Matthew Stanton

Matthew Stanton asked about Repligen's service opportunity, noting its accretive growth in 2025 and expected contribution in 2026, specifically inquiring if it applies to new products or the install base, and any changes to commercial incentives.

Answer

President and CEO Olivier Loeillot stated that services represented approximately 6% of total sales in 2025, below the industry benchmark of 10%. He highlighted a high attachment rate for analytical products (above 50%) but significantly lower for larger scale equipment like RX downstream and ATF systems. Repligen is focusing on incentivizing commercial teams for service contracts and treating the service business as a more independent P&L with dedicated resources.

Matthew Stanton asked about Repligen's service opportunity more broadly, noting its accretive contribution to growth in 2025 and expected continuation in 2026, particularly on the analytics side. He inquired whether the focus is on new products or the existing install base, and if any adjustments have been made to commercial incentives to capture this runway.

Answer

Olivier Loeillot, President and CEO, stated that services represent approximately 6% of total sales, which is 4-5 points below the industry benchmark, indicating a significant growth opportunity. He highlighted a high attachment rate for analytical portfolio services (>50%) but a significantly lower rate for larger-scale equipment like RX downstream systems and ATF. Repligen is incentivizing its commercial team for service contracts, treating the service business as a more independent P&L, and adding dedicated commercial resources, with an ambition to reach 10% of total sales in a few years.

Matthew Stanton asked about the drivers behind strong OPUS demand, particularly the shift to larger columns and increased adoption by large pharma. He also requested an update on the innovation pipeline, including feedback on the new Tantti resin and the strategy for the recently launched Metenova mixer.

Answer

Executive Olivier Loeillot attributed the OPUS trend to the operational ramp-up of large-scale single-use facilities and noted two significant new pharma wins. He highlighted strong performance from Repligen's own resins, including a new double-stranded RNA product, with more launches planned. The new Metenova mixer is receiving positive feedback, with demos planned and orders expected in the second half of 2025.

Matthew Stanton asked for color on October order trends and inquired about the performance of new products launched in 2024, such as the RS10 system, compared to historical trends.

Answer

President and CEO Olivier Loeillot confirmed a "very strong start" to Q4 with robust October order intake, boosting confidence for the rest of 2024 and entry into 2025. He noted that the impact of new products is similar to last year and that recent launches like the RS10 system and integrated FlowVPX are seeing excellent traction, particularly in new modalities.

Matthew Stanton of Jefferies inquired about the significant growth in the EcoSynthesis customer pipeline, asking for a breakdown of the over 30 engagements. He also sought details on the Eco Innovation Lab's utilization and the company's plans and timing for expanding manufacturing capacity to meet rising demand. Finally, he asked for more color on the revenue phasing for the second half of the year.

Answer

COO Kevin Norrett confirmed the pipeline has grown to over 30, approaching 40, with a mix of CDMOs, large drug innovators, and smaller biotechs. CEO Stephen Dilly added that the breadth of the pipeline allows them to be selective and that they are already planning a second Eco Innovation Lab to service early-phase projects. CFO Georgia Erbez reiterated full-year guidance, noting that second-half growth is expected to come from the ligase and EcoSynthesis businesses.

Matthew Stanton inquired about the composition of the 7+ customer pipeline, whether the 2025 guidance includes ECO Synthesis revenue, the nature of completed feasibility studies, and the outlook for gross margins.

Answer

CFO Georgia Erbez confirmed that revenue from ECO Synthesis contracts is expected to contribute to growth in the second half of 2025. President and CEO Dr. Stephen Dilly and COO Kevin Norrett added that the customer pipeline is dynamic and shouldn't be rigidly categorized, as relationships evolve between ligation and full synthesis. They stressed the focus is on overall traction. Ms. Erbez also stated that while 2023 margins were artificially high, the company aims to improve upon the 56% gross margin reported for 2024.

Matt Stanton of Jefferies inquired about Maravai's guidance philosophy, questioning the withdrawal of the 2025 forecast while simultaneously targeting positive cash flow in 2026. He also asked about the strong performance and durability of the Biologics Safety Testing (BST) business and whether there were any demand pull-forwards from China.

Answer

CEO Bernd Brust explained that as a new leadership team, they need more time to understand the 'lumpy' business before providing guidance, but are committed to achieving profitability regardless of revenue. CFO Raj Asarpota confirmed a minor, immaterial pull-forward in China for the BST business, attributing its strong 10% growth to demand for host cell protein kits and MOCV products. Brust cautioned that mid-single-digit growth is a more sustainable expectation for BST.

