Rod de Greef - Chief Financial Officer Mike Rice - President and Chief Executive Officer.

William March - Janney Montgomery Scott Jeffrey Cohen - Ladenburg Thalmann.

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the BioLife Solutions Third Quarter 2016 Earnings Conference Call. At this time, all participants will be in a listen-only mode. Later, we will be taking questions and instructions will be given at that time.

I would like to turn the conference over to Roderick de Greef, Bio Solutions Chief Financial Officer. Please go ahead, sir..

Thank you, Tykia. Good afternoon everyone and thank you for joining us for the BioLife Solutions conference call to review the operating and financial results for the third quarter of 2016. Earlier this afternoon, we issued a press release which summarizes our results for the three and nine months ended September 30.

This release is available on the Investor Relations page of our website at biolifesolutions.com. As a reminder, this call is being recorded 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 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 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 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.

Now, I'd like to turn the call over to Mike Rice, President and CEO of BioLife..

Thanks, Rod and good afternoon everyone. I'm pleased to discuss our third quarter results and activities and we're focused on to drive growth and increase shareholder value, afterward we will be glad to take your questions. First, I’ll give an update on our biopreservation Media business.

We had another record revenue quarter and continue to believe that the franchise we built in the re-gen med space has the potential to create significant shareholder value.

As we disclosed in our press release issued earlier today, we estimate that CryoStor and HypoThermosol are now embedded in more than 230 customer validations and clinical trials of various cell therapies targeting blood cancers, solid tumors, vision loss, stroke, heart disease and other leading causes of death and disabilities for millions of patients throughout the world.

About half of these trials are using T-cell immunotherapies. We continue to believe that our initial customers could obtain regulatory approval and begin commercial manufacturing next year. During Q3, we gained 35 new customers, with 17 in the region med market segment.

I’m also pleased to report that our distributors continue to increase the size and frequency of their order for CryoStor and HypoThermosol. Our key distributors are also expanding their reach in placing our orders. So for this year we drop shipped distributor product orders to over 150 different end customers.

This momentum is positive in later stage for sustained growth. Turning to evo and biologistex, this is our disruptive scalable IoT Cold Chain Management solution for time and temperature sensitive biologic materials.

We spent the last year educating our strategic markets and the need for improves shipping containers and censor based logistics to support good distribution practices for source material and manufactured cell products.

As you know these include apheresis collections from cancer patients and the lifesaving dose of CAR T-cells manufactured from the patient’s own blood.

Several regernerative medicine companies continue to evaluate and validate the evo Smart Shipper and biologistex coaching and management staffs for using clinical trials and eventual commercial distribution. Based on potential customer requirements, several additional evo models are in development at joint venture partner SAVSU Technologies.

These include a larger payload carrier intended to provide stable transport and temperature maintenance of apheresis collections, so we’re focused on delivering a fleet range of evo Smart Shipper models to serve the entire biologistex Cold Chain temperature range.

Recently we issued a press release about a shipping study we completed with Brooks Automation, which show that the combination of the CRYO evo dry ice shipper and our CryoStor cell freeze media provided superior cell viability and recovery compared to a typical foam dry ice shipper and home brew freeze media.

This is really strong evidence to support our premise at Biopreservation of living cells is a complex and dynamic environment requiring multiple confirmatory tools to achieve the best results. We look forward to being able to share more evo performance data from other customers over the next few quarters.

As later stage cell therapy companies approach BLA filings in realized distribution pitfalls and the critical success factors, there’s a growing interest and appreciation for the critical role censor based logistics and high performance thermo insulated shipping containers playing and ensuring that cell therapies arrive intact and viable for patient administration.

Due to lengthier validation processes and sales cycles, did not anticipate meaningful biologistex revenue in 2016, but remain committed to this great opportunity to provide even more value to our customers. No, I’ll turn the call back over to Rod to review our financial results and convey our expectations for 2016..

Thanks Mike. As noted in our press release, biopreservation media revenue for the third quarter of 2016 reached a record $2.1 million, which represents a 31% increase over the third quarter of last year. For the first nine months of 2016, total revenue was 6 million or 29% above the prior year.

