BioLife Solutions, Inc.

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the BioLife Solutions 3rd Quarter 2023 Shareholder and Analyst Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. I will now turn the call over to Troy Wisherman, Chief Financial Officer of BioLife Solutions.

Thank you, Operator. Good afternoon, everyone. And thank you for joining the BioLife Solutions 2023 Third Quarter Earnings Conference Call. To start off the call, I'd like to give a warm welcome back to Rod DeGrief, our recently appointed Chairman and Chief Executive Officer, who is on the call with me today. On this call, we will cover business highlights and financial performance for the quarter and reiterate our previous comments on four-year revenue guidance. Earlier today, we issued a press release announcing our financial results and operational highlights for the third quarter of 2023, 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 day 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 DeGries, Chairman and CEO of BioLife.

Thanks, Troy. Good afternoon, and welcome to BioLife's third quarter 2023 conference call, and my first call since rejoining the company in mid-October. While I think most of you on the call know me, For those of you who don't, I have over 30 years of senior financial operating and board experience in both public and private companies in the medical technology and life science industries. My history with BioLife dates back to the early 2000s when I joined the board and raised several rounds of capital through 2013. In early 2016, I returned to CFO and later became Chief Operating Officer until December of last year when I retired and rejoined the board. I bring significant strategic and operational experience and a strong understanding of the company's operations, products, and customers, as well as solid relationships with the management team and key shareholders. I've been asked several times why I made the decision to return to an operating role at BioLife. And the answer is simple, and it comes down to the opportunity. The growth potential of the cell and gene therapy market combined with how well BioLife is positioned to participate in that growth creates a unique opportunity to build on our market leadership position and generate shareholder value. The chance to lead the organization throughout this critical time was extremely compelling and I can honestly say it's great to be back. As stated on our last call and consistent with our peers, both large and small, The macro headwinds and global economic uncertainty experienced throughout the bioprocessing industry related to pharma destocking, a constrained biotech funding environment, and China weakness have persisted throughout the third quarter. While these challenges have been undeniable, we're beginning to see signs of stabilization, and they've also presented BioLife with opportunities to adapt as we navigate through these dynamic times. In this spirit, my immediate efforts are to continue the renewed focus on our cell processing and bio storage platforms and to bring the divestiture process of our freezer business to a conclusion as quickly as possible. I'll provide a brief update on our progress there later in my prepared remarks. In the mid to long term, our thesis remains intact and we believe that the company is very well positioned to take advantage of the underlying growth drivers of what is still a nascent CGT market in order to drive profitable growth. These growth drivers include additional regulatory approvals in multiple jurisdictions and a growing number of clinical trials, the geographic expansion and migration of existing approved therapies to second and first-line treatment, and the longer-term growth of allogeneic therapies. These tailwinds are further underpinned by a growing interest from large pharma in the CGT space. Our cryopreservation media has become the industry standard, evidenced by our media products being embedded in five of six approved CAR-T therapies and a total of 11 relevant approved cell and gene therapies, and in hundreds of clinical trials globally. In addition, our other cell processing tools and biostorage services are used in 10 relevant approved cell and gene therapies, as well as being incorporated in well over 100 clinical trials. In addition to our knowledge, there is not another commercially available cryopreservation media that is in any relevant approved therapy. We intend to couple our core scientific expertise, industry reputation, and the market position we have achieved with a relatively small but focused team of scientifically oriented sellers to drive the adoption of the other cell processing products in our portfolio. With that context, I'd like to say a few words on our revenue platforms while allowing Troy to speak in more detail to our Q3 financial results during his portion of the call. For our cell processing platform, revenue for these products were in line with internal expectations and impacted by the same headwinds others in the CGT industry faced in the third quarter, resulting in a 29% sequential decrease for this platform compared to Q2. Within the cell processing platform, Non-biopreservation media product sales were essentially flat compared to the prior quarter. However, media revenue decreased 5.4 million or 32% sequentially. When we reviewed Q3 customer data, we found that approximately 3 million or 55% of the sequential decrease was related to reduced purchases by several large direct customers, which we believe is attributable to their efforts to lower inventory levels. The balance of the decrease was split evenly between our smaller direct customers that make up approximately 20% of the overall media revenue and our larger distributors that account for approximately one-third of total media revenue. And we attribute this to the general macro conditions being felt industry-wide. On the biostorage services side, the flat year-over-year results mask the strong ex-COVID growth of 50% that Gary Richardson, our new chief revenue officer and his team were able to deliver. We will continue to focus on filling our existing bio storage capacity in Boston, New Jersey and Amsterdam, which will generate positive financial results in 2024, as well as look strategically at new sites for further expansion. We are confident that these efforts will result in a return to consistent revenue growth and a robust profitability and cash flow profile. Moving on to freezers, you will recall that the company initiated a strategic review of the freezer businesses last May, and in August announced that it intended to proceed with divesting its CBS and Sterling product lines and refocus its effort on the core recurring high margin cell processing products, as well as building out the bio storage services platform. We're fully committed to this effort and are working hard to drive this to a timely close. At the end of October, we received multiple LOIs and still have other parties working through a diligence process. Due to the competitive dynamics involved, I can't discuss any specifics. However, I will say that we expect to close on the transactions in early 24. We believe the financial profile of the company, post-investiture of the freezer product lines, will immediately benefit from the operating leverage provided by the high margin recurring revenue generated by the core biopreservation media products. As part of the recently announced management changes, I'd like to welcome Gary Richardson to the team as our newly appointed chief revenue officer. Gary founded our biostorage business 13 years ago, which we then acquired in 2020. Since then, he's done a great job expanding that business as part of BioLife and has a proven track record of delivering on revenue commitments and establishing and maintaining large biopharma accounts. I look forward to his contribution as he refocuses the sales team on our cell processing platform. Now I'd like to turn the call over to Troy to review the third quarter financial results.