We'll go ahead and get started. Can everybody hear me? All right, great. Thanks for joining us. Welcome to the Wells Fargo Healthcare Conference. I'm Brandon Couillard. I cover life science tools and diagnostics. Thrilled to have Maravai LifeSciences with us at the conference this year. Joining us to my left, CEO Trey Martin, as well as CFO Kevin Herde. Fellas, thanks for being here. Thanks for having us. Trey, start with you. You've been on the job a little over a year now. Just curious at a high level, you know, what surprised you positively and negatively about the business, the company, maybe the market as well, since you kind of took over the role? I would say I've been really, really pleased with what I walked into. You know, Maravai was a private equity-backed roll-up of some category-leading companies. The continued, I would say, reinvestment in those companies, the capabilities, the use of the pandemic-era capital to expand capabilities beyond the original plan, and the execution therein. So, you know, we talk about Flanders 2, for example, as a facility opening, but that's, those were investments and commitments made two, three years ago that are then realized at this time. So the infrastructure is world-class and largely brand new. Team is outstanding. The capabilities, I think, are better than I even expected. If we look at, you know, the past year, I think the COVID-related dynamics are pretty well understood. Your disclosure's been pretty clear on, you know, that piece that went into the vaccine production. The base business has, you know, been down but stable, you know, give or take, you know, some lumpiness quarter to quarter for, you know, about the past year and a half. Will you just unpack some of the headwinds? T hat the business has seen? Has this been a function of destocking? Is it biotech funding? Is it pipeline reprioritizations and how those have evolved and, you know, how you're feeling about just the base business, you know, right now, maybe to where you were twelve months ago when you first came on board? Yes. Yes. You know, the one of the dynamics that was both beneficial and challenging for Maravai is really, during the pandemic, so much focus was on one customer and one reagent, one of Maravai's businesses, TriLink, and one product, CleanCap, and for one customer. And so that customer and a few others were carved out and reported separately. Now that people are moving not only from just a specific spike protein neoantigen to multiple neoantigens for multiple infectious diseases, we can't say with certainty, "Oh, this is only COVID," for example. But I would also say that several of our peers reported what they called a COVID halo effect. You know, the entire industry was lifted with funding and activity, and we didn't specifically, nor did anyone else, carve that out of the base activity. When we talked about previous reporting of COVID, we were talking about two or three customers total over several years, so there is the halo effect, to quote another peer, that I think we're still resolving what normal is in the endemic state, but nonetheless, I'm, I'm so encouraged by the growth of programs, our participation in them, and our ability to execute and, and get it beyond a COVID CleanCap story. CleanCap's incredible technology. It's gonna be central to our thesis going forward, but it's, it's the keystone to the entire mRNA ecosystem, and the, again, the investments that, that predated me in world-class nucleic acid chemistry, in an enzyme company, and building these facilities, they give us all of the right framework to have a completely unique position in this growing modality. Just to put a pin in, the commercial, let's say, CleanCap, I think you refer to it as GMP CleanCap now. Yeah, or high volume or... Yeah. Yeah. And you specifically talked about a $50 million number this year. Does that include Pfizer-BioNTech, or is that diminished now as a large contributor? And, you know, how should investors think about the variability of that number just for next year, given it's, I don't know, a quarter, 20% of the revenue mix, just from that concentrated, you know, small group of customers? Yeah, I'm happy to take that. Yeah, I mean, the $50 million we talked about at the beginning of the year was really the firm commitments we had locked in when we gave our original guidance, and that hasn't changed. That was predominantly tied to one customer, which is disclosed in our 10-Q, so everyone can see what it is. But as it was to an American distributor, Nacalai, which sells through to Daiichi, which is one of the larger customers. And then also Pfizer and BioNTech have also been ordering this year as well, that kind of high-volume GMP CleanCap. And we call it that now, really, just because our product's fungible in the hands of our customers, particularly the large pharma customers, that are supporting commercial products, but also supporting late-stage products for other vaccines, as well as all of their research. So we can't. They don't parse it out. Our product isn't labeled by the indication, so it can be used across various things. And where it goes, I think we'll see. I think a lot of this will depend on, you know, how seasonality goes, how the booster campaigns go, how their progress and other high volume population targets and vaccines progress. You know, it's interesting. I think as we look back, you know, I think everyone thought, okay, the COVID and the respiratory vaccines will be at least as accepted and administered as flu, probably