The increase in revenue for both periods was primarily the result of higher sales to our customers in the re-gen med space, including increased orders from our later stage clinical customers and to our domestic and international distributors. Gross margin for the third quarter was 57% compared to 60% last year.

Gross margin for the nine month period was essentially unchanged at 57% compared to 58% last year. Total operating expenses this quarter were 2.4 million compared to 2.3 million for the same period in 2015. For the nine month period this year, operating expenses were 7.6 million compared to 6.3 million last year.

The increase in operating expenses for both periods was primarily a result of higher personnel, sales and marketing and software development cost related to the evo Smart Shipper and biologistex Cold Chain Management software. The net loss attributable to BioLife this quarter was 1 million compared to 1.1 million last year.

For the nine months of this year, the net loss attributable to BioLife was 3.6 million compared to 3.1 million in 2015. Our cash balance at the end of the third quarter was 1.4 million compared to 3.8 million at December 31, 2015 and 1.3 million at the end of the second quarter.

With respect to our outlook for the full year of 2016, we continue to expect that our core biopreservation media revenue will grow over 25% from last year and exceed $8 million for the full year. We anticipate that the gross margin on our biopreservation media revenue for the full year will be in the range of 55% to 60%.

We will continue to use cash this year and into 2017, but we believe that the $2 million which remains available on our credit facility in conjunction with their current projected operating results will provide the company with sufficient capital to reach positive cash flow from operations in the second half of next year.

Now I'd like to turn the call back over to Mike..

Thanks again, Rod. I’ll close with a summary that 2016 is shaping up to be another really strong year for BioLife. Our biopreservation media business is strong and it’s the foundation for continued growth, evo and biologistex fill critical roles in Cold Chain Management, for re-gen med and will play a key role in commercialization.

We believe that CryoStor, HypoThermosol and evo could become standard re-gen med cold chain tools over the next few years. Thank you for your interest in BioLife. Now we’ll open the call for questions.

Operator?.

Thank you [Operator Instructions]. Our first question comes from Paul Knight with Janney Montgomery. Your line is open..

Hey guys, this is actually Bill on behalf of Paul.

How are you doing?.

Good Bill, how are you doing?.

Doing well, first, 35 new customers obviously half of that is within regenerative medicine and that’s a big area of focus for you guys, but maybe what other customers are you seeing interest from for your products?.

Yeah, great question Bill. So the remainder of those are distributors, cell suppliers and another 10 hair transplant physicians and that comprised the 35 new customers..

And then on the biologistex business, maybe how has that sales cycle shifted from when you first introduced the product today, maybe what’s the hurdle that you need to get over to start converting people to customers?.

Yeah, that’s a great question. So I’m not sure it’s changed, it’s longer than that.

It really depends on how far or long a particular prospect is and if they’re latter stage, they may have baked in some potential shipping kind of decisions, not to say those are lost opportunities but that takes a lot more work to get them to slow down long enough to validate evo.

The earlier stage or mid stage clinical preapproval customers we have a little bit more runway to find the right decision makers and get the evo evaluation started and provide the right performance data. So it really is a - it’s really just a matter of their focus, their priorities and how far or long they are..

And last one for me Rod, maybe just talking about the outlook and getting the profitability, how do you guys think about bridging that gap, is there an inflection point from biologistex, is it a commercial - an FDA approval and commercial manufacturing of a drug, maybe what are the milestones or inflection points to get the profitability? Thank you, have a good one..

Yeah, thank you Bill. So I think it’s really going to be driven by the core media business and the revenue growth we’re seeing organically and also the anticipated revenue growth that will come from those customers that will be realizing regulatory approval next year. So really it’s that revenue stream that we anticipate.

As we get high revenue levels, margin will go up and we also anticipate some decreases in OpEx as we go into next year. So it’s a combination of those two things and we’re really looking for that breakeven point some point in the latter half of next year..

Great, thanks guys. Have a good one..

You too, thanks, Bill..

Thank you [Operator Instructions]. And our next question comes from the line of Jeffrey Cohen with Ladenburg Thalmann. Your line is now open..

