Q4 2024 Harvard Bioscience Inc Earnings Call
[inaudible]
Speaker Change: Thank you for your time, and I'll see you in the next video.
Speaker Change: Please note that statements made in today's discussion that are not historical facts, including statements or expectations for future events or future financial performance are forward looking statements and are made pursuant to the safe Harbor provisions of the private Securities litigation.
Speaker Change: Form act of 1995.
Speaker Change: Actual results may differ materially from those expressed or implied please.
Speaker Change: Please refer to today's press release for other disclosures on forward looking statements.
Speaker Change: These factors and other risks and uncertainties are described in the call.
Speaker Change: Billings with the security and exchange.
Speaker Change: Harvard Bioscience assumes no obligation to update or revise any forward looking statements publicly.
Speaker Change: Management statements are made as of today.
Speaker Change: During this call.
Speaker Change: Sure.
Speaker Change: Reference certain non-GAAP financial measures.
Speaker Change: Useful in evaluating the companys operations related to our financial condition.
Speaker Change: These non-GAAP measures are intended to supplement GAAP financial information and should not be considered as substitutes.
Speaker Change: Reconciliations of GAAP to non-GAAP measures are provided in today's earnings press release.
Speaker Change: I will now turn the call over to Jim Jim. Please go ahead. Thanks.
Speaker Change: Catherine.
Thank you and good morning.
Speaker Change: We'll start on slide three of the presentation and look at our quarterly results.
Speaker Change: Revenue in the fourth quarter came in at $24 6 billion, which is 13% below revenue from Q4 last year.
Speaker Change: On a sequential basis revenue were up 12% from the third quarter and we had a positive book to bill ratio.
Speaker Change: Gross margin for the fourth quarter was $14 million or 57% of revenue impacted by lower revenue year over year.
Speaker Change: Operating income was breakeven on a GAAP basis on an adjusted basis, our operating income measure 2.5 million or 10% of revenue and adjusted EBITDA came in at $3 million or 12% of revenue.
Jennifer: I'll now turn it over to Jennifer <unk>, our CFO to discuss our financial results in more detail. Thank you.
Jennifer: Thank you, Jim and Hello, everyone I'll provide further detail a little bit of what Jim said, but just wanted to go through this in detail. So on slide four if you could please refer where we will look at revenue for the quarter by product family and region.
Jennifer: Overall revenues in the fourth quarter showed sequential improvement, finishing at $24 6 million compared to $22 million in the prior quarter.
Jennifer: Revenues for the year were 94 million compared to $112 million last year.
Jennifer: You can see our quarterly trend, which shows evidence of quarter to quarter stabilization across the globe.
Jennifer: I will now break it down to look at regional results.
Jennifer: Starting with the Americas revenues in the fourth quarter grew sequentially by 3% over revenues in Q3, but were down 11% versus revenues in the fourth quarter of last year.
Jennifer: Our preclinical sales rebounded sequentially with a return to normal purchasing during Q4.
Jennifer: As shown in the light Blue C. M. T is down sequentially and we did not see the typical end of year bump we attribute to end of year academic budget spending.
Jennifer: Moving onto Europe overall revenue in Europe in the fourth quarter grew 28% sequentially, but was down 7% compared to revenue in Europe in last Q4.
Jennifer: Our European revenues have been relatively level through the first three quarters of the year and during Q4 experienced a nice growth due to our new products.
Jennifer: Our preclinical sales were up sequentially in Q4 sales in Q3 with increased telemetry and respiratory sales offset by lower behavioral sale.
Jennifer: Cellular and molecular sales grew sequentially and year over year. We are excited to see the impact of early adopters of our EMEA systems and mesh MAA chip.
Jennifer: Moving to China, and the Asia Pacific overall in the fourth quarter APAC revenue was sequentially up by 8% over the previous quarter through APAC. The APAC revenue was down 24% compared to prior year.
