Q2 2024 Maravai Life Sciences Holdings LLC Earnings Call

Operator: Thank you for standing by, and welcome to the Maravai Life Sciences second quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.

Operator: Thank you for standing by, and welcome to the Maravai Lifesciences second quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.

Operator: Thank you for standing by, and welcome to the Maravai Lifesciences 2nd Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

Thank you for standing by and welcome to the <unk> Life Sciences second quarter 2024 earnings Conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

Operator: Please wait; the conference will begin shortly.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again, press star number one. Thank you. I'd now like to turn the call over to Debra Hart, Head of Investor Relations.

Operator: After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you.

Debra Hart: If you would like to withdraw your question again prestige Starwood. Thank you I'd now like to turn the call over to Debra Hart head of Investor Relations you may begin.

Debra Hart: Drew Burch, President of Nucleic Acid Production, and Becky Buzzeo, our Chief Commercial Officer, will join the call for the question and answer session following the prepared remarks. During today's call, management will make forward-looking statements. It is possible that actual results could differ from management's expectations. We refer you to slide three for more detail on forward-looking statements. Please also refer to Maravai's SEC filings for additional information on the risks and uncertainties that may impact our operating results, performance, and financial condition. Now, I'll turn the call over to Trey.

Debra Hart: I'd now like to turn the call over to Debra Hart, Head of Investor Relations. You may begin.

Debra Hart: Good afternoon, everyone. Thanks for joining us on our second quarter 2024 earnings call. Our press release and the slides accompanying today's call are posted on our website and available at investors.maravai.com.

Debra Hart: Good afternoon, everyone. Thanks for joining us on our second quarter 2024 earnings call. Our press release and the slides accompanying today's call are posted on our website and available at investors Dot Mario Vivus Dot com.

Debra Hart: As you can see on our agenda for today on slide two, Trey will provide a business update, and Kevin will review our financial results and guidance through Birch, President Nucleic Acid Productions, and Becky Buzzeo, our Chief Commercial Officer, will join the call for the question and answer session following the prepared remarks. During today's call, management will make forward-looking statements. It is possible that actual results could differ from management expectations. We refer you to slide three for more detail on forward-looking statements.

Speaker Change: As you can see on our agenda for today on slide two K will provide a business update and Kevin will review, our financial results and guidance.

Speaker Change: Birch president nucleic acid production.

Speaker Change: <unk>, our chief commercial officer will join the call for the question and answer session. Following the prepared remarks.

Speaker Change: During today's call management will make forward looking statements. It is possible that actual results could differ from management's expectations. We refer you to slide three for more detail on forward looking statements.

Debra Hart: Also, during this call, we will be referring to certain financial measures not prepared in accordance with generally accepted accounting principles or GAAP. A reconciliation of these non-GAAP financial measures, the most directly comparable GAAP measures, is available in the press release and also posted to the investor section of our website.

Speaker Change: Also during this call we will be referring to certain financial measures not prepared in accordance with generally accepted accounting principles or GAAP. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures is available in the press release and also posted to the Investor section of our website.

Debra Hart: Please also refer to the Maravai SEC filings for additional information on the risks and uncertainties that may impact our operating results, performance, and financial condition.

Speaker Change: Please also refer to <unk> SEC filings for additional information on the risks and uncertainties that may impact, our operating results performance and financial condition.

Trey: Now, I'll turn the call over to Trey. Thank you, Deb, and good afternoon, everyone. We appreciate you joining us for our call today.

Speaker Change: Now I will turn the call over to Trey.

Trey: Thank you, Deb, and good afternoon, everyone. Let me briefly recap the quarter, share an update on our new Flanders facilities, and highlight some innovative new products we introduced. Kevin will go into more detail on the financial results later in the call. Slide 6 shows our cash on hand at the end of the quarter was $573 million, up about $11 million from Q1.

Trey: Thank you Deb and good afternoon, everyone.

Trey: We appreciate you joining us for our call today.

Trey: Let me briefly recap the quarter, share an update on our new Flanders' facilities, highlight some innovative new products we introduced, and provide a few additional business updates before turning the call over to Kevin. Let's start with our second quarter results on slide five. Today, we reported $73 million in revenue for Q2, $17 million in total adjusted EBITDA, and $0 and adjusted fully diluted EPS for the quarter. Our new play-accessive production segment had revenue of $58 million in Q2. The biologic safety testing revenue was $15 million in the second quarter. Kevin will go into more detail on the financial results later in the call.

Trey: Let me briefly recap the quarter.

Trey: Share an update on our new Flanders facilities highlights some innovative new products, we introduced and provide a few additional business updates before turning the call over to Kevin.

Kevin: Let's start with our second quarter results on slide five.

Kevin: Today, we reported $73 million in revenue for Q2 $17 million in total adjusted EBITDA.

Trey: And zero dollars and adjusted fully diluted EPS for the quarter.

Speaker Change: Our nucleic acid production segment had revenue of $58 million in Q2 the.

Speaker Change: The biologic safety testing revenue was $15 million in the second quarter.

Speaker Change: Kevin will go into more detail on the financial results later in the call.

Trey: Slide six shows our cash on hand at the end of the quarter was $573 million, up about $11 million from Q1. Deb is $530 million gross, thus we maintain a $43 million net cash position. We remain in a great position to fund our long-term growth strategy through organic investments while simultaneously pursuing external partnerships and or in the name.

Kevin: Slide six shows our cash on hand at the end of the quarter was $573 million up about $11 million from Q1.

Kevin: That is $530 million gross thus, we maintain a $43 million net cash position.

Trey: We remain in a great position to fund our long-term growth strategy through organic investments while simultaneously pursuing external partnerships and or M&A. Regarding organic investments, let me provide an update on our chief landers facility. I'm excited to share that our Flanders facilities are truly coming alive. Flanders One started initial engineering runs in April, and our team has continued to hit all key milestones to ensure we complete our commitments to BARDA and the U.S. government. On slide seven, you'll see a photo of one of the four clean rooms at Flanders One.

Speaker Change: We remain in a great position to fund our long term growth strategy through organic investments, while simultaneously pursuing external partnerships <unk> M&A.

Kevin: Yes.

Trey: Regarding organic investments, let me provide an update on our two Flanders' facilities. I'm excited to share that our Flanders facilities are truly coming alive. Flanders 1 started initial engineering runs in April, and our team has continued to hit all key milestones to ensure we complete our commitments to Barta and the U.S. government. On slide 7, you'll see a photo of one of the four clean rooms at Flanders 1. This was taken during the recently completed engineering run to produce GMP clean cap in six. Other milestones we've achieved for our Flanders 1 facility include our environmental monitoring process qualification or EMPQ, and our ISO 9001 certification.

Trey: Regarding organic investments, let me provide an update on our two flavors facilities.

Trey: This was taken during the recently completed engineering run to produce GMP Clean Cap M6. Other milestones we've achieved for our Flanders I facility include our Environmental Monitoring Process Qualification, or EMPQ, and our ISO 9001 certification. Planters 1 adds significant scale and mitigates operational risk as we now have multi-site capacity to manufacture CGMP small molecules in the United States. This includes the clean cap analogs, as well as other nucleic acid chemistries like RNTPs and N1-methyl pseudouridine, which are also needed as clinical grade inputs for mRNA production.

Kevin: I'm excited to share that our Flanders facilities are truly coming alive.

Kevin: <unk> started initial engineering runs in April and our team has continued to hit all key milestones to ensure we complete our commitments to BARDA in the U S government.

Speaker Change: On slide seven Youll see a photo of one of the four clean earnings if lenders want.

Kevin: This was taken during the recently completed engineering run to produce GMP clean cap and six.

Kevin: Other milestones we've achieved for our Flanders wanted facility include our environmental monitoring process qualification of our A&P queue Andrew.

Kevin: And our ISO 9001 certification.

Trey: Flanders 1 at significant scale and mitigates operational risk as we now have multi-site capacity to manufacture cGMP small molecules in the United States. This includes the clean cap analogues as well as other nucleic acid chemistries like RNTPs in one methyl suite of your team, which are also needed as clinical great inputs for mRNA production. Turning to slide A, our Flanders 2 teams produce the first batch of mRNA in the facility through the successful tri-link internal engineering run, demonstrating our ability to bring Tri-Link's best in class mRNA manufacturing processes to our phase 2 and phase 3 mRNA service customers.

Kevin: Lenders, one add significant scale and mitigate operational risk as we now have multi site capacity to manufacture cgmp small molecules in the United States.

Kevin: This includes the clean cap analogs as well as other nucleic acid chemistries like R&D piece, and one metal <unk>, which are also needed as clinical grade inputs for mrna production.

Trey: Turning to slide 8, our Flanders 2 teams produced the first batch of mRNA in the facility through the successful TriLink internal engineering run, demonstrating our ability to bring TriLink's best-in-class mRNA manufacturing processes to our Phase 2 and Phase 3 mRNA service customers. In addition, the CG&P manufacturing environments at the Flinders II facilities have also completed their EMPQs.

Kevin: Turning to slide eight our Flanders two teams produced the first batch of mrna in the facility through the successful Trialing internal engineering run demonstrating our ability to bring trailing <unk> best in class mrna manufacturing processes to our phase II and phase III mrna service customers.

Trey: In addition, the CGMP manufacturing environments at the Flanders 2 facilities have also completed their EMPQs, an initial data review of our primary manufacturing suites for use in late phase and commercial manufacturing campaigns. This is a very important step to ensure the facility meets the stringent regulatory requirements our customers have for their clinical material. Tri-Link is committed to combining our innovation in mRNA manufacturing with the compliance needed for late phase and commercial manufacturing. This marks the beginning of how we can enable the advancement of life-changing medicines for patients worldwide. I'm also really pleased by our commercial team's success in winning RFPs for Flanders 2 CDMO services for builds that start in the second half of 2024.

Kevin: In addition.

Kevin: Cgmp manufacturing environments at the first two facilities have also completed their E&P queues.

Trey: Initial data review of our primary manufacturing suites for use in late phase and commercial manufacturing campaigns. This is a very important step to ensure the facility meets the stringent regulatory requirements our customers have for their clinical materials. TriLink is committed to combining our innovation in mRNA manufacturing with the compliance needed for late phase and commercial manufacturing. This marks the beginning of how we can enable the advancement of life-changing medicines for patients worldwide. I'm also really pleased by our commercial team's success in winning RFPs for Flanders 2 CDMO services for builds that start in the second half of 2024.

Kevin: And initial data review of our primary manufacturing suites for use in late phase and commercial manufacturing campaigns.

Kevin: This is a very important step to ensure the facility meets the stringent regulatory requirements of our customers have further clinical materials.

Speaker Change: <unk> is committed to combining our innovation in mrna manufacturing with the compliance needed for late phase and commercial manufacturing.

Kevin: This marks the beginning of how we can enable the advancement of life changing medicines for patients worldwide.

Speaker Change: I'm also really pleased by our commercial team's success in winning Rfps for Flanders to CD ammo services for builds that start in the second half of 2024.

Trey: One customer whose RFP we won for a pivotal trial has already stated an intent to work with Trilink on additional products in their pipeline to service their early phase clinical manufacturing needs. Being the first customer in a brand new facility is not an easy decision, but the combination of our investments in plant design, consultations on regulatory requirements, and our experienced teams have eased any of the customer concerns. TriLink has manufactured over 100 GMP batches with over 70 different constructs, and we've made over 16,000 RUO constructs for thousands of clients.

Trey: One customer whose RFPV1 for a pivotal trial has already stated and intends to work with Tri-Link on additional products in their pipeline to service their early phase clinical manufacturing needs. Being the first customer in a brand new facility is not an easy decision, but the combination of our investments in plant design, consultations on regulatory requirements, and our experienced teams has eased any of the customer concerns. Tri-link has manufactured over 100 GMP batches with over 70 different constructs, and we've made over 16,000 RUO constructs for thousands of clients. We are in a unique position to be a strategic value to our customers at any stage of their journey.

Speaker Change: One customer who's Rspb, one for a pivotal trial has already stated an intent to work with trying to think on additional products in their pipeline to service their early phase clinical manufacturing needs.

Speaker Change: Being the first customer in a brand new facility is not an easy decision, but the combination of our investments in plant design consultations on regulatory requirements and our experienced teams have eased any customer concerns.

Speaker Change: Trialing has manufactured over 100, GMP batches with over 70 different constructs and we've made over 16000 arguable constructs for thousands of clients.

Trey: We are in a unique position to be of strategic value to our customers at any stage of their journey. Our customers' continued trust in our expertise in manufacturing and analytics, along with our new state-of-the-art mRNA plant, are the key elements in winning these deals. Prilank has also established its Analytical Sciences Center of Excellence, or ASCE.

Speaker Change: We are in a unique position to be of strategic value to our customers at any stage of their journey.

Trey: Our customers continue to trust in our expertise and our manufacturing and analytics, along with our new state-of-the-art mRNA plant, are the key elements in winning these deals. Tri-link is committed to providing innovative solutions to mRNA drug development, from early discovery through preclinicals and now through late phase and commercial service to complement our products.

Speaker Change: Our customers continued trust in our expertise and our manufacturing and analytics along with our new state of the RT Mart a plan are the key elements in winning these deals.

Speaker Change: <unk> is committed to providing innovative solutions to mrna drug development from early discovery through preclinical and now through late phase and commercial service to complement our products.

Trey: Prionlink has also established its Analytical Sciences Center of Excellence, or ASCE, reinforcing our commitment to mRNA innovation. The ASCE will serve as the hub for analytical development, where assays and tests will be available to our customers. ASCE is closely linked with every manufacturing site, including the new Flanders facilities, with redundancies and equipment, so the test methods can easily be transferred and product release occurs at the site of manufacturing. The ASCE also expands the capacity of tri-linked analytical services group, opening the possibility for a new business associated with nucleic acid product testing.

Speaker Change: Currently <unk> has also established its analytical Sciences center of excellence or Asce.

Speaker Change: Reinforcing our commitment to mrna innovation.

Speaker Change: The SCE will serve as the hub for analytical development.

Speaker Change: Saves and tests will be available to our customers.

Trey: The ASCE is closely linked with every manufacturing site, including the new Flanders facilities, with redundancies in equipment so that test methods can easily be transferred, and product release occurs at the site of manufacturing. The ASCE also expands the capacity of TriLink's analytical services group, opening the possibility for a new business associated with nucleic acid product testing. NPIs, or New Product Introductions, are a key strategic priority for us, and I'm pleased with the progress we've seen to date.

Speaker Change: SCE is closely linked with every manufacturing site, including the new Flanders facilities with redundancies and equipment. So the test methods can easily be transferred and product release occurs at the site of manufacturing.

Speaker Change: The ASC also expands the capacity of train links analytical services group opening the possibility for a new business associated with nucleic acid product testing.

Trey: Let's move to slide nine in our nucleic acid production segment. I'll highlight our new product portfolio expansion and our focus on bringing these products to market. NPI's and new product introductions are a key strategic priority for us, and I'm pleased with the progress we've seen today. The tri-link team enhanced our catalog mRNA offerings, repositioned custom chemistry services, developed offerings for our GNP-RNTP platform, and launched catalog IVT enzymes into the tri-linked commercial ecosystem. Let's take each of those in order. As we touched on last quarter's call, we recently launched a new catalog mRNA products with our tri-linked discovery group using the CleanCat N6 and N1 Metal City Euridine.

Speaker Change: Let's move to slide nine and our nucleic acid production segments, I'll highlight our new product portfolio expansion and our focus on bringing these products to market.

Speaker Change: NPI or new product introductions are a key strategic priority for us and I am pleased with the progress we've seen to date.

Speaker Change: The trailing team enhance our catalog mrna offerings repositioned custom chemistry services developed offerings for our GNP RMP platform and launched catalog <unk> enzymes into the Trialing commercial ecosystem.

Speaker Change: Let's take each of those in order.

Trey: As we touched on during last quarter's call, we recently launched new catalog MRNA products with our Trilink Discovery Group using CleanCap N6 and N1 methylciduridine. We've now completed that catalog refresh and upgraded our existing catalog with our most up-to-date CleanScript IVT process.

Speaker Change: As we touched on last quarter's call. We recently launched new catalog mrna products with our trailing discovery group.

Speaker Change: Using the clean cap and six in one metal <unk> with.

Trey: We've now completed that catalog refresh and upgraded our existing catalog with our most up-to-date CleanScript IVT process. Since the launch, sales had exceeded our expectations for these new products, so we're very pleased by the market response. Our custom chemistry offering has been repositioned to improve how quickly our customers can interact with us and get the custom nucleic acids they need. The team tackled a few key areas, the most notable being our turnaround time, cutting that quote-to-cash process in half. Overall, we believe the improvements enable both existing and new customers to easily choose us and have a great experience to help them advance their discoveries.

Speaker Change: We've now completed that catalog refresh and upgrade our existing catalog with our most up to date cleaning scripts IBP process.

Trey: Since the launch, sales have exceeded our expectations for these new products, so we're very pleased with the market response. Our custom chemistry offering has been repositioned to improve how quickly our customers can interact with us and get the custom nucleic acids they need. The team tackled a few key areas, the most notable being our turnaround time, cutting that quote to cash process in half.

Speaker Change: Since the launch sales have exceeded our expectations for these new products. So we're very pleased by the market response.

Speaker Change: Our custom chemistry offering has been repositioned to improve how quickly our customers can interact with us and get the custom nucleic acids they need.

Speaker Change: The team tackled a few key areas. The most notable being our turnaround time cutting that quote to cash process and half.

Trey: Overall, we believe the improvements enable both existing and new customers to easily choose us and have a great experience to help them advance their discoveries. For example, we've already incorporated alpha-zyme enzymes into our CleanScript mRNA production workflow. We've made it easier for our customers to access the breadth of differentiated mRNA production inputs and for us to gain a greater share of the wallet. As you can see on slide 10, Prilink is able to supply all the key inputs for the IVT mRNA production process, all produced in our U.S.-based facilities.

Speaker Change: Overall, we believe the improvements enable both existing and new customers to easily choose us and have a great experience to help them advance their discoveries.

Trey: In Q2, we launched both RUO and GNP nucleotide tri-phosphates, or NTPs. When our customers come to us for their mRNA raw materials as they start discovery, it's important for them to know that we can continue to support them with GNP-grade materials, produced here in the U.S. as they scale and move into the clinic. This effort showcases our capabilities to do just that with a GNP platform for standard and custom molecules. As our customers advance their development, we can move with them, scaling from production and water rich to production and flangers, and with the confidence of high-quality, productivity and our expertise.

Speaker Change: In Q2, we launched both <unk> and GMP nucleotide try phosphates are mtp's.

Speaker Change: When our customers come to us for their mrna raw materials as they start discovery, it's important for them to know that we can continue to support them with GMP grade materials produced here in the U S as they scale and move into the clinic.

Speaker Change: This effort showcases our capabilities to do just that with the GNP platform for standard and custom molecules.

Speaker Change: As our customers advance their development, we can move with them scaling for production and water rich to production in Flanders, and with the confidence of high quality productivity and our expertise.

Trey: Expanding our portfolio across these materials better enables us to support our customers and unlock the potential of GNP medicine. During the last week of June, we launched our IVT enzymes under the Tri-Link brand. and an important effort across both Tri-Link and Alpha-Sign. We've already incorporated alpha-sign enzymes into our clean-script mRNA production workflow, and now have extended the enzyme product offering to our tri-link customers. By offering these enzymes at a single point of sale with our clean-cap technology, along with modified and unmodified NTPs, we've made it easier for our customers to access the breadth of differentiated mRNA production inputs, and for us to gain a greater share of wallet.

Speaker Change: Expanding our portfolio across these materials better enables us to support our customers and unlock the potential of genomic medicines.

Speaker Change: During the last week of June we launched our IBP enzymes under the trailing brand.

Speaker Change: An important effort across both Trialing and Alpha <unk>.

Speaker Change: We have already incorporated alphas I'm enzymes into our clean script mrna production workflow.

Speaker Change: And now have extended the enzyme product offering to our traveling customers.

Speaker Change: By offering these enzymes at a single point of sale with our clean cap technology, along with modified and unmodified Ntp's. We have made it easier for our customers to access the breadth of differentiated mrna production inputs and for us to gain a greater share of wallet.

