Roderick Greef - CFO Michael Rice - President, CEO.

Jeffrey Cohen - Ladenburg Thalmann.

Good day, ladies and gentlemen, and welcome to BioLife Solutions First Quarter 2016 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call will be recorded.

I would now like to introduce your host for today’s conference, Mr. Roderick de Greef, BioLife Solutions Chief Financial Officer. You may begin..

Thank you, Karen. And good afternoon everyone. Thank you for joining us for the BioLife Solutions conference call and webcast to review the financial results for the first quarter of 2016. Today, we issued a press release which summarized our results for the first quarter.

This release is available on the Investor Relations page of our website at biolifesolutions.com. As a reminder, this call is being recorder and also broadcast live on our website. A replay of the webcast will be available through the same link for 90 days.

Before we get started, I would like to remind everyone that during the course of this conference call, we will make projections and other forward-looking statements regarding future events or the future financial performance of the company.

These statements are subject to many risks and uncertainties that could cause actual results to differ materially from expectations.

For a detailed discussion of the risks and uncertainties that affect the company’s business and that quality to whether they qualify to be forward-looking statements made on this call, I refer you to our periodic and other public filings filed with the SEC.

Company projections and forward-looking statements are based on factors that are subject to change and therefore, these statements speak only of as of the date they are given. The company assumes no obligation to update any projections or forward-looking statements except as required by law.

And now, I’d like to turn the call over to Mike Rice, President and CEO of BioLife..

Thank you, Rod. And let me officially welcome you to BioLife. It's great to have you on the team. Thanks everyone for joining the call. As many of you will be in contact with Rod over the next few months, I can tell you he's extremely capable and will make a significant contribution to our success.

It's my pleasure to provide this business update, after which Rod will present the financial highlights for the quarter and then we'll be glad to take your questions. I'll start with some comments about our core biopreservation media business.

We had another very strong quarter with record revenue, orders from several new cell therapy companies and increased order volume from later stage clinical customers who have embedded our CryoStor and HypoThermosol biopreservation media products in their collection, preservation and distribution processes of biologic starting material such as apheresis collections and also downstream manufacture to CAR T and other cell therapies.

Product sales to our distribution partners also reached a new record high in Q1 and we're encouraged about how we're able to leverage the selling teams of companies such as STEMCELL Technologies, VWR, Sigma, and Thermo Fisher, with nearly no overlap with our direct selling activities in the region of medicine market.

Specific to this segment, we now estimate that CryoStor HypoThermosol are being used in over 215 preclinical validation projects and clinical trials of new cell and tissue based biologic therapies targeting cancer, heart disease, vision loss, movement disorders, graft-versus-host-disease and organ transplants and other large disease states.

This is important to know that the potential treatable population and these indications are significant. So, some of the cell therapies are approved, we could expect really meaningful potential increases in demand for our proprietary biopreservation media products.

As you know, we fall the space in our customer trials closely and based on public information and direct communication, we believe that some approvals could be received toward the end of the year and into the first half of next year. I should remind you that our customer relationships are very sticky.

So, as we remain committed to very high product quality and stellar customer service, we don’t anticipate real competition from substitutes in the market. Turning now to our biologistex SaaS offering. You may have seen our news release about in the exciting new partnership we formed with MNX Global Logistics.

MNX is a specialty courier offering door-to-door same day delivery and next wide out managed logistic services for high value, time and temperature sensitive biologic shipments. In the first component in our relationship, we started technical integration of MNX services in our biologistex cold chain SaaS.

So, BioLife customers can directly purchase MNX services as better alternatives to traditional freight carriers where critical shipments often gets stuck overnight in a hub and in some cases the biologic payload is rendered unusable due to delivery delays or shelf-life expiration.

We've already completed some joint sales calls with the MNX team to cell therapy companies and I'm very encouraged about this opportunity and the energy and engagement both companies are committed to ensure success. We've also introduced new ALL SEASON™ Cold Packs and Payload Carriers for the evo Smart Shipper.