Jennifer: The APAC market has been especially difficult this past year, but Q4 was our first sequential improvement this year and trailing orders have remained consistent over the last few quarters, indicating stability.
Jennifer: Preclinical APAC sales in Q4 saw sequential growth over sales in Q3, but were down compared to prior year, which we attribute to destocking.
Jennifer: Cellular and molecular APAC product showed some minor declines in Q4 sequentially and year over year.
Jennifer: Yes.
Jennifer: We continued throughout Q4 to experience improvements in our booking trend and continue to see growth in our global trailing three month trend. This has been trending positive now since June we do expect to see a dip sequentially in Q1, and Jim will discuss this with our outlook.
Jim Jim: If you can please refer to slide five I will discuss additional metrics.
Jim Jim: Please refer to the middle of the slide.
Jim Jim: Gross margin during Q4 was 57, 1% compared to 58% in Q4 of last year.
Jim Jim: Sequentially margins are effectively neutral when adjusted for FX, the strengthening of the U S dollar relative to foreign currencies in Q4 contributed to a one percentage point margin decline during Q4 relative to Q1.
Jim Jim: Q3, sorry.
We maintained stability in our gross margin by managing expenses to offset lower absorption of fixed manufacturing costs during Q4 and throughout the last year.
Jim Jim: We are encouraged that despite lower revenue levels, we are maintaining gross margins close to our target of 60%.
Jim Jim: We are now also operating on one U S ERP system, which represents 80% of our manufacturing and shipments.
Jim Jim: As part of implementing our new ERP system, we are experiencing some inefficiencies as we start to use the new system in our Boston facility, but we are working to stabilize our processes and associated controls as we move deeper into 2025.
Jim Jim: This new consolidated environment constitutes an opportunity for us to mature our sales and operations planning supply chain and inventory management through automation and further improvement of processes and controls.
Jim Jim: If you refer to the right side of the graph our adjusted EBITDA. During Q4 finished at $3 million compared to $3 6 million in last year's fourth quarter.
Jim Jim: The 3 million adjusted EBITDA figure was a sequential improvement of $1 7 million over adjusted EBITDA of $1 3 million in Q3.
Jim Jim: The sequential improvement was mainly due to revenue and margin growth as well as cost reductions taken throughout last year.
Jim Jim: Compared to the prior year Q4, the reduction in gross profit was mostly offset by lower operating expenses in Q4.
Yeah.
Jim Jim: Now moving to the bottom left where we show both reported and adjusted loss and earnings per share first as I've done in the past I will remind you of the primary differences between GAAP and adjusted EPS, which includes the impact of stock compensation amortization and depreciation.
Jim Jim: These differences can be found and highlighted in the reconciliation tables on slide 11 and are all noncash items.
We recorded a correction during Q4 related to our accounting for the closure of a legacy pension plan, which favorably impacted Q4 of 2024 by three the impact of this noncash activity is zero year to date and is offsetting activity in Q3.
Jim Jim: Cash flow from operations was $1 $7 million during Q4 compared to $4 3 million in Q4 of last year. The Q4 cash flows.
Jim Jim: <unk> represents sequential improvement compared to Q3.
Jim Jim: Now I will move to slide six where we will cover the full year results and we can discuss our liquidity and debt position.
Jim Jim: We maintained consistent gross margins during 2024 at 58, 2% compared to 58, 9% in 2023.
Jim Jim: We manage our costs to largely offset the impact of lower revenue and gross profit.
Jim Jim: For the full year adjusted EBITDA was down $7 4 million due to reduced gross margin of 11 3 million, partially offset by these reduced operating expenses of $3 9 million.
Jim Jim: Full year 2024, adjusted EPS was <unk> <unk> compared to 14 cents in 2023 as a result of the dropdown of lower gross margins offset partially by lower expenses.
Jim Jim: This included an unfavorable impact compared to prior year of the loss on sales of equity securities of <unk>.
Jim Jim: Differences between GAAP and adjusted EPS during 2024.
