Q3 2022 BioLife Solutions Inc Earnings Call
Good afternoon, ladies and gentlemen, and thank you for standing by and welcome to the Biolife solutions 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'll now turn the call over to Troy Whitman, 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 <unk>, Chairman and Chief Executive Officer, and Rod degree, if 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 Biolife solutions Dot com.
As a reminder, during this call we will 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 differ 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.
As required by law.
During this call, we will speak to non-GAAP or adjusted results reckon.
Reconciliations of GAAP to non-GAAP .
Adjusted financial metrics are included in our 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 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 photo present, our financials for Q3 and nine months of 2022.
Rod 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 tool 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 bio preservation media revenue growth of 50%.
Our growth catalyst and business fundamentals remain intact.
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.
13% was high margin recurring services revenue, so about 60% is non hardware related.
With the recovery of our <unk> freezer platform, well underway with greatly improved quality and low 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 bio preservation media franchise could easily reached $250 million in revenue within five years, reflecting 30 plus percent annual growth.
<unk> 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 unique customer sites across our three product and services platforms.
Most of our revenue comes from existing customers as we penetrate deeper and pitch our integrated solutions to take more share of their spend for manufacturing storage and distribution products and services.
And each of the first three quarters. This year, we gained about 200, new customer sites building a phenomenal pipeline of early stage customers and we will nurture and support to drive future growth.
I'll remind you know what our three platforms are.
First self processing, which includes bio preservation media and Sexton and cell processing products.
Second is our freezes and thaws systems platform comprised of cryogenic liquid nitrogen freezers and Sterling <unk> mechanical freezers and automated following devices and finally storage and storage services, which includes our <unk> storage services and our Evo cold chain management offering.
New Q3 customer sites by product line included 14, more now using bio preservation media.
11, new thoughts star users 12, new Evo cold chain and users.
14, new cryogenic freezers and accessory customers 114, new Sterling <unk> freezer and accessory customers <unk>.
18, new bio storage customers and 10, new cell processing customers now using section products.
For sale processes in Q3, we gained 24, new customers and received confirmation that our cell processing solutions will be used in at least 20 additional clinical trials for new seller gene therapies.
We estimate that our bio preservation media products have been used in or are planned to be used in 570 customer clinical applications for.
For bio preservation media, we also remain confident that each customer clinical application if approved could generate revenue.
And a range of $502 million annually.
To date, our bio preservation media is used in 11 approved therapies and our sex and cell processing media in vials are used in three approved therapies, including <unk> from BMS.
<unk> from Ria cell and realm of cell from J W. Therapeutics.
Note all of these also use our cryo store, our bio preservation media.
Our bio preservation media products are also embedded in at least 10 additional anticipated approvals by the end of 2023.
I'll conclude by saying that our bio preservation media clinical customer base includes most of the car T cell developers with our proprietary products embedded in a majority of the autologous and allogeneic platforms currently in development.
We expect to be able to continue to take share from home brew preservation cocktails as awareness grows of the critical role our engineered media formulations play in reducing risk or CGT companies.
In addition to the initial approvals of new cell and gene therapies. We also see the recent and pending approvals of CGT products for first or second line treatment and approvals for additional indications and in new geographies as for growth catalyst for our bio preservation media and other solutions.
But the other part of our cell processing platform, our section products adoption and customer clinical applications includes 67, using HBO media 62, using Celsius vials and three using automated fill machines. So you can see we're running our bio preservation media playbook to drive adoption of <unk> products, we estimate there.
Annual revenue for section reagents, and consumables used and approved customer therapies ranges from 500, K to $1 million for both <unk> and <unk> media.
Turning to our freezes and thoughts systems platform to reiterate we shipped first time orders to 139, new customer sites, our hyper focus on the acquired Sterling platform as resulted in greatly improved quality and reduced shipping lead times, which Rob will speak to you on this call.
Customers continue to see the value proposition of our <unk> freezer offering based on tight temperature regulation reduce power consumption reduce heat generation and less noise pollution as these support their goal of reducing the negative environmental impact of their operations.