Matthew Stanton of Jefferies asked for more detail on the five new CleanCap license agreements signed in the quarter, including customer types and cross-selling success. He also inquired about the long-term market share dynamics for CleanCap given increased competition.

Answer

Executive William Martin specified the new licenses included academic, CDMO, innovator clinical, and OEM customers. Chief Commercial Officer Becky Buzzeo added that a reorganized sales team is focused on driving cross-selling. Regarding market share, Martin acknowledged the competitive landscape and stated Maravai is embracing the need for lower mRNA costs through its vertical integration and workflow optimization services, which allow for competitive pricing while protecting margins.

Matthew Stanton from Jefferies asked for insights into Maravai's 2025 profitability, specifically seeking guardrails on gross margins and inquiring about available cost-saving measures given the significant headwind from removing high-volume CleanCap revenue.

Answer

Chief Financial Officer Kevin Herde explained that the 2025 cost structure is expected to remain consistent with 2024, as cost-saving measures will offset strategic investments in acquisitions, commercial expansion, and IP protection. Herde noted that of the company's cost structure, approximately $200 million is fixed, with a variable component of 10-12% of revenue, suggesting an adjusted EBITDA breakeven point around the $230 million revenue level.

Matt Stanton from Jefferies inquired about the updated 2025 revenue guidance, seeking clarity on the visibility for the second-half ramp, the drivers behind it, and the expected phasing between Q3 and Q4. He also asked for an update on the cross-selling strategy's traction and the development timeline for the CryoCase product based on customer feedback.

Answer

Chairman & CEO Roderick de Greef confirmed the second-half ramp is based on strong visibility from their top 20 customers, who constitute 80% of biopreservation media (BPM) revenue. He noted that while there might be lumpiness between Q3 and Q4, they are confident in the full-year number. CFO Troy Wichterman added that the business does not experience significant seasonality. Regarding cross-selling, de Greef stated they are seeing traction and plan to report specific metrics in Q3, highlighting a potential large deal for the CT5 automated fill device. On the CryoCase, he mentioned that over 30 customers are evaluating it and they are seeking a commitment from a large customer before investing in material changes to the product mold.

Matthew Stanton asked for an update on demand trends from the clinical (non-commercial) side of the business and inquired about the strategic rationale and future milestones for the recent PanTHERA CryoSolutions acquisition.

Answer

CEO Roderick de Greef stated that the clinical customer segment performed as expected, with growth primarily driven by commercial clients. He noted that distributors have not signaled any slowdown despite potential macro headwinds. Regarding PanTHERA, he explained the acquisition timing was driven by successful proof-of-concept, allowing BioLife to control the development of a next-generation cryopreservation product. The goal is to enhance efficacy, lower DMSO concentrations, or enable -80°C storage, with the new scientific team increasing R&D throughput.

Matthew Stanton asked about the expected pacing of adjusted EBITDA margin expansion through 2025 and the strategy for realizing the 2-3x revenue increase from cross-selling the broader portfolio beyond media.

Answer

Executive Troy Wichterman advised using Q4 2024 SG&A as a baseline for 2025, noting R&D would increase from a Q4 2023 baseline, leading to steady EBITDA margin expansion into the mid-20s. CEO Roderick de Greef added that cross-selling is a multi-year effort focused on clinical trial customers and the pipelines of commercial clients for products like CryoCase and CellSeal vials.

Matthew Stanton of Jefferies asked about BioLife's strategic focus after the SciSafe sale, particularly regarding M&A or capacity additions for the media business. He also requested an update on the new Crow Case launch, including customer feedback and how success will be measured.

Answer

CEO Roderick de Greef explained that the strategic focus is now squarely on the core cell processing product line, with proceeds from the sale funding biopreservation capacity expansion. He emphasized that any potential M&A would be subject to stringent criteria to protect margin trajectory. Regarding the Crow Case, he noted positive initial feedback but stated that material revenue is not expected until the second half of 2025 due to customer validation processes.

Matt Stanton of Jefferies inquired about the customer impact of the FDA's update on REMS for CAR-T therapies, biopharma customer spending appetite, and gross margin expectations for the second half of 2025.

