Good afternoon, everyone, and welcome to KeyBank's Healthcare Conference. My name is Anna Snopkowski, and I'm an associate on our life science equity research team here at KeyBank, led by Paul Knight. I'm joined today by the Harvard Bioscience team, Jim Green, who's the CEO, and Jennifer Cote, who is the CFO. As a quick reminder, after the introduction, we will open it up for Q&A, so feel free to email myself at anna.snopkowski@key.com, or you can also post in the chat below if you have any questions. Maybe to start, I will hand it off to Jen to go over a quick financial overview. Good day, everyone. What I'm going to do is I'll give a quick intro of the company, and then I'm going to hand it back to Anna and Paul to do some Q&A with Jim, and we'll start there. I'm going to introduce just the company at a high level for those who are not familiar with it. Harvard Bioscience, I'm going to skip over some of these things. This presentation can be found on our Investor website. Just at a high level, our company is a provider of life science tools that help support academic research institutions, CROs, Biotech, and Pharma companies in the full end-to-end process of drug development. The company has two major areas of the business: cellular and molecular, and preclinical systems, each of which make up about half of the business. We have three primary locations. We're headquartered just outside of Boston, Massachusetts. We have a manufacturing location there in Minneapolis and also in Stuttgart, Germany, where we also do some of our research and development. The company has about 350 employees. We completed 2024 with revenues of $94 million and Adjusted EBITDA just about 8% of revenue. About 40% of our business is recurring in nature, which includes consumables, software, and services. When we look at the split globally, we are about half shipping into the Americas, with the rest split between Europe and Asia-Pacific. About half of our business is sold into academic and research, as opposed to the other half, which is with industrial customers, biotech, pharma, and CROs. With that, I'm going to hand it back. We have a lot going on with the company right now, and I'm sure Jim can introduce himself and share a little bit more. Thank you, Jen. Yeah, I thought we should just go ahead and get right to what really is concerning investors today. Many of you know me. I'm Jim Green, CEO. Many of our investors knew me when I ran Analogic, 10 years as CEO there. Many of our institutional investors came here or as operating CEO here. I think the question really is, what's going on with the stock price? This company, historically, if you look at our margins in the space that we're in, we typically sell for our EBITDA is about 15. You would typically expect to see us trading at 15, maybe 18 times EBITDA. Here we are now, we know what the stock price is. That's really very much under pressure. Some of the things, I'll just give you a little quick highlight of how we got here. Last year, we had revenues reducing mainly through China and Asia-Pacific with destocking. It felt like we got through that reasonably well at the end of the year. We all know that life sciences have had some issues, both in the U.S. and in Europe. Last year seemed to stabilize pretty well. What kind of came out of nowhere, as many of you know and are dealing with, is with the change of administration, the change of how NIH is budgeting. That adds a big piece of noise and kind of makes visibility a little harder for companies like us and others in our space. At the same time, we were working to replace our debt facility. We are now at a point where we have got the next few months, so we expect to replace it. I know that there's going to be questions about the debt facility that we're working on. You put those things together. When you're a small-cap company and you've got some leverage that can tend to scare people away, in general, we've always focused on making sure that we have the right level of profitability and the right level of EBITDA to fund our capital expenses we need to continue to drive new growth and enter new products into the market, and at the same time, continue to service our debts and pay our bills and pay our suppliers and such. I thought we'd just take the time for Paul and Anna to kind of, let's talk about what really counts. Because again, you can always take a look at our presentations and learn more about the company itself. am also happy to talk about some of the technologies if that is, again, as we get through the next 20 or so minutes for this call. Anna, I want to turn it back over to you and Paul if you want to go through what some of the burning questions are. Perfect. Thank you, Jen. Thank you, Jim. Maybe to start on a positive note on the new products that you've been launching, I know these are in some growthier areas of the market, such as electroporation and the Mesh MEA technologies. Maybe could you just talk to these products? What are the growth rates you expect to see in each of these compared to your base business? How will that boost your overall company? Okay. Yeah, you know maybe why don't I just take a minute and walk you through slide eight. Jen, can you pull up slide eight for us on the deck? I think it's one before that. Yep, there you go. Yeah, I think it's important to know where our products and technologies fit into the drug development cycle. The key ones that I'll focus on are the one, and these are the ones that we're investing in and do expect and see growth in these areas, natural growth. These products are technologies that are essential in the product development or in the drug development cycle. Typically, as the development cycle works, a research company or a pharmaceutical company is working on a new compound. If they're working on a new compound and it's a new generation where they're having to actually edit the genes or edit the RNA or DNA or is doing some type of a CRISPR procedure, it's a reasonable assumption that they're using our BTX technology for the creation of these compounds. BTX has been, it's one of our core product