And our final of free revenue platforms storage and storage services, which includes Evo cold chain rentals and <unk> storage services, we either shipped to first use products or engaged for initial services with 30, new customer sites in Q3 18 for storage services at 12 for Evo.
Our <unk> storage services platform is growing rapidly and we are now considering multiple locations for a new buyer a repository plan to open in 2023.
With our Evo cold chain management platform cell and gene therapy companies now have broad access to our class defining offering through our expanded specialty Courier partner network that now includes world Courier with international paper on Thermo Fisher Martin and <unk>.
We're very excited about our market opportunity to drive our evo platform to become a meaningful revenue and profit contributor.
Q3, Evo shipments over 2000 were up 100% over the same quarter last year.
We estimate at least 75% or four approved therapies and the rest were for clinical trials.
We're collecting a huge amount of shipment information that is shaping our continued evo is cloud innovation to give our courier partners and and CTG customers, even more actual data to reduce risk.
We continue to expect that by mid next year. The Evo platform will be used for all of the currently approved car T cell therapies.
This adoption validates our belief that the evo platform will increasingly be selected as a class defining temperature controlled shipping container and related cloud app by the leading CGT companies now I will turn the call over to Troy to present, our financials for Q3. Thank.
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%.
Given by a 50% increase in bio preservation 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%.
<unk> and <unk> 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 processing platform revenue versus 23% last year.
Storage and storage services platform revenue was $7 3 million with both total and organic growth of 56% over the same period in 2021 Covid.
COVID-19 related revenue accounted for approximately 40% of the storage and storage services platform revenue.
Total revenue for the nine months ended September 32022 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.
And for the first nine months of 2022, GAAP operating expenses were $212 8 million, which includes the noncash intangible impairment of $69 9 million related to the global cooling acquisition recorded in Q2.
Compared with 2021 nine months ended GAAP operating expenses of $98 5 million.
Adjusted operating expenses for Q3, 2022 or $25 million compared with $17 4 million in Q3 of 2021 and 20.0 million in Q2 2022.
For the first nine months of 2022, adjusted operating expenses were $60 3 million compared with $39 5 million in the first nine months of last year.
Adjusted operating expenses increased due to the 2021 acquisitions of global cooling in Sexton.
In addition, operating expenses increased due to higher accounting cost and increased head count to support our growth.
Adjusted operating expenses increased by 420000.
Over the previous quarter, primarily due to increased accounting fees.
Adjusted operating loss for the third quarter of 2022 was $6 7 million.
Compared with adjusted operating loss of $8 1 million in the third quarter of 2021.
Our adjusted operating loss for the first nine months of 2022 totaled $20 2 million compared with adjusted operating loss of $7 5 million in 2021.
Adjusted EBITDA for the third quarter of 2022 was positive $1 4 million compared with negative $2 1 million for the third quarter of 2021 and positive $2 2 million for the second quarter of 2022.
For the first nine months of 2022, adjusted EBITDA was positive $2 8 million compared with $4 4 million in the same period in 2021.
We expect higher adjusted EBITDA in the second half of 2022 compared with the first half of 2022.
Our cash and marketable securities balance at September 32022 was $61 7 million compared with $46 6 million at June 32022.
On September 20th we closed a $50 million secured loan agreement with Silicon Valley Bank and advanced $20 million on this facility.
We have $30 million of additional facility to draw upon prior to June 32023.
Which is comprised of $10 million upon the companys discretion.
$10 million upon achieving a revenue milestone.
And an additional $10 million upon fcb's discretion.
The loan matures on June one 2026.
And may be extended to June 2027, upon the occurrence of certain conditions.
The interest rate is the greater of 575% or Wall Street Journal Prime plus 50 bps <unk>.
Subject to an overall interest rate ceiling of not more than 1% above the time of the advance.
Our first $20 million advance as an interest rate ceiling of 7% and has no financial covenants.
On repayment in full of the loans, we will pay an additional 575% of the aggregate principal amount extended.
Taking into consideration our loan advance and adjusted EBITDA, a positive $1 4 million cash use in Q3 2022 was related to capital expenditures of $3 9 million primarily related to the build outs of our bio repository facilities and.