Jim Jim: Also included restructuring expenses commissions for employee retention credit payments and settlement of an abandoned property audit, which resulted in four cents of unfavorable impact for the year.
Jim Jim: Okay.
Jim Jim: We haven't reduced the quarterly run rate of our operating expenses by $2 million or 12%. When you compare Q4 of 2024 with Q4 of 2023, which positions us Fortunately for improved Opex in 2025.
Jim Jim: If you refer to the bottom middle graph cash flow from operations for the year ending.
Jim Jim: <unk>.
Jim Jim: December 31, 2024 finished with a $1 $4 million decline.
Jim Jim: And declined by $12 6 million compared to last year.
Jim Jim: We struggled early in 2024 to drive favorable operating cash flow, but showed improvements and you see the results in Q4 through this.
Jim Jim: Careful expense management.
Jim Jim: On the bottom right you can see that we maintain stability in our net debt position at the end of the year. Our net debt was just slightly above net debt at the end of 2023.
Jim Jim: Yeah.
Jim Jim: As of yearend we are not.
Jim Jim: Were not in compliance with the consolidated net ratio net leverage ratio covenant contained in our existing credit agreement.
Jim Jim: Earlier this week, we entered into an amendment and which the lenders agreed to waive our Q4 noncompliance.
Jim Jim: Under the amendment, we are required to refinance the existing agreement by June 30th.
Jim Jim: We are also precluded from further borrowings under the credit facility.
Jim Jim: That said based on our current operating plans, we expect that our available cash and cash generated from operations will be sufficient to finance operations and capital expenditures, while we work to refinance the credit agreement.
For more information on the amendment. Please refer to the 8-K that we filed with the SEC last night now I will turn it back over to Jim.
Speaker Change: Thank you Jim.
Jim Jim: We can move to slide seven.
Jim Jim: The first one I mentioned that we've historically, we've augmented our European sales through distribution agreements with.
Jim Jim: The large distributors like Fisher and VW are we're now working with them to extend this agreement with Fisher and VW are specifically formal distribution relationship to also now include North America, and we're also planning to offer through the distributors.
Jim Jim: To increase our number of products, including our new unique EMEA systems.
Jim Jim: Now if you go to the next slide let's actually still slide seven right.
Jim Jim: I just wanted to say I'm not going to drain this but I like to think about our business as our base business and then areas, where we're expanding expanding into potentially high growth areas like electroporation about production and also expansion into Organoid related technologies. Another area that we believe provides significant growth opportunities.
Jim Jim: The base, which we expect to be roughly run with the market the life science tools market and.
Jim Jim: It's augmented by new product introductions, some of which you'll hear about today.
Jim Jim: Both electroporation and bio production and emerging and our emerging mesh MAA organised applications are expected to be long term high growth opportunities, but also drive a higher recurring revenue consumables.
Jim Jim: Moving to slide eight.
I'll update you on the progress on key new product launches in more detail.
Jim Jim: So first of all at the table.
On this slide highlights the commercial status of two new products, we consider part of our base business.
Jim Jim: Late in 2020 forward, we began production shipments of our new Soho family of telemetry devices, which now enable real time telemetry measurements of animal models and shared housing environments.
Jim Jim: In 2025, we plan to expand our Soho capable implants to also cover cardiac and neuromodulation capabilities.
Jim Jim: Once you get this month's society of toxicology, our Soho systems are already seeing strong quoting request from industrial customers and academic customers alike.
Jim Jim: The first delivery of our new automated <unk> neuro behavioral monitoring system with the Labcorp.
Jim Jim: We've been working with Labcorp to tune the system and supporting them in the integration of it into their testing network.
Jim Jim: We're now in discussions with them to acquire another <unk> system for a second for a second one of their facilities.
Jim Jim: We assume later in this year.
Jim Jim: And we're also working to get the next large CRM customer onboard with <unk>.
Jim Jim: The second row of the table highlights the commercial status of our products targeted to potentially long term high growth electroporation and bio production opportunities.