These new accessories further simplify the pack-up process and offer expanded capacity for larger payloads such as apheresis collections. Lastly, based on specific customer feedback, we completed additional performance validation testing on the evo in extreme ambient environments in inappropriate pack-up and storage conditions.

This new independent performance data is very compelling and we'll put even more space between evo and competing traditional foam coolers and vacuum insulated containers.

In reflecting on biologistex over the last year, we learned a tremendous amount of our customer expectations, the selling environment and who the key decision makers are in our target organizations. And we'll say that the roll-out has taken much longer than we anticipated but we now have inventory and a full data package.

So, going to spend the rest of this year focused on winning marquee early adopter accounts and partnering with MNX to hone and deliver a very strong message about how evo and biologistex can enable our customers to make a positive paradigm shift in our cold change distribution practices.

It's important that I recognize the efforts and accomplishments of our JV partner SAVSU Technologies. A SAVSU design team continues to innovate with velocity. At the ISCT annual meeting in Singapore at the end of this month will be unveiling the newest and fourth model in the evo Smart Shipper family, a LN2 evo.

This is a liquid nitrogen version of the award winning evo designed for short to medium duration intra campus transport of frozen biologics, as an alternative to bulky and cumbersome liquid nitrogen doers.

Before turning the call back over to Rod, I should also speak to the announcement in our earnings release about the $4 million credit facility we executed with our larger shareholder. This is a really strong commitment of support to our company, mission and team and provides the cash cushion needed due to the relay realization of biologistex revenue.

Now, I'll turn the call back over to Rod to go over our financial results for the quarter and to update our expectations for 2016..

Thanks, Mike. As noted, revenue for the first three months of 2016 was 1.9 million which is the highest level of growth revenue for our core biopreservation media products and represents at 25% increase over the first quarter of last year.

The increase in revenue was primarily the result of higher sales to our customers in the region in that space and to our domestic and international distributors. Gross margin for the quarter was 58% which was essentially the same as the first quarter of last year.

Our total operating expenses this quarter were 2.6 million compared to 2 million for the same period in 2015. The increase in operating expenses is related to severance payments made during the quarter increase noncash stock based compensation expense and higher cost associated with the roll out of our biologistex product line.

The net loss attributable to BioLife this quarter was 1.2 million compared to 1 million last year, reflecting a higher level of operating expense somewhat offset by the increased gross profit related to the higher revenue levels. Our cash balance at the end of the quarter was 1.7 million compared to 3.8 million at December 31st 2015.

As Mike just mentioned, we've entered into a $4 million credit facility with our largest shareholder way beholding's and we believe this facility will provide the company with sufficient capital to reach positive cash flow sometime next year.

With respect to our current outlook for 2016, we confirm that we expect our core preservation media revenue to continue to grow between 20% and 30% over last year and be in the range of 8 million for the full-year. We anticipate that gross margin for this revenue line will be between 55% and 65%.

While we do expect some nominal revenue from our biologistex product line in 2016, we will provide more specific revenue and margin guidance on future calls as we see how the initial adoption curve develops over the coming quarters. Now, I would like to turn the call back over to Mike..

Thanks again, Rod. My closing comments are focused on the foundation we built with our biopreservation media products, our marquee franchise group of customers in the cell therapy space, our biologistics opportunity and an incredible team here BioLife. We were recently named the "Washington State Manufacturer of the Year" by Seattle Business Magazine.

This is a great honor and a testament to the team here and how we're working hard to change biologic base medicine for the better. Karen Foster recently joined BioLife as VP of Operations and just a few short weeks Karen is getting fluency in our operations and is making a very positive impact on the team.

I look to her to lead and manage the scale out of her biologistex customer onboarding fulfillment and support functions. Thank you for your interest in BioLife. Now we'll open the call for questions.

Operator?.

Thank you, ladies and gentlemen. [Operator Instructions] And our first question comes from Jeffrey Cohen with Ladenburg Thalmann. Your line is open..

Hi Jeff, can you hear us?.