Trey: As you can see on slide 10, Tri-Link is able to supply all the key inputs for the IDT mRNA production process, all produced in our US-based facilities. We have four clean-cap options, and starting this quarter, we'll offer M6 as a GNP input. Our clean-cap franchise is patent-protected for clean-cap materials and methods in all major markets in the world, and we're continuing to innovate with R&D on new mRNA capping analogues while continuing to protect the franchise with new and continuing patent applications. We have N1 methods to do your team, and as I just mentioned, we now have the wild-type R&TPs and a process for scaling up other modified NTPs into GNP production.

Speaker Change: As you can see on slide 10, finally is able to supply all the key inputs for the IGT mrna production process all produced in our U S based facilities.

Speaker Change: We have four clean cap options and starting this quarter, we will offer <unk> six is a GNP input or.

Trey: Our Clean Cap franchise is patent protected for clean cap materials and methods in all major markets in the world, and we're continuing to innovate with R&D on new mRNA capping analogs while continuing to protect the franchise with new and ongoing patent applications. We have N1-methylsodouridine, and as I just mentioned, we now have the wild-type RNTPs and a process for scaling up other modified NTPs into GMP production.

Speaker Change: <unk> <unk> franchise is patent protected for a clean cap materials and methods and all major markets in the world and we're continuing to innovate with R&D on new mrna capping analogs, while continuing to protect the franchise with new and continuing patent applications.

Speaker Change: We have in one metal pseudo urethane and as I. Just mentioned, we now have the wild type <unk> and the process for scaling up other modified ntp's enter GMP production.

Trey: And finally, we offer the enzymes that are used in the process. So, by having all the key inputs for IDT, we enhance the simplicity of doing business with Tri-Link. We can support the full workflow with innovation across the NVT transcription inputs and continuous improvement to the IVT production process itself.

Speaker Change: And finally, we offer the enzymes that are used in the process.

Speaker Change: So by having all of the key inputs for IDT, we enhanced the simplicity of doing business with train link we can support the full workflow with innovation across the in vitro transcription inputs and continuous improvement to the IGT production process itself.

Trey: Turning to slide 11, Glenn Research also launched five new products in our 59th Glenn Report, expanding our tools for genomic research and diagnostics. This includes four new serenol nucleic acids that expand our options for DNA and RNA backbone modifications. SNA oligos will hybridize with SNA, RNA, as well as DNA. These oligos are nuclease-resistant and have been used in guide strands for CRISPR, molecular beacons, and other applications. I continue to be impressed by customer feedback regarding Glenn Research's industry-leading promptness, responsiveness, quality, and commitment to excellence.

Speaker Change: Turning to slide 11.

Speaker Change: Glenn Research also launched five new products in our 59th Glenn reports, expanding our tools for genomic research and diagnostics.

Speaker Change: This includes four new serranoid nucleic acids that expand our options for DNA and RNA backbone modifications.

Speaker Change: SNA Oligos will hybridize with SNA RNA as well as DNA.

Speaker Change: These oligos nuclease resistant and had been used in guide strands for CRISPR molecular beacons and other applications.

Trey: I continue to be impressed by customer feedback regarding Glenn Research's industry-leading promptness, responsiveness, quality, and commitment to excellence. Trilink's investment in the partnership includes funding for the center and enabling Hopkins researchers to use CleanCap and our in vitro transcription technology, CleanSpread. Additionally, TriLink will provide technical expertise and access to other critical discovery and manufacturing supplies, further lowering the barriers to the discovery and application of mRNA. The Center will bring together Johns Hopkins experts in RNA biology, genetic medicine, drug delivery, and biotechnology under one roof.

Speaker Change: I continue to be impressed by customer feedback regarding Glenn researches industry, leading promptness responsiveness quality and commitment to excellence.

Trey: Turning to slide 12, we continue to bolster our market leadership in the mRNA space through collaborations and strategic partnerships. In Q2, we announce the collaboration with Johns Hopkins University to establish a new mRNA Innovation Center. Tri-link's investment in the partnership includes funding for the center and enables Hopkins researchers to use clean cap and our NVT transcription technology, clean script. Additionally, Tri-Link will provide technical expertise and access to other critical discovery and manufacturing supplies, further lowering the barriers to discovery and application of the mRNA. The center will bring together Johns Hopkins experts in RNA biology, genetic medicine, drug delivery, and biotechnology under one group.

Speaker Change: Turning to slide 12, we continue to bolster our market leadership in the mrna space through collaborations and strategic partnerships.

Speaker Change: In Q2, we announced the collaboration with Johns Hopkins University to establish a new mrna innovation center.

Speaker Change: <unk> investment in the partnership includes funding for the center and enables Hopkins researchers to use clean cap and our in vitro transcription technology clean script.

Speaker Change: Additionally, trialing, who will provide technical expertise and access to other critical discovery and manufacturing supplies.

Speaker Change: Either lowering the barriers to discovery and application of mrna.

Speaker Change: The center will bring together Johns Hopkins experts in RNA biology <unk>.

Speaker Change: Lettic medicine drug delivery and biotechnology under one roof we.

Trey: We expect it will serve as a training center for the next generation of R&E investigators and as a hub for R&E researchers across the Hopkins network. Our continued key academic partnerships are helping to enhance innovation and are designed to accelerate market adoption of our latest technology and products. In addition to the JSU agreement, we have seven active research collaborations with top-tier academic institutions, including a new collaboration with the Houston Methodist Research Institute.

Trey: We expect it will serve as a training center for the next generation of RNA investigators and as a hub for RNA researchers across the Hopkins network. Our continued key academic partnerships are helping to enhance innovation and are designed to accelerate market adoption of our latest technology and products. In addition to the JSU agreement, we have seven active research collaborations with top-tier academic institutions, including a new collaboration with the Houston Methodist Research Institute.

Speaker Change: We expect it will serve as a training center for the next generation of RNA investigators and as a hub for R&D researchers across the Hopkins network.

Speaker Change: Our continued key academic partnerships are helping to enhance innovation.

Speaker Change: Designed to accelerate market adoption of our latest technology and products.

Speaker Change: In addition to the <unk> agreement, we have seven active research collaborations with top tier academic institutions, including a new collaboration with the Houston Methodist Research Institute.

Trey: We shared with you during our last call that AlphaZine was collaborating with Applied DNA for scale-up manufacturing, enabling the linear R&E polymerase. They have recently completed the process development project, which resulted in over 70% reduction in linear R&E polymerase manufacturing costs and the manufacturer of a quantity of enzymes sufficient to support Applied DNA's anticipated demand for critical starting material for production. We developed the full enzyme production process and the breakthroughs in the manufacturing workflow that allowed Applied DNA to enter the market with a fully compliant quality product and a cost structure that enables the linear platform to be highly competitive.

Kevin: We shared with you during our last call that AlphaZyme was collaborating with Applied DNA for scale-up manufacturing of the Linnea RNA polymerase. We developed the full enzyme production process and made breakthroughs in the manufacturing workflow that allowed Applied DNA to enter the market with a fully compliant, quality product and a cost structure that enables the Linnea platform to be highly competitive. Now, let's turn to slide 13 in our biologic safety testing business updates under the CYGNSS technology brand.

Speaker Change: We shared with you during our last call that al design was collaborating with applied DNA for scale up manufacturing, enabling the linear RNA polymerase.

Speaker Change: They have recently completed the process development project, which resulted in over 70% reduction in linear RNA preliminaries manufacturing costs and the manufacture of a quantity of enzyme sufficient to support applied DNA is anticipated demand for critical starting material for production.

Speaker Change: We developed the full enzyme production process and made breakthroughs in the manufacturing workflow that allowed applied DNA to enter the market with a fully compliant quality product and a cost structure that enables the linear platform to be highly competitive.

Trey: We believe that investing in new product innovation and partnering with leading academic and industry partners is a key driver for creating long-term value. We are exceptionally positioned to win customers early for product and technology adoption.

Speaker Change: We believe that investing in new product innovation, and partnering with leading academic and industry partners is a key driver for creating long term value.

Speaker Change: We are exceptionally positioned to win customers early for product and technology adoption.

Trey: Now let's turn to slide 13 in our biologic safety testing business updates under the Sickness Technology brand. As with the nucleic acid sickness, we continue to innovate to bring improved products to market to support our customers. Signance Technologies recently launched three new products, including our second E. coli Hoselle protein kit for the BL-21 variant used for recombinant protein expression. Our first fungal cell line Hoselle protein kit and our protein L mix and go kit, the first residual protein L ELISA on the market. The E. E. coli kit was developed for a specific strain that E.

Speaker Change: Now, let's turn to slide 13 in our biologic safety testing business updates under the sickness technology brand.

Kevin: As with the nucleic acid segment, we continue to innovate to bring improved products to market to support our customers. Cygnus Technologies recently launched three new products, including our second E. coli host cell protein kit for the BL21 variant used for recombinant protein expression. The E. coli kit was developed for a specific strain of E. coli used for recombinant protein expression and is the only kit on the market for this specific

Speaker Change: As with the nucleic acid segment, we continue to innovate to bring improved products to market to support our customers.

Speaker Change: <unk> technologies recently launched three new products, including our second E. Coli host cell proteins kit for the BL 'twenty, one variant used for recombinant protein expression.

Speaker Change: Our first fungal cell line wholesale protein kit and our protein L. Mixing go kit the first residual protein <unk> on the market.

Speaker Change: <unk> was developed for a specific strain of E. Coli used for recombinant protein expression and is the only hit on the market for this specific stream.

Trey: coli used for recombinant protein expression and is the only kit on the market for this specific strain. The fungal line HCP kit was developed in partnership with Diatic International. The assay is expected to play an important role in facilitating the broad adoption of diatic C1 protein production platform, which enables rapid and efficient low-cost production of antigens, monoclonal antibodies, and other therapeutic proteins. We believe this partnership will help accelerate the adoption of the C1 platform, ultimately aiming to enhance access and affordability of health care for patients and developing countries. The protein L kit, which is highlighted on slide 14, will be used for affinity purification on next generation antibodies, including bi-specific antibodies, tri-specific antibodies, and fragment, antigen binding antibodies or FAFs.

Speaker Change: To fund the line HCP kit was developed in partnership with Dyadic International.

Speaker Change: The assay is expected to play an important role in facilitating the broad adoption of dyadic C. One protein production platform.

Speaker Change: Which enables rapid and efficient low cost production of antigens monoclonal antibodies and other therapeutic proteins.

Kevin: We believe this partnership will help accelerate the adoption of the C1 platform, ultimately aiming to enhance access and affordability of healthcare for patients in developed and developing countries. Tri-specific Antibodies and Fragment Antigen Binding Antibodies (FAB), and are working meticulously to increase transparency and build the infrastructure necessary to support long-term sustainable growth. This team has done important work today, and we are committed to being a strong corporate citizen. We look forward to keeping you apprised of our progress. Moving to slide 17, I'll now ask Kevin to provide more details on our second quarter performance and our expectations for the balance of the year.

Speaker Change: We believe this partnership will help accelerate the adoption of the <unk> platform ultimately aiming to enhance access and affordability of health care for patients in developed and developing countries.

Speaker Change: The protein L kit, which is highlighted on slide 14, we will be used for affinity purification on next generation antibodies, including bi specific antibodies.

Speaker Change: By specific antibodies and fragment antigen binding antibodies our fabs.

Trey: There are over 100 bi-specific antibodies in clinical development, most in the early stages. Since 2014, the FDA has approved nine bi-specific marketing applications to treat cancer, as well as hematologic and ocular diseases. In the future, the FDA anticipates there will be a spectrum of bi-specific antibodies developed to prevent, treat, or diagnose diseases. For comparison, since 1986, the FDA approved over 100 full-length monoclonal antibodies. Full-length maps are purified with protein as A-resins. Bi-specific antibodies are purified with protein L-resins. Given the number of bi-specific antibodies in development, we believe there's high-growth potential for protein L-resin, and thus, we're pleased to introduce our residual protein L quantification assay, the Protein L, Mix-and-Go, Elicit Kit.

Speaker Change: There are over 100 bi specific antibodies in clinical development most in the early stages.

Speaker Change: Since 2014, the FDA has approved nine by specific marketing applications to treat cancer as well as hematologic and ocular diseases.

Speaker Change: In the future the FDA anticipates, there will be a spectrum of bi specific antibodies developed to prevent treat or diagnose diseases.

Speaker Change: For comparison since 1986, the FDA approved over 100 full length monoclonal antibodies.

Speaker Change: Full length maps are purified with protein a resins.

Speaker Change: By specific antibodies are purified with protein <unk> resin.

Speaker Change: Given the number of bi specific antibodies in development. We believe this high growth potential for protein a resin and thus we're pleased to introduce our residual protein L. Quantification assay the protein al mixing go Elisa kit.

Trey: As we celebrate our one-year anniversary of occupancy in our New Leland facility, we're proud to announce the completion of our new DNA laboratory. This 800-square-foot full-service space is BSL-2 compliant with segregated areas for development, manufacturing, and cold storage. This new lab provides the dedicated space and capabilities for the development of our new line of DNA detection kits, demonstrating our commitment to continuously improve. And broaden our best-in-class portfolio of host cell detection products.

Speaker Change: As we celebrate our one year anniversary of occupancy in our new Leland facility, we're proud to announce the completion of our new DNA Laboratory.

Speaker Change: This 800 square foot full service space is BSL, two compliant with segregated areas for development manufacturing and cold storage. This new lab provides the dedicated space in capabilities for the development of our new line of DNA detection kits, demonstrating our commitment to continuously improve and broaden our best.

Speaker Change: In class portfolio of host cell detection products.

Trey: Finally, we're pleased that Cygnus was recently featured in BioFarm International for our cutting-edge antibody affinity extraction method. As a menap segment, we plan to continuously improve our offerings in BST to ensure differentiated solutions, superior technical support, the highest quality services and offerings, and the most comprehensive catalog of products to meet our customers' needs.

Speaker Change: Finally, we're pleased that Cigna was recently featured in Biopharma international for our cutting edge antibody affinity extraction method.

Speaker Change: As in the Napp segment, we plan to continuously improve our offerings and PST to ensure differentiated solutions superior technical support the highest quality services and offerings and the most comprehensive catalog of products and meet our customers' needs.

Trey: Now moving to slide 15 in our commitment to deliver unquestionable quality. TriLink, Cygnus, Glyn, and AlphaZine all recently hosted successful ISO odds. These always require tremendous effort from the quality team members, as well as many others on-site. I was really pleased to hear how positive and complimentary the feedback was from our auditors about every process, system, site, instrument, and person involved. Quality is a central MarvI objective, and the zero major observations and successful certification to ISO standards in each of the audits is a testament to our adherence to high quality standards.

Speaker Change: Now moving to slide 15, and our commitment to deliver unquestionable quality.

Speaker Change: Trialing sickness, Glen and Alpha assigned all recently hosted successful ISO audits.

Speaker Change: He is always require tremendous effort from the quality team members as well as many others on site I was really pleased to hear how positive and complementary the feedback was from our auditors about every process system sight instrument in person involved.

Speaker Change: Quality is a central <unk> objective.

Speaker Change: <unk> zero major observations and successful certification to ISO standards and each of the audits is a testament to our adherence to high quality standards before.

Trey: Before I turn the call over to Kevin, I'd like to let you know that in early July we published our third Environmental, Social, and Governance report. Without question, our commitment to ESG goes hand in hand with achieving our company's long-term strategic objectives. On slide 16, you'll find some highlights from the report. This new report covers the 2023 fiscal year and provides an expansive look into our evolving ESG program, with tangible examples of how we're making a positive impact on our stakeholders and positioning our business for sustainable growth. A key ESG advancement was expanding our environmental disclosures to include Select Scope 3 greenhouse gas emissions.

Speaker Change: Before I turn the call over to Kevin I'd like to let you know that in early July we published our third environmental social and governance report without question our commitment to ESG goes hand in hand, with achieving our company's long term strategic objectives.

Kevin: On slide 16, Youll find some highlights from the report.

Kevin: This new report covers the 2023 fiscal year and provides an expansive look into our evolving ESG program with tangible examples of how we're making a positive impact on our stakeholders and positioning our business for sustainable growth.

Speaker Change: A key ESG advancement was expanding our environmental disclosures to include select scope three greenhouse gas emissions.

Trey: These advancements will enable Maravai to better evaluate how to make meaningful emissions reductions in the future. I encourage you to review the report in the investor section of our website. The comprehensive 50-page report is the accumulation of our enterprise-wide effort to deliver holistic value to our stakeholders while scaling operations and executing our return to growth strategy in a socially and environmentally responsible manner. Along with the safety and quality of our products, we are proud of our ESG advancements and are working meticulously to increase transparency and build the infrastructure necessary to support long-term sustainable growth. This team has done important work today, and we are committed to being a strong corporate citizen.

Speaker Change: These advancements will enable <unk> to better evaluate how to make meaningful emissions reductions in the future.

Speaker Change: I encourage you to review the report in the Investor section of our website.

Speaker Change: The comprehensive 50 page report is the accumulation of our enterprise wide effort to deliver holistic value to our stakeholders, while scaling operations and executing our return to growth strategy in a socially and environmentally responsible manner.

Speaker Change: Along with the safety and quality of our products. We are proud of our ESG advancements and working meticulously to increase transparency and build the infrastructure necessary to support long term sustainable growth.

Speaker Change: This team has done an important work to date and we are committed to being a strong corporate citizen. We look forward to keeping you apprised of our journey.

Trey: We look forward to keeping you apprised of our journey.

Kevin: Moving to slide 17, I'll now ask Kevin to provide more details on our second quarter performance and our expectations for the balance of the year.

Speaker Change: Moving to slide 17, I'll now ask Kevin to provide more details on our second quarter performance and our expectations for the balance of the year.

Kevin: Kevin? Appreciate it, right? Certainly, it was a very busy quarter from Maravai as we continue to broaden and deepen our overall capabilities and offerings. I want to recognize the efforts of our entire team for not only delivering over 73 million in revenues in the quarter, but also the numerous operational and R&D accomplishments in the quarter, which demonstrate the commitment and strength of our employees.

Speaker Change: Kevin.

Kevin: I appreciate it.

Kevin: Certainly it was a very busy quarter for <unk> as we continue to broaden and deepen our overall capabilities and offerings.

Kevin: I want to recognize the efforts of our entire team for not only delivering over $73 million in revenues in the quarter, but also the numerous operational and R&D accomplishments in the quarter, which demonstrate our commitment to the strength of our employees.

Kevin: Now let's dig into the Q2 financial results starting on slide 18. Revenue for the quarter was $73 million. Our gap net loss before non-controlling interests was $14 million for the second quarter of 2024. This compares to a net loss of 12 million for the second quarter of 2023. Adjust the EBITDA, a non-GAAP measure, was 17 million for Q2 2024 compared to 9 million for Q2 2023. Our adjusted EBITDA margin was 23% in Q2 2024, up from the 13% in Q2 2023 and up from the first quarter of 2024 is adjusted EBITDA margin of 12%. Overall, while the EBITDA margin in our second quarter was solid, it trailed our expectations.

Speaker Change: Now, let's dig into the Q2 financial results starting on slide 18.

Speaker Change: Revenue for the quarter was $73 million.

Speaker Change: Our GAAP net loss before Noncontrolling interests was $14 million for the second quarter of 2020 for.

Speaker Change: This compares to a net loss of $12 million for the second quarter of 2023.

Speaker Change: Adjusted EBITDA, a non-GAAP measure was $17 million for Q2 2024 compared to 9 million for Q2 2023.

Speaker Change: Our adjusted EBITDA margin was 23% in Q2 2024 up from the 13% in Q2 2023 and up from the first quarter of 2024 is the adjusted EBITDA margin of 12%.

Speaker Change: Overall, while the EBITDA margin in our second quarter was solid it trailed our expectations.

Kevin: As we have seen over the past six quarters, both our revenues, which have arranged from 64 million to 79 million, and our adjusted EBITDA margins, which have arranged from 12% to 30%, have shown a fair amount of variability. For the trailing 12 months, our adjusted EBITDA margin stands at 21% on revenues of 279 million.