Debt repayment of $1 8 million.
Which was partially offset by cash provided by operations of $1 5 million.
Turning to 2022 revenue guidance, we have tightened full year revenue guidance to be in the range of $160 million to $164 million versus prior guidance of $160 million to $166 million.
Our guidance reflects a year over year growth of 34% to 38% and organic growth of 37% to 40%.
COVID-19 related revenue is expected to account for approximately 7% to 8% of total revenue.
Total revenue expectations for 2022 include the following platform updates.
For our cell processing platform lowered the top range of our guidance by $1 5 million, reflecting the potential for a supply chain challenges that could delay in shipments.
Full year 2022 platform revenue is now expected to be between 67 million to $68 million, an increase of 49% to 51% over 2021.
And organic growth of 42% to 43%.
Any 2022 orders that are delayed are expected to ship in Q1 of 2023.
For our freezers and processing platform, we decreased the bottom range by $4 million and decreased the top range by $3 5 million.
Full year 2022 platform revenue is now expected to be between $66 million and $68 million, reflecting supply chain challenges on our cryogenic freezer product line.
This guidance represents growth of 17%, 17% to 20% over 2021 and organic growth of 8% to 13%.
COVID-19 related revenue is estimated to account for 3% of the freezer and <unk> systems platform revenue.
For our storage and storage services platform, we increased the bottom range by $4 million and increased the top range by $3 million and is now expected to be between 27 million to $28 million with total and organic growth of 54% to 59% over 2021.
COVID-19 related revenue is expected to account for an estimated 40% to 45% of the storage and storage services platform revenue.
The COVID-19 related revenue is primarily based on contracts and therefore, we do not expect to see variability on this number through the balance of the year.
In addition, our COVID-19 contract that extended into 2023 has been amended in November to start therapies instead of Covid vaccines.
Therefore, we expect minimal COVID-19 revenue in 2023.
In terms of our new share count.
As of today, we have $42 8 million shares issued and outstanding and $45 4 million shares on a fully diluted basis.
Lastly.
As this is rod last earning call I would like to thank him for all his contributions to biolife and being a true team player you.
You've made a positive impact on this organization and for me on a personal level as well.
I wish you the best and a well deserved retirement and I look forward to working with you on the board.
Now I.
I'll turn the call to Rod 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 have some very acute issues, but.
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 that Sterling continue to improve.
Positively impacting gross margin through lower warranty utilization this quarter compared to historical levels.
Our previously announced plans to move the manufacturer of two of the three <unk> 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 780, <unk> freezer and prepare for the launch of the next generation large capacity freezer.
In Q and 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 and a smaller Albuquerque facility, we expect dv.
10 production to begin in Michigan in Q1 of next year.
In addition to bringing the Evo and <unk> production lines into our LNG freezer facility, we've been finalizing the validation of a second source for our key component used in our LNG 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 impacts gross margins on these products in 2023.
Moving on to our bio preservation media products, we continue to make progress working through existing supply chain constraints and based on continued higher than expected demand. We are focused on increasing capacity in the near and mid term.
To that end in Q3, we finished the validation process involved in moving from 100 to 200 liter media batches and are currently producing our lead product cryo store at that volume.
Increased production in the coming quarters should allow us to meet continued growing demand and replenish our safety stock, which has been depleted in the last year.
In addition, we are now executing on our plan to establish a small but scalable bio preservation media production suite at our facility in Indianapolis and expect that facility to begin producing our smaller volume product runs by mid 2023, which will enable us to dedicate our thoughtful production slots to the larger volume runs.
Finally, with respect to the two other key operational initiatives, establishing a high margin service revenue program and our net suite ERP implementation.
I am pleased to report that our pilot service revenue program is expected to exceed $700000 in revenue this year.
We expect service revenue and related gross margin to have a larger impact on our financial performance in 2023.
While the majority of our accounting functions are now running on net suite the balance of the implementation has encountered some delays based on bandwidth constraints and we now expect to have the full accounting and manufacturing applications up and running by the middle of next year and middleware connectivity to numerous numerous other applications entity wide by the end of <unk>.
2023.