better, and it's now it's still the opposite. Which I think is, you know, from a health perspective, is a little puzzling. But certainly, I think to the extent you see an advancement of combinations. I think you'll see that compliance, if you will, increase, which will be a net positive for us as well. But I think, you know, once we step back, and I think a lot of the story around Maravai, you know, certainly having been here for a while and seen it, was talking about that base business and what we've been trying to focus on over the years, and that is really, you know, what do we need to have from a capabilities perspective, product perspective, to support where we think this market's broadly going? And that is really looking not just at the one commercial program that's out there, but the thousand or so- ... additional programs that are coming down the pipeline that we want to be participatory in over the next decade, and creating the right products, technologies, infrastructure, capabilities to be a main player in that. And that's kind of what the consistent thing we've always done, even throughout these crazy times, over the last six years, and we're just now finishing up that facility investment as we go live with our first build for a phase two, three pivotal for one of our customers in our new Flanders facility. So we're sitting here now and heading into the back half of this year, next year, with that whole infrastructure now in place. You know, I think and that's a great reason why Trey's here, and a great reason we've kind of changed a lot of our infrastructure, not just from a facilities perspective, but also from a people perspective. You know, we've all these companies we bought never had commercial people. Everyone knew TriLink, everyone knew Cygnus, everyone knew these great brands. We would sell to the scientists, from our scientists, and we'd work together. Now it's a much more competitive landscape. People are a lot more people are promoting or trying to sell their capabilities in mRNA and mRNA therapeutics, but they don't have the decades of experience that we do. They haven't done hundreds of GMP runs, and they don't have the vertical integrations of products, services, technologies that we do as well, which is very unique. A few big companies do, but across the CDMO landscape, you know, they're using other people's product and technologies. We're a product and technology first company that is also now has the capability to stay with customers to make the FDA, you know, quality drug substance, which is a unique thing for a small company to have. And that's, you know, we're trying to get off of that. Again, great product in CleanCap, great technology but there's a whole bunch more going on, and I think that's really setting a strong base foundation, you know, for the next few years. A good goal would be to not have anyone listed in the customer concentration in the 10-Q. You know, to diversify, and we expect that to happen over time here. Your, but as you said, it comes back to, we get commitments when we get them. The pandemic era supply chain concerns led to a really nice situation for predictability, which was, you know, people wanted to sign up, and they'd sign up for take or pay up to a year in advance. That's not the dynamic anymore. So, you know, we hear what people's, you know, if people will sign up for that, we hear about it at the very end of the year. And sometimes when you're a GMP service business, that doesn't happen as much, but when you have GMP products like we do, you can literally have a very large multimillion-dollar order come in in May and ship in June. In fact, we have that dynamic this year, which is why we leveled out our year. So we're certainly not gonna turn that away, but our goal, you know, like the duck paddling under the water, is to try to build this diversified base of business to minimize the seasonal or the periodic impact of these very large orders. We're certainly glad to have them, but a broad, diverse base of customer activity is going to be more predictable in the future. Speaking of that analogy of kind of the duck paddling under the water, but staying in place, I mean, the mRNA, mRNA pipeline continued to grow. You've published numbers on the number of CleanCap customers, which is growing substantially year- over- year. Yet, as we've talked about, kind of the base business has sort of been trending sideways. Are there, you know, one or two things that are outside the area of vaccines that are in the pipeline, be in phase one or two milestones that you would kind of point to or that you're looking to validate, you know, the opportunity, to validate the other indications beyond? Absolutely. Yeah, that, you know. I sometimes say mRNA is the software of the cell, because the way, you know. Ultimately, though you might choose a different cap, though you might have a different UTR, though you might play around with the tail, fundamentally, what you're doing is programming the message with AGC and U. And that is, that molecule is made the same way, whether it is the spike protein neoantigen for COVID, or one of the new flu, or a personalized oncology vaccine, or a protein replacement therapy, or expressing the endonuclease for CRISPR gene editing, or really, I mean, there are almost limitless things you can do with the software of the cell. But Kevin and I were just reviewing our pipeline data, which we've now taken in-house so that we can be more frequent with updates. And within the phase 3-plus programs, there are, of