Speaker Change: As we have seen over the past six quarters, both our revenues, which have range from <unk> $64 million to $79 million.

Speaker Change: Our adjusted EBITDA margins, which have range from 12% to 30% have shown a fair amount of variability.

Kevin: For the trailing 12 months, our Just Diva Dom margin stands at 21% on revenues of $279 million. First, our overall product mix and related contribution is the primary item in this bridge, and frankly, the largest contributor to the variance to our internal expectations.

Speaker Change: For the trailing 12 months, our adjusted EBITDA margin stands at 21% on revenues of $279 million.

Kevin: With a recommendation of your questions, will we focus on margins? Let me spend some time discussing this topic on slide 19. As we look back, when we last achieved revenues near this level, we only have to look back to Q4 2023 in which revenues for 74.1 million and our adjusted EBITDA was 28%. 27.7% to be exact, which was 470 basis points higher than this current Q2 2024 performance. I will spend a few moments broadly reconciling to that data point and discussing some of our profitability dynamics. First, our overall product mix and related contribution with the primary item in this bridge.

Speaker Change: With a record many of your questions, we'll be focused on margins, let me spend some time discussing this topic on slide 19.

Speaker Change: As we look back when we last achieved revenues near this level, we only have to look back to Q4 2023 in which revenues were $74 1 million and our adjusted EBITDA was 28% 27, 7% to be exact which was 470 basis points higher than this current Q2 2024.

Speaker Change: I will spend a few moments broadly reconciling to that data point and discussing some of our profitability dynamics.

Speaker Change: First our overall product mix and related contribution was the primary item in this bridge and frankly, the largest contributor to the variance to our internal expectations.

Kevin: And frankly, the largest contributor to the variance toward internal expects. RBST Business, which we expected to decline about a million from its strong Q1 2024 performance, to climb more than anticipated, ending the quarter at 15 million or 3 million below Q1. That variance, combined with lower absorption at our BST manufacturing facility, led to about 2 million and lower adjusted EBITDA as compared to Q4 2023. This is roughly a 270 basis point impact. The second item to detail represents our higher startup costs and preparedness expenses tied to our new Flanders facility. These costs totaled $2.5 million in the quarter, up from $1 million in Q4 2023.

Kevin: Our BST business, which we expected to decline about a million from its strong Q1 2024 performance, declined more than anticipated, ending the quarter at $15 million, or $3 million below Q1. That variance, combined with lower absorption at our BST manufacturing facility, led to about 2 million in lower adjusted EBITDA as compared to Q4 2023. This is roughly a 270 basis point impact.

Speaker Change: Our BSG business, which we expected to decline about $1 million from its strong Q1, 2024 performance declined more than anticipated ending the quarter at $15 million or $3 million below Q1.

Speaker Change: That variance combined with lower absorption of <unk> manufacturing facility led to about $2 million and lower adjusted EBITDA as compared to Q4 2023. This is roughly a 270 basis point impact.

Speaker Change: The second item to detail represents our higher startup costs at preparedness expenses tied Scott Flanders facility.

Speaker Change: These costs totaled $2 5 million in the quarter up from $1 million in Q4 2023.

Kevin: This $1.5 million incremental expense was primarily tied to third-party consultants that have completed most of their work. This impact of the EBITDA margin by approximately 200 basis points in Q2 2024 versus Q4 2023. Lastly, Q2 2024 contained incremental expenses in our R&D efforts and costs associated with our Johns Hopkins collaboration. These items were roughly a million in total, or about 150 basis points of impact. So, to sum up those items, they totaled around 620 basis points of margin impact versus Q4 2023 levels. Now, offsetting some of that saluted impact of the aforementioned items was the benefit of our cost-saving actions.

Speaker Change: It's $1 $5 million incremental expense was primarily tied to third party consultants that have completed most of their work.

Speaker Change: This impacted the EBITDA margin by approximately 200 basis points in Q2 2024 versus Q4 2023.

Speaker Change: Lastly, Q2, 2024 contain incremental expenses and our R&D efforts and cost associated with our Johns Hopkins collaborations.

Speaker Change: These items were roughly a million dollars in total or about 150 basis points of impact.

Speaker Change: To sum up those items.

Kevin: They total around 620 basis points of margin impact versus Q4 2023 levels. I will speak more about our margin in our updated 2024 guidance section in a bit. Capital expenditures net of BARDA reimbursements were $6 million in the quarter, a bit lighter than anticipated based on the timing of the final outfitting stage at some of our Flanders buildings. Stock-Based Compensation and Non-Cash Charges were $14 million for the quarter, also in line with our expectations. Next to slide 22 and the discussion of segment performance in the course.

Speaker Change: A total of around 620 basis points of margin impact versus Q4 2023 levels.

Speaker Change: Now offsetting some of that diluted impact of the aforementioned items was the benefit of our cost saving actions.

Kevin: The net impact of all other items, which in total provides 150 basis points of benefit, completing the 470 basis point locked down from the Q4 2024 EBITDA margins.

Speaker Change: Net impact of all other items, which in total provide 150 basis points of benefit completing the 470 basis points locked down on the Q4 2024 EBITDA margins.

Kevin: I will speak more to our margin in our updated 2024 guidance section in a bit.

Speaker Change: I will speak more to our margin and our updated 2024 guidance section in a bit.

Kevin: Moving to slide 20 and EPS. A second diluted EPS for the second quarter was a loss of 5 cents per share, the same as Q2 2023. Adjusted EPS was 0 for the quarter, also consistent with the prior year's second quarter.

Speaker Change: Moving to slide 20, and EPS basic and diluted EPS for the second quarter was a loss of <unk> <unk> per share the same as Q2 2023.

Speaker Change: Adjusted EPS was zero for the quarter also consistent with the prior year second quarter.

Kevin: Moving forward to the year in balancing cash flow and other financial metrics on slide 21. As Craig mentioned, we ended the quarter of 573 million in cash, up 11 million from the end of Q1 2024 and 530 million in long-term debt, resulting in a $43 million net cash position. For Q2 2024, cash provided by operations was $17 million. Capital expenditures and that of barter reimbursements were 6 million in the quarter, a bit lighter than anticipated based on the timing with the final outfitting stage of some of our funder's buildings. Depreciation and amortization was 12 million in the quarter, which is in line with our expectations and annualized guidance.

Speaker Change: Moving forward to the year end balance sheet cash flow and other financial metrics on slide 21.

Speaker Change: As Trey mentioned, we ended the quarter with $573 million of cash up $11 million from the end of Q1, 2024 and $530 million in long term debt, resulting in a $43 million net cash position.

Speaker Change: For Q2, 2024 cash provided by operations was $17 million.

Speaker Change: It'll expenditures net of BARDA reimbursements were $6 million in the quarter a bit lighter than anticipated based on the timing with the final outfitting space with some of our flankers buildings.

Speaker Change: Depreciation and amortization was 12 million in the quarter, which is in line with our expectations and annualized guidance.

Kevin: Interest expense and that of interest income was 5 million in the quarter, consistent with our expectations. Stock-based compensation and non-cash charge was $14 million for the quarter, also in line with our expectations. Now we ended Q2 with 141 million Class A shares outstanding and 111 million Class B shares outstanding for a total of 252 million shares outstanding. The fully diluted share cap impacting our just EPS metrics was 254 million total shares in the quarter and 253 million total shares on either day basis.

Speaker Change: Interest expense net of interest income was $5 million in the quarter consistent with our expectations stock.

Speaker Change: Stock based compensation and noncash charge was $14 million for the quarter also in line with our expectations.

Speaker Change: Now we ended Q2 with 141 million class a shares outstanding and a 111 million class B shares outstanding for a total of 252 million shares outstanding fully.

Speaker Change: Fully diluted share count impacting our adjusted EPS metrics was 254 million total shares in the quarter and 253 million total shares on a year to date basis.

Kevin: Next, the slide 22 and the discussion of segment performance in the quarter. Howard McLeague, acid production segment, which includes both our discovery and GMP products and services marketed under our Trialing, Glenn Research and Alpha Zine Brands, had revenues in the second quarter of 58 million, and adjusted EBITDA of 21 million, a margin of 36%. Our biologic safety testing segment, which includes products from our Stringness brand, had revenues of 50 million in the second quarter, and adjusted EBITDA of 9 million, and adjusted EBITDA of 63%. Lower than recent trends, as previously mentioned, corporate shared service expenses, impacting adjusted EBITDA to over 42 million in the second quarter, down over 1.6 million from the comparable second quarter of 2023.

Speaker Change: Next to slide 22, and the discussion of segment performance in the quarter.

Kevin: Our Nucleic Acid production segment, which includes both our Discovery and GMP products and services marketed under our TriLink, Glenn Research, and Alphazyme brands, had revenues in the second quarter of $58 million and adjusted EBITDA of $21 million. Our biologic safety testing segment, which includes products from our Cygnus brand, had revenues of $15 million in the second quarter and adjusted EBITDA of $9 million, an adjusted EBITDA margin of 63%, lower than recent trends, as previously mentioned.

Speaker Change: Our nucleic acid production segment, which includes both our discovery at CMP products and services marketed under our trailing Glenn research and <unk> brands had revenues in the second quarter of $58 million and adjusted EBITDA of $21 million a margin of 36%.

Speaker Change: Our biologic safety testing segment, which includes products from our sickness brand had revenues of $15 million in second quarter, and adjusted EBITDA of $9 million and adjusted EBITDA margin of 63% lower than recent trends as previously mentioned.

Speaker Change: Corporate shared service expenses impacting adjusted EBITDA totaled $14 million in the second quarter down over $1 $6 million from the comparable second quarter of 2023.

Kevin: Overall, Q2 was solid, with revenue in line with our expectations, margins slightly below as a result of a few specific items, as discussed, and it continues solid balance sheet and cash flow performance.

Kevin: Overall, Q2 was solid, with revenue in line with our expectations, margins slightly below as a result of a few specific items, as discussed, and a continued solid balance sheet and cash flow performance. So with half of 2024 in the books, let me now detail how we are now thinking about the full year of 2024 on slide 23. Based on Q2 revenues being aligned with our expectations and our current assessment of the likely range of revenue outcomes for the year, we remain comfortable with the existing 2024 total revenue range of $265,000 to $285,000.

Speaker Change: Overall Q2 was solid with revenue in line with our expectations margins slightly below as a result of a few specific items as discussed.

Operator: Thank you for standing by and welcome to the Maravai Lifesciences Second Quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.

Speaker Change: And a continued solid balance sheet and cash flow performance.

Kevin: So, with half of 2024 in the books, let me now detail how we are now thinking about the full year of 2024 on slide 23. Based on Q2 revenues being aligned with our expectations and our current assessment of the likely range of revenue outcomes of the year, we remain comfortable with the existing 2024 total revenue range of 265 to 285 million. Looking at the segments, our biologic safety testing business printed a strong 18 million all first quarter, but was followed by a weaker than expected Q2 based upon some lingering uncertainty in China. Based on the first half and the outlook for the second half, we now see the BST segment up in the low single digits for 2024.

Speaker Change: So with half of 2024 and the books, let me now detail how we're now thinking up a full year of 2024 on slide 23.

Operator: After the speakers remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you.

Speaker Change: Based on Q2 revenues being in line with our expectations and our current assessment of the likely range of revenue outcomes for the year, we remain comfortable with the existing 2024 total revenue range of $265 million to $285 million.

Debra Hart: I'd now like to turn the call over to Debra Hart, Head of Investor Relations. You may begin. Good afternoon, everyone. Thanks for joining us on our second quarter, 2024 earnings call. Our press release and the slides that companies today call are posters on our website and available at investors.maravai.com. As you can see on our agenda for today on slide two, Trey will provide a business update and Kevin will review our financial results and guidance through Birch, President Nucleus Acid Productions, and Becky Buzzeo, our Chief Commercial Officer, will join the call for the question and answer session following the prepared remarks.

Speaker Change: Looking at the segments, our biologics safety testing business printed a strong $18 million first quarter that was followed by a weaker than expected Q2 based upon some lingering uncertainty in China.

Kevin: Based on the first half and the outlook for the second half, we now see the BFC segment up in the low single digits for 2020. After taking this estimated performance for the VST business, the NAF segment will be roughly around $210 million at the midpoint of our revenue guidance for 2024, with the sensitivities to this midpoint mostly around the performance of our TriLink branded discovery business and the extent and timing of GMP-related service revenues in the second half of 2024.

Speaker Change: Based on the first half and the outlook for the second half we now see the BSG segment up in the low single digits for 2024.

Kevin: After taking this estimated performance for the BST business, the NAS segment will be roughly around 210 million at the midpoint of our revenue guidance for 2024, with the sensitivities to this midpoint, most around the performance of our trialing brand of discovery business and the extent and timing of GMP-related service revenues in the second half of 2024. As for the gating of revenue, with 138 million in first half revenues and a 275 million midpoint of our range, this second half at 137 million at the midpoint or about 68 million to 69 million per quarter. And we see Q3 likely in that 65 to 70 million dollar range.

Speaker Change: After taking this estimated performance for the BSG business than that segment will be roughly around $210 million at the midpoint of our revenue guidance for 2024 with the sensitivities to this point most of that around the performance of our trailing branded discovery business and the extent and timing of GMP related service revenues in the second half of 2024.

Debra Hart: During today's call, management will make forward-looking statements. It is possible that actual results could differ from management expectations. We refer you to slide three for more detail on forward-looking statements. Also, during this call, we will be referring to certain financial measures not prepared in accordance with generally acceptable accepted accounting principles or gaps. A reconciliation of these non-gap financial measures, the most directly comparable gap measures, is available in the press release and also post to the investor section of our website.

Kevin: As for the gating of revenue, with $138 million in first half revenues and a $275 million midpoint of our range, this sets the second half at $137 million at the midpoint, or about $68 million to $69 million per quarter. And we see Q3 likely in that $65 to $70 million. This 300 basis point reduction in our estimated adjusted EBITDA margin stems mostly from our product mix, the higher than initially anticipated planned or startup costs, and the expenses associated with the more recent initiatives that we believe are the right moves for the business, including the John Hopkins funding and licensed deals in our Enzyme Business Unit.

Speaker Change: As for the gaming revenue with $138 million in first half revenues and a $275 million midpoint of our range.

Speaker Change: Second half at $137 million at the midpoint or about 68 million to $69 million per quarter, and we see Q3 likely in that $65 million to $70 million range.

Kevin: Now we see the profitability metrics likely lower than our initial guidance for 2024 that we left unchanged after Q1. We now see the adjusted EBITDA margin expectations of 20% to 22%, and our full year adjusted EPS and the range of a two cent loss to an eight cent loss per share. This 300 basis point reduction in our estimated adjusted EBITDA margin stems mostly from our product mix, the higher than initially anticipated planters start up costs, and the expenses associated with the more recent initiatives that we believe are the right foods for the business, including the jobs, Hopkins funding.

Speaker Change: Now, we see the profitability metrics likely lower than our initial guidance for 2024 that we left unchanged. After Q1, we.

Debra Hart: Please also refer the Maravai SEC filings for additional information on the risks and uncertainties that may impact our operating results, performance, and financial condition.

Speaker Change: We now see the adjusted EBITDA margin expectations of 20% to 22% and our full year adjusted EPS in the range of a <unk> <unk> loss to an <unk> net loss per share.

Speaker Change: This 300 basis point reduction in our estimated adjusted EBITDA margin stems, mostly from our product mix the higher than initially anticipated Flanders startup costs and the expenses associated with the more recent initiatives that we believe it's the right moves for the business, including the John Hopkins funding and license deals and our enzyme business unit.

Trey: Now, I'll turn the call over to Trey. Thank you, Deb, and good afternoon, everyone. We appreciate you joining us for our call today.

Trey: Let me briefly recap the quarter, share an update on our new flander's facilities, highlights some innovative new products we introduced, and provide a few additional business updates before turning the call over to Kevin. Let's start with our second quarter results on slide five. Today, we reported $73 million in revenue for Q2, $17 million in total adjusted EBITDA, and $0 and adjusted fully diluted EPS for the quarter. Our new Play Acid Production segment had revenue of $58 million in Q2.

Kevin: And license deals in our ends and business unit. As the supplies given the first half performance, this results in a second half adjusted EBITDA margin around 24%. Resulting from consistent math performance, a step up in BST revenues from Q2 levels, the completion of the Flanders start up costs and overall cost control efforts and operating expenses.

Kevin: As this implies, given the first half performance, this results in a second half adjusted EBITDA margin of around 24%, resulting from consistent NAP performance, a step up in BST revenues from Q2 levels, the completion of the Flanders startup costs, and overall cost control efforts in operating. Our guidance also holds the following expectations in 2024. Interest expense, net of interest income, is expected to be between $20 million and $25 million, a slight improvement from our previous guidance given our tight treasury operations and the continued benefit from our interest rate cap contracts given the lack of rate cuts.

Speaker Change: As this implies given the first half performance. This results in the second half adjusted EBITDA margin around 24%, resulting from consistent that performance a step up in <unk> revenues from Q2 levels. The completion of the Flanders startup costs and overall cost control efforts and operating expenses.

Kevin: Our guidance also holds the following expectations in 2024. Interest expense, net of interest income, to be between $20 million and $25 million, a slight improvement from our previous guidance given our tight treasury operations and the continued benefit from our interest rate cap contracts given the lack of rate cuts. Appreciation and amortization between $45 million and $50 million, equity-based compensation, which we show as a reconciling item from gas to non-gaffee, but to be between $45 million and $50 million, and as a fully converted share count of 254 million shares of a year and an adjusted effective tax rate of 24%.

Kevin: Appreciation and Amortization between $45 million and $50 million, an as-if fully converted share count of 254 million shares per year, and an adjusted effective tax rate of 24%. Finally, we see total net capital expenditures of around $30 million for 2024. So thanks for your time today, and I'll turn the call back over to Trey.

Speaker Change: Our guidance also holds the following expectations in 2024.

Speaker Change: Interest expense net of interest income to be between $20 million and $25 million a slight improvement from our previous guidance given our take treasury operations and the continued benefit from our interest rate cap contract given the lack of rate cuts.

Trey: The biologic safety testing revenue was $15 million in the second quarter. Kevin will go into more detail on the financial results later in the call. Slide six shows our cash on hand at the end of the quarter was $573 million, up about $11 million from Q1. Deb is $530 million gross, thus we maintain a $43 million net cash position. We remain in a great position to fund our long-term growth strategy through organic investments, while simultaneously pursuing external partnerships and or in the name.

Speaker Change: Depreciation and amortization between $45 million and $50 million.

Speaker Change: Equity based compensation, which we show as a reconciling item from GAAP to non-GAAP EBITDA to be between $45 million and $50 million.

Speaker Change: And add that fully converted share count of 254 million shares for the year and an adjusted effective tax rate of 24%.

Kevin: Finally, we see total net capital expenditures of around $30 million for 2024.

Speaker Change: Finally, we see total net capital expenditures of around $30 million for 2024.

Kevin: So thanks for your time today.

Speaker Change: So thanks for your time today now I'll turn the call back over to Trey.

Trey: We're now from the call back over to trade. Thanks, Kevin. So to wrap up on slide 25, we had a solid first half of the year and are tracking against the revenue guidance range we originally communicated to you in March. We are executing on our return to growth strategy, and your to date have introduced significant new innovations to the market that further extend our leadership across the entire mRNA production workflow, as well as increasing our manufacturing capacity at our tri-linked Flinders 1 and Flinders 2 facilities in these high-value areas. Our Cygnus team continues to innovate with new product introductions and market-expanding technologies.

Trey: Regarding organic investments, let me provide an update on our two flander's facilities. I'm excited to share that our Flanders facilities are truly coming alive. Flanders 1 started initial engineering runs in April, and our team has continued to hit all key milestones to ensure we complete our commitments to Barta and the U.S, government. On slide 7, you'll see a photo of one of the four clean rooms at Flanders 1. This was taken during the recently completed engineering run to produce GMP clean cap and six.

Trey: Thanks, Kevin.

