Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the BioLife Solutions First Quarter 2025 Shareholder and Analyst Conference Call. [Operator Instructions] I will now turn the call over to Troy Wichterman, Chief Financial Officer of BioLife Solutions. Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining the BioLife Solutions' 2025 first quarter earnings conference call. On the call with me today is Roderick de Greef, CEO and Chairman of the Board. We will cover business highlights and financial performance for the quarter and affirm our full year 2025 financial guidance. Earlier today we issued a press release announcing our financial results and operational highlights for the first quarter of 2025 which is available at biolifesolutions.com. As a reminder, during this call we will make forward-looking statements. These statements are subject to risks and uncertainties that can be found in our SEC filings. These statements speak only as of the date given, and we undertake no obligation to update them. We will also 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. Now I'd like to turn the call over to Rod de Greef, Chairman and CEO of BioLife.

Thanks, Troy. Good afternoon and thank you for joining us for BioLife's first quarter 2025 conference call. The first quarter marked a strong start to 2025, meeting our expectations as we continue to execute our strategic priorities and build on the momentum of 2024. We delivered solid top line performance with our cell processing revenue increasing 33% compared with Q1 last year and total revenue up 30% year-over-year. With another sequential increase in cell processing revenue and meaningful expansion of our adjusted EBITDA margin, which came in at 24%, we are realizing the operating leverage and financial strength of our optimized portfolio and streamlined operations resulting from the strategic initiatives we carried out last year. With a fortified balance sheet with over $100 million in cash at the end of the quarter, we are on solid footing to navigate what remains a dynamic operating environment and to invest in growth initiatives, support innovation and drive market share. We remain steadfast in our commitment to delivering leading solutions to the cell and gene therapy market and are confident in our strategy, competitive positioning and ability to deliver sustainable growth throughout 2025. Looking at our first quarter revenue in a little more detail, our cell processing platform delivered $21.6 million, a 33% year-over-year increase and up 6% sequentially over Q4 last year, marking our sixth consecutive quarter of revenue growth. This performance was driven by continued strength in our core biopreservation media, or BPM product line, which represents the majority of our cell processing platform. In Q1, our top 20 customers continue to account for approximately 80% of BPM revenue, which provides us with heightened visibility to a large and critical part of our business. Approximately 60% of our BPM revenue comes from direct sales and 40% through distribution. Notably, around 40%…

Thank you, Rod. We reported Q1 revenue of $23.9 million, representing an increase of 30% year-over-year. The year-over-year increase was primarily related to a 33% increase in our cell processing platform, driven by an increase in biopreservation media revenue. GAAP gross margin for Q1 2025 was 63% compared with 63% in Q1 2024. Adjusted gross margin for the first quarter was 66% compared with 66% in the prior year. Although, our adjusted gross margin percentage remained consistent year-over-year, we had an increase of $3.5 million or 29% in gross margin dollars, reflecting strong revenue growth compared to the prior year. GAAP operating expenses for Q1 2025 were $25.2 million versus $21.7 million in Q1 2024. The increase compared to the prior year was largely due to increases in cost of sales from revenue growth and acquisition-related fees from our PanTHERA acquisition, which we closed on April 4. Adjusted operating expenses for Q1 2025 totaled $14.9 million compared with $14.6 million in the prior year. GAAP operating loss for Q1 2025 was $1.2 million versus $3.3 million in the prior year. Our adjusted operating income for the first quarter of 2025 was $900,000 compared with an adjusted operating loss of $2.4 million in Q1 2024. The decrease in GAAP operating loss was primarily due to an increased revenue of $5.5 million compared to the same period in the prior year. Our GAAP net loss was $400,000 or $0.01 per share in Q1 compared to $3.2 million or $0.07 per share in the prior year. The decrease in net loss was primarily due to a $3.5 million improvement in gross margin. Adjusted EBITDA for the first quarter of 2025 was $5.7 million or 24% of revenue compared with $2.6 million or 14% of revenue in the prior year. Adjusted EBITDA increased from…

[Operator Instructions] And the first question comes from Matt Stanton with Jefferies. Please go ahead.