Jim Jim: Late in 2023, we announced that a large pharma company had adopted our Bts electroporation system configured for bio production.
Jim Jim: Looking at the commercial status in 2024, we're pleased to see that consumable revenue from this first large customer has now grown to approximately $1 million annual run rate.
This first large customer a top five top five pharma company worldwide has adopted the bts for bio production of vaccine application and is validating our right to win and higher volume GMP applications.
Jim Jim: The first application of the vaccine for companion animals in this way it allowed us to fast track into bio production and get the higher volumes quickly.
Jim Jim: At the same customers adopting our system for a second potentially high volume vaccine at another site.
Jim Jim: When we talk about human use novo Nordisk, a longtime customer of Harvard Bioscience is an early adoption of our <unk> for our new generation therapy.
Jim Jim: Also for human use a large U S. Biotech is adopting our BT extra Bob production of a car T based therapy.
Jim Jim: And we're also currently prototyping our next generation <unk> platform designed for ease of use and new compound creation and also ease of transition to bio production in CMP cgmp environments.
Jim Jim: Also in 'twenty four we began shipping our new cgmp compliant immunoassay analysis system to pharma companies for bio processing applications.
Our triple a is an adaptation of our leading Biocrime AAA system currently operating and clinical labs internationally and is showing initial demanded bio production applications, such as biomaterial quality control.
Jim Jim: The third row of the table highlights the commercial status of our emerging new high growth mesh MAA Organised platform.
Jim Jim: We have adapted our MAA electrophysiology system to be the industry's first in vitro Organoid data acquisition and analysis system is capable of supporting long life launch to the analysis of organized and there are initially targeted to neuro and to cardiac applications.
Jim Jim: As for our commercial progress with mesh MBA systems in 2024, we initiated five beta sites three of which were academic sites, including University of Texas to peer University in France, and the University of Michigan.
Jim Jim: <unk> is an advanced CRO in France, focusing on safety and toxicology applications.
Jim Jim: And a leading Biopharma company with operations in Cambridge, and multiple multiple sites across California is focusing on longitudinal viability testing for neuro and cardiac applications.
Jim Jim: In Q4 early adopters, including Stanford in the Mayo Clinic purchased 10 systems for a combination of neuro and cardiac applications.
Jim Jim: In 2025 or 25 goals include expanding adoption by leading academic sites plus government labs in the U S U K and the European Union.
Jim Jim: Interestingly enough. The NIH itself recently purchased one of our mesh EMEA systems for neuro applications.
Jim Jim: This year, we will focus on adapting the system to more potential high growth industrial applications in biotech and pharma.
Jim Jim: And we see a growing pipeline of biotech and pharma opportunities as we look forward this year.
Jim Jim: Now in terms of refinancing efforts, we've retained an investment banker to assist and there have been and we've held multiple discussions with potential lenders.
Jim Jim: We plan to complete this refinancing effort by the end of June and for more information you could look to the 8-K that we filed last night.
Jim Jim: <unk>.
Jim Jim: Now if we move on to our guidance and outlook on the next the next slides.
Jim Jim: Given the lack of visibility around NIH funding and the recent effects on academic research funding, we're going to hold off on giving an outlook for the full year at this time. So at this time, we will just discuss Q1 2025.
Jim Jim: And some basics about finishing how we're operating through the rest of the year considering the uncertainty around NIH related academic funding in such along with a typical Q4 to Q1 seasonality. We expect Q1 revenue to range from 19% to $21 million.
Jim Jim: We expect Q4 gross margin to be in the 56% to 58% range.
Jim Jim: Regarding Q1, EBITDA, we expect unusually high professional fees related to audit and debt related refinance activities.
Jim Jim: When I think about going forward absent these unusual fees.
Jim Jim: With our gross margins remaining strong and our continued focus on reducing operating expenses, we expect sufficient positive EBITDA to.
To support continued self funding of our business and continued servicing of our debt obligations and this while we work to refinance our debt facility.