Trey: So, to wrap up on slide 25, we had a solid first half of the year and are tracking against the revenue guidance range we originally communicated to you in March. We are executing on our return-to-growth strategy and, year-to-date, have introduced significant new innovations to the market that further extend our leadership across the entire mRNA production workflow, as well as increasing our manufacturing capacity at our TriLink Flanders 1 and Flanders 2 facilities in these high-value areas.

Trey: So to wrap up on slide 25, we had a solid first half of the year and are tracking against the revenue guidance range. We originally communicated to you in March.

Speaker Change: We are executing on our return to growth strategy and year to date have introduced significant new innovations to the market that further extend our leadership across the entire mrna production workflow as well as increasing our manufacturing capacity at our trailing Flanders one in Flanders two facilities in these high value areas.

Trey: Other milestones we've achieved for our Flanders 1 facility include our environmental monitoring process qualification or EMPQ and our ISO 9001 certification. Flanders 1 at significant scale and mitigate operational risk as we now have multi-site capacity to manufacture CGMP small molecules in the United States. This includes the clean cap analogs as well as other nucleic acid chemistries like RNTPs and N1 methyl pseudioridine, which are also needed as clinical grade inputs for mRNA production.

Trey: Our Cygnus team continues to innovate with new product introductions and market-expansion technology. We have incredible and passionate teams across Maravai and the opportunity to do amazing things for human health. Our balance sheet remains strong, and we are well positioned to execute on opportunities for both organic and inorganic investments to bolster our market position and provide our customers with innovative solutions. We remain confident in the fundamental strength of our end markets and the value we provide our customers for the life-changing development of drug therapies, diagnostics, and novel vaccines. We remain committed to building a strong foundation for long-term, diversified, and sustainable growth for our businesses.

Speaker Change: <unk> team continues to innovate with new product introductions and market expanding technologies.

Trey: We have incredible and passionate teams across MRI and the opportunity to do amazing things for human health. Our balance sheet remains strong, and we are well positioned to execute on opportunities for both organic and organic investments to bolster our market position and provide our customers with innovative solutions. We remain confident in the fundamental strength of our end markets and the value we provide our customers for the life-changing development of drug therapies, diagnostics, and novel vaccines.

Trey: We have incredible and passionate teams across <unk> and the opportunity to do amazing things for human health.

Speaker Change: Our balance sheet remains strong and we are well positioned to execute on opportunities for both organic and inorganic investments to bolster our market position and provide our customers with innovative solutions.

Speaker Change: We remain confident in the fundamental strength of our end markets and the value we provide our customers for the life changing development of drug therapies diagnostics and novel vaccines. We remain committed to building a strong foundation for long term diversified and sustainable growth for our businesses.

Trey: Turning to slide A, our Flanders 2 teams produce the first batch of mRNA in the facility through the successful tri-link internal engineering run, demonstrating our ability to bring tri-link's best-in-class mRNA manufacturing processes to our Phase 2 and Phase 3 mRNA service customers. In addition, the CGMP manufacturing environments at the Flanders 2 facilities have also completed their EMPQs. An initial data review of our primary manufacturing suites for use in late phase and commercial manufacturing campaigns.

Trey: We remain committed to building a strong foundation for long-term, diversified, and sustainable growth for our businesses.

Operator: I would now like to turn the call back over to the operator to open up the line for your questions. Thank you.

Operator: I would now like to turn the call back over to the operator to open up the line for your questions. Thank you. Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue.

Speaker Change: I would now like to turn the call back over to the operator to open up the line for your questions. Thank you.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. We ask you please limit yourself to one question and one follow-up. Your first question comes from the line of Catherine Schulte from Baird. Your line is open.

Operator: We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again.

Speaker Change: Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue. If you would like to withdraw your question simply press Star. One again, we ask that you. Please limit yourself to one question and one follow up your first question comes from the line of.

Operator: We ask you, please let me yourself to one question and one follow-up.

Trey: This is a very important step to ensure the facility meets the stringent regulatory requirements our customers have for their clinical material. Tri-link is committed to combining our innovation in mRNA manufacturing with the compliance needed for late phase and commercial manufacturing. This marks the beginning of how we can enable the advancement of life-changing medicines for patients worldwide.

Catherine Schulte: Your first question comes from the line of Catherine Schulte from Baird. Your line is open.

Unknown Executive: Yeah, I'm happy to take that, Catherine. Yeah, I would say that as it relates to the sequential slight decline in NAP, it would be in that segment of the NAP segment, and we do see, you know, some of the orders that we had scheduled at the beginning of the year gating that way. So, you know, the second quarter contains some of those kind of high volume clean cap orders, and that is going to step down a little bit sequentially in the third quarter and result in NAP being a little We're hopeful that BST can recover certainly from that low water point that we saw there in the second quarter. We've discussed that dynamic a little bit. One of the interesting things about having GMP is that you can do so many things with it.

Speaker Change: Catherine Schulte from Baird. Your line is open.

Catherine Schulte: Thanks for the questions.

Catherine Schulte: Hey, guys. Thanks for the questions first great to see you get back to double digit growth during the quarter were there any one timers or lumpy orders that you saw in the second quarter and then what should we expect to see a sequential decline in revenue in the third quarter is that primarily on AP.

Catherine Schulte: First, great to see NIP get back to double-digit growth here in the quarter. Were there any one-timers or lumpy orders that you saw in the second quarter, and then why should we expect to see if the client and revenue in the third quarter? Is that primarily on the NIP side or BST?

Speaker Change: Yes.

Catherine Schulte: Yeah, I'm happy to take that, Catherine. Yeah, I would say that as a relapse to the sequential slide decline in NIP, it would be in that segment and NIP segment, and we do see some of the orders that we had scheduled at the beginning of the year gating that way. Second, contain some of those high volume clean cap orders, and that is going to step down a little bit, squenching the third quarter and resulting in NIP being able to.

Trey: I'm also going to use CDMO services for builds that start in the second half of 2024. One customer who's RFPB1 for a pivotal trial has already stated an intent to work with tri-link on additional products in their pipeline to service their early phase clinical manufacturing needs. Being the first customer in a brand new facility is not an easy decision, but the combination of our investments in plant design, consultations on regulatory requirements and our experienced teams has eased any of the customer concerns.

Speaker Change: Yes, I'm happy to take that Catherine.

Speaker Change: Let's say that as it relates to the sequential slight decline in AP and it would be in that segment in napp segment, and we do see some of the orders that we had scheduled at the beginning of the year gating that way. So segment contains some of those kind of high volume clean cap orders.

Speaker Change: And that is going to step down a little bit sequentially in the third quarter, and we sold not being a little bit.

Catherine Schulte: a little bit. We're hopeful that BSD can recover certainly from that low water point that we saw there in the second quarter. We've discussed that dynamic a little bit. One of the interesting things about having GMP services and GMP products is that while GMP services, unfortunately, will tend to move out if there's movement. Sometimes GMP products can come in and go out within the quarter or, in some cases, within the month. So we did, as you identified, Catherine, have a little bit of that here in Q2. The GMP products that's within that were helpful.

Speaker Change: We're hopeful that DST can recover certainly from that low water points that we saw there in the second quarter.

Unknown Executive: We discussed that dynamic a little bit. One of the interesting things about having GMP services and GMP products is that while GMP services will tend to move out if there's movement, sometimes GMP products can come in and go out within the quarter, or in some cases, within the month. So we did, as you identified, Catherine, have a little bit of that here in Q2, the GMP products that slid in that were helpful. Okay, got it.

Speaker Change: We've discussed that dynamic a little bit one of the interesting things about having GMP services and GMP products.

Trey: Tri-link has manufactured over 100 GMP batches with over 70 different constructs, and we've made over 16,000 RUO constructs for thousands of clients. We are in a unique position to be a strategic value to our customers at any stage of their journey. Our customers continue trust in our expertise, in our manufacturing and analytics, along with our new state-of-the-art mRNA plant are the key elements in winning these deals. Tri-link is committed to providing innovative solutions to mRNA drug development from early discovery through preclinicals and now through late phase and commercial service to complement our products.

Speaker Change: Is that while GMT services. Unfortunately will tend to move out if theres movement, sometimes GMP products can come in and go out within the quarter.

Speaker Change: Or in some cases within the month. So we did as you identified Catherine have a little bit of that.

Speaker Change: During Q2.

Catherine: <unk> products, that's within that were helpful.

Catherine Schulte: Okay, I got it. And then maybe for BST, can you just remind us how much of your business is in China and how is that business performing outside of China? Yeah, that you can explain over 80% of the BST results with China drops specifically.

Unknown Executive: And then maybe for BST, can you just remind us how much of your business is in China and how that business is performing outside of China? Yeah, that you can explain over 80% of the BST results with the China drop specifically. We, that's really the only place where we have any Chinese exposure. As you know, the growth in BST Chinese came during the 21-22 COVID period, and then, of course, we took that leg down in the second half of 22.

Speaker Change: Okay got it and then maybe for BST can you just remind us how much of your business is in China, and how is that business performing.

Speaker Change: All right.

Speaker Change: Yes.

Speaker Change: You can explain.

Trey: Pranlink has also established its Analytical Sciences Center of Excellence or ASCE, reinforcing our commitment to mRNA innovation. The ASCE will serve as the hub for analytical development where assays and tests will be available to our customers. ASCE is closely linked with every manufacturing site, including the new Flanders facilities, with redundancies and equipment, so the test methods can easily be transferred and product release occurs at the site of manufacturing. The ASCE also expands the capacity of tri-linked analytical services group, opening the possibility for a new business associated with nucleic acid product testing.

Speaker Change: Over 80% of the DST results with China dropped specifically, that's really the only place where we have any China exposure as you know the growth.

Catherine Schulte: That's really the only place where we have any China exposure, as you know. The growth in BST, China came during the 21-22 COVID period. And then, of course, we took that leg down in the second half of '22. Since then, honestly, we've had five very steady quarters. So the drop that happened here in Q2 in BST, China specifically was a surprise to us and our distribution partners, actually.

Speaker Change: And BSG, China came during the 'twenty one 'twenty two COVID-19 period, and then of course, we took that leg down in the second half of 'twenty two.

Unknown Executive: Since then, honestly, we've had five very steady quarters. So the drop that happened here in Q2 in BST, China specifically, was a surprise to us and our distribution partners actually. I don't think that we've specifically carved out exposure, but it's... It's now in, let's say, in the teens for BST.

Speaker Change: Since then honestly, we've had five very steady quarters.

Speaker Change: So the drop that.

Speaker Change: That happened here in Q2 in DST, China specifically.

Speaker Change: Was a surprise to us and our distribution partners actually.

Catherine Schulte: I don't think that we've specifically carved out exposure, but it's now, let's say, in the teens for BST.

Speaker Change: I don't think that we have specifically carved out exposure but.

Trey: Let's move to slide 9 in our nucleic acid production segment. I'll highlight our new product portfolio expansion and our focus on bringing these products to the market. NPI's and new product introductions are a key strategic priority for us, and I'm pleased with the progress we've seen today. The tri-link team enhanced our catalog mRNA offerings, repositioned custom chemistry services, developed offerings for our GNP-RNTP platform, and launched catalog IVT enzymes into the tri-linked commercial ecosystem.

Speaker Change: It's now at let's say in the teens for DST.

Speaker Change: Okay.

Matthew: Your next question comes from a line of Matthew cites from Goldman Sachs. Your line is open.

Unknown Executive: Your next question comes from the line of Matthew Sykes from Goldman Sachs. Your line is open.

Matthew sites: Your next question comes from the line of Matthew sites from Goldman Sachs. Your line is open.

Unknown Executive: Hi, this is Yvonne from Ad. Thanks for taking my questions. The first one, can you talk through what you're seeing from pharma customers within their discovery R&D spend versus some later stage projects? Have you seen a reprioritization of spend as companies look to cut costs but maintain investment in their later stage projects?

Matthew: Hi, this is Evian from AdThings for taking my questions. The first one, can you talk through what you're seeing from former customers within their discovery R&D spend versus some later stage projects? Have you seen a repartization of spend as companies looked to cut costs that maintain investment in their later stage projects?

Speaker Change: Hi, This is <unk> on for Matt Thanks for taking my questions.

Speaker Change: First one can you talk through what Youre seeing from pharma customers within their discovery R&D spend versus some later stage projects.

Speaker Change: Re prioritization of spend as companies look to cut costs to maintain investment in their later stage projects.

Trey: Let's take each of those in order. As we touched on last quarter's call, we recently launched a new catalog mRNA products with our tri-linked discovery group using the CleanCat N6 and N1 Metal City Euridine. We've now completed that catalog refresh and upgraded our existing catalog with our most up-to-date CleanScript IVT process. Since the launch, sales had exceeded our expectations for these new products, so we're very pleased by the market response. Our custom chemistry offering has been repositioned to improve how quickly our customers can interact with us and get the custom nucleic acids they need.

Matthew: Sure, I think I'll hand that one to Drew.

Unknown Executive: Sure, I think I'll hand that one to Drew. Thanks.

Speaker Change: Sure I think I'll hand that one to true.

Drew Burch: Sure, thanks, Trey. Yeah, I think that's a fair statement. We have seen, you know, and we follow the companies publicly; there's been some re-prioritization across the sector. It's a little tough to tie it to, you know, one company or another company, but there's a fair amount of portfolio moves. Just overall, we've seen positive dynamics in terms of mRNA program starts, and so we think the fundamental backdrop is positive, but each given company may be re-prioritizing as it moves forward.

Matthew: Sure, thanks, Trey. Yeah, I think that's a fair statement. We have seen, you know, and we've found the companies publicly.

Speaker Change: Sure. Thanks, Yes.

Speaker Change: Yes, I think Thats, a fair statement, we have seen.

Speaker Change: And for the company's publicly.

Matthew: We've spent some repartization across the sector. It's a little tough to tie to one company or another company, but there's a fair amount of portfolio moves. Overall, we've seen positive dynamics in terms of mRNA program starts, and so we think the fundamental backdrop is positive. But each given company may be re-prioritizing as they move forward. Okay, that's helpful.

Speaker Change: There has been some re prioritization.

Speaker Change: Across the sector little tough to tie to one company or another company, but but there's a fair amount of.

Speaker Change: Portfolio moves overall, we've seen.

Speaker Change: Positive dynamics in terms of mrna program starts and so we think the fundamental backdrop is positive but each given the company may be re prioritizing as they move forward.

Trey: The team tackled a few key areas, the most notable being our turnaround time, cutting that quote to cash process in half. Overall, we have a great experience to help them advance their discoveries. In Q2, we launched both RUO and GNP nucleotide tri-phosphates or NTPs. When our customers come to us for their mRNA raw materials as they start discovery, it's important for them to know that we can continue to support them with GNP grade materials produced here in the US as they scale and move into the clinic.

Unknown Executive: Okay, that's helpful. And then this is more of a broad question about your strategy. So understand the focus on winning and discovery and then shifting customers to GMP as they move along their pipelines. But will you try to poach programs as they move from clinical to or from discovery to clinical from players doing it internally? Yeah, I think that's...

Speaker Change: Okay. That's helpful. And then this is more of a broad question on your strategy. So I understand the focus is on winning in discovery and then shifting customers to JMP as they move along their pipelines.

Matthew: And then this is more of a broad question on your strategy. So understand the focus on winning a discovery and then shifting customers to GMP as they move along their pipelines. But will you try to poach programs as they move from clinical to from the discovery to clinical from like players doing internally? Yeah, I think that's probably the biggest market opportunity because it's still early days in mRNA. I think everyone knows that we're all excited because of how quickly we saw it, you know, go from a concept or the last mile to who, you know, the billions of doses of vaccines.

Speaker Change: You try to poach programs as they move from clinical Q from discovery to clinical from like players doing internally.

Unknown Executive: Yeah, I think that's probably the biggest market opportunity because it's still early days for MRNA. I think everyone knows that.

Speaker Change: Yes, I think thats, probably the biggest market opportunity because it's it's still early days in mrna I think everyone knows that we're all excited because of how quickly we saw it.

Unknown Executive: We're all excited because of how quickly we saw it, you know, go from a concept or the last mile to billions of doses of vaccines. But really, the ecosystem and the programs that are at play, many of them started in-house, and many people still perform the MR&E production process in-house. One of the things we've seen, to your point, is what we call our clean script workflow, which is the workflow that we've done hundreds and hundreds and hundreds of times here.

Speaker Change: Go from a concept or the last mile too.

Trey: This effort showcases our capabilities to do just that with a GNP platform for standard and custom molecules. As our customers advance their development, we can move with them, scaling from production and water rich to production and flanders and with a confidence of high quality productivity and our expertise. Expanding our portfolio across these materials better enables us to support our customers and unlock the potential of genomic medicines.

Speaker Change: The.

Speaker Change: Billions of doses of vaccines.

Matthew: But really the ecosystem and the programs that are at play, many of them started in-house and many people still perform the in-marning production process in-house. One of the things we've seen, to your point, is the, you hear us talk about what we call our clean script workflow, which is the workflow that we've done hundreds of, hundreds and hundreds of times here. And very often we have people who make the choice, having run programs internally. Do we go through the trouble of tech transferring our program, or do we just bolt into the well-travel clean script process, which has already gone for so many programs at different phases?

Speaker Change: But really the ecosystem and the programs that are at play many of them started in house and many people still.

Speaker Change: Perform the Montney production process in house.

Speaker Change: One of the things we've seen to your point.

Speaker Change: As you hear us talk about what we call our clean script workflow.

Speaker Change: Is the workflow that we've done hundreds of hundreds and hundreds of times here.

Unknown Executive: And very often, we have people who make the choice, having run programs internally, do we go through the trouble of tech transferring our program, or do we just bolt into the well-traveled clean script process, which has already gone for so many programs at different phases? So we actually see that conversion as probably one of the biggest opportunities we have as programs modernize and as we have the opportunity for uptake to bring efficiency to those programs.

Speaker Change: And very often we have people who make the choice having run programs internally.

Trey: During the last week of June, we launched our IVT enzymes under the tri-link brand, and an important effort across both tri-link and alpha-sign. We've already incorporated alpha-sign enzymes into our clean-script mRNA production workflow, and now have extended the enzyme product offering to our tri-link customers. By offering these enzymes at a single point of sale with our clean-cap technology, along with modified and unmodified NTPs, we've made it easier for our customers to access the breadth of differentiated mRNA production inputs, and for us to gain a greater share of wallet.

Speaker Change: We go through the trouble of tech transferring our program or do we just bolt into the well.

Speaker Change: Well travelled clean script process, which has already gone for so many programs with different phases. So we actually see that conversion is probably one of the biggest opportunities we have as programs modernize and as we have the opportunity for uptake to bring efficiency to this.

Matthew: So we actually see that conversion as probably one of the biggest opportunities we have as programs, modernize, and as we have the opportunity for uptake to bring efficiency to those programs. Great, thank you.

Speaker Change: Programs.

Speaker Change: Great. Thank you.

Tejas Savant: Your next question comes from a line of Tejas Savant from Morgan Stanley. Your line is open. Hey guys, good evening, and thanks for the time here. A couple of quick ones for you, Craig, to kick things off. Sort of following up on that earlier question on just Smith-Gabb Biotech, right? I mean, we had a large pre-clinical CRO this morning, take down numbers pretty dramatically in the back half, citing weakness on the global biopharma side as well as on the biotech side.

Unknown Executive: Your next question comes from the line of Tejas Savant from Morgan Stanley. Your line is open.

Trey: As you can see on slide 10, tri-link is able to supply all the key inputs for the IDT mRNA production process, all produced in our US-based facilities. We have four clean-cap options, and starting this quarter, we'll offer M6 as a GNP input. Our clean-cap franchise is patent-protected for clean-cap materials and methods in all major markets in the world, and we're continuing to innovate with R&D on new mRNA capping analogues while continuing to protect the franchise with new and continuing patent applications.

Speaker Change: Your next question comes from the line of Tejas Savant from Morgan Stanley. Your line is open.

Unknown Executive: Hey guys, good evening, and thanks for your time here. A couple of quick ones for you, Trey, to kick things off, sort of following up on that earlier question about just SmithCap Biotech, right? I mean, we had a large preclinical CRO this morning, which kicked down numbers pretty dramatically in the back half, citing weakness on the global biopharma side as well as on the biotech side. And so what are you assuming in your back half guide in terms of the early stage sort of biotech contributions? And then can you comment a little bit on the pricing environment that you're seeing broadly across the space? Is it just tougher negotiations, or are you needing to do more discounting here?

