter.

Thanks Paul.

Your next question comes from the line of Thomas Flaten with Lake Street. Please go ahead.

Hey guys, congrats on the quarter. Mike, just with respect to the supply chain constraints. I'm guessing that they're rather different across bioprocessing versus the freezers. I was wondering if you could maybe enumerate those a little bit more for us?

I'll turn it to Rob to do that. He's much closer. I mean, obviously, we know what they are, but he's closer to the details. Go ahead, Rod.

Yeah. Hey, Thomas. So on the media side, cell processing side, really it's about packaging, and that would be bottles and bags from a particular supplier, where they've had some capacity constraints that they've been working through opening a new plant. Anecdotally, it feels like things are loosening up a little bit, may still have a few constraints here as we go through Q4 in this regard. But I think 2023 will really loosen up based on their increased capacity. On the cryogenic freezer side of things, which I mentioned, there's a very specific constraint as it relates to one vendor who provides us with the critical component for those freezers, and as I mentioned, we have a second source where we've got three products or three components, if you will, that need to be validated. One is completed, and we're shipping products in Q4. We're working hard to validate the second one to see if we can get some units out till this quarter. And the third one will be done in Q1, which is obviously the smaller volume one as well. Then in addition, we've got some electronic component constraints. Those are probably more global in nature and more generic. And that also has eased up a bit, but that has created some issues with respect to boards for our ULT freezers, in particular, the Board replacement customer service program that we embarked on a couple of quarters back, has slowed a little bit just based on the lack of flow and are directing the flow to new products versus customer service.

Great. If I could switch over to the storage services. I was curious, if we could an update on the facility that was due to open here anytime. And then also, as you're thinking about new sites, how do you think about the location of those relative -- if you're thinking about manufacturer versus site of service, I saw Allogene, for example, just opened a new Shanghai facility. So, is it -- how does that factor into the calculus due to pick sites?

Thanks, Thomas. Another really good question. The plan of opening another biorepository this calendar year has now been delayed for good reason. We have more inputs now to help us make the best decision, and we're looking at several locations, both here in the US and outside the US. And to your point, correlating those to anchor customer sites where they have production facilities, where the transport time from their place to our storage facility would be reduced. So we've got a lot of factors that we're thinking about. But for sure, I mean our plan is to pick the site and get at least one new buyer positive turned up in the next calendar year in 2023. That's not reflective of any diminishment of demand to the contrary, we just want to slow down a little bit and be a lot more thoughtful in the inputs of that decision to make sure that we've got just a great pack with plenty of scale capacity.

And then one final one. Any updates for us on the Coriell agreement that you guys struck I think it was three or four months ago?

No, nothing noteworthy.

Got it. Appreciate it. Thanks guys.

Thanks Thomas.

Your next question is from the line of Jacob Johnson with Stephens. Please go ahead.

Hey. Good afternoon, everybody. And Rod, I'll echo my congrats on the retirement. As long as Mike said, it sticks this time.

Thank you, Jacob.

Maybe first, just -- yes. Just first, on the freezer business, I think as you guys alluded to, there's some talk that maybe the macro backdrops impacting demand for freezers in the near term. It seems -- where you moderated expectations is more around your own internal supply and the supply chain. So can you just talk about what you're hearing from customers on the freezer side in terms of demand? And maybe how should we think about this asset growing longer term?

Yes. Jacob, Mike here. Good question. The demand side, I guess, from our perspective is things are going fine. We have the supply chain constraint that we're talking about. But I will say that, because of the COVID sugar high and all the need to build up COVID infrastructure over the last couple of years, I would not be surprised if we face to some degree, a new competitor that would be in the form of resale of used freezers. And that's going to affect everybody who's been selling freezers in that space. But we'll see. No real detriment from that yet, but they're keeping our eye on that. But as far as our book of business on cryo and Sterling across those temperature ranges, we're not seeing some huge erosion to the contrary. It's really more of our ability to produce.

Okay. That's helpful, Mike. And then just sorry to belabor the point, but going back to storage services, there's a good amount of COVID in that business. It sounds like you've already transitioned one of the contracts for kind of non-COVID applications. But I think investors are concerned, do we see that business maybe shrink next year if COVID is rolling off. So maybe can you talk about the dynamic of how we should think about those COVID revenues rolling off in the near term and then your ability to transition that capacity for non-COVID purposes, maybe particularly as we think about 2023?

Yes. We can give some color. And, of course, when we issued guidance for the full year 2023, we'll have some more granularity on that platform and some support of narrative that can help you understand how we got there. But as Troy just mentioned, a big COVID contract has already at least been contractually committed to be replaced, and that's great. So we're going to be reducing our reliance on COVID revenue across the entire portfolio as we get out to the next year and years beyond. Right now, it's down significantly from last year and next year, it will be even less. So it was all fine. We and other companies who enjoyed that, that bolus, when it was there, but at least for us, we're not going to be anticipating any reduction in storage services for next year. We're not going to tell you where we're going with it yet, but its certainly going to have a healthy growth rate applied to it, based on just organic growth, but also the replacement of that big chunky COVID contract.