lines and technologies, and it's probably somewhere in the neighborhood of 8%-10% of our revenue. Once a compound's created, the next step is immediately go to cell-based testing. That's where we are a leader in both patch clamp and microelectrode array systems. Once you have a compound, you'll typically want to see how it affects an individual cell. I have to apologize. My computer seems like it wants to go dead on me, so I'm going to plug in. Here we go. We're a leader in electrophysiology testing, so our patch clamp systems. If things go well at the individual cell level, they'll go to groups of cells and they'll move to our microelectrode array systems. That's where you're testing a group of cells, and that's essentially kind of a proxy for typically it's the brain or the heart. Those are areas that you really want to test quickly. We've introduced recently a brand new technology where we call it the Mesh MEA organoid platform. Instead of just having a small group of cells that's sitting on a microelectrode array, you actually grow a proxy for the organ. You actually grow a brain. Typically, it's based on stem cells from even individual people. We can test with our system. We can now, instead of cells that maybe live only a day or two, these cells and brain cells and such or these brain organoids we're seeing live up to a year. You can really start to get a good feel for how a compound affects a brain, someone's brain or someone's heart tissue. You can not only tell if the compound is helpful, but you also want to know, very importantly, is it harmful? It can act as a filter to help establish which compounds really should go into the next level of testing where you're starting to get into the millions of dollars of spend. As I look on the left-hand side, cellular molecular technologies, we report this out as typically it primarily sells into research departments at pharma companies and biotechs and also into academic research sites. On the right side, the preclinical products, this is when you're starting to do the testing with small animal models. If a compound looks like it's going to be safe, it'll then go to small animal model testing for safety and toxicology and then to large non-human primate testing. In both these cases, we are the leader. Most every drug that goes through the large CROs and the large pharma companies who've used us for many years will need to use our implantable telemetry systems to collect the physiologic data from these populations of animals. That's what's used to generate the report to the FDA that indicates that this drug is now safe and effective and ready to move into bio production and into use with humans. If we go to the next slide, we'll just go into what are some of the areas that we're investing in. I look at our core business, which is about 80% of it, and it's made up of our main systems, our data systems. We've introduced a new product called SoHo for shared housing. With this, this is an adaption now to be able to do the testing in the animals in a shared housing environment instead of an individual environment. This is an area where I see this section as really the base that grows with the market. If the market has headwinds, we will see headwinds. The two areas of expansion for us is into high growth of bioproduction and electroporation. That's one area where we're expanding, and I'll talk to you a little bit about that in a minute on the next slide. The other area that's real exciting is expanding into the use of organoids and how organoids will make a difference here in the drug development process. If we go to the next slide, I'll just take a second to tell you about the new products and how that's going. Again, as part of our base business, just this week at Society of Toxicology, we introduced our new SoHo platform. This is a platform of implantable devices that no longer have you have to have an individual animal in an individual cage where you're monitoring the health of the animal. You can actually implant the animals with these systems, and they can live in groups in a shared environment like they typically live. That's really how you want to evaluate how a drug is affecting an animal, not just their physiologic health, but their behavioral health. How are they doing? Are they getting up? Are they finding their food? Are they fighting? That kind of thing you really want to know. The other area, the second area is electroporation and bridged bioproduction. Here we've talked about now the adoption of some very large companies starting to buy from us. One of the largest initial launches here, which started last year, was with a top Biopharma company. This first large volume is being used for an RNA or for a vaccine type, a new vaccine that's being used with companion animals. Now, why would we be interested in that? The interesting is we're also working with a number of companies for human use for these. For instance, if you look on the slide, you'll see we have a company that's working with us now on CAR T- cell therapy. We also have a company with a new generation therapy. These are not small companies. These are the big biopharma biotech that are working with us on this. It takes a while and time to get through the process to really go into production where you're having volume in these new drugs for humans. By being able to use the same technology and applying it to companion animals, that's why we're seeing with this first use of the first version of this vaccine, we're already up to about $1 million a year of consumable. This particular, it's a top five pharma company. They're now working to adapt it to another vaccine. It will be one that will be developed, and it will be using the same technology, but it will be sold into Europe also for companion animals. That gives us an exposure not just to developing new therapies for humans, but also the higher volume therapies for, again, for companion animals. The last area is the Mesh MEA organoid platform. We introduced this last year. It is expected to be a big part of our growth. Late in the year, Q4, we placed 10 new systems with early