Tejas Savant: Hey, guys good evening and thanks for the time here.

Unknown Executive: Just any color on that would be helpful.

Tejas Savant: Couple of quick ones for you.

Speaker Change: To kick things off.

Speaker Change: Sort of following up on that earlier question on just smid cap biotech right I mean, we had a large preclinical CRO. This morning.

Speaker Change: Our numbers pretty dramatically in the back half, citing weakness on the global Biopharma side as well as on the on the biotech side.

Tejas Savant: And so what are you assuming in your back half guide in terms of the early stage sort of biotech contributions? And then can you comment a little bit on the pricing environment that you're seeing broadly across the space? It's just tougher negotiations. Are you needing to do more discounting here? Just any color on that would be helpful.

Speaker Change: And so what are you assuming in your back half guide in terms of the release date sort of biotech contribution and then can you comment a little bit on the pricing environment that you're seeing.

Trey: We have N1 methods to do your team, and as I just mentioned, we now have the wild-type R&TPs and a process for scaling up other modified NTPs into GNP production. And finally, we offer the enzymes that are used in the process. So, by having all the key inputs for IDT, we enhance the simplicity of doing business with tri-link. We can support the full workflow with innovation across the NVT transcription inputs and continuous improvement to the IVT production process itself.

Speaker Change: Broadly across the space.

Speaker Change: This tougher negotiations are you, meaning to do more discounting or just any color on that would be helpful.

Unknown Executive: Sure, thank you. We did have, as we discussed, a large, well, a few large orders come in for GMP products that were for big top pharma. And so within the quarter, that lowered our typical SMID, as you like to say, Tejas, from, you know, from the high teens to the low teens. And I think, well, we expect that to moderate out a little bit. It was a rather extreme move in this quarter, but we are not expecting it to grow substantially in the rest of this year's guidance, if that's what you're looking for.

Tejas Savant: Sure, thank you. We did have, as we discussed, a large, well a few large orders come in for GMP products that were for big top-form. And so within the quarter that lowered our typical Smith, as you like to say, from the high teens to the low teens.

Speaker Change: Sure. Thank you.

Speaker Change: We did have as we discussed a large well a few large orders come in for GMP products that were for big top pharma.

Speaker Change: And so within the quarter that lowered our typical.

Smith: Smith as you'd like to say to us.

Trey: Turning to slide 11, Glenn Research also launched five new products in our 59th Glenn Report, expanding our tools for genomic research and diagnostics. This includes four new serenol nucleic acids that expand our options for DNA and RNA backbone modifications. SNA oligos will hybridize with SNA, RNA as well as DNA. These oligos are nuclease resistant and have been used in guide strands for CRISPR, molecular beacons, and other applications. I continue to be impressed by customer feedback regarding Glenn Research's industry leading promptness, responsiveness, quality, and commitment to excellence.

Speaker Change: Hi.

Speaker Change: From the high teens to the low teens.

Tejas Savant: And I think, well, we expect that to moderate out a little bit. It was a rather extreme move in this quarter, but we are not expecting it to grow substantially in the rest of this year's guidance, if that's what you're saying. Got it.

Smith: And I think well, we expect that to moderate out a little data it was rather extreme.

Smith: Move in this quarter, but we are not expecting it to grow substantially in the rest of this year's guidance if thats what youre.

Unknown Executive: Got it. And then, uh, Crian, on the pricing?

Tejas Savant: And then, Cran, on the pricing? Pricing, as a function of each individual program, so it's not quite as simple as where a catalog-type company would throw a two to three percent price increase in every year. But we see the opportunities to take; we take price opportunities when we can. I'll put it that way. But they are also not; there's not a target number specifically that we're needing to achieve that would be in jeopardy for the rest of the model this year.

Speaker Change: Got it and then.

Speaker Change: On the pricing.

Unknown Executive: Pricing, you know, is a function of each individual program. So it's not quite as simple as, you know, where a catalog type company would throw 2-3% price increases in every year. But we see the opportunities to take, we take price opportunities when we can, I'll put it that way, but they are also not, there's not a target number specifically that we're needing to achieve that would be in jeopardy for the rest of the model this year.

Speaker Change: Pricing is a function of each individual program. So it's not quite as simple as.

Speaker Change: We're a catalog type company would throw 2% to 3% price in every year.

Speaker Change: But we see the opportunities to.

Speaker Change: To take we take we take price opportunities when we can and I'll put it that way, but they are also not there is not a target number specifically that we're that we're needing to achieve that would be in jeopardy for the rest of the model this year.

Trey: Turning to slide 12, we continue to bolster our market leadership in the mRNA space through collaborations and strategic partnerships.

Trey: In Q2, we announce the collaboration with Johns Hopkins University to establish a new mRNA innovation center. Tri-link's investment in the partnership includes funding for the center and enables Hopkins researchers to use clean cap and our NVT transcription technology clean script. Additionally, Tri-link will provide technical expertise and access to other critical discovery and manufacturing supplies, further lowering the barriers to discovery and application of the mRNA. The center will bring together Johns Hopkins experts in RNA biology, genetic medicine, drug delivery, and biotechnology under one group.

Unknown Executive: Got it. And Kevin, I want to dig in a little bit on EBITDA margin cadence in the back half. You know, a couple of moving pieces here; you've got the step down and high volume pin cap that you called out, and then potentially, a little bit of a step up in BST as well. Those two dynamics basically sort of offset each other as we think about, you know, 3Q versus 4Q. And then, is that 4Q number a good jumping off point from which we can see sort of steady sequential increases next year? Thank you. Yeah, thanks.

Tejas Savant: and Kevin, I want to dig in a little bit on EB-Dum margin, Kiddins in the back half, a couple of moving pieces here, you've got the step down in high volume pink cap that you called out, and then potentially a little bit of a step up in BSD as well.

Kevin: Got it and Kevin.

Kevin: I wanted to dig in a little bit on an EBITDA margin cadence in the back half.

Kevin: A couple of moving pieces, you've got the step down in high volume being GAAP that you called out and then potentially a little bit of a step up in BSD as well.

Tejas Savant: Those two dynamics essentially offset each other as we think about the 3Q versus 4Q, and then is that 4Q number a good jumping-off point, off of which we can see steady sequential increases next year. Thank you. Yeah, thanks.

Speaker Change: Those two dynamics essentially sort of offset each other as we think about the <unk> versus <unk>.

Kevin: Is that <unk> number a good jumping off point.

Speaker Change: Off of which we can see sort of steady sequential increases next year. Thank you.

Trey: We expect it will serve as a training center for the next generation of RNA investigators and as a hub for RNA researchers across the Hopkins network. Our continued key academic partnerships are helping to enhance innovation and are designed to accelerate market adoption of our latest technology and products. In addition to the JSU agreement, we have seven active research collaborations with top tier academic institutions. Including a new collaboration with the Houston Methodist Research Institute.

Unknown Executive: Yeah, thanks. To the latter part of your question, certainly that's going to be revenue-dependent more than anything else. So, you know, we'll see that margin tie very directly to where our revenue hits versus the cost structure, which will be pretty stable going into next year, given all the work we've done to complete our facilities footprint. As it relates to the quarterly sequential migration of our EBITDA margin from here, yeah, I would say, as I mentioned in the prepared remarks, really it's sort of a normalization of NAP, kind of seeing NAP So it's the other items that I mentioned, as well as some of the things that are related, for a cost-saving guide. We're modeling at a slightly higher margin in the second half.

Tejas Savant: That's a lot of part of your question, and certainly that's going to be ultimately revenue dependent more than anything else, so we'll see that margin tie very directly to our revenue hits versus the cost structure that'll be pretty stable going into next year, get in all the work we've done to complete our facilities footprint. As it relates to the quarterly sequential migration of EB-Dum margin from here, yeah, I would say, as I mentioned the prepared remarks, really sort of a normalization of NAB, kind of seeing NAB relatively the same as always in the first half of the year, BSD hopefully approving, moving up some margin there, and then a lot of the costs that were dragged on the margin the first time started to pay a lot. So the point is, so it's the other items that I've seen in as well as some of the things that are related.

Speaker Change: Yes, Thanks, Thats through the latter part of your question that certainly that's going to be ultimately revenue dependent more than anything else. So.

Unknown Executive: Got it. Thanks, guys. I appreciate the color.

Speaker Change: We'll see that margin tie very directly to our revenue hits versus the cost structure that'll be pretty stable going into next year, given all of the work we've done.

Speaker Change: <unk> our facilities footprint as it relates to the quarterly sequential migration of.

Kevin: Our EBITDA margin from here.

Speaker Change: As I mentioned in the prepared remarks is really sort of a normalization of nap kind of thing that relatively the same as always in the first half of the year.

Trey: We shared with you during our last call that AlphaZine was collaborating with applied DNA for scale up manufacturing, enabling the linear RNA polymerase. They have recently completed the process development project which resulted in over 70% reduction in linear RNA polymerase manufacturing costs and the manufacturer of a quantity of enzymes sufficient to support applied DNA's anticipated demand for critical starting material for production. We developed the full enzyme production process and the breakthroughs in the manufacturing workflow that allowed applied DNA to enter the market with a fully compliant quality product and a cost structure that enables the linear platform to be highly competitive.

Kevin: Hopefully improving.

Kevin: We're picking up on the margin and then a lot of the costs that were a drag on the margin of our substrates.

Kevin: Firstly with the other items as well.

Speaker Change: Well, it's a lifting sir.

Tejas Savant: So we're going to take a look at the costs that we've got; we're modeling it as that slightly higher margin in the second half. Got it.

Kevin: Related.

Kevin: Our cost savings.

Kevin: Through our modeling and our staff.

Kevin: Slightly higher margin in the second half.

Kevin: Yes.

Tejas Savant: Thanks, guys.

Unknown Executive: Got it thanks, guys I appreciate the color.

Tejas Savant: I appreciate the color.

Unknown Executive: Okay.

Matthew: Your next question comes from a line of Matthew from Craig Hallum. Your line is open.

Unknown Executive: Your next question comes from a line from Matt Hewitt from Craig Hallam. Your line is open. Good afternoon, and thank you for taking the question.

Unknown Executive: Your next question comes from a line from Matt Hewitt on Craig Hallam's line. Your line is open. Good afternoon, and thank you for taking the questions. And just a heads up, you guys are cutting out pretty bad. I don't know if it's just on our end, but...

Kevin: Your next question comes from the line of Matt Hewitt from Craig Hallum. Your line is open.

Matthew: Good afternoon, and thank you for taking the questions. And just to heads up, you guys are cutting out pretty bad. I don't know if it's just on our end, but there's quite a bit of pauses in between words. I guess first up, you noted during your prepared remarks that NTPs manufactured obviously here in the US. How important is that to your customers? Are you seeing some of this repatriation kind of really starting to bear fruit, and what are you hearing from customers regarding that? Yeah, I think, first of all, I think the sound was a couple of F-35s flying over us here in San Diego, so hopefully you can hear us clearly now.

Matt Hewitt: Good afternoon, and thank you for taking the questions and just a heads up you guys are cutting out pretty bad I don't know if its just on our end but.

Speaker Change: There is quite a bit of pauses in between words.

Trey: We believe that investing in new product innovation and partnering with leading academic and industry partners is a key driver for creating long term value. We are exceptionally positioned to win customers early for product and technology adoption.

Speaker Change: I guess first up.

Speaker Change: You noted during your prepared remarks that ntp's manufactured obviously here in the U S. How important is that to your customers are you seeing some of this repatriate position.

Trey: Now let's turn to slide 13 in our biologic safety testing business updates under the sickness technology brand. As with the nucleic acid segments, we continue to innovate to bring improved products to market to support our customers. Signus technologies recently launched three new products, including our second E, coli host cell protein kit for the BL21 variant used for recombinant protein expression. Our first fungal cell line host cell protein kit and our protein L mix and go kit, the first residual protein L ELISA on the market.

Speaker Change: Kind of really starting to bear fruit and what are you hearing from customers regarding that.

Unknown Executive: Yeah, first of all, I think the sound was a couple of F-35s flying over us here in San Diego. So hopefully, you can hear us clearly now. Then, and thank you for the question.

Speaker Change: Yes, I think first of all I think the sound was a couple of F 35 flying over us here in San Francisco. So hopefully you can hear us clearly now.

Matthew: And thank you for the question. I'm smiling because I would not necessarily have thought it would become such an advantage to have RUO and GNP chemistry manufacturing in San Diego, California. And similarly, enzyme manufacturing in to Florida, but we're seeing a tremendous amount of interest come from those facts. It just happens to be the result of where our businesses started and grew up, but it looks like it could become a significant strategic advantage. And we have people not only asking one level deep in the supply chain, but being interested, I think, for the first time that I've noted in how deep in the supply chain they can find out the origin story.

Unknown Executive: <unk>.

Speaker Change: And thank you for the question.

Unknown Executive: I'm smiling because, you know, I would not necessarily have thought it would become such an advantage to have RUO and GMP chemistry manufacturing in San Diego, California, and similarly enzyme manufacturing in Jupiter, Florida. But we're seeing a tremendous amount of interest come from those facts. It just happens to be the result of where our businesses started and grew up. It looks like it could become a significant strategic advantage. And we have people not only asking one level deep in the supply chain but being interested, I think, for the first time that I've noted, in how deep in the supply chain they can find out the origin story. So, yeah, I think it's going to actually become a pretty appreciable advantage for us moving forward here.

Speaker Change: I'm smiling because.

Speaker Change: I would not necessarily have thought it would become such an advantage to have.

Speaker Change: Oh, and G&P chemistry manufacturing in San Diego, California.

Unknown Executive: And similarly enzyme manufacturing in Jupiter, Florida, but we're seeing a tremendous amount of interest come from those facts.

Trey: The E, coli kit was developed for a specific strain that E, coli used for recombinant protein expression and is the only kid on the market for this specific strain. The fungal line HCP kit was developed in partnership with diatic international. The assay is expected to play an important role in facilitating the broad adoption of diatic C1 protein production platform, which enables rapid and efficient low cost production of antigens, monoclonal antibodies and other therapeutic proteins.

Speaker Change: Happens to be the result of.

Speaker Change: Where our business has started and grew up but.

Unknown Executive: It looks like it could become a significant strategic advantage and we have people not only asking one level deeper in the supply chain, but.

Speaker Change: Being interested I think for the first time that I've noted.

Kevin: How deep in the supply chain they can find out the deal.

Unknown Executive: Origin story, so, yes, I think it's going to actually become a.

Matthew: So, yeah, I think it's going to actually become a pretty appreciable advantage for us moving forward here.

Trey: We believe this partnership will help accelerate the adoption of the C1 platform, ultimately aiming to enhance access and affordability of health care for patients and developed in developing countries. The protein L kit, which is highlighted on slide 14, will be used for affinity purification on next generation antibodies, including bi-specific antibodies, tri-specific antibodies, and fragment antigen binding antibodies or fats. There are over 100 bi-specific antibodies in clinical development, most in the early stages.

Kevin: Pretty appreciable advantage for us moving forward here.

Matthew: That's good for me.

Speaker Change: Thats, great and Thats good for me. Thank you.

Justin Bowers: Your next question comes from a line of Justin Bowers from Deutsche Bank. Your line is open. Hi, good afternoon, everyone.

Unknown Executive: Your next question comes from the line of Justin Bowers from Deutsche Bank. Your line is open.

Speaker Change: Your next question comes from the line of Justin Bowers from Deutsche Bank. Your line is open.

Unknown Executive: Hi, good afternoon, everyone. Can you give us a sense of, well, number one, with Flanders 2, do you have that capacity built out now where you want it? Or are you still building out additional clean room capacity? And then can you give us a sense of what the timeline is like for that from when you just initially start adding equipment versus engineering runs versus when you're actually in revenue generation?

Justin Bowers: Hi, good afternoon, everyone.

Justin Bowers: Can you give us a sense of, well, number one, with Flanders 2, do you have that capacity built out now where you want it? Or are you still building out additional clean room capacity? And then can you give us a sense of what the timeline is like for that from when you just initially start adding equipment versus engineering ones versus when you're actually in revenue generation phase? Yeah, I think, as Kevin mentioned, we are really at the tail end here of the capital cycle. And as we mentioned in the comments about the EBITDA bridge, really have had some start some one-time startup costs, professional fees and other things to get the facility truly rolling.

Unknown Executive: Can you give us a sense of.

Justin Bowers: Well number one with lenders to do you have that capacity built out now where you want it or are you still.

Unknown Executive: Building out additional clean room capacity and then can you give us a sense of what the timeline is like for that from when you initially start adding equipment versus engineering runs versus when you're actually in revenue generation phase.

Trey: Since 2014, the FDA has approved nine bi-specific marketing applications to treat cancer as well as hematologic and ocular diseases. In the future, the FDA anticipates there will be a spectrum of bi-specific antibodies developed to prevent, treat, or diagnose diseases. For comparison, since 1986, the FDA approved over 100 full-length monoclonal antibodies. Full-length maps are purified with protein as A-resins. Bi-specific antibodies are purified with protein L-resins. Given the number of bi-specific antibodies in development, we believe there's high-growth potential for protein L-resin, and thus, we're pleased to introduce our residual protein L quantification assay, the protein L, mix and go elicit kit.

Unknown Executive: Yeah, I think, as Kevin mentioned, we are really at the tail end here of the capital cycle. And, as we mentioned in the comments about the Evadaw Bridge, we really have had some one-time startup costs, professional fees, and other things to get the facility truly rolling. We are doing this at the same time, however, so the whole rooftop has to open, obviously. But we are, let's say, scaling in from a labor perspective and a total overhead perspective as we fill that factory.

Speaker Change: Yes, I think as Kevin mentioned, we are really at the tail end here of the capital cycle.

Unknown Executive: And as we mentioned in the comments about the EBITDA bridge.

Unknown Executive: We have had some start with some one time startup costs professional fees and other things to get the facility truly rolling.

Justin Bowers: We are at the same time, however, so the whole rooftop has to open obviously, but we are, let's say, scaling in from a labor perspective and a total overhead perspective as we fill that factory, but there's no, there's no more substantial cat backs to do to turn on the multiple suites at this. So I think we've been, we've, we've shared this previously, but we have three parallel manufacturing suites, and there are jobs right now to fill them out.

Unknown Executive: We we are at the same time, however, so the whole roof top has to open obviously.

Unknown Executive: But we are let's say scaling in from a labor perspective, and in total overhead perspective, as we fill that factory, but there is no there.

Unknown Executive: But there's no more substantial CAPEX to do to turn on the multiple suites at this. I think we've been, we've shared this previously, but we have three parallel manufacturing suites, and it's our job right now to fill them up.

Unknown Executive: There is no more substantial capex due to turn on the multiple suites at this I think we've been we've we've shared this previously but we have we have three parallel manufacturing suites in there our job right now we feel the model.

Trey: As we celebrate our one-year anniversary of occupancy in our New Leland facility, we're proud to announce the completion of our new DNA laboratory. This 800-square-foot, full-service space is BSL-2 compliant with segregated areas for development, manufacturing, and cold storage. This new lab provides the dedicated space and capabilities for the development of our new line of DNA detection kits, demonstrating our commitment to continuously improve and broaden our best-in-class portfolio of host cell detection products.

Justin Bowers: Understood, and then quick follow up any change in the commended orders that you have for some of the larger commercial programs. For the bulk orders, no, no changes.

Unknown Executive: Okay. And then, quick follow up, any change in the committed orders that you have for some of the larger commercial programs?

Speaker Change: Understood and then quick follow up any change in the committed orders that you have for some of the larger commercial programs.

Unknown Executive: For bulk orders, no, and no changes.

Speaker Change: For the bulk orders known no changes.

Unknown Executive: Yes.

Speaker Change: Thank you.

Unknown Executive: Yes.

Connor McNamara: Your next question comes from a line of Connor McNamara from RBC Capital Markets. Your line is open.

Unknown Executive: Your next question comes from the line of Conor McNamara from RBC Capital Markets. Your line is open.