Jim Jim: So with that I will turn it over to turn the call back to the operator to open the call for open the line for questions. Thank you.
Speaker Change: Thank you if you'd like to ask a question. Please press star one one.
Speaker Change: If your question has been answered and you'd like to remove yourself from the queue. Please press star one again.
Matthew: Our first question comes from Matthew <unk> with Keybanc. Your line is open.
Speaker Change: Hi, Jim It's Paul Knight, calling from Keybanc.
Matthew: The question is.
Matthew: How are you.
Matthew: Okay number one.
Matthew: Debt financing what was the metric that was busted.
Matthew: With the with three or four quarters of reducing revenue, which we saw through starting in early 'twenty four it really impacted our net leverage ratio, which looks at our current debt divided by our trailing 12 months EBITDA, so even with positive EBITDA, whether it's one two or 3 million.
We had had that we had built strong EBITDA over the prior years and in fact, we had gotten our net ratio down to under two I believe but with three quarters winding up of EBITDA of lower EBITDA that ratio just starts to get ahead of you pretty fast. So we were bouncing up against that we're about to hit up against that covenant for a while.
Matthew: In hindsight, we should have earlier tried to work on a refinance that we worked with the banks to get to get coverage through those to get to this point now, but either way we knew we needed to to put a new debt facility in place and Thats really the focus now.
Speaker Change: And you are paying on that rate was what percent rate and then what.
A new new transaction look like Harvard anything at.
Speaker Change: Yes, we were sitting here, we were at so far silver plus $3 75, So I think that adds up to around eight or so im guessing.
Speaker Change: Yeah.
Speaker Change: And then the ranges are probably somewhat above Shannon.
Yes, I think when you look to the Mark private debt facilities, they're probably again, we're looking at a number of different opportunities and they will range.
Speaker Change: Based on various various.
Speaker Change: Waste they set it up but in general we expect it to go up two to three points maybe four.
Speaker Change: It is going to be higher on the interest rate likely.
But it will give us much more flexibility we have we have needs to continue to have these new products launching I certainly don't want to be held back.
Speaker Change: Ill be able to put some of the capital capital into expanding capacity in a couple of these new areas. So we're going to get a little of that flexibility on the.
Speaker Change: Our ratio of Covenant light debt at least for a little for a short time and Thats why we need to kind of lender that's used to working with growth companies that makes investments and doesn't get held back by.
Speaker Change: Having a more conservative debt facility.
Speaker Change: And Jim moving to the good news part it seems like the new product introductions are gaining traction.
Speaker Change: What part of.
Speaker Change: Revenue are these new products like edge mesh.
Speaker Change: And BT <unk> with other that you would call high growth and what was their growth in <unk>.
Speaker Change: <unk>. Thanks.
Speaker Change: Well I think.
Speaker Change: When you look at the numbers for instance that Gen showed you.
Speaker Change: What really jumped out as for instance, mesh MBA systems.
We really started heavily in academic research there and heavily in Europe, where we have very strong relationships plus with the pharma companies. There. So we saw Europe really led the way.
Speaker Change: With growth and again by placing.
Speaker Change: Or more systems into one quarter of a new system sell for 770000 to $100000 plus they bring considerable Danielle that was a very nice incremental pop for the business and really leads the way towards us.
Speaker Change: Adaption is adapting of this technology into the much higher industrial users. So certainly this is going to be a big growth area for us we had in general our EMEA business had been around 5% of our business I think if you go back a year or so I think in this year. We I think we can put it in the presentation.
Speaker Change: Yes.
Speaker Change: Sections around seven so it's grown by.
Speaker Change: A cup buy from five years to 7% Justin just in that one year of our of that sexual event of that of that revenue stream. So it's definitely a windup area for us and a growth opportunity bio production is another big growth opportunity for us. It is a longer area because it tends to take more time. It is a longer sale you have to.
Speaker Change: Get the systems.
Speaker Change: Incorporated validated in their production environment Youll notice that I described some of the applications specifically what was.