Answer

President & CEO Jerrell Shelton and Chief Scientific Officer Dr. Mark Sawicki described the REMS update as 'definitively beneficial,' with more clarity expected in Q3. Dr. Sawicki also noted that spending pullbacks are mainly in preclinical areas, not affecting Cryoport's well-funded clinical and commercial clients. CFO Robert Stefanovich stated the goal is to sustain gross margins, though new initiatives like IntegraCell may cause a temporary dip, while reiterating the long-term target of over 55%.

Matthew Stanton asked for more detail on leading indicators, seeking to qualify the nature of order stabilization in Life Science Products and the increased client engagement in Life Science Solutions, particularly regarding new versus existing clients.

Answer

Chief Scientific Officer Dr. Mark Sawicki pointed to the growth in the clinical trial portfolio to 711 trials as a key indicator of new client acquisition. He also highlighted the 22.5% YoY growth in BioStorage/BioServices revenue as evidence of deeper penetration with existing clients. An executive also noted that the growing ecosystem, including DHL's acquisition and interest from other major logistics players, validates Cryoport's strategy.

Matthew Stanton sought to clarify the growth expectation for the commercial revenue bucket in 2025, asking if it would be closer to the 20% annual rate or the high 30s quarterly rate.

Answer

CSO Dr. Mark W. Sawicki clarified that while growth in 2025 will be stronger than the 20% seen in full-year 2024, a rate in the mid-30s would be 'a hair aggressive.' He estimated growth would likely land in the 'high 20s' based on current visibility.

An associate on behalf of Matt Stanton from Jefferies asked if a 25-30% growth rate is a fair assumption for the commercial business in 2025 and sought details on the company's confidence in the high single-digit sequential revenue step-up implied by the Q4 guidance.

Answer

CSO Dr. Mark Sawicki and CFO Robert Stefanovich deferred specific 2025 guidance to the next call but highlighted a positive outlook driven by 17 commercial therapies and new approvals. Mr. Stefanovich acknowledged that Q3 product revenue was below expectations, leading to a more conservative Q4 product view, but noted the services side remains robust. CEO Jerrell Shelton added that the company has adapted to near-term challenges in the cell and gene therapy space.

Matthew Stanton from Jefferies asked for more detail on NGS growth drivers, traction from academic labs outsourcing work, and the timeline for when the innovation pipeline might contribute to revenue.

Answer

CEO John Marotta credited strong sales execution with core labs in both academic and pharma settings for the NGS growth. On innovation, he noted increased investment in R&D and product management, driven by the Azenta Business System, but did not provide a specific timeline for revenue impact. CFO Lawrence Lin quantified a delayed C&I order as a 'couple million' dollars, which shipped in July.

Matthew Stanton asked for more detail on the Gene Synthesis business trends, particularly by customer type and geography, and the potential impact of tariffs. He also probed the company's capital deployment strategy, the balance between M&A and share buybacks, and the development of its M&A capabilities.

Answer

CEO John P. Marotta attributed the Gene Synthesis softness to a temporary pause in large pharma programs due to customer-side restructuring, but noted that April bookings showed positive signs. On capital deployment, he emphasized a focus on long-term shareholder value through four levers, stating that M&A opportunities are becoming clearer. While the company remains open to buybacks, he stressed a disciplined approach to all capital allocation, overseen by the Board and a new Value Creation Committee.

Matthew Stanton from Jefferies asked for details on Azenta's academic and government end-market exposure, particularly related to NIH funding, and inquired about recent trends in the cell and gene therapy business.

Answer

CEO John P. Marotta stated that potential NIH funding impacts are contemplated in the guide, noting the company has seen some project delays but can pivot sales focus to its larger pharma and biotech customer base. He also highlighted strong momentum in cell and gene therapy, with the auto cryo business growing significantly and continued bullishness on the end market.

Matthew Stanton asked about Azenta's M&A strategy under the new CEO, inquiring about the state of the deal funnel and the key criteria for strategic tuck-ins, such as ROIC hurdles. He also asked about the pricing assumptions embedded in the 3-5% revenue growth guidance for fiscal 2025.

Answer

CEO John P. Marotta stated that while it's early, he sees M&A opportunities in the biorepository space where Azenta can leverage its automation platform. He emphasized that any deal would be subject to a rigorous process with a double-digit ROIC as a clearing criterion. Regarding pricing, CFO Herman Cueto said the guidance anticipates continued pricing headwinds in NGS and that the company is not yet treating the recent stabilization as a definitive trend.

