BioLife Solutions, Inc.

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the BioLife Solutions First Quarter 2025 Shareholder and Analyst Conference Call. At this time, all participants are in a 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 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 DeGrief, 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 gap to non-gap 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 DeGrief, 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 of 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're 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% of total BPM revenue came from customers with an approved commercial therapy. Said another way, this translates into about 60% of our direct BPM revenue coming from customers that have an approved commercial therapy. While a portion of that demand supports clinical pipeline programs, and process development validation, rather than patient dosing, we expect these commercial customers to drive growth throughout the remainder of the year. I highlight this because it provides an important measure of resilience in our business model, mitigating exposure to earlier stage programs that may be more vulnerable to funding or regulatory constraints. Overall, these metrics remain broadly consistent with what we saw in 2024, reinforcing the stability and durability of our cell processing business. At the end of the first quarter, our BPM products were utilized in a total of 17 approved therapies. As we've shared before, we estimate our BPM products are used in at least 70% of relevant, commercially sponsored CGT trials in the U.S., with our share of late-stage clinical trials exceeding 75%. At this point, the only meaningful alternative to our offering is homebrew formulations, which, while perhaps functional at a small scale, lack the rigor, consistency, and scalability that our GMP-grade solutions provide. Our sales and marketing team remains focused on deepening relationships with our key BPM customers, both commercial and clinical, in order to create cross-sell opportunities and drive adoption of our broader cell processing platform. Today, our CellSeal and HPL products are integrated into four approved therapies in the U.S. and internationally, in addition to being used in numerous clinical trials. We see a significant opportunity to scale these products over time. Importantly, each additional product integrated into a commercial therapy can materially enhance our revenue on a per-dose basis. with the potential to generate up to two to three times the revenue per dose compared to our BPM products alone. I would emphasize that this opportunity is not hypothetical. We have demonstrated success with customers who have adopted multiple components of our platform, validating both our product quality and our role as a trusted, scalable partner. As we continue to execute, we believe expanding our footprint with these commercial therapies will be a durable mid- to long-term growth engine for biolife. In April, we further advanced our strategy with the acquisition of Panthera CryoSolutions, an innovative addition that expands our biopreservation portfolio with proprietary ice recrystallization inhibitor technology and enhances the scientific capabilities of our teams. This transaction reflects our ongoing commitment to selectively deploy capital to strengthen our offerings and reinforce our leadership as a pure play provider of bioproduction consumables. While we remain optimistic that the underlying longer-term industry fundamentals remain intact, we recognize that near-term uncertainty persists. whether from tariffs, NIH funding cuts, or leadership changes at the FDA, all of which have the potential of creating near-term headwinds across the ecosystem. We continue to closely monitor and assess these factors from both a supplier and a customer perspective, and at this time, we do not expect any material impact on our financial outlook. Accordingly, we are reaffirming our full-year revenue guidance of $95.5 to $99 million, with growth continuing to be led by our cell processing platform and, more specifically, our commercial customers. With that, I'll hand the call over to Troy, who will provide an overview of our full Q1 results. Troy?

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. Gap 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. Gap 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 reclosed on April 4th. Adjusted operating expenses for Q1 2025 totaled $14.9 million compared with $14.6 million in the prior year. Gap 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 in the prior year primarily due to a $3.5 million improvement in gross margin driven by increased sales of biopreservation media. Turning to our balance sheet. Our cash and marketable securities balance reported as of March 31, 2025, was $107.6 million, compared with $109.2 million as of December 31, 2024. Taking into consideration our adjusted EBITDA of $5.7 million in Q1, cash usage was primarily driven by unfavorable working capital of $3.2 million, debt principal payments of $2.5 million, and capital expenditures of $1 million. Our SVB long-term debt balance at quarter end was $12.5 million. We expect to continue making quarterly repayments of $2.5 million going forward. Turning to our 2025 financial guidance, which we are affirming our original guidance from our Q4 earnings call. Total revenue is expected to be $95.5 million to $99 million, reflecting an overall growth of 16% to 20%. Our cell processing platform is expected to contribute 86.5 million to 89 million, or 18% to 21% growth over 2024. Our Evo and Thaw platform is expected to contribute 9 million to 10 million, or 3% to 15% growth over 2024. We expect adjusted gross margin for the full year to be in the mid-60s, a reduction in gap net loss and expansion in adjusted EBITDA margin in 2025 due to higher expected revenue, partially offset by increases in R&D expenses related to development projects and an estimated $1 million in R&D-related expenses from our Panthera acquisition for the balance of 2025. We do not expect any material revenue from Panthera in 2025. Finally, in terms of our share count, as of May 1st, which includes shares issued from our Panthera acquisition. We had 47.6 million shares issued on outstanding and 50.1 million shares on a fully diluted basis. Now I'll turn the call back to the operator to open up for questions.