Hi, thanks for taking the questions. Maybe, Rod, first for you. I appreciate all the color on the progress on the commercial side of the business, but maybe just to focus a little bit on the noncommercial and more clinical side of the business, which is the other 60 or so. Can you just kind of talk about level of visibility into trends there, what you're hearing from customers? Obviously, there's no shortage of headlines around the FDA funding and things like that. Maybe it's a bit of have and have nots on the funding side. But just a little bit more clarity or update on what you're hearing and seeing in terms of demand trends and patterns from that clinical side of the business today? Thanks.

Sure. The clinical customers that buy direct from us actually came in reasonably well for the quarter, right? So we don't really see anything in the near term at that point. It's not a significant up. The growth for the quarter was definitely driven by our commercial customers. Where we would see the majority of any kind of impact from the issues you're raising here would be on the distribution side. And while we don't have perfect visibility to the customer segmentation of those distributors, distributors came in, the two large ones in particular, came in as we had expected. So right now -- and we're in contact with them on a pretty regular basis, a couple of times a month. Last week, I sat in on our quarterly business review with our largest distributor, also our largest customer, and they are not signaling any sort of slowdown in demand at this point in time, although they're clearly aware of the potential impact of, let's say, NIH funding cuts. I think the potential for delays relative to changes and cuts at the FDA, I think that's going to play out over a longer period of time as opposed to this quarter or next quarter, if it plays out at all.

Great. That's really helpful color. And then maybe just on the PanTHERA deal. Maybe you can talk a little bit about more why it makes sense, proof points we can expect going forward. You obviously had kind of a front row seat there the last few years with your involvement in the asset prior. And then what does the team bring you today that you didn't have before? And is there kind of a product pipeline where you have the opportunity to layer some of the stuff they've been working on into your existing offering? Thank you.

Yes. I think that from a timing perspective, the reason we did this now is because they had demonstrated proof of concept with their first-generation molecule. So we felt comfortable that the fundamental technology worked. And what we wanted to do was be in a position to be able to very completely control the future development of the next-gen molecule so that the focus and all of the effort from a scientific perspective was in combining that next-gen molecule with our CryoStor product line. So that's what the focus is for the next 18 months. And I think as we've said, really the opportunity for us is to have a next-gen line of cryopreservation products, which can do 1 of 3 things, if not more than one of those 3 things combined. One would be having just a cryopreservation product that has more efficacy in general with maybe some different types of cell types. The other is to have the same efficacy but with potentially lower concentrations of DMSO, which some customers have signaled as important to them. And then I think the third opportunity really is to create a product that would allow us to cryopreserve cells and tissues that could be held and transported at minus 80, so that's a dry ice kind of temperature range versus minus 196, which would be LN2. So the logistics around LN2 transportation and storage are significantly more sophisticated than dry eye shipments. So from a scientific team, we added 2 very experienced, very well-regarded scientists. What that does is not only just backfill from a risk mitigation perspective, given that we had a very small team of 1 or 2 folks depending on how you want to look at it, but it also allows us to increase the throughput of the scientific experiments that are going to be done here in the next 12 to 18 months.

Thank you, appreciate it and congrats on the strong quarter.

Thank you.

And your next question comes from Paul Knight with KeyBanc. Please go ahead.

Hi, Rod hi Troy congrats on the quarter. Rod, where are you in the pricing journey that you are on? I know that you're working on across-the-board changes. Are you half done, 1/3 done? And does this happen over, what, 3 years?

Yes. We are more than half done, Paul, on sort of the 4 or 5 key customers that had significant legacy discounts that are not applicable to the world we are in today. Some of them kick in, one large one kicks in, in the second half of the year just based on their own fiscal year and just the negotiations that took place. And they are, for the most part, given the magnitude of the clawback of the discounts, they are spread out over a 36-month period on an annual basis. So we'll see a bit of a tailwind there over the next 3 years.