Matthew Stanton of Jefferies asked for an update on the U.S. academic and government market, inquiring how trends progressed through Q1 and into Q2, and how the forecasted mid-teens decline is split between product categories. He also requested early feedback and details on the commercial model for the newly launched single SOMAmer Reagents.

Answer

CEO Michael Egholm stated that the mid-teens decline forecast for the U.S. academic market remains appropriate, citing evidence such as institutions delaying instrument purchases and curbing travel budgets. He noted some instrument sales to academia were supported by private funding. Regarding the new single SOMAmer Reagents, Egholm explained they are now fully available after an early access period, with initial applications in protein pull-downs. He sees a significant long-term opportunity but advised against high short-term revenue expectations as it is a new commercial capability for the company.

Matthew Stanton asked for real-time feedback on the NIH funding situation's impact and inquired about the specifics of the forecasted high single-digit million headwind. He also sought more color on the Illumina partnership's $1 billion market opportunity and what revenue is anticipated from it in the 2025 guidance.

Answer

Executive Michael Egholm stated that while direct impacts are not yet significant, they anticipate reduced academic spending and have factored it into guidance. CFO Hanjoon Kim specified the impact is expected primarily on instruments. Regarding the Illumina partnership, Egholm affirmed the $1 billion market opportunity is substantial. Kim added that while revenue from the partnership will increase in 2025, it is considered a transition year, with more significant growth expected in 2026 and beyond.

Matthew Stanton inquired about potential green shoots in the weak instrument market, specifically in China, and asked about investment priorities for new launches like the single SOMAmer product. He also sought directional commentary for 2025 revenue.

Answer

President and CEO Michael Egholm noted that while instrument funnels are building, a market recovery is not yet evident, though China could be a 2025 tailwind. He confirmed that growth investments are protected despite cost cuts and detailed the 'minimal viable product' launch for single SOMAmers to existing customers. Both Egholm and COO/Interim CFO Hanjoon Kim declined to provide 2025 guidance, emphasizing focus on Q4 and the long-term potential of the Illumina partnership.

Matthew Stanton asked for a breakdown of the revised revenue guidance, the visibility into the second-half recovery, whether the SomaScan service revenue miss was a timing issue, and the long-term revenue path to achieve 2026 adjusted EBITDA breakeven.

Answer

CEO Michael Egholm and CFO Jeff Black attributed the guidance cut primarily to project delays and forecasting misses in the SomaScan services business, which they are now addressing with a more rigorous process. Egholm confirmed the revenue miss was mostly timing-related but also faced tough year-over-year comparisons due to customer concentration. He reiterated a firm commitment to achieving adjusted EBITDA breakeven in 2026 regardless of the top-line revenue, stating they will manage costs to meet the target.

Matthew Stanton, on for Tycho Peterson, asked about the immediate market opportunity and expected penetration for the new ultraRapid Whole Genome Sequencing product, as well as the company's capital allocation priorities between organic and inorganic growth.

Answer

CEO Katherine Stueland positioned the ultraRapid product as key to unlocking the ~$1 billion NICU market, where genetic testing is currently underutilized. She stated that organic growth is the priority, with investments focused on product development, enhancing the customer experience through AI and automation, and scaling lab and interpretation platforms to maintain a competitive edge in quality, speed, and cost.

Matthew Stanton of Jefferies asked for the primary drivers of the Q3 gross margin step-up and the key levers for continued improvement into 2025. He also inquired about the timing of the business impact from recent state coverage wins like Texas and Florida.

Answer

CFO Kevin Feeley identified the main drivers of margin expansion, in order of impact, as higher average reimbursement rates, lower cost per test, and favorable mix. Looking ahead, he highlighted automation of manual 'dry side' processes as the largest opportunity for further COGS improvement. He noted that the impact from new state coverage decisions typically has a 1-to-2 quarter lag, making them a 2025 contributor.

Representing Matthew Stanton of Jefferies, an associate questioned how recent high-end mass spec pricing affects Nautilus's view on price elasticity and its go-to-market model. He also asked for an update on the academic funding landscape and the expected customer mix at launch.

Answer

CEO Sujal Patel stated that the strong pricing of new systems like the Astral validates the importance of proteomics and supports Nautilus's planned ~$1 million initial deal size, suggesting there could even be upward flexibility. Regarding the market, he acknowledged that while academic funding may be flattish, the platform's disruptive potential is expected to attract significant interest from both academic and pharma customers. He anticipates the initial customer mix post-launch will be relatively even between academic/non-profit and commercial entities like pharma.