Hi Mike and Rod, can you hear me okay?.

Yes, I’m feeling great.

How are you?.

Just fine, just a couple of issues I wanted to kind of dive into a little bit.

First, can you kind of go to little more detail about evo currently, how many entities were out there that are testing and evaluating the platform and how much they look - you talked about revenues commencing in 2017, can you walk us through the trials sort of out there and testing that’s out there and what’s the potential?.

Yeah, so we will be a little careful with customer specifics Jeff, but in general there are a couple of handfuls at least of customers or prospective customers that are again putting evo through its phases somewhere in later stage clinical trial, so that’s great.

So that means that things go well in the validation they’ll be converting to revenue customers at some point. And then we have other customers not just in cell therapy, but in the cell supplier space, who are interested in evo and have some.

They’re teaching us a lot about how evo works; how are they validating shipping lanes and how the app is working for them providing critical data for shipment. So it’s all going really well, just taking a little bit longer and as you can imagine, we’re fighting that battle every day, but it’s a good one and it’s a great opportunity..

Okay and then secondly, could you give us a little further color as far as the number of trials out there now that have entered Phase 3 or currently in Phase 3 and what you expect over the next six months..

You can take the first part Jeff, so in the current investor deck on our website, you’ll see those two familiar charts and in the one slide you’ll see 230 total and the breakdown on the subsequent slide, it’s about 20 or so in Phase 3, almost 100 in Phase 2 and again overall all of the total of the 230, as I mentioned a few minutes ago, about half are in the T-cell immunotherapy space.

And we know some - we disclosed Kite as a customer, so we can now track their estimates when they have data readouts as this year coming up soon is obviously going to be a very - interesting in a formal meeting for Kite and their competitors, so we’ll be looking for news worth from that conference with a high degree of interest..

Okay, irrespective of the actual aggregate number, since you - like the pipeline now as far as apheresis its more or less advanced than it was a couple of quarters ago?.

Much more, I mean just look at the aggregate, I mean we have to - you can’t deny the aggregate or ignore that, right. So what we’ve done Jeff, we reduced the time it takes to get new folks to evaluate HypoThermosol and CryoStor because now we have this win at our back, we have this great momentum in base of customers.

So our ability to catch folks early and get them in the pre-clinical and the Phase 1 trials is going really, really great. And so what we can control is how fast we reach out and get new folks in the funnel.

We can’t control their own pace and success, but our challenge and our opportunity is just to get them in as fast as we can with the understanding that there could be a fair amount of attrition.

Nevertheless, this biology is hard and with 230 and growing every quarter, this really sets the stage for we think high margin revenue growth as the first few get approved and obviously the ones that follow after that. But our mission on the sales side of marketing is to catch these folks early, as many as we can.

Our distributors are even generating some leads that we’re converting directly in the re-gen med space for cell therapy, so that’s helpful. That’s a force multiplier and next year should be really exiting..

Perfect, thanks for the update guys..

You’re welcome..

Thank you [Operator Instructions] Our next question comes from the [Rick Jensen with BioLife] [ph]..

Can you guys hear me?.

Yes we can..

Hey Rod, hey Mike, how are you doing. I’ve got a question about the -.

Little bit of background noise really. I’m not sure if you can reduce that..

Yeah, I can hear you. I’m sorry, I’m driving.

So I’m wondering about the Storganix that you filed the 510 and how are we looking on that for fourth quarter 2016?.

Yeah, thanks Rick. Thanks for asking anyway, so just to clarify, we have files the 510-K nor have we disclosed to announce that we have filed the 510-K, but Storganix development work, we’re all over it and we understand the opportunity and when we can give further updates we will so..

Okay, so now we’re looking at first quarter in 2017 on that?.

To be determined, we’ve got some work to do and when we’re in a position to give some more guidance on that we can and we certainly will..

Okay, alright, very good. Good quarter..

Thank you. Bye..

Thank you [Operator Instructions]. And I’m showing no further questions at this time. I would like to turn the conference back over to Mr. Mike Rice for closing remarks..

Thanks, Tykia and thanks everyone for your interest, good evening..

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