Speaker Change: Because the system is really designed for these new these new types of drugs, where youre going to be transfected.
Speaker Change: This transfectant mammalian cells to create it so theres often a long time from when you get through testing you get through preclinical before you get into peak before you get into first phase one clinical human so it takes a while for that to really ramp up. So the thought was by having a couple of applications like this first one being <unk>.
<unk> going to <unk>.
<unk> in animals.
Speaker Change: I have always love selling technology too.
Speaker Change: It sounds like the people, who who who spend on their pets because people I think to spend more on their pets and their kids. These days so that gave us the ability to very quickly prove that we can do higher volumes in a cgmp type environment and at the same time, we've been working with human applications with a number of our.
Speaker Change: <unk> and <unk>.
Speaker Change: One of them, which I think is pretty exciting as novo nordisk working with them toward.
Speaker Change: But one of them one of them.
Speaker Change: Applications that will be one of the person who uses the bts any bio production environment for our next generation therapy and are there are others. We're working with another one that's coming along as a car T therapy, and that's what the very large well known biotech here in the states. So we're trying to cover all bases I won't be able to prove that we can that we can do the transfer.
Speaker Change: Efficiently that we can create these new drugs, which they use us often for preferred discovery, but now the Canadians for bio production, but I need to be able to show for instance, with what we're doing with these companion animal application that we can do volume types of production in the same type of cgmp environment and by the way. This is with a very.
Speaker Change: A top five worldwide pharma company. This was this is not a.
Speaker Change: A small start this is a big big opportunity for us and they are working with US now to have another vaccine application that will go to another one of their facilities using our technology for a slightly different vaccine.
Speaker Change: Okay, and then just to quickly wrap it up on my side the other cost of one point.
Speaker Change: $4 million in the quarter was FX I'm, assuming and then the last is year NIH exposures, what about 15%.
Yes, it's sometimes hard to describe exactly but NIH the way I see academic academic research, we're about half, but header business academic research worldwide.
Speaker Change: A little less than half of that is probably the United United States maybe.
Speaker Change: Kind of eyeballing, maybe it's 40% or so, but then you've split that into the sections of whats NIH and what is academic research outside of NIH.
Speaker Change: NIH, we generally think of NIH to be around 30% or so of academic research revenue in the United States. The rest is generally more.
Speaker Change: Budgeted by the universities themselves, so thats kind of how we see it but it is we have seen and given whenever there are some unknowns.
Speaker Change: We expect to see some extra time it takes for some of these some of these research grants that we will have to go back through and be reviewed.
Speaker Change: And those are more of the specific NIH.
Speaker Change: Initiated brands, but I think we're also we could see some noise just from the general academic research site.
Speaker Change: Sites, where there may be worried about what's coming their way and so.
Speaker Change: There is a kind of a lack of visibility with some of that we're hoping of course that that.
Speaker Change: Sorts out fast Youre, probably hearing something similar from other companies that are heavily exposed to academic research.
Speaker Change: But no we are.
Speaker Change: Those types of impacts we started seeing a.
Speaker Change: Pull down in our revenue in Q4 were in Q4 and academic research, we would've expected a bump in U S. But if you look at when you look at our chart, you'll see that the academic research part of our business or the CMT part actually went down some in Q4 now the good news for US is it was more than offset by strong growth sequentially.
Speaker Change: In our industrial was crows and such.
Speaker Change: But I think we've been seeing a little of this headwind for a bit and it's.
Speaker Change: Kind of hard to predict exactly when that settles out, but we're of course, hoping that it settles quickly and in the meantime, as you've heard we're continuing to manage our cost structure to make sure that whatever revenue stream. We're at if it drops a little or whatever we are going to make sure that we're able to deliver the EBITDA, we need that we stay profitable that we generate the cash.
Speaker Change: Cash to service, our debt and our capex needs so already happens.
Speaker Change: Flexible and able to handle it thank you Paul.
Speaker Change: Thank you.