We will now begin the question and answer session. To ask a question, you may press star and one on your telephone keypad. If you are using the speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. And the first question comes from Matt Stanton with Jefferies. Please go ahead.

Hey, thanks for taking the question. Maybe, Rod, first for you, appreciate all the color on the progress on the commercial side of the business, but maybe just to focus a little bit on the non-commercial and more, you know, 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, you know, there's no shortage of headlines around the FDA funding and things like that. Maybe it's a bit of have it, have not 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're 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 is I think that's going to play out over a longer period of time as opposed to, you know, this quarter, next quarter, if it plays out at all.

Great. That's really helpful caller. And then maybe just on the Panthera deal, maybe you can talk a little bit about more, you know, why it makes sense through 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, you know, what does the team bring you today that you didn't have before? And is there kind of a, product pipeline, you know, where you have the opportunity to layer some of the stuff they've been working on, you know, into your existing offering. Thank you.

Yeah. I think that, you know, from a timing perspective, the reason we did this now is because they had demonstrated proof of concept with their first generation molecules. 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 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 cryo store 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 one of three things, if not more than one of those three 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 ice shipments. So from a scientific team, we added two 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 one or two 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. Thanks, appreciate it, and congrats on the strong quarter. Thank you.

And your next question comes from Paul Knight with KeyBank. 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, a third done, and does this happen over, what, three years?

Yeah, we're more than half done, Paul, on sort of the four or five key customers that had, you know, 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 three years.

And then the last question would be, how does 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, thanks.

You bet.

And your next question comes from Chad Wyatrowski with TD Cowan. Please go ahead.

Hey, this is Chad Wytrowski on for Brendan Smith. Was the limited impact from sort of tariffs and 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, maybe from a manufacturing standpoint? And just in general, what about that sort of 14% exposure to European revenues?

Yeah, 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 self-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 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 two times a month.

Really helpful color. Rod, thanks.

You bet.

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

Hey, good afternoon, guys. Congrats on a great quarter. Hey, Rod, just to 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?

Yeah, 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 five to six 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 nine months of finished goods inventory there in Indy. So that will be a larger CapEx expense, but it's really a 26 event as opposed to 25.

Got it. Thank you. 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?

Yeah, 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 Hallam 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're looking at at least 18 months before you could see some revenues there. But I'm wondering how difficult or is it feasible for 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?

Yeah, 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 a CGT manufacturer to swap out the biopreservation media? And it was clear that as you go down further down the clinical pipeline, so say clinic phase three or commercial product, It becomes a very big hurdle. And by that, I mean several million dollars and a couple of three 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 one or preclinical timeframe 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 onto 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. Correct. Yes. So I think that, yeah, 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. All right. Thank you. Thank you.

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

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

Yeah, that's correct, Carl, to the tune of about a million dollars for the remaining nine months of the year.

Okay, that's what I thought you said, but I wanted to check. Cool. Excellent. Congrats again. Thanks.

Thank you.

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

Thank you for taking my question. 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?

Yeah, it's a fair question. I think it's very early to try to quantify anything. Again, I think you've 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, you know, 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 DeGrief 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.