Alpha Teknova, Inc.

Good day and welcome to Technova's second quarter 2023 financial results conference call. At this time, all participants are in a listen-only mode. After this speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Ms. Sarah Mitchell-Moore, with Investor Relations. The floor is yours.

Great. Thank you, Operator. Welcome to Technova's second quarter of 2023 Earnings Conference Call. With me today on the call are Stephen Gunstream, Technova's President and Chief Executive Officer, and Matt Lowell, Technova's Chief Financial Officer, who will make prepared remarks and then take your questions. As a reminder, the forward-looking statements that we make during this call, including those regarding business goals and expectations for the financial performance of the company, are subject to risks and uncertainties that may cause actual events or results to differ. Additional information concerning these risk factors is included in the press release the company issued earlier today, and they are more fully described in the company's various filings with the SEC. Today's comments reflect the company's current views, which could change as a result of new information, future events, or other factors, and the company does not obligate or commit itself to updating its forward-looking statements except as required by law. The company's manager believes that in addition to GAAP results, non-GAAP financial measures can provide meaningful insight when evaluating the company's financial performance and the effectiveness of its business strategies. We will therefore use non-GAAP financial measures of certain of our results during this call. Reconciliations of GAAP to non-GAAP financial measures are included in the press release that we issued this afternoon, which is also posted to Technova's website and available on the SEC website. Non-GAAP financial measures should always be considered only as a supplement to and not as a substitute for or as superior to financial measures prepared in accordance with GAAP. The non-GAAP financial measures in this presentation may differ from similarly named non-GAAP financial measures used by other companies. Please also be advised that the company has posted a supplemental slide deck to accompany today's prepared remarks. It can also be accessed on the investor relations section of Technova's website and on today's webcast. And now I will turn the call over to Stephen.

Thank you, Sarah. Good afternoon and thank you everyone for joining us for our second quarter of 2023 earnings call. Technova is a leading producer of critical reagents for the life sciences industry to accelerate the introduction of novel therapies, vaccines, and molecular diagnostics that will help people live longer, healthier lives. We manufacture high-quality customer agents with short turnaround times in our position to scale with our customers as they advance their products from discovery to commercialization. We had an excellent second quarter, both financially and operationally, against a difficult market backdrop. Our ability to deliver in these challenging conditions is a testament to the dedication of our very talented team and the diversity of our market segments. We increased revenue sequentially by 26% and continued to execute on our key initiatives to position the company for sustainable long-term growth. Our sales in the second quarter were $11.5 million, the second highest quarterly revenue in the company's history. We had a notable uptick in clinical solutions, benefiting from the migration of a large customer from Lab Essentials as it prepares to enter clinical trials. In addition, we have actively and effectively managed our operating expenses, reducing our free cash outflow in the second quarter to $6.2 million, giving us confidence that we will achieve our free cash outflow target of $30 million for the year despite a lowered near-term revenue outlook. We remain optimistic about the long-term potential of our target markets and are excited about the progress we've made in the second quarter to execute our long-term growth strategy. First, our new state-of-the-art modular manufacturing facility is now certified for GMP-grade production. We are enthusiastic about the potential this multi-year investment will unlock for the business. We have already hosted a number of high-profile customers and have been very encouraged by the reaction to the facility and the company's transformation. Our customer audit schedule is nearly full for the remainder of 2023, increasing our confidence that this investment will begin to bear fruit in mid to late 2024. As a reminder, we believe this new facility, plus our existing operating infrastructure, will give us the capacity to deliver approximately $200 million in annual product revenue when fully utilized. Next, On the R&D front, I am pleased to say our new product pipeline is progressing ahead of schedule. In July, we built upon the recent launch of our AAV2 buffer screening kit by extending the portfolio to include the AAV8 serotype. We expect to launch AAV6 and AAV9 by the end of the year. Early feedback on the product line has been very positive, with some customers already in discussions about scaling up with our proprietary buffer formulations. We believe this buffer kit can save our gene therapy customers months as they develop their production workflows. In addition, we launched more than 20 reagents to streamline and simplify the entire AAV bioproduction process. We expect to become an even more valued supplier to these customers as they advance their therapies towards commercialization. Lastly, I want to take a moment to discuss our view of the current market environment. In the near term, we continue to see emerging biotech, historically one of our larger growth segments, focused on conserving capital by delaying, reducing, or canceling clinical trials. We still believe this to be temporary, particularly against the backdrop of the total number of trials underway and encouraging recent clinical outcomes. We are particularly encouraged by the advancements in gene therapy. We saw a notable approval for an AAV gene therapy for Duchenne muscular dystrophy. We believe this approval demonstrates the potential value of AAV gene therapies, an area in which we have recently developed and will continue to develop a number of proprietary product offerings. The combination of our new products with our operational capabilities positions us well to participate in this segment as the market evolves. As we turn to our revenue outlook for the remainder of 2023, we now expect a mid-single-digit percentage year-on-year decline in top-line revenue with a return to year-on-year growth in the fourth quarter of 2023. Even with this change in guidance, we continue to track towards our previously communicated free cash outflow target of approximately $30 million for fiscal 2023. I will now hand the call over to Matt for discussion of the financials.