Speaker Change: Your next question comes from the line of Conor Mcnamara from RBC capital markets. Your line is open.

Trey: Finally, we're pleased that Cygnus was recently featured in BioFarm International for our cutting-edge antibody affinity extraction method. As in the NAF segment, we plan to continuously improve our offerings in BST to ensure differentiated solutions, superior technical support, the highest quality services and offerings, and the most comprehensive catalog of products to meet our customer's needs.

Connor McNamara: Hey guys, congrats on ice quarter and thanks for the questions. Just just as the follow up on the flenders to have you have you incorporated any phase two or phase three programs starts into your guidance this year? We'll start there.

Unknown Executive: Hey guys, congrats on ICE's quarter and thanks for the questions. Just as a follow-up on Flanders 2, have you incorporated any Phase 2 or Phase 3 program starts into your guidance this year? We'll start there.

Speaker Change: Hey, guys congrats on a nice quarter and thanks for the questions.

Unknown Executive: Just just as a follow up on the Flanders to have you have you incorporated any phase II phase III program starts into your guidance this year.

Speaker Change: We'll start there.

Unknown Executive: Yes. One of our first commitments was a Phase II-III pivotal project. So, yes.

Unknown Executive: Yes.

Connor McNamara: Yes, one of our first commitments was a phase two, three, so yes. Okay. Sorry. And then it could just, could you tell us, I know you guys have showed this in the past, but you know something that a trial that goes. You know, when a trial advances from preclinical to the clinic, you see a pretty big step up. Is there any way you can kind of quantify how big of an opportunity each of these programs are or how we should think about, you know, as you add in new programs? What's the potential benefit for new programs?

Unknown Executive: One of our first commitments was a phase III pivotal so yes.

Speaker Change: Okay.

Unknown Executive: Can you tell us, I know you guys have shown this in the past, but when a trial advances from preclinical to the clinic, you see a pretty big step up. Is there any way you can quantify how big of an opportunity each of these programs is? Or how we should think about, as you add in new programs, what's the potential benefit for new programs?

Speaker Change: Alright, and then.

Trey: Now moving to slide 15 in our commitment to deliver on questionable quality. TriLink, Cygnus, Glenn, and AlphaZine all recently hosted successful ISO odds. These always require tremendous effort from the quality team members, as well as many others on site. I was really pleased to hear how positive and complimentary the feedback was from our auditors about every process, system, site, instrument, and person involved. Quality is a central MRI objective, and the zero major observations and successful certification to ISO standards in each of the audits is a testament to our adherence to high quality standards.

Speaker Change: And then just can you tell us I know you guys have shared this in the past.

Unknown Executive: The trial that goes lumina trial advances from preclinical to to the clinic you see a pretty big step up is there any way you can kind of quantify how big of an opportunity. Each of these programs are or how we should think about as you add in new programs, what's the potential benefit for new.

Speaker Change: The new programs.

Unknown Executive: I understand where you're going with that, Conor, and it would be good if we could, but what we're seeing that we're actually excited about is, you know, the broadening of the use of mRNA from an infectious disease vaccine to part of, well, Tools for Cell and Gene Therapy for Protein Replacement Programs as the It has the message to be expressed for CRISPR gene editing and so on and so forth. And all of those have different delivery sizes and use cases.

Connor McNamara: I understand where you're going with that, Connor, and it would be good if we could, but what we're seeing that we're actually excited about is, you know, the broadening significantly of the use of mRNA from infectious disease vaccine. To part of, well, tools for cell and gene therapy for protein replacement programs as the. as the message to be expressed for CRISPR gene editing and so on and so forth. And all of those have different delivery sizes and use cases. So the historically the results we've shared have been what happens to a bulk GNP clean cap, well an RUO clean cap customer that's preclinical that goes bulk GNP clean cap in phase one and two and so on.

Unknown Executive: Yeah.

Speaker Change: I understand where youre going with that contract and it would be good if we could but what we're seeing that we're actually excited about is the broadening significantly.

Unknown Executive: Use of mrna from infectious disease vaccine.

Unknown Executive: Two.

Unknown Executive: Part of well tools for cell and gene therapy.

Trey: Before I turn the call over to Kevin, I'd like to let you know that in early July we published our third environmental, social, and governance report. Without question, our commitment to ESG goes hand in hand with achieving our company's long-term strategic objectives. On slide 16, you'll find some highlights from the report. This new report covers the 2023 fiscal year and provides an expansive look into our evolving ESG program, with tangible examples of how we're making a positive impact on our stakeholders and positioning our business for sustainable growth.

Unknown Executive: Sure.

Unknown Executive: Protein replacement programs.

Unknown Executive: As the.

Speaker Change: And as the message to be expressed for CRISPR gene editing and so on and so forth and all of those have different delivery sizes and use cases.

Unknown Executive: So historically, the results we've shared have been what happens to a bulk GMP clean cap, well, an RUO clean cap customer that's preclinical that goes bulk GMP clean cap in phase one and two, and so on. But when you blend in the service, and now, again, we're happy to see these different uses for mRNA and these different therapeutic targets, it unfortunately makes it more difficult to predict what the step up will be We just know that it's good progress at each stage.

Speaker Change: So the historically the results we've shared has been what happens to a bulk G&P clean cap and <unk> clean cap customer that's preclinical that goes both G&P clean cap in phase, one and twos and so on when you blend in the service and now again, we're happy to see these.

Connor McNamara: When you blend in the service and now again we're happy to see these different uses for mRNA and these different therapeutic targets. It unfortunately makes it more difficult to predict what the step up will be. We just know that it's a good progress at each stage.

Trey: A key ESG advancement was expanding our environmental disclosures to include SelectScope3 greenhouse gas emissions. These advancements will enable Maravai to better evaluate how to make meaningful emissions reductions in the future. I encourage you to review the report in the investor's section of our website. The comprehensive 50-page report is the accumulation of our enterprise wide effort to deliver holistic value to our stakeholders while scaling operations and executing our return to growth strategy in a socially and environmentally responsible manner.

Speaker Change: These different uses for mrna in these different therapeutic.

Unknown Executive: <unk> therapeutic targets.

Unknown Executive: It Unfortunately makes it more difficult to predict what the step up will be we just know that.

Unknown Executive: Good progress at each stage.

Connor McNamara: Right, and let me just sneak one in for Kevin if that's okay, Kevin.

Unknown Executive: Right. And let me just sneak one in for Kevin, if that's okay.

Kevin: Great and let me just sneak one in for Kevin If that's okay. Kevin did you can you quantify the opex change from Q2 to the second half of the year. It sounds like there is a couple million dollars of costs in there that wont repeat those should we assume that that opex on an absolute basis goes down from current levels.

Connor McNamara: Did you, can you quantify that the up X change from Q2 to the second half of the year? It sounds like there's a couple million of costs in there that won't repeat those. Should we assume that that op X on an absolute basis goes down from current levels? Yeah, I think on an adjusted EBITDA impacting basis, that's correct. Great.

Unknown Executive: Kevin, can you quantify the OPEX change from Q2 to the second half of the year? It sounds like there's a couple million of costs in there that won't repeat. So should we assume that OPEX on an absolute basis goes down from current levels?

Unknown Executive: Yeah, I think on an adjusted EBITDA impacting basis, that's correct, Conor.

Kevin: Yes, I think on an EBIT adjusted EBITDA impacting basis Thats correct.

Trey: Along with the safety and quality of our products, we are proud of our ESG advancements and are working meticulously to increase transparency and build the infrastructure necessary to support long-term sustainable growth. This team has done important work today and we are committed to being a strong corporate citizen. We look forward to keeping you apprised of our journey.

Unknown Executive: Great. Thanks, guys. I appreciate it.

Speaker Change: Great. Thanks, guys I appreciate it.

Connor McNamara: Thanks guys, appreciate it.

Unknown Executive: Your next question comes from the line of Michael Ryskin from Bank of America. Your line is open.

Michael Riskin: Your next question comes from a line of Michael Riskin from Bank of America. Your line is open.

Speaker Change: Your next question comes from the line of Michael Riskin from Bank of America. Your line is open.

Unknown Executive: Great. Thanks for taking the question, guys. And yeah, as I said earlier, the audio was a little bit in and out. So if you've answered this, I apologize that I must have missed it. But, Just on the marching guide revision for the year, that bridge you provided was helpful, and you called out the product mix, which makes a lot of sense. Transcripts provided by Transcription Outsourcing, LLC. How transient are some of those factors, right?

Michael Ryskin: Okay great.

Michael Riskin: Great. Thanks for taking the question, guys. And yes, earlier the audio was a little bit in and out, so if you answered this, I apologize that I must have missed it. But I just on the March in guide revision for the year. That bridge you provided was helpful, and you called out the product mix in BST, which makes a lot of sense. The Flanders start across, some of the initiatives. What I want to dig into is just sort of how transient are some of those factors. So the product mix that should be relatively transient, the Flanders cost, again, if you could run a little color on, if that's just start of cost or actual operating costs, it's coming out a little higher.

Unknown Executive: Thanks for taking the question guys and jazz earlier, the audio was a little bit in and out. So if you've answered. This I apologize that I must have missed it but.

Kevin: Moving to slide 17, I'll now ask Kevin to provide more details on our second quarter performance and our expectations for the balance of the year. Kevin? Appreciate it, right? Certainly it was a very busy quarter from Maravai as we continue to broaden and deepen our overall capabilities and offerings. I want to recognize the efforts of our entire team for not only delivering over 73 million in revenues in the quarter, but also the numerous operational and R&D accomplishments in the quarter which demonstrate the commitment and strength of our employees.

Speaker Change: I was just on the margin.

Unknown Executive: Revision for the year.

Rich: Rich you provided.

Unknown Executive: It was helpful. And then you called out the product mix and DSC, which makes a lot of sense.

Speaker Change: The Flanders startup cost some of the initiatives what I wanted to dig into is just sort of.

Speaker Change: How transient or some of those factors right. So the product mix that should be relatively transient.

Unknown Executive: So, you know, the product mix that should be relatively, The Flanders Cross, if you could write a little more color on, if that's just startup cost or actual operating costs coming in a little higher. And then same thing on the initiatives, the Johns Hopkins and some of those other collaborations. I imagine that's relatively one time in nature in terms of starting up that facility, starting up the collaboration, or is that something that's gonna have a run rate? Yeah, Yeah, sure. Happy to.

Unknown Executive: Flanders costs again, if you could provide a little more color on if that.

Kevin: Now let's dig into the Q2 financial results starting on slide 18. Revenue for the quarter was 73 million. Our gap net loss before non-controlling interests was 14 million for the second quarter of 2024. This compares to a net loss of 12 million for the second quarter of 2023. Adjust the EBITDA a non-gap measure was 17 million for Q2 2024 compared to 9 million for Q2 2023. Our adjusted EBITDA margin was 23% in Q2 2024 up from the 13% in Q2 2023 and up from the first quarter of 2024 is adjusted EBITDA margin of 12%.

Unknown Executive: Startup cost or actual operating costs come in at a little higher and then same thing on the initiatives that.

Michael Riskin: And then, same thing on the initiatives, the Johns Hopkins and some of those other collaborations. I imagine that's relatively one-time in nature in terms of starting up that facility, starting up the collaboration.

Unknown Executive: Johns Hopkins and some of those other collaborations.

Unknown Executive: I imagine thats relatively onetime in nature in terms of starting up that facility starting up the collaboration.

Michael Riskin: Or is that something that's going to have a run rate in the model going forward? Yeah. That into it. Yeah, sure. Happy too. Yeah, certainly on the Flanders cost, that we've incurred a year-to-date close to almost $3 million now of, I would say, really incremental costs to bring up our quality systems, have the documentation, have the validation, stock the facility with things that are not inventoryable items that are therefore used over the manufacturing periods going forward. So we've gone ahead and just included those in our expense burdens. I know some companies choose to exclude those as pre-revenue startup costs, but we've just fleshed those through our P&L.

Speaker Change: Or is that something that's going to have a run rate in the model going forward.

Unknown Executive: Yes.

Unknown Executive: Dive into it.

Unknown Executive: Yeah, certainly on the Flanders cost that we've incurred a year to date, you know, close to almost $3 million now of, I would say, really incremental costs to bring up our quality systems, have the documentation, have the validation, you know, stock the facility with things that are not inventoryiable items that are therefore used over the manufacturing periods going forward. So, you know, we've gone ahead and just included those in our expense burden.

Unknown Executive: Yes, sure happy to.

Unknown Executive: Certainly on the on the Flanders cost that we've incurred a year to date.

Unknown Executive: Close to three.

Unknown Executive: $3 million now I would say.

Unknown Executive: Sure.

Unknown Executive: Really incremental costs too.

Unknown Executive: Bringing up our quality systems have the documentation asset validation.

Kevin: Overall, while the EBITDA margin our second quarter was solid, it trailed our expectations. As we have seen over the past six quarters, both our revenues which have arranged from 64 million to 79 million and our adjusted EBITDA margins which have arranged from 12% to 30% have shown a fair amount of variability. For the trailing 12 months, our adjusted EBITDA margin stands 21% on revenues of 279 million.

Unknown Executive: <unk>.

Unknown Executive: Facility with things that are not inventory of the items that are therefore used over the manufacturing creates going forward. So we've gone ahead and just included those in our expense burden that have some companies choose to exclude those.

Unknown Executive: As pre revenue start up costs, but we've just flesh those through our P&L. So most of that will be period and isolated to the first half of the year and then we will be starting to generate revenue and not see those as an incremental drag on margins prospectively.

Unknown Executive: I know some companies choose to exclude those as pre-revenue startup costs, but we've just flushed those through our P&L. So most of that will be periodical and isolated to the first half of the year, and then we'll be starting to generate revenue and not see those as an incremental drag on margins prospectively. As it relates to a couple of the other things that we mentioned specifically, certainly our startup expenses for the collaboration with Johns Hopkins, as well as some of our smaller licensed deals that we haven't talked about publicly in our enzyme division, all were basically drags on the first half and will kind of come in and out of some of the quarters as we look at them prospectively.

Michael Riskin: So most of that will be period and isolated to the first half of the year. And then we'll be starting to generate revenue and not see those as an incremental drag on margins prospectively. Has it relates to a couple of the other things that we mentioned specifically.

Kevin: With a recommendation of your questions, will we focus on margins?

Kevin: Let me spend some time discussing this topic on slide 19. As we look back, when we last achieved revenues near this level, we only have to look back to Q4 2023 in which revenues for 74.1 million and our adjusted EBITDA was 28%. 27.7% to be exact, which was 470 basis points higher than this current Q2 2024 performance.

Unknown Executive: As it relates to a couple of the other things that we mentioned specifically certainly.

Michael Riskin: Certainly, our startup expenses for the collaboration with Johns Hopkins, as well as some of our smaller license deals that we haven't talked about publicly in our enzyme division, all were basically drags on the first half and will kind of come in and out of some of the quarters as we look at it prospectively. But overall, when you think about all of those different costs, they will predominantly be behind us as you move on for the rest of the year. Thank you.

Unknown Executive: Our startup expenses with the collaboration with John Hopkins as well as some of our smaller license deals that we haven't talked about publicly in our enzyme division all were paid.

Unknown Executive: Basically drags on the first half and will kind of come in and out of some of the quarters as we look at it prospectively, but overall when you think about all of those different costs, they will predominantly be behind us as we.

Unknown Executive: But overall, when you think about all those different costs, they will largely be behind us as you vote for the rest of the year. Okay, okay, that's helpful. And then as far as some of the new product introductions, you know, you're highlighting, my belief is they're a relatively small contributor to revenues now and won't gradually ramp up over time. So correct me if that's wrong.

Kevin: I will spend a few moments broadly reconciling to that data point and discussing some of our profitability dynamics. First, our overall product mix and related contribution with the primary item in this bridge. And frankly, the largest contributor to the variance toward internal expects. RBST Business, which we expected to decline about a million from its strong Q1 2024 performance to climb more than anticipated, ending the quarter at 15 million or 3 million below Q1.

Unknown Executive: Going forward for the rest of the year.

Michael Riskin: Okay, okay, that's helpful. And then, as far as some of the new product discussions, you know, you're highlighting, I mean, my belief is they're relatively small, contributed to revenues now and, you know, won't gradually ramp over time. So correct me if that's wrong.

Speaker Change: Okay. Okay. That's helpful and then as far as some of the new product introductions.

Speaker Change: Youre highlighting.

Speaker Change: I mean my mic.

Speaker Change: Belief is they are relatively small contributor to revenues now and we gradually ramp over time.

Speaker Change: Correct me if that's wrong.

Michael Riskin: But then I also want to ask about the big mental even contribution from those, you know, we know your historical, you know, clean cap and BSD. The margins, how should we think about these new products relative to that? Are the incremental to margins, essentially, or just think about them as more in line with. Thanks. Yeah, I think, well, predominantly our incremental products, again, this is for us, continues to be, you know, more of a relative game than a lot of varying margins within that. You know, we do see a little bit based on the customer channel and some of the different business units that we have, but overall, I mean, especially as relates to the discovery products, I mean, this for us is, you know, an infrastructure that we have in place; the incremental variable costs aren't much different.

Unknown Executive: But then I also want to ask about the incremental EBITDA contribution from those. We know your historical, you know, clean cap and BSE margins. How should we think about these new products relative to that? Are they incremental to margins, essentially, or should we just think about...

Speaker Change: But then I also want to ask about the incremental EBIT contribution from those we know your historical clean.

Kevin: That variance, combined with lower absorption at our BST manufacturing facility, led to about 2 million and lower adjusted EBITDA as compared to Q4 2023. This is roughly a 270 basis point impact. The second item to detail represents our higher startup costs and preparedness expenses tied to our new Flanders facility. These costs totaled $2.5 million in the quarter, up from 1 million in Q4 2023. This $1.5 million incremental expense was primarily tied to third-party consultants that have completed most of their work.

Speaker Change: Clean cap and DSD margins.

Speaker Change: Should we think about these new products relative to that.

Speaker Change: Or are the incremental margins essentially or should we just think about them as more in line with <unk>.

Unknown Executive: Thanks.

Unknown Executive: Yeah, I think, well, predominantly, our incremental products, again, this is, for us, continues to be, more of a revenue game than a lot of varying margins within NAP. We do see a little bit based on the customer channel and some of the different business units that we have. But overall, I mean, especially as it relates to the discovery products, I mean, this, for us, is, you know, an infrastructure that we have in place.

Speaker Change: Yes, I think we will predominantly our incremental products again. This is for US continues to be more of a revenue game than a lot of bearing margins within nap.

Unknown Executive: We do see a little bit based on the customer channel and some of the different business units that we have but overall I mean, especially as it relates to the discovery of products I mean this for us is.

Kevin: This impact of the EBITDA margin by approximately 200 basis points in Q2 2024 versus Q4 2023. Lastly, Q2 2024 contained incremental expenses in our R&D efforts and costs associated with our Johns Hopkins collaboration. These items are roughly a million in total or about 150 basis points of impact. To sum up those items, they totaled around 620 basis points of margin impact versus Q4 2023 levels. Offsetting some of that saluted impact of the aforementioned items was the benefit of our cost saving actions, the net impact of all other items, which in total provides 150 basis points of benefit, completing the 470 basis point locked down from the Q4 2024 EBITDA margins.

Unknown Executive: In infrastructure, we have in place the incremental variable costs are much different.

Michael Riskin: We're trying to put together really, you know, solutions that are best for our customers that drive revenues, and those overall revenues, you know, drive margin expansion for us. So, you know, for us, again, strategic and, you know, overall financially beneficial, you know, just drive the total revenue numbers. All these products have high variable margins and, again, mostly generated by our already established facilities and workforce. Gotcha.

Unknown Executive: Trying to put together really solutions that are best for our customers that drive revenues in those overall revenues drive margin expansion for us so for us again in strategic and overall financially beneficial.

Unknown Executive: The incremental variable costs aren't much different. We're trying to put together really, you know, solutions that are best for our customers that drive revenues, and those overall revenues, you know, drive margin expansion for us. So, you know, for us, again, it's strategic and, you know, overall financially beneficial. You know, just to drive the total revenue numbers, all these products have high variable margins and are again, mostly generated by our already established facilities and workforce.