adopters, including the Mayo Clinic and Stanford. The NIH actually recently adopted this technology for neurotesting. For this year, for 2025, we expect to expand into a number of leading academic sites and also government labs, both in the U.S., U.K., European Union, including the NIH. The long term for us, and you'll see this already starting to happen, is to adapt this technology for higher consumable use by industrial users. That means big pharma companies. You look at some of the companies that are working with companies like Roche and other very large players who work with us who are very interested in starting to adopt some of this technology and developing that pipeline. Anyway, that's kind of a look at what I see as the main drivers right now of new technologies, new products that are going to be driving incremental growth for our company going forward. Anna, I'll turn it back to you. Thank you, Jim. That was very helpful. Maybe just going a little deeper on some of those products you just touched on, I can imagine that as the pipeline gets more complex and we move towards more cell and gene therapies, CAR T, ADCs, that people will start to rely on your products even more. Maybe just what are you seeing there? I know you mentioned you saw a customer adopt your electroporation for a next-generation therapy. Maybe just what you're seeing there would be great. Yeah, yeah. I mean, because biotechs and pharma companies, because they know us and have worked with us for many years, it's not like we're a garage shop coming in to talk to them about new technology. They have used our BTX technology in their academic environment. They have also been used to using us in their discovery departments, the research departments of the pharma companies. Now we are working, now that we have this and a version of the product that is cGMP compliant, you can now use this. If they use this to create a drug, they can now use this to go into bioproduction with us. It is a fairly long sales cycle, especially if it is going to be bioproduction for large-scale use. Those tend to have, they tend to develop a little slower. By having a lot of them in play at the same time, as these products, as these therapies come out and as they start to be, as they start to need to produce these in the bioproduction environment, they'll need to do that for the preclinical phases and then the early-stage clinical phases. It gives us a chance to really get our product in there for early adoption. As they grow, if it turns out that we can't meet high volume for them, they may have to reformulate and go to another very large supplier and then be putting out a lot more capital to be able to do that. As I see it, we are a low-cost, low-risk bridge into that first stage of bioproduction. Depending on the drug itself, it may or may not need to be 10 million doses. It might be an orphan drug where there's only 50,000 doses a year, something like that that's required. It does take this new technology where you're having to actually edit the stem cells to create the use of this, to actually create the fundamental drug itself. That's a big, again, that's why we're looking at specific areas where our products are compelling, again, in the creation of the drug, then in the cellular-based testing, now with the use of organoids. Once you get through those phases and you're now into in vivo testing, we are the leader there too, well-known. If somebody like Pfizer has been using us for 30 years, they're going to want to keep using us, or even if they outsource the testing to Charles River or somebody, because they want to have that longitudinal data from 30 years or so of these kinds of drug development they've been doing. Maybe just talking about how you think about new product launches and what's next for Harvard Bioscience, is a lot of your product launches in response to what customers are expressing to you in terms of what they need, applications more specific to certain therapies, or what are you seeing as a big need in the market? That is exactly what happens. Many of our products, we do not think that we are smarter than our customers. It is often our customers who help us understand what needs to be done, what is that unmet need. An example of that would be, for instance, when we found that some large companies were using our BTX to create drugs and were asking us, "Why cannot we go into production with this?" We said, "Okay, we know how to do that. We just need to go, we will need to update the system to make it cGMP compliant. You need longitudinal traceability of your supply chain for that." We also found that companies, big pharma companies were buying our AAA systems. Originally, it had been designed and had been in use in clinical applications for probably 25 years. Again, we got pulled into it and asked, "Why can't you make this cGMP compliant and allow us to be able to do validation of materials and biomaterials for QC in our production?" We said, "I guess we could do that." We learned from that. We also were proactive in some areas. We're very well known with the in vivo testing. There we went to the large CROs and the biopharma companies and said, "Look, here's what we do in telemetry. What do you think about the next step?" What we learned there was clearly a need to go to shared housing. First, for simplicity, for being able to use less space in their labs, but also just a more efficient natural environment for the animal models. That leads us to develop new products. It really is based on what are the needs of the customer, what does it make sense that we can do and still sell into our space where we have a right to be there and we have a technology that's compelling. Yeah, that's very helpful. I guess just continuing on that point, who are, well, obviously your existing customers are probably some of those early adopters of those new products, but what's your strategy to expand to a new customer base and maybe even larger, more industrial-sized customers? Yeah, that's our fundamental philosophy, is to take what we've done, perfect the technology in the academic environment and