As I move from my operational role to a seat on the board early next year.
Very confident that the company's operations will continue to progress under the new leadership team.
So closely with over the last year now.
Now I'd like to turn the call back over to Mike.
Thanks Rod.
Now I'll summarize our key takeaways from Q3 and for the rest of 2022 first.
<unk> solutions is a critical highly trusted tools and services provider to the cell and gene therapy industry.
Built a valuable portfolio of risk mitigating solutions that help CDC developers increase their likelihood of success.
<unk>.
Demand for our portfolio of class defining <unk> production tools and services remains 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 homebrew alternatives, becoming much less often considered and selected.
<unk> III, 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.
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 am 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 Raj contributions to biolife during his long association with the company.
With his retirement coming at the end of the year. This is Roger last earnings call as he transitions to joining our board of directors.
So fortunate to leverage his experience and guidance to help us take biolife to our next level of growth and 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 will turn the call back over to the operator Dennis.
If you would like to ask a question simply press Star then the number one on your telephone keypad once again to ask a question today. Please press Star then the number one.
Our first question.
One is from the line of Paul Knight with Keybanc. Please go ahead.
Yeah, Thanks, Todd what rod Thanks, I think our years together approaches almost double digits as well so.
Hope you enjoy the next round of retirement.
And the questions Mike.
Mike or how many CCD 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 on the per revenue per approved therapy.
Why do you think it's stickier than ever you kind of expressed this comment in Europe .
Youre finish.
Finishing comments about homebrew kind of.
Less and less.
Okay.
Alternative, but why is that thanks for all of those three questions.
Yes, Hi, Paul Thanks, really good questions next year, perhaps 10 additional approvals that our media is baked in okay, and thats a combination of U S and outside the U S predominantly Europe .
I'm going to answer your last one then we'll go back to try to take the metal part.
What gives us confidence that the.
The estimated range of annual revenue of an approved therapy of 500, K to $2 million per year can hold.
Lot of anecdotal data and looking at revenue from our customers who have approved therapies now some of them are doing clinical trials as well, but it's it's patently clear to us Paul that the revenue range.
That we're talking about here is fully supportable look I'll go out on limb 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 are buying lots of media and we know that most of that's going to the approved therapies for <unk>.
Production, the remainder going to the clinical trial candidates that Theyre also using our media in Troy why don't you speak to our confidence about replacing that coverage to our contract with non cohort revenue per 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 sterling freezers and the.
Minor that goes from negative 20 to negative ADC, which is the perfect temperature range to store other therapies. So really it's about replacing that COVID-19 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 starting there and we expect to expand that capacity to with that current modality of are starting now.
Thanks very much.
Congrats on the quarter.
As possible.
Your next.
Question comes from the line of Thomas Flaten with Lake Street. Please go ahead.
Hey, guys congrats on the quarter that Mike just.
With respect to the supply.
Supply chain constraints.
Guessing that they are rather different cros bio processing versus the freezers I was wondering if you could maybe numerate those a little bit more for us.
I'll turn it to Rob to do that he is much closer to the harvest should know what they are where he's closer to the details go ahead, Rod 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 <unk>.
<unk> constraints that they've been working through opening of new plants.
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 <unk>.
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 product in Q4, we're working hard to validate the second wanted to see if we can get some units out still this quarter and the third one will be done in Q1, which is obviously the smaller volume one as well than in <unk>.
<unk>, we've got some electronic component.
Constraints those are probably more global in nature and more.
Generic <unk>.
That also has has eased up a bit but that has created some issues with respect to boards for our <unk> T. Freezers in particular, the board replacement customer service program that we embarked on a couple of quarters back as slowed a little bit just based on that on the lack of slow and are directing the flow to <unk>.
New products versus customer service.
Great if I could switch over to the storage services I was curious if we can get an update on the facility that was due to open here anytime and then also as you're thinking about new facility, new us new sites.
How do you think about the.
The location of those relative if youre thinking about manufacturer versus site of service I saw <unk>. For example, just opened a new Shanghai facility. So is it.
How does that factor into the calculus, you do two <unk> sites.
Thanks, Thomas another really good question.
Yes.