Speaker Change: Okay.
Bruce Jackson: Thank you. Our next question comes from Bruce Jackson with the Benchmark Company. Your line is open.
Speaker Change: Hi, Bruce Hi, good morning.
Bruce Jackson: Thanks for taking my questions.
Speaker Change: Wanted to go back to the ERP implementation.
Speaker Change: Just real quick you get some more details so it's now in place and now it's a matter of getting it.
Speaker Change: Given the experience with it do you think that youre going to see any operational efficiencies from the ERP system during 2025.
Speaker Change: I do but.
Speaker Change: Done.
Speaker Change: Last count I don't know if it was five or six ERP system ERP trends transfers I've done and Theres always some initial learning curve. So there's usually a little bit of chaos at first lien first turn it on because you are now teaching your people to use.
Speaker Change: A better more consistent process. We are basically adopted we took the we took the ERP system.
Speaker Change: From.
Speaker Change: Our group in Minneapolis, which was very up to date, we control it well, we support it well with <unk>.
Speaker Change: Got it up at the latest.
Speaker Change: It's a.
Speaker Change: <unk> is a leading type of system and then we've integrated and we brought the rest of our operations in the U S. Here in Boston to that same ERP. So we're.
Speaker Change: Synthesizing the processes here to adapting needs to be the same as what we do in Minneapolis that lets us be much more consistent that gives us a ton of flexibility. It also helps us with provide better accounting for our inventories and it also gives us a better view of how we can work on reducing inventory and more.
Speaker Change: Efficient supply chain and shipping so again I always would expect the first maybe couple of quarters to be a little noisy maybe some inefficiencies with your direct labor because they are learning to do something a little different than they've been.
Speaker Change: But it is a better way to do it and you end up with a process that you can now tune and definitely during the year. This will help us provide much better management of our inventory much better management of the process around how we order the parts to take that are required for shipments will be able to better predict shipments.
Speaker Change: And with that just an overall efficiency that should show up and improving gross margin and Thats, where I would expect financially to measure that so gross margin I would expect to see inventory reductions as we get to later in the year and just an overall better business.
Speaker Change: Okay, Great and then.
Speaker Change: We can just go into some of the new product opportunities and a little bit more detail one of the.
Speaker Change: A major bottlenecks right now in car T therapy as production and you've got this large biotech debts.
Speaker Change: With your technology.
Speaker Change: How do you see that business unfolding over the course of this year.
Speaker Change: It's going to be hard to predict because it is a longer cycle, we're talking about new drugs and we know with.
Speaker Change: The changes that at.
Speaker Change: Human services that there is in that which I think is good for US there is going to be a push to make sure that any drug going through the pipeline goes through the full set of preclinical testing and proper testing so that means they're going to they're going to consume our products are preliminary products are testing products. So that's that's good for us.
Speaker Change: So clearly the Bts. It is the exploration is a key technology to use for generating many of these gene edited or DNA or RNA edited generate new generation drugs.
Speaker Change: And the more of these that go into the pipeline that to me. That's the most important thing if I can get if I can be a part of more of those and if they are using us to discover and create the compound and they use us bridge them into pilot production, it's a more efficient way to do it.
Speaker Change: This should generate not just business for us and with these types of applications. It will also then pull in more of our other products as they get to through the preclinical phases.
I don't know if that answers your question Bruce.
Speaker Change: That's helpful. And then if we can just also take a look at the EMEA Organoid business a lot of that right. Now is academically focus are these projects fully funded and are they going to be stable going forward and this is just like you.
Speaker Change: Just putting aside the uncertainty around new grants.
Speaker Change: The research.
Service expense issue.
Speaker Change: The current projects that you have going are they are they fully funded moving forward.
Speaker Change: Yes, well.
Speaker Change: Well I mean, the as we expected the initial adopters.
Speaker Change: Actually what we've seen even in Q4.
Speaker Change: Placing 10 more systems, they are predominantly academics and predominantly in.