Unknown Executive: Just to drive the total revenue number as to how these products have high variable margins and again, mostly generated by our already established.

Unknown Executive: Facilities and workforce.

Speaker Change: Got you.

Matt LaRue: Your next question comes from a line of Matt LaRue from William Blair. Your line is open. Yeah, after maybe a stick on the new products side, I'm sure you highlighted what now is part number of new products filling out for the mRNA production suite. Your efforts, part of that obviously, is the workflow and the ability to access more wallet. Perhaps relative to clean cap, could you characterize, you know, the size of some of the markets that you're able to access with the new products?

Unknown Executive: Your next question comes from a line from Matt LaRue from William Blair. Your line is open.

Unknown Executive: Your next question comes from the line of Matt Larew from William Blair. Your line is open.

Kevin: I will speak more to our margin in our updated 2024 guidance section in a bit.

Unknown Executive: I'm going to maybe just stick on the new product side, as you highlighted. What now is quite a number of new products filling out for the mRNA production suite, and a referenced part of that obviously is the workflow and the ability to access more wallets. Perhaps relative to CleanCap, could you characterize the size of some of the markets that you're able to access with the new products and if there are any of these new products in particular where you view your approach, your technology, the service offering, and product offering, you know, to be particularly differentiated and one that you might see drive more growth? Yeah,

Matt LaRue: Good afternoon, maybe just stick on the.

Speaker Change: The new product side, you highlighted what.

Kevin: Moving to slide 20 and EPS, a second diluted EPS for the second quarter was a loss of 5 cents per share, the famous Q2 2023. Adjusted EPS was 0 for the quarter, also consistent with the prior year's second quarter.

Speaker Change: What now is.

Speaker Change: A number of new products going out.

Speaker Change: Our net production suite.

Speaker Change: You referenced part of that obviously is the workflow.

Speaker Change: Hello to access more wallet.

Speaker Change: Perhaps relative to clean cap could you characterize that.

Kevin: Moving forward to the year in balancing cash flow and other financial metrics on slide 21. As Craig mentioned, we ended the quarter of 573 million cash, up 11 million from the end of Q1 2024 and 530 million in long term debt, resulting in a $43 million net cash position. For Q2 2024, cash provided by operations was 17 million. Capital expenditures net of barter reimbursements were 6 million in the quarter, a bit lighter than anticipated based on the timing with the final outfitting stage of some of our funder's buildings.

Speaker Change: The size of some of the markets you're able to access.

Speaker Change: With the new products and if there are any.

Matt LaRue: And if there are any of these new products in particular where you view your approach, your technology, the service offer, product offering, you have to be particularly differentiated and one that you might be drive more growth. Yeah, absolutely. Within the framework of the mRNA, IBT workflow, there are certainly bulk commodity chemicals. There are obviously enzymes, and there are differentiated chemicals, or excuse me, differentiated technologies, which are, you know, workflow technologies that manifest themselves in our service business or. Products, you know, materials and methods that manifest themselves like clean cap. We are definitely looking for both internally organic innovation around differentiated solutions to bring the next generation of workflows to market.

Speaker Change: These new products in particular.

Speaker Change: Your view.

Speaker Change: Your approach your technology service offering a product offering that would be particularly differentiated and one that you might see drive more growth.

Unknown Executive: Yeah, absolutely. Within the framework of the mRNA IVT workflow, there are certainly bulk commodity chemicals, there are obviously enzymes, and there are differentiated chemicals or, excuse me, differentiated technologies, which are, you know, workflow technologies that manifest themselves in our service business or products, you know, materials, and methods that manifest themselves through CleanCap. We are definitely looking for both internal and organic innovation around differentiated solutions to bring the next generation of workflows to market.

Speaker Change: Yes, absolutely.

Unknown Executive: Within the framework of the mrna Aibt workflow there are certainly bulk commodity chemicals.

Speaker Change: There are.

Kevin: Appreciation and amortization was 12 million in the quarter, which is in line with our expectations and annualized guidance. Interest expense net of interest income was 5 million in the quarter consistent with our expectations. Stock-based compensation and non-cash charge was 14 million for the quarter, also in line with our expectations. Now we ended Q2 with 141 million class A shares outstanding and 111 million class B shares outstanding for a total of 252 million shares outstanding. The fully diluted share cap impacting our just EPS metrics was 254 million total shares in the quarter and 253 million total shares on either day basis.

Unknown Executive: Enzymes and there are differentiated chemicals or excuse me <unk> differentiated technologies.

Unknown Executive: Which are workflow technologies that manifest themselves in our service business or.

Unknown Executive: Products materials and methods that manifest themselves by clean cap.

Unknown Executive: We are definitely looking for.

Unknown Executive: Both internally organic innovation around differentiated solutions to bring the next generation of workflows to market, but a big part of this lift I think that you've identified is just to make sure. We cover all the fundamental elements of the IBD workflow.

Unknown Executive: But a big part of this lift, I think, that you've identified is just to make sure we cover all the fundamental elements of the IVT workflow. Thanks to the acquisition of AlphaZyme, we now have access to very high quality, high purity enzymes for our customers to blend with the already stellar position that Trilink and MyChem have within the nucleic acid chemistry space. So what you're hearing and commenting on here is the aggregation of all of the inputs to the IVT workflow.

Matt LaRue: But a big part of this lift, I think that you've identified, is just to make sure we cover all the fundamental elements of the IBT workflow. Thanks to the acquisition of Alphazine, we now have access to very high quality, high purity enzymes for our customers to blend with the, the already stellar position that Tri-Link and My Kim had within the nucleic acid chemistry space. So what you're, what you're hearing and commenting on here is the aggregation of all of the inputs to the IBT workflow, and what our, our innovation is focused on is finding more differentiated ways to bring about the next generation of mRNA through solutions like clean cap.

Kevin: Next, the slide 22 and the discussion of segment performance in the quarter. Howard McLeague, acid production segment, which includes both our discovery and GMP products and services marketed under our trialing, Glenn Research and Alpha Zine Brands, had revenues in the second quarter of 58 million, and adjusted EBITDA of 21 million, a margin of 36%. Our biologic safety testing segment, which includes products from our fitness brand, had revenues of 50 million in the second quarter, and adjusted EBITDA of 9 million, and adjusted EBITDA of 63%.

Unknown Executive: Thanks to the acquisition of <unk>, we now have access to.

Unknown Executive: Very high quality high purity enzymes for our customers to blend with the the.

Speaker Change: <unk> already stellar position that trend Lincoln Mike him.

Speaker Change: It had it within the nucleic acid chemistry space, So what youre, what youre hearing and commenting on areas.

Unknown Executive: The aggregation of all of the inputs to the IV workflow and what are our innovation is focused on is finding more differentiated ways to bring about the next generation of mrna through solutions like clean cap I can't flash those that of course, we haven't released yet, but I am pretty excited that there.

Unknown Executive: And what our innovation is focused on is finding more differentiated ways to bring about the next generation of RNA through solutions like CleanCap. I can't flash those that, of course, we haven't released yet, but I'm pretty excited that there are so many different places within the workflow and within the inputs to improve performance overall. Overall, I think we're going to bring mRNA purity up, yield up, and cost down for our customers. And we can bring that, we can make that possible, as you've said, from a wallet share perspective with a one-stop shop. But our intent is to continue driving the industry forward with innovation within that framework.

Kevin: Lower than recent trends, as previously mentioned, corporate shared service expenses, impacting adjusted EBITDA, total of 4.2 million in the second quarter, down over 1.6 million from the comparable second quarter of 2023. Overall, Q2 was solid, with revenue in line with our expectations, margins slightly below as a result of a few specific items as discussed, and it continues solid balance sheet and cashflow performance.

Matt LaRue: I can't flash those that, of course, we haven't released yet, but I'm pretty excited that there are so many different places. within the workflow, and within the inputs to improve performance overall. Overall, I think we're going to bring mRNA purity up, yield up, and cost down for our customers. And we can bring that; we can make that possible, as you've said, from a wallet share perspective with one stop shop. But our intent is to continue driving the industry forward with innovation within that framework.

Unknown Executive: So many different places.

Unknown Executive: Within the workflow and within the inputs to improve performance overall overall I think we're going to bring mrna purity up.

Unknown Executive: Yield up and costs down for our customers.

Kevin: So, with half of 2024 in the books, let me now detail how we are now thinking about the full year of 2024 on slide 23. Based on Q2 revenues being aligned with our expectations and our current assessment of the likely range of revenue outcomes of the year, we remain comfortable with the existing 2024 total revenue range of 265 to 285 million. Looking at the segments, our biologic safety testing business printed a strong 18 million all first quarter, but was followed by a weaker than expected Q2 based upon some lingering uncertainty in China.

Unknown Executive: We can bring that we can make that possible.

Unknown Executive: As you said from a wallet share perspective, with a one stop shop.

Unknown Executive: But our intent is to continue driving the industry forward with innovation within that framework.

Matt LaRue: Okay, thank you. And then just on Flanders 2, you mentioned the winning RFPs for bills starting in the second half. Could you maybe speak to how the funnel behind some of those initial wins is building what you're seeing from a phase or customer mix perspective, you know, how many of those potential RFPs relate to customers who are existing Cleanly. I think that customers, and then maybe just sort of when the size or activity level is, you know, kind of on a quarter basis. Thank you for that question. It's well time because I think Becky was getting a little lonely.

Unknown Executive: Okay, thank you. And then just on Flanders, too, you mentioned that winning RFPs for bills started in the second half. Could you maybe speak to how the funnel behind some of those initial wins is building, what you're seeing from a phase or customer mix perspective, you know, how many of those potential RFPs relate to customers who are existing Clean Cap customers and then maybe just sort of when the size or activity level is, you know, kind of on a quarter-by-quarter basis.

Speaker Change: Okay. Thank you.

Unknown Executive: And then just on Flanders too you mentioned, winning Rfps for Bill starting the second half.

Speaker Change: Could you maybe speak to help them.

Donald: Donald behind some of those initial wins.

Unknown Executive: Building and what Youre seeing from.

Kevin: Based on the first half and the outlook for the second half, we now see the BST segment up in the low single digits for 2024. After taking this estimated performance for the BST business, the NAS segment will be roughly around 210 million at the midpoint of our revenue guidance for 2024, with the sensitivities to this midpoint most around the performance of our trialing brand of discovery business, and the extent and timing of GMP related service revenues in the second half of 2024.

Unknown Executive: Our customer mix perspective.

Unknown Executive: Many of those.

Unknown Executive: Potential rfps relate to customers, who are existing clean cap.

Unknown Executive: Customers and then maybe just sort of what the size or activity level.

Unknown Executive: Yes.

Unknown Executive: Quarter over quarter basis.

Unknown Executive: Thank you for that question. It's well-timed because I think Becky was getting a little lonely. Becky, do you want to talk about customer progression, bookings, GMP, phasing, all that? Sure, we've had that conversation before.

Unknown Executive: Thank you for that question, it's well time, because I think Becky was getting a little lonely. Thank you do you want to talk about customer progression bookings GMP phasing all of that.

Becky Buzzeo: Becky, do you want to talk about customer progression, bookings, GMP, phasing, all that? Sure, we've had a strong interest in our GMP services to manufacture clean cap mRNA drug substance. And that has, it's continued to be quite strong for us this year and building our funnel. We've made additions to our commercial team, both on the technical side and then on the seller side. And we have seen, you know, a really nice doubling of our funnel from Q1 to Q2. And it's across different indications. So, you know, cell and gene therapy, protein replacement; those are the places that we've seen the most activity.

Kevin: As for the gating of revenue, with 138 million in first half revenues and a 275 million midpoint of our range, this second half at 137 million at the midpoint, or about 68 million to 69 million per quarter, and we see Q3 likely in that 65 to 70 million dollar range.

Becky Buzzeo: Sure, we've had a strong interest in our GMP services to manufacture clean cap mRNA drug substances. And that has continued to be quite strong for us this year in building our funnel. We've made additions to our commercial team, both on the technical side and then on the seller side. And we have seen, you know, a really nice doubling of our funnel from Q1 to Q2, different indications. So, you know, cell and gene therapy, protein replacement, those are the areas where we've seen the most activity.

Unknown Executive: Sure.

Becky: We've had.

Becky Buzzeo: A strong interest in our G&P services to manufacturer.

Becky Buzzeo: Clean cap mrna drug substance and that has.

Becky Buzzeo: It continued to be quite strong crop this year in building our funnel.

Kevin: Now we see the profitability metrics likely lower than our initial guidance for 2024 that we left unchanged after Q1. We now see the adjusted EBITDA margin expectations of 20% to 22%. And our full year adjusted EPS and the range of a two set loss to an eight cent loss per share. This 300 basis point reduction in our estimated adjusted EBITDA margin stems mostly from our product mix, the higher than initially anticipated planters start up costs. And the expenses associated with the more recent initiatives that we believe are the right foods for the business, including the jobs, Hopkins funding, and licensed deals in our ends and business unit.

Becky Buzzeo: We've made additions to our commercial team both on the technical side and then on the seller side.

Becky Buzzeo: We have seen.

Becky Buzzeo: Really nice doubling of our funnel from Q1 to Q2.

Becky Buzzeo: And it's across.

Becky Buzzeo: Different indications so yes.

Becky Buzzeo: So in gene therapy.

Becky Buzzeo: Protein replacement.

Becky Buzzeo: Those are the places that we've seen.

Becky Buzzeo: In the most activity.

Operator: Okay.

Speaker Change: Okay. Thank you.

Becky Buzzeo: Okay.

Unknown Executive: Rob, I think we have time for one last question here. Thank you.

Kyle Cruz: Rob, I think we have time for one last question here.

Becky Buzzeo: Rob I think we have time for one last question here.

Kevin: As the supplies given the first half performance, this results in a second half adjusted EBITDA margin around 24%. Resulting from consistent math performance, a step up in BST revenues from Q2 levels, the completion of the Flanders start up costs and overall cost control efforts and operating expenses.

Unknown Executive: Thank you. Your final question comes from a line of Kyle Cruz from UBS. Your line is open.

Kyle Cruz: Thank you. Your final question comes from a line of Kyle Cruz from UBS.

Unknown Executive: Your final question comes from the line of Kyle Cruz from UBS. Your line is open. Hey, thank you for taking the question. Could you please describe if you're recently announced by agreement?

Speaker Change: Thank you. Your final question comes from the line of Kyle crews from UBS. Your line is open.

Kyle Cruz: Your link is open. Okay.

Kyle Cruz: Thank you for taking the question. Could you please describe if you're recently announced by agreements with large CDMOs for agreements you have with their party distributors or influencing how you think about adjusted even margins going forward. And on a similar note with planters to opening up, how do you view some of the CDMOs you're supplying clean cap as competitors and partners for work going forward?

Kyle Cruz: Hey, Thank you for taking the question could you. Please describe your recently announced five agreements with large gmos or agreements you have with third party distributors are influencing how you think about adjusted EBIT margins going forward and.

Kevin: Our guidance also holds the following expectations in 2024. Interest expense, net of interest income, to be between $20 million and $25 million, a slight improvement from our previous guidance given our tight treasury operations and the continued benefit from our interest rate cap contracts given the lack of rate cuts. Appreciation and amortization between $45 million and $50 million, equity-based compensation, which we show as a reconciling item from gas to non-gaffee, but to be between $45 million and $50 million, and as a fully converted share count of $254 million shares of a year and an adjusted effective tax rate of 24%.

Speaker Change: On a similar note with lenders to opening up how do you view some of the CD modes, you're supplying clean cap as competitors and partners.

Kyle Cruz: Thank you.

Speaker Change: Going forward. Thank you.

Kyle Cruz: Yeah, I'll take the latter part first, and then hand the first part to Kevin. We look, we want to make sure that our technology is in every molecule. So we realize that that's unlikely if we try to hold to type to the idea that, you know, you have to do everything with us. And we have not specced planters to satisfy the need of every customer, obviously, in every continent. That's why we have these key partnerships with the leading CDMOs, like Fuji, like Lonza, that we've announced. It's a key part of our program. And of course, we would love the service business, but we want to make sure that we have differentiated products.

Unknown Executive: Yeah, I'll take the latter part first and then hand the first part to Kevin. As we look, we want to make sure that our technology is in every molecule. So we realized that that's unlikely if we try to hold too tight to the idea that, you know, you have to do everything with us. And we haven't spec'd Flanders 2 to satisfy the needs of every customer, obviously, on every continent.

Speaker Change: Yeah, I'll take the latter part first and then hand, the first part to Kevin.

Unknown Executive: We look we want to make sure that our technology is in every molecule.

Unknown Executive: So we realized that thats unlikely if we try to hold.

Kevin: Two type to the idea that you have to do everything with us and we have not specced Flanders too.

Kevin: Finally, we see total net capital expenditures of around $30 million for 2024.

Kevin: To satisfy the need of every customer obviously in every continent.

Unknown Executive: That's why we have these key partnerships with the leading CDMOs, like Fuji, like Lonza, that we've announced. It's a key part of our program. And of course, we would love the service business, but we want to make sure that we have differentiated products, we help bring about the next generation of mRNA, and that we help with that, whether it's just with products, or whether it's product and service. Kevin, I'll hand you the front side. Yeah, I mean, these relationships are really strategic.

Unknown Executive: That's why we have these key partnerships with the with the leading CDN most like Fuji like Lonzo that we've announced it's a key part of our program and of course, we would love the service business, but we want to make sure that we have differentiated products. We help bring about the next generation of mrna.

Trey: So thanks for your time today.

Trey: We're now from the call back over to trade. Thanks, Kevin. So to wrap up on slide 25, we had a solid first half of the year and are tracking against the revenue guidance range we originally communicated to you in March. We are executing on our return to growth strategy and your today have introduced significant new innovations to the market that further extend our leadership across the entire mRNA production workflow, as well as increasing our manufacturing capacity at our tri-linked Flanders 1 and Flanders 2 facilities in these high-value areas.

Kyle Cruz: We help bring about the next generation of mRNA and that we help with that, whether it's just with product or whether it's product insert.

Kevin: And that we help with that whether it's just with product or whether it's product and service.

Kyle Cruz: and Kevin, I'll hand the front side. Yeah, I mean, these relationships are really strategic and about a symbiotic relationship here to help these large CDMOs help their customers with getting access to the best technologies to give them the best end product, and certainly throwing clean cap into that portfolio is incredibly important as far as economic considerations. It's really still boils down to volume. This is really, there's not stand alone, you know, distributor type pricing or anything of that nature embedded here. This is really about the underlying program or the volume of that program is, and we stay pretty disciplined to volume-based pricing.

Kevin: And Kevin I'll hand, the front side, yes, I mean, these relationships are really strategic and about a symbiotic relationship here to help these large <unk> helped their customers for getting access to the best technologies to give them the best product and certainly try and clean cap into that portfolio is incredibly important as far as.

Unknown Executive: Yeah, I mean, these relationships are really strategic and about a symbiotic relationship here to help these large CDMOs help their customers with getting access to the best technologies to give them the best end product. And certainly, throwing CleanCap into that portfolio is incredibly important.

Trey: Our Cygnus team continues to innovate with new product introductions and market-expanding technologies. We have incredible and passionate teams across Maraville and the opportunity to do amazing things for human health. Our balance sheet remains strong and we are well positioned to execute on opportunities for both organic and inorganic investments to bolster our market position and provide our customers with innovative solutions. We remain confident in the fundamental strength of our end markets and the value we provide our customers for the life-changing development of drug therapies, diagnostics, and novel vaccines.

Unknown Executive: As far as economic considerations, you know, it really still boils down to volume. This is really because there's not standalone, you know, distributor-type pricing or anything of that nature embedded here. This is really about the underlying program, what the volume of that program is, and we stay pretty disciplined to volume-based pricing. So, you know, economically, as we drive volumes through these incremental channels, I would not see the underlying margins differ much from historical margins.

Unknown Executive: Ohmic.

Unknown Executive: Considerations, it's really still boils down to volume and this is really theres not stand alone.

Unknown Executive: Distributor type pricing or anything of that nature embedded here. This is really about the underlying program on the volume of that program as we stay pretty disciplined to volume based pricing. So economically as we drive volume through these incremental channels that would not see the underlying margins differ much from historical margins.