The plan of opening another buyer repository of 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 U S and outside the U S and to your point correlating those two 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 were thinking about but for sure I mean, our plan is to pick the siding and yet at least one new buyer positive turned up in the next calendar year in 2023.
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 and 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 any updates for us on the Corio agreement that you guys struck I think it was three or four months ago.
Nothing noteworthy.
Got it I 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.
Echo my congrats on the retirement.
As long as Mike said it sticks this time.
<unk>.
Thank you and then maybe first yes, yes, yes.
Just first on the freezer business I think you guys alluded to it.
Some talk that maybe the macro backdrops impacting demand for freezers in the near term it seems.
What were you moderated expectations is more around your own internal supply and the supply chain. So can you just talk about.
Yes.
What youre hearing from customers on the <unk> side in terms of demand and maybe how should we think about this asset growing longer term.
Yes, Hey, Jacob <unk> 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-19 sugar high in all of the need to build up COVID-19 infrastructure over the last couple of years I would not be surprised if we face to some degree a new competitor in that would be in the.
The form of resale of used freezers, and thats going to affect everybody, who has been selling freezes in that space, but we will see no real detriment from that yet, but we're keeping our eye on that but as far as our book of business on cryo and Sterling across those temperature ranges and 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-19 in that business. It sounds like you've already transition one of the contracts.
For non Covid applications, but I think investors are concerned do.
Do we see that business, maybe shrink next year. If COVID-19 is rolling off soon so maybe can you talk about the dynamic of how we should think about that as COVID-19 revenues rolling off in the near term and then your ability to transition that capacity for non COVID-19 purposes, maybe particularly as we think about 2023.
Yes, we can give some color and of course, when we issue guidance for the full year 2023, we will have some more granularity on that platform and some support of narrative that can help you understand how we got there, but it's Troy just mentioned.
A big Colbert contract is already at least been contractually committed to be replaced and Thats great.
So.
We're going to be reducing our reliance on Cobra 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'll be even less so.
It was all fine.
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 the storage services for next year, we're not going to tell you, where we're going with it yet, but it's certainly going to have a healthy growth rate apply to it based on just organic growth, but also the replacement of that big Chunky Colbert contract.
Thanks for that link that's Super helpful. Just one quick clarification, there that the contract that was amended that kind of a contract that has a mandate for non COVID-19 purposes is there any change in like the revenue I guess, it's still the same and it's still paying the same amount again good question.
Yes, I appreciate you asked about too much detail, we wouldn't speak to that detail.
Okay fair enough and attract.
Thank you, Mike and congrats again rod.
Thank you.
Your next question is from the line of Max Masucci with Cowen. Please go ahead.
Hi, This is Stephanie on for Matt. Thanks for taking my question and congrats on the retirement.
Quick one.
Rockwell thing.
I think demand trends by customer end market.
Wow.
I'm sorry.
All right.
Of note Alamo earlier stage biotech of Biopharma customers.
Great.
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 breath, having failed systemic chemo two or three times to get a car T cell.
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 in the clinical results are stellar the farmer economics work to support that kind of spend so yes, no slowdown whatsoever.
That's great.
And then another one.
Alright.
So.
Partnership with Grupo <unk>.
Right.
Second.
Awesome.
Well first of all quite hopeful that a mechanical normal function.
12 months.
How should we think about that.
The increase in shipments over the coming quarters.
Any seasonality factors that we should keep in mind.
I would say notice seasonality, Stephanie it's really about how fast we can onboard and get the CSA 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 its spread pretty much every quarter. The number of your shipments are doubled from the quarter. The same period last year or the previous year. So I mean with a 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 Thats helpful.
One last one for me.
Bob will touch on for.
Okay.
Yes.
Carl.
So all in all.
Those are all ordering vessels.
Thanks, Bob.
Local local orders from your customer base.
That's fine.
Product.
Yes, just wanted to the contrary so in our most recent quarter reported Q3, one of our largest distributor ordered quite a bit more than the previous quarter. They have healthy discounts. So that customer mix, obviously has a bit of a gross margin impact, but no to the contrary not not not anything about reduced orders are 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 where embedded into so many customers and particularly these large global global pharma companies, who have CGT operations, either de novo or acquired.