in the research environment at the big pharma companies, and then adapt that to their needs on the higher volume utilization, where there's much higher volume of consumables. It's more of a razor-blade type application. For us, it's a natural transition, and it doesn't have to reach out to customers that we don't already know. To me, it's very critical that we stick to where we have a reputation, a technology, have a sales channel that is recognized. Speaking of sales channel, one of the things that we're doing now in Europe, we've always used the big distributors to help augment our sales because we just didn't have that many salespeople to call on all the sites. Groups like Fisher and VWR, we use extensively throughout Europe and other parts of the world. We have a formal relationship there. With that, that's a big part of our growth and prospecting for product sales. We're just now in the process of adapting that and rolling that out in the U.S. That's going to give us a whole other level of prospecting, feet on the street. Maybe we had seven or eight people trying to cover a group of academics and pharma companies where Fisher has 900 people out there and a website that people are typically buying from. Getting with them on their platform makes a lot of sense for us, expands our prospecting, and that turns into expansion of new sales for us. When are you expecting to maybe see some of those commercial sales hit your top line from VWR? Yeah, for us, typically in the past, it's been they would come to us because somebody wanted it, and they wanted it to be on their paper because they had a contract with them. It would be a lot of work to do it. Not to mention, their sales folks would not necessarily be compensated for that. We've been working on it now. I mean, it takes a few months to put something like that in place. It might overall take even longer. We're expecting to have that in place here over the next few months and start to see that be feeding into our prospecting by mid-year. That'll be a measurable bump in our business because of that. Okay, perfect. Thank you. Maybe just moving, you talked about it a little bit in the beginning, but just around NIH, we could just spend a minute to talk about your exposure there, what you think downside risks are, and maybe what you're seeing initial conversations shaking out to be. Yes. With NIH, of course, I think it was kind of, it kind of came out of nowhere where all of a sudden, I do not know that any of us had predicted that the election would change the way funding and the way NIH and in some ways academic research is funded. It did. What we have seen with it is in some cases, research grants that were already in place had to go back and be resubmitted. Things that were already funded tended to not really be a problem, but there was still nervousness. I think it is important to size what is NIH. It is not a perfect measurement, but our business overall, it is a little under half of our business is academic research. With that, in the U.S., it is about half of that. Let's say you go from, I don't know, $45 million to half of that, you're maybe a little under $25 million for all of academics. NIH itself and its NIH grants is about 30% of that. You're down to somewhere around, you could argue it's $8 million - $9 million of our, again, maybe 8%- 9% of our business. There has been some delays there. We saw that with some of the early adoptions. We are seeing a little bit of a little slower in getting orders through. It's not that we're losing them, but it's more like they have to resubmit. There has also shaken some of the other academics. I think they're a little worried like, "Well, is there something else that's going to affect us?" The way I see it is I look at that and what I'm trying to judge is, do I just need to plan for this lower rate right now? I've identified what I see Q1 looking like, and that will include some impacts as we see so far from NIH with academic funds and such. With that, I mean, if it stays at that level, I mean, for us, that's not the end of the world. We continue to stay very lean. We've already identified some areas that we're going to be taking some further reductions in to make sure that we've got plenty of cushion. Should revenue stay at this lower level right now that I've predicted that I've shown for Q1, if it were to stay like that, what I'm going to do is I'm going to continue to lower my cost base. I'm going to make sure that I deliver the EBITDA that has enough, make sure that I have the ability to fund my CapEx and fund my debt facilities and so on, and then continue to pay my suppliers and customers and employees and everything. It really comes down to just keeping our head down. Those investors who know me know that I know how to do this. It's not the first time we've had to sit back and keep our head down and get through some kind of questionable times. At the end of the day, our main businesses are just, they're up and running and fine. You look at our in vivo business with DSI and what's happening there, I mean, it's rock solid. Our gross margins are the best. Really, it's a great business. And with some visibility issues in some part of academics, we just get lean and continue to drive new products. These new products are designed to drive growth in the business. Even if it is off a lower base, it just means that we'll be growing off a slightly lower base. If that's the case with my operating leverage, a new dollar of growth should drop down 60-70 cents. Even if I'm, again, because we are very lean, that growth drives dramatic profit improvement very, very quickly. Are there certain products that are more at risk to the NIH? Would it be on the research and discovery side versus the preclinical applications? Also, base business versus some of those growthier areas? Yeah, no, I think that's exactly right. Where we expect to see some of that as far as the slowness, we're seeing it more on the CMT, the cellular molecular side, which has more exposure to academic research. You'll also notice some of the new products that we're introducing are in that