Kyle Cruz: So, you know, economically, as we drive volumes through these incremental channels, that would not see the underlying margins different much from historical margins.

Unknown Executive: Okay.

Operator: And that concludes our question-and-answer session.

Debra Hart: And that concludes our question and answer session. I will now turn the call over to Debra Hart for closing remarks.

Deborah <unk>: And that concludes our question and answer session I will now turn the call over to Deborah <unk> for closing remarks.

Debra Hart: I will now turn the call over to Debra Hart for closing remarks. Well, we just want to thank you for joining us today. We'll be attending several financial conferences in the coming week, so we could try to connect with you at one of those events. Feel free to reach out with any further questions, and we hope you have a great evening.

Trey: We remain committed to building a strong foundation for long-term, diversified, and sustainable growth for our businesses.

Debra Hart: Well, we just want to thank you for joining us today will be attending several financial conferences in the coming weeks.

Operator: I would now like to turn the call back over to the operator to open up the line for your questions. Thank you.

Speaker Change: Try to connect with you that one of those events.

Debra Hart: Feel free to reach out with any further questions and we hope you have a great evening.

Operator: We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. We ask you please limit yourself to one question and one follow-up.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Debra Hart: This concludes today's conference call. Thank you for your participation you may now disconnect.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Operator: Please wait. The conference will begin shortly. Thank you very much.

Debra Hart: Please wait the conference will begin shortly.

Operator: Sure.

Catherine Schulte: Your first question comes from the line of Catherine Schulte from Baird. Your line is open. Hi, guys. Thanks for the questions. First, you know, great to see NIP get back to double-digit growth here in the quarter.

Operator: [music].

Catherine Schulte: Were there any one-timers or lumpy orders that you saw in the second quarter, and then why should we expect to see if the client and revenue in the third quarter? Is that primarily on the NIP side or BST? Yeah, I'm happy to take that, Catherine. Yeah, I would say that as a relapse to this sequential slide decline in NIP, it would be in that segment and NIP segment, and we do see, you know, some of the orders that we had scheduled at the beginning of the year dating that way.

Operator: Okay.

Operator: Sure.

Operator: Yes.

Operator: Yes.

Operator: Yes.

Operator: Yes.

Operator: Yes.

Operator: Sure.

Operator: Yes.

Operator: [music].

Catherine Schulte: So, you know, second quarter contains some of those kind of high-volume clean cap orders, and that is going to step down a little bit to squench the third quarter and result in NIP being able to, a little bit. We're hopeful that BSD can recover certainly from that low water point that we saw there in the second quarter. We've discussed that dynamic a little bit. One of the interesting things about having GMP services and GMP products is that while GMP services, unfortunately, will tend to move out if there's movement.

Catherine Schulte: Sometimes GMP products can come in and go out within the quarter or in some cases within the month. So we did, as you identified, Catherine, have a little bit of that here in Q2, the GMP products that's within that were helpful.

Catherine Schulte: Okay, I got it.

Catherine Schulte: And then maybe for BST, can you just remind us how much of your business is in China and how is that business performing outside of China? Yeah, that you can explain over 80% of the BST results with China drops specifically. That's really the only place where we have any China exposure, as you know, the growth in BST, China came during the 21-22 COVID period. And then of course, we took that leg down in the second half of 22.

Catherine Schulte: Since then, honestly, we've had five very steady quarters. So the drop that happened here in Q2 in BST, China specifically was a surprise to us and our distribution partners, actually. I don't think that we've specifically carved out exposure, but it's now, let's say, in the teens for BST.

Catherine Schulte: Great.

Matthew Cites: Your next question comes from a line of Matthew Cites from Goldman Sachs. Your line is open.

Matthew Cites: Hi, this is Evian from AdThings for taking my questions. The first one, can you talk through what you're seeing from pharma customers within their discovery R&D spend versus some later stage projects? Have you seen a repartiation of spend as companies looked to cut costs that maintain investment in their later stage projects? Sure, I think I'll hand that one to Drew. Sure, thanks, Trey. Yeah, I think that's a fair statement we have seen, you know, and we've found the companies publicly.

Matthew Cites: We've spent some repartiation across the sector. It's a little tough to tie to, you know, one company or another company, but there's a fair amount of portfolio moves. So overall, we've seen positive dynamics in terms of mRNA program starts, and so we think the fundamental backdrop is positive, but each given company may be re-prioritizing as they move forward.

Matthew Cites: Okay, that's helpful.

Matthew Cites: And then this is more of a broad question on your strategy. So understand the focus on winning a discovery and then shifting customers to GMT as they move along their pipelines. But will you try to poach programs as they move from clinical to or from the discovery to clinical from like players doing internally? Yeah, I think that's probably the biggest market opportunity because it's it's still early days in mRNA. I think everyone knows that we're all excited because of how quickly we saw it, you know, go from a concept or the last mile to and the billions of doses of vaccines.

Matthew Cites: But really the ecosystem and the programs that are at play, many of them started in-house, and many people still perform the mRNA production process in-house. One of the things we've seen to your point is you hear us talk about what we call our clean script workflow, which is the workflow that we've done hundreds and hundreds of times here, and very often we have people who make the choice having run programs internally.

Matthew Cites: Do we go through the trouble of tech transferring our program, or do we just bolt into the well-traveled clean script process, which has already gone for so many programs at different phases? So we actually see that conversion as probably one of the biggest opportunities we have.

Matthew Cites: As programs modernize, and as we have the opportunity for uptake to bring efficiency to those programs. Great, thank you.

Tejas Savant: Your next question comes from a line of Tejas Savant from Morgan Stanley. Your line is open. Hey guys, good evening, and thanks for the time here. A couple of quick ones for you, Craig, to kick things off. Sort of following up on that earlier question on just Smith Gap biotech, right? I mean, we had a large pre-clinical CRO this morning, ticked down numbers pretty dramatically in the back half, citing weakness on the global biopharma side as well as on the biotech side.

Tejas Savant: And so what are you assuming in your back half guide in terms of the early stage biotech contributions? And then can you comment a little bit on the pricing environment that you're seeing broadly across the space? It's just tougher negotiations. Are you needing to do more discounting here? Just any color on that would be helpful. Sure, thank you. We did have, as we discussed, a large, well, a few large orders come in for GMP products that were for big top form.

Tejas Savant: And so within the quarter that lowered our typical Smith, as you like to say, Tejas, from the high teens to the low teens. And I think, well, we expect that to moderate out a little bit. It was rather extreme move in this quarter. But we are not expecting it to grow substantially in the rest of this year's guidance, if that's what you're saying.

Tejas Savant: Got it. And then, Craig, on the pricing? Pricing, you know, as a function of each individual program. So it's not quite as simple as, you know, where a catalog type company would throw two to three percent price in every year. But we see the opportunities to take, we take up, we take price opportunities when we can. I'll put it that way. But they are also not, there's not a target number specifically that were needing to achieve that would be in jeopardy for the rest of the model this year.

Tejas Savant: And Kevin, I want to dig in a little bit on EB-Dum margin, Kiddins in the back half, a couple of moving pieces here, you've got the step down in high volume pink cap that you called out, and then potentially a little bit of a step up in BSD as well. Those two dynamics essentially offset each other as we think about the 3Q versus 4Q, and then is that 4Q number a good jumping off point, off of which we can see steady sequential increases next year.

Tejas Savant: Thank you. Yeah, thanks. That's a lot of part of your question, and certainly that's going to be ultimately revenue dependent more than anything else. So, you know, we'll see that margin tie very directly to our revenue hits versus the cost structure that'll be pretty stable going into next year, given all the work we've done to complete our facilities footprint. As it relates to the quarterly sequential migration of our EB-Dum margin from here.

Tejas Savant: Yeah. So, I would say, as I mentioned the prepared remarks, really sort of a normalization of NAB kind of seeing NAB relatively the same as always in the first half of the year, BSD hopefully approving, and moving up some more there, and then a lot of the costs that were dragged on the margin the first time started to pay a lot, so the point is, so it's the other item that I mentioned as well as some of the things that are related. So, that's going to be a little bit more cost-taking. We're modeling that slightly higher margin in the second half. Got it. Thanks, guys.

Tejas Savant: I appreciate the color.

Matthew: Your next question comes from a line of Matthew from Craig Hallum. Your line is open. Good afternoon, and thank you for taking the questions and just to heads up, you guys are cutting out pretty bad. I don't know if it's just on our end, but there's quite a bit of pauses in between words. I guess, first up, you noted during your prepared remarks that NTPs manufactured obviously here in the U.S. How important is that to your customers?

Matthew: Are you seeing some of this repatriotization kind of really starting to bear fruit, and what are you hearing from customers regarding that? Yeah, I think, first of all, I think the sound was a couple of F-35s lying over us here in San Diego. So, hopefully you can hear us clearly now. And thank you for the question.

Matthew: I'm smiling because I would not necessarily have thought it would become such an advantage to have R-U-O and G-M-P chemistry manufacturing in San Diego, California. And similarly enzyme manufacturing in to Florida, but we're seeing a tremendous amount of interest come from those facts. It just happens to be the result of where our businesses started and grew up, but it looks like it could become a significant strategic advantage. And we have people not only asking one level deep in the supply chain, but being interested, I think, for the first time that I've noted, in how deep in the supply chain they can find out the origin story. So yeah, I think it's going to actually become a pretty appreciable advantage for us moving forward here. That's great. That's good for me. Thank you.

Justin Bowers: Your next question comes from a line of Justin Bowers from Deutsche Bank. Your line is open. Hi, good afternoon, everyone.

Justin Bowers: Can you give us a sense of, well, number one, with Flanders 2, do you have that capacity built out now where you want it? Or are you still building out additional clean room capacity? And then can you give us a sense of what the timeline is like for that from when you just initially start adding equipment versus engineering ones versus when you're actually in revenue generation phase?

Justin Bowers: Yeah, I think as Kevin mentioned, we are really at the tail end here of the capital cycle. And as we mentioned in the comments about the EBITDA bridge really have had some start some one time startup costs, professional fees and other things to get the facility truly rolling. We are at the same time, however, so the whole rooftop has to open obviously, but we are, let's say scaling in from a labor perspective and a total overhead perspective as we fill that factory, but there's no, there's, there's no more substantial capex to do to turn on the multiple suites at this. So I think we've been, we've, we've shared this previously, but we have, we have three parallel manufacturing suites and there are jobs right now to fill them out.

Justin Bowers: Understood, and then quick follow up any change in the commended orders that you have for some of the larger commercial programs. For the ball quarters, no, no changes. Thank you.

Connor McNamara: Your next question comes from a line of Connor McNamara from RBC capital markets. Your line is open. Hey guys, congrats on ice quarter and thanks for the questions. Just, just as the follow up on the flenders to have you, have you incorporated any phase two or phase three program starts into your guidance this year? We'll start there. Yes, one of our first commitments was a phase two, three, so yes. Okay. Sorry, and then it could just, could you tell us, I know you guys have showed this in the past, but you know, something that a trial that goes.

Connor McNamara: When a trial advances from preclinical to the clinic, you see a pretty big step up. Is there any way you can kind of quantify how big of an opportunity each of these programs are or how we should think about, you know, as you add in new programs. What's what's the potential benefit for new programs? I understand where you're going with that, Connor, and it would be good if we could, but what we're seeing that we're actually excited about is, you know, the broadening significantly of the use of mRNA from infectious disease vaccine to part of, well, tools for cell and gene therapy for protein replacement programs as the.

Connor McNamara: Okay, as the message to be expressed for CRISPR gene editing and so on and so forth. And all of those have different delivery sizes and use cases. So the historically the results we've shared have been what happens to a bulk G&P clean cap. Well an RUO clean cap customer that's preclinical that goes bulk G&P clean cap in phase one and two and so on. When you blend in the service and now again we're happy to see these different uses for mRNA and these different therapeutic targets. It unfortunately makes it more difficult to predict what the step up will be. We just know that it's a good progress at each stage.

Connor McNamara: Great.

Connor McNamara: And let me just sneak one in for Kevin if that's okay. Kevin, can you quantify that the op-x change from Q2 to the second half of the year sounds like there's a couple million of costs in there that won't repeat those. Should we assume that op-x on an absolute basis goes down from current levels? Yeah, I think on an even adjusted EBITDA impacting basis. That's correct. Great. Thanks guys. Appreciate it.

Michael Riskin: Your next question comes from a line of Michael Riskin from Bank of America. Your line is open. Great. Thanks for taking the question guys. And yes earlier the audio was a little bit in and out. So if you answered this I apologize and I must have missed it but I just on the Marchin guide revision for the year you know that that bridge you provided was helpful and you called out the product mix in BST which makes a lot of sense.

Michael Riskin: You know the Flanders start across some of the initiatives. What I want to dig into is just sort of how transient are some of those factors right? So you know the product mix that should be relatively transient. The Flanders cost, again if you could brought a little bit more color on if that's just you know startup cost or actual operating cost is coming out a little higher. And then same thing on the initiatives the Johns Hopkins and some of those other collaborations.

Michael Riskin: I imagine that's relatively one time in nature in terms of starting up that's a silly starting up the collaboration or is that something that's going to you know have a run rate in the model going forward. Yeah. Let's change that into it. Yeah sure happy too.

Michael Riskin: Yeah certainly on the Flanders cost that we've incurred a year to day you know close to almost $3 million now of I would say really incremental costs to bring up our quality systems. Have the documentation, have the validation, you know stock the facility with things that are not inventoryable items that are therefore used over the manufacturing periods going forward. So you know we've gone ahead and just included those in our expense burdens and of some companies choose to exclude those as as pre revenue startup cost but we've just blessed those through our P&L.

Michael Riskin: So most of that will be period and isolated to the first half of the year and then we'll be starting to generate revenue and not see those as an incremental drag on margins prospectively. Has it relates to a couple of the other things that we mentioned specifically. Certainly our startup expenses for the collaboration with John Hopkins as well as some of our smaller license deals that we haven't talked about publicly in our enzyme division all were basically drags on the first half and we'll kind of come in and out of some of the quarters as we look at it prospectively but overall when you think about all those of our costs they will predominantly be behind us as you go forward for the rest of the year.

Michael Riskin: Okay, okay, that's helpful. And then as far as some of the new product discussions, you know, you're, you're highlighting, I mean, my, my belief is they're relatively small, contributed to revenues now, and you know, won't gradually ramp over time. So correct me if that's wrong. But then I also want to ask about the big mental even contribution from those, you know, we know your historical, you know, clean cap and BSD. The margins, how should we think about these new products relative to that?

Michael Riskin: Are the incremental to margins, essentially, or you should just think about them as more in line with, you know, thanks. Yeah, I think well, predominantly our fundamental products, again, this is for us, continues to be, you know, more of a revenue game than a lot of varying margins within that. You know, we do see a little bit based on the customer channel and some of the different business units that we have, but overall, I mean, especially as it relates to the discovery products, I mean, this for us is, you know, an infrastructure that we have in place, the incremental variable costs aren't much different.

Michael Riskin: We're trying to put together really, you know, solutions that are best for our customers that drive revenues and those overall revenues, you know, drive margin expansion for us. So, you know, for us, again, strategic and, you know, overall financially beneficial, you know, just drive the total revenue numbers of all these products have high variable margins and, again, mostly generated by our already established facilities and workforce. Gotcha.

Michael Riskin: Thanks.

Matt LaRue: Your next question comes from a line of Matt LaRue from William Blair. Your line is open. Yeah, after maybe just stick on the new products side, I'm sure you highlighted what now is part number of new products filling out for the mRNA production suite. Your efforts part of that obviously is the workflow and the ability to access more wallet. But perhaps relative to clean cap, could you characterize, you know, the size of some of the markets that you're able to access with the new products?

Matt LaRue: And if there are any of these new products in particular, where you view your approach, your technology, the service offer products offering, you have to be particularly differentiated and one that you might be drive more growth. Yeah, absolutely. Within the framework of the mRNA, IBT workflow, there are certainly bulk commodity chemicals. There are obviously enzymes and there are differentiated chemicals, or excuse me, differentiated technologies, which are, you know, workflow technologies that manifest themselves in our service business or products.

Matt LaRue: You know, materials and methods that manifest themselves like clean cap, we are definitely looking for both internally organic innovation around differentiated solutions to bring the next generation of workflows to market. But a big part of this lift, I think that you've identified is just to make sure we cover all the fundamental elements of the IBT workflow. So thanks to the acquisition of Alphazine, we now have access to very high quality, high purity enzymes for our customers to blend with the already stellar position that TriLink and my Kim had within the new playic acid chemistry space.

Matt LaRue: So what you're what you're hearing and commenting on here is the aggregation of all of the inputs to the IBT workflow. And what our innovation is focused on is finding more differentiated ways to bring about the next generation of mRNA through solutions like clean cap. I can't flash those that, of course, we haven't released yet, but I'm pretty excited that there are so many different places, within the workflow and within the inputs to improve performance overall.

Matt LaRue: Overall, I think we're going to bring mRNA purity up, yield up and cost down for our customers. And we can bring that, we can make that possible, as you've said, from a wallet share perspective with a one stop shop, but our intent is to continue driving the industry forward with innovation within that framework.

Matt LaRue: Okay, thank you. And then just on the landers too, and you mentioned the winning RFPs for build certain second half. Could you maybe speak to how the funnel behind some of those initial wins is building what you're seeing from a phase or customer-mixed perspective, how many of those potential RFPs really the customers who are existing clean cap customers, and then maybe just sort of one the size where activity level is, you know, kind of on a quarter basis.

Matt LaRue: Thank you for that question. It's well time because I think Becky was getting a little lonely. Becky, do you want to talk about customer progression, bookings, GMP, phasing, all that? Sure. We've had a strong interest in our GMP services to manufacture clean cap mRNA drug substance, and that has, it's continued to be quite strong for us this year and building our funnel. We've made additions to our commercial team, both on the technical side and then on the seller side.

Matt LaRue: And we have seen, you know, a really nice doubling of our funnel from Q1 to Q2. And it's across different indications. So, you know, cell and gene therapy, protein replacement, those are the places that we've seen the most activity.

Matt LaRue: Okay.

Operator: Thank you. Rob, I think we have time for one last question here.

Kyle Cruz: Thank you. Your final question comes from a line of Kyle Cruz from UBS. Your link is open. Okay. Thank you for taking the question.

Kyle Cruz: Could you please describe if you're recently announced by agreements with large CDMOs or agreements you have with their party distributors or influencing how you think about adjusted even margins going forward? And on a similar note with Planters 2 opening up, how do you view some of the CDMOs you're supplying clean cap as competitors and partners for work going forward? Thank you. Yeah, I'll take the latter part first and then hand the first part to Kevin.

Kyle Cruz: We look, we want to make sure that our technology is in every molecule. So, we realize that that's unlikely if we try to hold to type to the idea that, you know, you have to do everything with us. And we have not specced Planters 2 to satisfy the need of every customer, obviously, in every continent. That's why we have these key partnerships with the leading CDMOs like Fuji, like Lonza, that we've announced. It's a key part of our program. And, of course, we would love the service business, but we want to make sure that we have differentiated products.

Trey: We help bring about the next generation of mRNA and that we help with that, whether it's just with product or whether it's product insert, and Kevin, I'll hand the front side. Yeah, I mean these relationships are really strategic and about a symbiotic relationship here to help these large CDMOs help their customers with getting access to the best technologies to give them the best end product and certainly throwing clean cap into that portfolio is incredibly important as far as economic considerations.

Trey: It's really still boils down to volume. This is really, there's not stand alone. You know, distributor type pricing or anything of that nature embedded here. This is really about the underlying program or the volume of that program is we stay pretty disciplined to volume based pricing. So, you know, economically, as we drive volumes through these incremental channels, that would not see the underlying margins differ much from the store margins.

Trey: And that concludes our question and answer session.

Debra Hart: I will now turn the call over to Debra Hart for closing remarks. Well, we just want to thank you for joining us today. We'll be attending several financial conferences in the coming week so we could try to connect with you at one of those events.

Debra Hart: Feel free to reach out with any further questions and we hope you have a great evening.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect. Please wait.

Operator: The conference will begin shortly. Thank you very much.