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 alone. We think can get to $250 million revenue over five years, just as that one part of the business not total revenue or just preservation media.
Got it that's helpful. Thanks, again for taking my questions and congrats.
Youre welcome. Thank you.
Your next question is from the line of Hugh Onthe with B Riley Securities. Please go ahead.
Mike. Thank you for taking our questions and congratulations on a strong quarter in this tough microenvironment and Rob.
I'll Miss you there so here I have a couple of questions.
First glad to see the new partnership with <unk>, maybe follow a few follow ups here can you remind us how <unk>.
Fitting your offering right now in the context of all that Youre already at how other cool their partnership in place and now with <unk> with the cryogenic logistics will continue to gather all for fuel cell and gene therapy companies.
Yes, good place to start you aren't thanks, So safe is a really well managed company they've got some great relationships and CGT. This is really at its base just the extension of the evil partner network. So customers. Obviously, you have a lot of optionality. They can access the evo platform through a number of carriers all of the major.
Carriers see safe has obviously really strong aspirations to be a much.
More dominant supplier of these critical services to the CGT 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.
You'll be competing against particular shipment opportunities against the other carriers, but really 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 <unk>.
Got it and maybe a follow up there so what can <unk>, bringing to your table to kind of strengthen your current position in terms of offerings to customers.
I think.
One we're going to have to watch and see.
How they do with the current regime.
<unk> shipment of autologous therapies, clearly because they are in the big shipper container game as well theyre going to be able to offer the allogeneic space lots of flexibility and really tight temperature regulator storage of pellet size containers in both active and passive.
<unk> controls 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.
Even more expanded exposure to the CPG space through one other highly regarded highly trusted service provider.
Yes, that's good to hear and then maybe one last question on the <unk> partnership.
So as you'll know it requires regulatory inspections or.
Our filings to have this two platform integrated together. So maybe can you comment on how long does this per SaaS as Mel Tang and Wang.
To have those options available to them.
Oh, yes sure well.
As far as a customer and their own regulatory updates.
Naming a carrier in an IND or BLA I'm not so sure that's really how it goes Elon I think that it's more of a generic description that.
The final manufactured dose Shelby transported in the vapor phase of liquid nitrogen to the final destination.
My sense is not that theyre, naming <unk> or they're naming world courier or any third parties like that with that degree of specificity. So I don't really think thats going to be a necessity unless you know something that Idaho, but thats 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 CSA for relationship.
As well if they need to get going.
They need to.
Actually finished 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 clay.
Clarify whats the percentage.
Revenue coming from ex U S versus <unk>.
Domestically.
Yes, that's in the 10-Q and I believe it's 80% is U S and 20% ex U S.
Got it that's all from US Thank you for taking our questions.
Youre welcome.
Your next question is from the line of Suraj Kalia with Oppenheimer. Please go ahead.
Good afternoon, and thank you for taking my questions and let me echo the sentiment that there has been a pleasure.
Dealing with you over the last almost 15 years so.
Wish you 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.
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 at.
Ed.
Two when these customers start.
<unk>, having somewhat of a material impact in the respective line items.
That will be one of my questions and Mike to your other point.
$250 million by <unk>.
2024, maybe if you could just.
Help us understand.
Is that organic or.
Is it.
Are there any implicit acquisitions.
Acquisitions also baked in gentlemen, thank you for taking my questions and congrats again.
Thanks, Suraj peso Raj Mike, Yes, good questions I'll, just 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 US you know anywhere from.
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 a sustained and the stellar results and all that kind of stuff. So it really does vary by product or by the the service platform, but that's probably a reasonable sort of S.
<unk>.
I guess the point I'd like to just close on that as to rapid 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 are just media alone growing modestly and I say modestly relative to a lot of other tools and services, but modestly at 30% annually getting the $250 million in revenue of Super High margin recurring very sticky written into the 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 and 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 Goodnight.
Thank you all for joining the Biolife Biolife solutions shareholder and Analyst Conference call. We thank you for your participation you may now disconnect.
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