Speaker Change: Neuro research neuro applications, and also neuro Tox and safety, which is good and some in cardiac but we are seeing and we have placed a couple of units now with pharma companies, who are doing the same kind of thing.
Speaker Change: The big opportunity that I've always saw was.
Speaker Change: Prove the technology with the academics move it into the research departments discovery departments at the pharma companies and then allow that to get into the higher volume testing that needs to take place.
Speaker Change: We are getting demand in moving into those space Roche is a big customer long term customer of ours, working with us with mbas and moving towards mesh MAA.
Speaker Change: We expect that and as you do that with a few companies that are well known Neal the word spreads. They all talk to each other that when we start to see more other pharma biotech type companies we see.
Speaker Change: Others that are interested we're already talking to some are already in the purchasing process.
Speaker Change: Pfizer add.
Speaker Change: I mean these are these are real players.
Speaker Change: It's going to take a while to adopt it because it is in some ways that they've been doing something for many years a certain way.
Speaker Change: They've got to they've got to jump that bridge to technology adoption and the way to do it is to prove it out with the academics.
Speaker Change: I think the other real opportunity that we're seeing is the ability to offer this in vitro product as a potential talks.
Speaker Change: Filtering capability.
Speaker Change: As I said, we have synaxis in France, working on working with standard types of drugs that you have to test you have to go through and see us as a CSR as a as a CRO does with.
Speaker Change: Yes.
Speaker Change: Safety.
Speaker Change: And and Tox testing we're also.
Speaker Change: Think about to announce that we're working with a large CRO here in the United States and were planning were initially planning on a large correlation study between between.
Speaker Change: Our population of small animals.
Speaker Change: And correlated with a population with those particular animals. The ideas those particular animals that we would create brain organized from those animals, and then be able to do long term correlation studies for.
Speaker Change: Again being able to it.
Speaker Change: It very quickly and efficiently filter, whether a drug is going to have toxic or safety issues before you get into having to wait and spend a lot of money on lots of small animals and take months and then have to destroy the animals to find out how it affected their Oregon is a great way to make us more efficient.
Speaker Change: And at the end of the day it should in theory.
Speaker Change: The opportunity for lowering the throughput are shortening the elapsed time, which means you then can expand and get more drugs through the cycle. So it should be an efficiency. There. That's why we think that has a big financial.
Speaker Change: Our value proposition for the pharma companies.
Speaker Change: Okay, and then one last.
Speaker Change: Mesh EMEA question, you mentioned I think with the new distributor arrangements that this product could be included with that.
Speaker Change: Alright.
Speaker Change: That's right.
Speaker Change: We've always tended to have a good form a relationship with the big distributors in Europe.
Speaker Change: And we've tended to do more of the sale direct here in the United States and less of our equipment going through distribution. What we're now working with the big distributors as we all know who they are to now expand and have us be a formal a formal relationship with them with both those operations here in the United States that means instead of me having.
Speaker Change: Five or six sales reps there prospecting I've.
Speaker Change: I've got 900 sales reps in United States, prospecting and lead generating so and I think certainly what I. When you do this through distribution you always look to see does the distributor have an alternative product that maybe they're conflicted and whether they should sell yours or there is as we do this something like mesh EMEA is clearly something that nobody has it so.
Speaker Change: I expect it to.
Speaker Change: Nothing else just generate a lot more leads which does the.
Speaker Change: The entry into generating more orders and sales.
Speaker Change: Okay, Great. That's it for me thank you very much.
Bruce Jackson: Thank you Bruce.
Speaker Change: Thank you there are no further questions at this time I would like to turn the call back over to Jim <unk> for any closing remarks.
Jim Jim: Okay. Thank you. Thank you for joining us.
Speaker Change: This ends today's presentation will help youll come back and join Us in May.
Speaker Change: To discuss our fiscal 2025 first quarter results. Thank you so much thanks a lot.
Speaker Change: Thank you for your participation you may now disconnect everyone have a great day.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].