And then last question would be, how is the pipeline on M&A look?

We are definitely looking at a few things, Paul, but we have a pretty strict filter criteria. We are in the process of actually working through a more robust sort of strategic technology summit, if you will, that's coming up here internally, which will include a couple of our directors, Tony Hunt being one of them, so that we have a very clear and tight filter criteria as we look at things going forward. That said, there are a couple of things, small tuck-ins, not dissimilar to PanTHERA as it relates to how they would fit on the horizon.

Okay, thank you.

You bet.

And your next question comes from Chad Wiatrowski with TD Cowen. Please go ahead.

This is Chad Wiatrowski on for Brendan Smith. Was the limited impact from sort of tariffs, NIH funding more of -- caused by maybe limited exposure? Or did you have to take steps like with your global distributors to sort of insulate yourself from some of that and maybe from a manufacturing standpoint? And just in general, what about that sort of 14% exposure to European revenues?

Yes. Thanks, Chad. I think that when we did our analysis internally here around tariffs and NIH cuts, we really looked at the tariff side of it between suppliers first and then customers. So on the supplier side, all of our products for cell processing revenue are manufactured here in the United States, and we have very little exposure to foreign raw material inputs. So we're pretty comfortable that there's not going to be any impact on our cost of goods, certainly not any material impact on our cost of goods at this point in time. If that were to change, we would go ahead and implement some sort of surcharge program, which we did with respect to the freezer businesses we owned during COVID. On the customer side, on the direct customer side, which represents about 60% of our revenue, we also think we have very little exposure, almost no exposure to China. So we do have exposure to Europe, but we believe that the product that's being sold into Europe direct is primarily sold to customers that are in late-stage clinical and/or have a commercial therapy that is already, for the most part, manufactured there. So our product is such a critically enabling tool for the development of their therapies that we don't believe a 10% or 20% tariff on our product is going to make a bit of difference in terms of their utilization. It's certainly not going to be enough to make them think about switching. So we're pretty comfortable with the customers on the direct side. We do have some greater exposure on the distribution side, but we've been spending a lot of time, in particular, with our largest distributor, again, our largest customer, understanding their exposure to China, which is more than ours by a bit. And their view on the Chinese exposure from their perspective is that they expect the Chinese government to either exempt and/or subsidize these particular products so that they're protecting their own biotech industry. That's number one. For the rest of the world from a distribution perspective, they also feel that the incremental amount or increase in cost of product relative to tariffs would be relatively de minimis to those customers. And therefore, they, to date, at least, have not changed their rolling 12-month forecast for us, although I can tell you, it's something that we're in constant conversation with them probably 2 times a month.

Very helpful color. Thanks.

You bet.

And your next question comes from Thomas Flaten with Lake Street. Please go ahead.

Hey good afternoon guys. Congrats on a great quarter. Hey Rod, just a follow-up kind of on a prior question with respect to the pipeline for M&A. Obviously, you've got a nice little cash hoard at this point. Any other big projects we should be aware of CapEx, facility build-outs other than M&A that we should be thinking about?

Yes. I think we definitely are in the process of planning. So I think I may have mentioned on a previous call that we have leased -- earlier this year, we leased the third floor of the building that houses our current manufacturing, which is on the first floor. So that gives us an additional $75 million or so of capacity with respect to biopreservation media. So that's a sub-$10 million kind of investment, more like $5 million to $6 million when you net it with the TIs. So the larger CapEx project is in Indianapolis, where our lease runs out in the facility that we're in and have been in for a number of years. So we're in the process of identifying another facility. We will be building out a clean room for the manufacturing of hPL, which is what we do in Indianapolis and also plan on doing the fulfillment of all of our products from a business continuity standpoint, keeping our 9 months of finished goods inventory there in India. So that will be a larger CapEx expense, but it's really a 2026 event as opposed to 2025.