Thanks a lot. That's super helpful. Just one quick clarification there. The contract that was amended, the COVID contract that was amended for non-COVID purposes, is there any change in like the revenue? Like, is it still the same? Are they still paying the same amount, I guess, is the question?

Yes. I appreciate you asking, but too much detail. Yes. We wouldn't speak to that detail.

Okay. Fair enough. I had to try. Thank you, Mike, and congrats again, Rod.

Thank you.

Your next question is from the line of Max Masucci with Cowen. Please, go ahead.

This is Stephanie on for Max. Thanks for taking my questions and congrats, Rod, on the retirement. So, a quick one on self-processing. Are there any specific demand trends by customer end markets that you can call out within the platform segment? Are you seeing any evidence of slowdown among earlier-stage biotech or biopharma customers given recessionary fears?

Super question, Stephanie. To the contrary, you might recall in my remarks a few minutes ago, the four catalysts that we see driving demand for self-processing are really all about new approvals, additional indications for existing approved therapies, new geographies. And I think most importantly, for the benefit of cancer patients would be, getting these therapies moved up in the treatment regimen. So you don't have to be really on your last breadth, having failed systemic chemo two or three times to get a CAR-T. It's a second line. And I believe, clearly within our lifetime, if not in the next couple of years, we're going to see first-line therapies. And the clinical results are stellar, the pharmacoeconomics work to support that kind of spend. So, yes, no slowdown whatsoever.

That's great to hear. And another one on storage and cold chain services. So for your partnership with SciSafe indicated in that press release that we expect to support 10,000, 12,000 evo shipments for CGCT starting materials and manufacturing doses over the next 12 months. How should we think about that pacing of the increase in shipments over the coming quarters? And is there any seasonality factors that we should keep in mind?

I would say no to seasonality, Stephanie. It's really about how fast we can onboard and get the SciSafe team trained up and how fast they can do their thing with their own sales and marketing engine. As far as the run rate, right now, it's been pretty much every quarter, the number of evo shipments are doubled from the quarter of the same period last year or the previous year. So, I mean, with growth of the currently approved therapies and all the catalysts I just mentioned a minute ago, those will be the modulators that time out in terms of how fast we get there.

Great. That's helpful. And one last one from me. So some of your top manufacturing peers have indicated that customers are working through excess inventories and normalization -- and are seeing a normalization in ordering versus bulk annual orders. Have you seen any similar behavior to ordering trends with your customer base? And if so, could you specify on the specific products?

Yes. Just one to the contrary. So in our most recent reported Q3, one of our largest distributors ordered quite a bit more than the previous quarter. And they have a healthy discount. So that customer mix obviously has a bit of a gross margin impact. But no, to the contrary, not, not anything about reduced orders or burning through safety stocks or anything like that. If anything, on the media side, I mean, this is the business that's going to keep on giving. We're embedded in so many customers and particularly these large global pharma companies who have CGT operations, either de novo or acquired and this thing is going to rock for quite a while here. You might have heard me say in the prepared remarks that just using a modest kind of low 30% annual growth rate. Media loan, we think, can get to $250 million in revenue over five years, just as that one part of the business, not total revenue, but just preservation media.

Got it. That's helpful. Thanks again for taking my questions and congrats.

You’re welcome. Thank you.

Your next question is from the line of Yuan Zhi with B. Riley Securities. Please go ahead.

Mike, thank for taking our questions and congratulations on a strong quarter in this tough macro environment. And Rod, surely, we will miss you there. So here, I have a couple of questions. First, glad to see the new partnership with CSafe, maybe follow a -- follow-up there. Can you remind us how does CSafe fit in your offering right now? In the context of that you already have other courier partnerships in place. And now with CSafe within cryogenic logistics, what can you together offer to sell and gene therapy companies?

Yes, a good place to start, Yuan. Thanks. So CSafe is a really well-managed company. They've got some great relationships in CGT. This is really at its base, just the extension of the EVO partner network. So customers obviously have a lot of optionality. They can access the EVO platform through a number of couriers, all the major couriers. CSafe has obviously really strong aspirations to be a much a more dominant supplier of these critical services to the C CGT Safe space, and we're glad to have them in the network for sure. So I think we're going to certainly see some productivity from that team once they're trained up and they'll be competing against particular shipment opportunities against the other carriers, but really good for them and obviously good for customers to have broad access and ultimately really good for BioLife. So we've got just a force multiplier in the form of our partnership with CSafe

Got it. And maybe a follow-up there. So what can CSF bring to your table to kind of strengthen your current position in terms of offerings to customers?