space. We'll have some level of offset and improvement in that space. Now, it may not be as fast into academics, but we do expect it to continue to grow nicely into the biopharma companies, the larger industrials. Our in vivo business, again, it's running fine. We're going to continue to feed those horses that are running well. Some of the products that are having some, where we have some delays, we're just going to stay lean with it. Hopefully now with the expansion of getting more prospecting out there through distribution, that will help us overcome that too. Again, at the end of the day, even if I'm going to run lower on this run rate, my new growth will be incremental to that, and I will continue to see nice improvements in EBITDA and free cash flow. Yeah, I would also argue, Jim, that the NIH cut is only 8%. I mean, I get that there might be a stunned silence for a little while, but I do not know what you are seeing from NIH activity. I know it was paused for a while, but it does not seem like it. Yeah, I think you're right. I think we also see that in general, there's just kind of a hesitancy when they see NIH kind of hesitating and NIH-funded grants. That does kind of give folks at some of these universities, give them some pause that they should maybe be a little more careful. As I expect, it takes a few more signatures to get something through, double-check and check and so on. Yeah, that just means it slows some things down until that really gets picking back up. Like you say, in the meantime, I mean, if that's affecting whatever, 8% or 10% of my business, I still got the rest of my business that's selling into areas that are really not affected so much by what NIH is doing, but really affected by the number of new drug starts. As the pharma companies start to pivot now back toward real expansion into neurotests, neurodrugs, diseases of the aged and cancer, that's going to drive volume for our products. Is your CRO market improving? You know, I think as I see it, CROs seem to have stabilized nicely. It's kind of at its, I would almost say, normalized run rate. I don't see anything big up or down at this point. Last year, we did see there was a couple of times when I think because of the big jolt in interest rates, and we saw that some of the large CROs had started to push out purchases. We saw that specifically in a couple of areas, but that seems to be behind us. I mean, that really should be a nice base business for us. As you know, we're now introducing the new SoHo family, and that's getting a lot of interest and a lot of traction. We just introduced that at Society of Toxicology. We expect that to start penetrating. We'll see more of that starting to be adopted by CROs. We expect that to also be really compelling into research areas for pharma companies and academics. We continue to feed that space. The last bit here, I know the debt refi, that's due what, June 30? That's right. We have contracted with an investment bank to help us put a whole series of potential lenders in front of it. I like having somebody else work that for me and then bring that to me. I can do the analysis on the term sheets as to who we want to work with. We want to be careful. As it is right now, I'm paying on that $37 million, I'm paying about 8% in interest, but I'm also paying $1 million a quarter down on the principal. As far as dollars out of pocket and cash flow, if I end up with something on a private placement that has maybe, I do not know, 12% or 13% interest rate, net net, I'll probably be paying less than what I'm paying today as far as servicing it. I just need to make sure I get the flexibility and that I take the noise out with investors that there's just some worry that I'm not funding. I don't expect that to be a problem. We're already looking at a number of interested lenders on this. I have to work over the next couple of months to get that completed and get it behind me. Yeah. Okay. My last question would just be on some potential tailwinds in the industry. Obviously, we're seeing biosimilars and GLP-1s. Just on biosimilars, this is obviously drugs that are going off patent, redeveloping in the pipeline. Is there any upside opportunity there as preclinical research and discovery of biosimilars starts to happen? Yeah, I think so. I mean, I think what's interesting is during COVID, that really pretty much tied up the whole cycle of new drugs. GLP-1s, as we know, everybody had to have a GLP-1. Now as that's now finishing up, the assumption is that we're now going to get back to, like you say, not just the biosimilars, but the focus from HHS. What you hear from the government is they want to see drugs and vaccines and therapies. They want to see them go through the full clinical phases. That means full preclinical testing. That means utilizing our technology, our cellular-based technologies, using our organoids, we believe, and then our in vivo testing. All of that has to be done now. That's a good tailwind for us. The move back to the focus in government on funding and pushing toward the needs of the aging population. The aging demographic, the needs there, it's the focus is neurodegenerative diseases, you got Alzheimer's, you got epilepsy, you got the neuro-based diseases, you got the needs of late-stage cancer and all the opportunities there for using some of these new gene-edited type of applications. Those are all going to need to go through that cycle. That is where the real tailwinds are going to come. Much of it just comes down to the market stabilizing and getting back to what is it the end market needs. That end market needs, that's our aging demographic and what we need for our parents and grandparents. That is going to get a lot more focused now. That is for us in the long run a good tailwind. Thank you, Jim. Thank you, Jen. That was a very helpful overview of the business and addressing some of those concerns like NIH that we have time for today. Good luck with the rest of your meetings and have a great rest of your day. Thank you so much. Thank you, Jim. Thanks, Anna. Thanks, Thanks, Paul. Appreciate it. Take care. Take care.