Got it. And Troy, just a quick one on revenues. Anything we should be cognizant of now that we've shed the other businesses in terms of seasonality pacing of revenues across the balance of the year?

Yes. We don't really have much seasonality in our business in general. Summer months can be a little bit slow in Europe. But other than that, we don't have much of an impact for seasonality.

Got it. Thanks guys.

Thank you.

And your next question comes from Matt Hewitt with Craig-Hallum Capital Group. Please go ahead.

Good afternoon. Thanks for taking the questions. Maybe circling back to the PanTHERA acquisition. I think if I heard you correctly, you are looking at least 18 months before you could see some revenues there. But I'm wondering how difficult or is it feasible that a customer could swap out the PanTHERA media in for their existing media. Is that something that can happen that you could see maybe even a commercial program already using a media swap yours in, specifically the PanTHERA?

Yes. So good question. Last year, we did do -- we engaged with a third-party consulting group that has expertise in CGT, and we posed the question to them, what is the switching cost for CGT manufacturer to swap out the biopreservation media. And it was clear that as you go down further down the clinical pipeline to say, clinic Phase III or commercial product, it becomes a very big hurdle. And by that, I mean several million dollars and a couple of 3 years to do so. So it's unlikely that we would have any companies that have a product in the market switch out in part because the product works well for them today. So really, the opportunity lies in, to some degree, the clinical pipeline of those commercial customers. And what we're finding out is those are pretty robust in terms of number of clinical trials. And the other would be then to move to the early part of the funnel and start to introduce that technology in the Phase I or preclinical time frame, where we have a much easier job of swapping something out.

Makes sense. And maybe separately, regarding tariffs, on the off chance that you do start to face some headwinds there, do you have the ability to pass the tariff cost on to your customers via your current contracts? Or is that something that you would have to negotiate or figure out at that point?

Are you speaking to tariffs that might be attached to raw material inputs and therefore, increasing our cost of goods?

Correct.

Yes. So I think that, yes, the answer is we would -- if there's anything material, we would go ahead and put a surcharge on it for our customers. As I said, we have done that in the past. There's nothing in our supply agreements that prohibits us from doing that. Obviously, we'd want to be pretty judicious about that. But we would do it if it turns out to be a material increase in any way to our own COGS.

Makes sense. Alright, thank you.

Thank you.

And your next question comes from Carl Byrnes with Northland Capital Markets. Please go ahead.

Congratulations on the results on the quarter. Most of my questions have been answered. I'm wondering if we can go back to PanTHERA in terms of what you expect the incremental OpEx would be. I'm imaging, as you mentioned in your prepared comments, most of it's going to be in the R&D line. Thanks.

Yes, that's correct, Carl, to the tune of about, call it, $1 million for the remaining 9 months of the year.

Okay. That's what I thought you said, but I want to check cool. Excellent, congrats again, thanks.

Thank you.

And your next question comes from Yi Chen with H.C. Wainwright. Please go ahead.

Thank you for taking my questions. I'm just curious, is BioLife likely to benefit at all from pharmaceutical and biotechnology manufacturing onshoring due to tariff over the course of the coming quarters? And if so, to what extent?

Yes. It's a fair question. I think it's very early to try to quantify anything. Again, I think you got to remember that our product is an incredibly small part. And by that, I mean, probably less than 1% of a CGT manufacturer's cost of goods. So the fact that they're manufacturing product abroad and then importing their cryopreservation for the drugs that are being sold in, say, Europe or Asia, I just think it's a de minimis amount, and it's just simply not an issue at this point as far as we can see.

Got it. Thank you.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Roderick de Greef for any closing remarks.

Thank you, Mike. In closing, the first quarter positions us well for the year ahead. We remain confident in our ability to navigate potential headwinds with minimal impact to our financial results. Thank you for your time this afternoon, and we look forward to updating you as we move through the year as well as seeing some of you at investor conferences later this year.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.