I think, Yuan. We're going to have to watch and see how they do with the current regime of single shipment of autologous therapies. Clearly, because they're in the big shipper container game as well, they're going to be able to offer the allogenetic [ph] space lots of flexibility and really tight temperature-regulated storage of pallet size containers and both active and passively controlled containers. So my sense is we're going to start out with them and see how they do, give them great stellar support and ultimately their end customers as well, many of whom we already know, and many of which are already using our media or other parts of our solution. So really, this is to use my term of a minute ago, This is another force multiplier here, so we can have even more expanded exposure to the CGT space through one other highly regarded, highly trusted service provider.

Yes. That's good to hear. And maybe one last question on the CCF partnership. So, as you know, it requires regulatory inspections or filings to have these 2 platforms integrated together. So maybe can you comment on how long does this process will take? And when will customers have these options available to them?

Yes, sure. Well, as far as a customer in their own regulatory updates, naming a courier in an IND or BLA. I'm not so sure that's really how it goes, Juan. I think that it's more of a generic description that the final manufactured dose shall be transported in the vapor phase of liquid nitrogen to the final destination. My sense is not that they're naming Carport or their naming World Courier or any third parties like that with that degree of specificity. So I don't really think that's going to be a necessity unless you know something that I don't, but that's not our sense of how that particular documentation would go. And with regard to your last question about, when we might be able to speak to how productive the CCF relationship is. Well, they need to get going, they need to obviously finish the training and we need to do a lot of support with them. But my sense is over the next couple of quarters or so, we'll start to see them kick in, and we're glad to have them in the party with us in the boat.

Yes. Got it. And maybe one last quick one for Troy. Can you clarify what's the percentage of your revenue coming from ex-US versus the domestic?

Johan, yes, that's in 10-Q, and I believe it's 80% is US and 20% ex-US.

Got it. That's helpful. Thank you for taking our questions.

You’re welcome.

Your next question is from the line of Suraj Kalia with Oppenheimer. Please go ahead.

Good afternoon. Thank you for taking my questions. And Rod, let me echo the sentiment. It has been a pleasure dealing with you over the last, what, almost 15 years. So, wish you a healthy and safe retirement. Hey Mike, a lot of my questions have been asked, so I'll just stick to two. Mike, your comments about everything is rocking and rolling and the 30% CAGR. Maybe if you could just provide us one additional layer i.e., all the new customers that are being added, Mike, how much time from the point that they are added to when these customers start having somewhat of a material impact in the respective line items. That would be one of my questions. And to your other point on 250 million by 2024, maybe if you could just help us understand, is it organic, or is it -- are there any implicit acquisitions also baked in? Gentlemen, thank you for taking my question and Rod congrats again.

Thanks Suraj.

Hey Suraj, Mike here. Yes, good questions. I'll take the second one first. No, no other anticipated or additional M&A required to get us to that ending Q4 2024 run rate of total revenue. Now, with respect to the customer revenue journey, I can say the longest ramp would be on the preservation media just based on their own timeline to get something from a preclinical state through the various phases of clinical trials to a regulatory approval. And that can take, as you know, anywhere from just three to five years or so. Now, that's probably going to get compressed over time as the regulators become more familiar with these constructs, right? And the clinical data, hopefully, is sustained and these stellar results and all that kind of stuff. So, it really -- it does vary by the product or by the service platform, but that's probably a reasonable sort of estimate. I guess the point I'd like to just close on that is to wrap it is that most of the preservation media revenue comes from existing customers that have approved therapies. And over time, you could just see that as additional therapies make it over the goal line and the other three catalysts that I described earlier in the call, new indications for existing therapies, new geographies for existing approved therapies and then finally, getting the stuff moved up in the treatment regimen. This is just going to cascade. There will be several of these catalysts that stack up on each other every quarter and then year-over-year here, all of which we believe is easily going to support my comment a minute ago of just media alone growing modestly, and I say modestly relative to a lot of other tools and services, but modestly at 30%-plus annually, getting to $250 million in revenue of super high-margin recurring, very sticky, written into BLA kind of revenue. So, that's just one part of the business, but really encouraging

Thank you.

At this time, there are no further questions. I will now turn the call over to Mr. Rice for any closing remarks.

Thanks, Dennis. Thanks again, everyone, for your interest in BioLife. Have a great evening and the rest of the week. We'd like to wish you and your families a safe and joyful holiday season that's coming up here, and we look forward to seeing many of you at the JPMorgan Conference in January. Good night.

Thank you all for joining the BioLife Solutions shareholder and analyst conference call. We thank you for your participation. You may now disconnect.