Yes, just fine. So, just a couple of issues if we can go through.

So, firstly Rod, if you could talk about 1.7 of cash and 4 million credit, you expect that will get you to profitability as far as cash flow profitability during 2017 sometime?.

That's correct, Jeff..

Okay, got it.

Mike, could you give us a little more flavor for the biologistex and how the roll-out launch is going as far as some of the companies and early adopters and give us the kind of a rough idea what we might expect as far as number of units or number of customers by the end of '16?.

Yes. I can speak to the first part, Jeff. At this call I can't speak to the last part. But I think it's important to know that as we've gone out and we've introduced evo on our biologistics SaaS to both current BioLife Solutions media customers and also other cell therapy who aren’t using our media.

There's no doubt, there is a clear growing awareness for the need for improved cold chain distribution.

Now, that need is definitely more intense as these customers move to their later phases of clinical trials because the clinical importance of having these cells and tissues arrive alive and be usable is percolating to the organizations and particularly within the quality room of those companies.

And so we're really focused on the later stage companies. But we have two opportunity then. With respect to MNX, they have some relationships we don’t, we have some they don’t as well. So, that’s a really good relationship that we can leverage to make sure we're trying to increase the velocity with which we're talking to these early prospects.

I'll also follow-on and say that expanding on my remarks earlier, we have learnt some really important things about the evo.

It's so different from traditional foam coolers and vacuum insulated panel containers that the message is now it's being honed and we're smarter about the distinctions and who within these organizations will have the story resonate with and we're certainly staying away from traditional purchasing contacts and buyers and moving way up the food chain to quality and clinical decision makers.

Because these folks have an appreciation for really again making sure that they know where these shipments are. They understand that there are temperature escalations on the way, they understand the critical importance of notifying the destination contacts, how much shelf-life is left.

So, any workflow procedures that need to happen to make sure that the patient arrives and is prepped in time for the cell dose and they can use that within that shelf-life window. That's all really important and our app provides all those notification. So, we're really onto something here. The expanded data set that we talked about is really important.

And it puts us in the position, Jeff, to challenge our perspective customers to challenge any other vendors who come in with traditional containers to produce the same sort of evidence.

As you know on the media side we've always sold the products and presented it market nose from a performance evidence perspective with data and a lot of it being independent data. We've done the same thing with the evo.

So, we're in a position now to really set a very high bar with respective other competitors who might be pitching traditional containers because we know they don’t have this data. And if they go spend money to try to get it, the results aren’t going to be good.

So, a lot of learning, a lot of sculpting of the message and again really targeting better decision makers. So, I think we will be able to increase velocity here over the next few quarters and no doubt our new partners and colleagues at MNX will help us do that..

Okay, great. Thanks for the commentary.

Could you also give us a flavor for the current preservation media business, the composition of CryoStor and the composition of HypoThermosol?.

Sure. You've asked the question in the past and it’s a good one. It's about half and half, if you just want to use it something like that. And that's a total revenue, not specifically within the cell therapy space.

Okay?.

Okay, got it.

And lastly, as far as some of the ongoing trial work that's out there, as far as the Phase III, you've got some insight into how many do you expect to read out over 2016, I forget exactly how many Phase III's, they were ongoing somewhere between five and 10 I believe?.

That could be a consistent number, Jeff. And I think probably with some of these customers there's probably been a quarter of slide or slip in the schedule, maybe a quarter or two. But we're still feeling like toward the end of this year we'll have much better visibility and we can get some good news.

And no doubt in the first quarter of next year based on what we're hearing from some specific customers and looking at their quality audits and their supplier audits and their forecast for product. I think that's holding, so we're feeling good about that..

Okay, super. That does it for me, thanks guys..

Thank you..

Thank you. [Operator Instructions] And I'm showing no further questions at this time, I'd like to turn the call back to Mr. Mike Rice for any further remarks..

Thanks again everyone for your support and interest in BioLife. I wish you good afternoon..

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program, you may now disconnect. Everyone have a great day..