course, infectious disease, because that's already been clinically proven. There is personalized oncology, CRISPR, and one of the things mRNA is not the end therapy, but as a tool, we I think we've talked about how we have a phase 2, 3 in the service side in our new Flanders 2 facility, and that mRNA is actually a tool for engineering a cell therapy. Not the therapy itself, but the tool for making the therapy. It still has to be produced, of course, under GMP conditions, but all of those exist in the roughly dozen programs that are phase 3 plus. So and as I was saying to you before we started, I think that what's going to help the field enormously is the first approval for an mRNA, whether as a tool or a therapy, outside of infectious disease. We know infectious disease works, and it's great, and it's a much more efficient way to realize all vaccines, frankly. But when we get into those other modalities and there start to be big branches off of the tree, that's, I think, when people are going to start to really notice this as the next platform for medicine. Was 2023 the bottom for new program starts? You mentioned you're now tracking the pipelines internally, layering over your Salesforce data. How has that changed your visibility in the business? If, you know, if I think about one area where it might be most impactful is just forecasting. Has it had that effect yet? And what are some of the other, I guess, benefits that maybe I'm not thinking about? Yeah, I think that the tricky part for us still continues to be the fact that they're not our programs. I mean, we continue to be a tools provider, a product provider. When we're doing the services, as Trey alluded to, we certainly know what the program is. But generally speaking, that's, there's not a lot of programs that are in those later stages. So we still sell a lot of product into companies that have multiple programs, and we haven't quite got to the fact where we're adding up the SAM by adding up the potential value of each program. That's where we'd like to get. There's not enough dots yet to draw those lines, so because it's still pretty early days. I think you've seen some of the examples we've pointed to in the past, whereby a customer has been a research and discovery customer generating, you know, $500,000-$1 million of revenue. They'll move into a phase one, they'll be a $2 million-$3 million customer, then they'll move into a or a discovery, early phase one or a tox study, then they'll move into an actual clinical program, and that'll double or triple based upon the combination of a larger N needing more material than the upcharge to go from RU to GMP, which is anywhere from 30%-50% upcharge, just because the additional quality that comes around with it, the ancillary analytical services, et cetera. So, you know, that migration is a very important thing. We would love to be able to then model every program we know we're involved in with that migration, put a POS on it and extrapolate it out. That's where we're heading. We're not there yet. You know, the industry's not really there yet. I think people want to take traditional, you know, pharma type modeling and say: Okay, let's just p lop that on top of mRNA and go from there. I think we'll get there once we see some more data and have the ability to understand. Generally speaking, though, I mean, one, we can be very successful in discovery, as we've always have been. And two, I think that given what we're seeing, at least, I think given the regulatory environment, given the safety of the underlying technologies and, you know, the efficacy versus, you know, hard to treat conditions that haven't been addressed by existing modalities, I think we have a lot of opportunity to see this do better than historical as well, certainly from a safety perspective. So, I think the combination of all those things are positive, and then certainly the qualitative velocity of the number of programs and their advancement continues to give us conviction that, you know, the investments we're making are the right ones. Might not show up in this quarter's financials or next quarter's financials, but, you know, when we sit down with the board and say: You know, do we want to invest in A, B, and C? You know, that's what we're looking at, and we have a very enthusiastic, you know, board that says we're doing the right things, we're in the right space, we're making the right choices, and that continues to inform what we're doing, and we think the financial results will follow. By diversifying, like we were talking about, we make it harder to model. So the good news is we are diversifying and now participate in a unique way. Like Kevin said, RUO discovery reagents, not just CleanCap, all the triphosphate nucleotides, now all of the enzymes, and the ability to take all of those fully through clinical and commercial. And now with services, again, brand new with our brand new facility, we have the ability to. You know, we have a robust discovery business where we're really putting focus now on making mRNA for people, including our products, but also now with Flanders 2, have the ability to go all the way through a commercial approved mRNA. But that means that there are multiple ways we can service every program. And what we don't have, as we were just discussing, we don't have a personalized oncology, you know, treatment approved yet, a protein replacement treatment approved yet, a CRISPR using mRNA approved, or a cell therapy that uses mRNA. We're close. Those are all in phase three, but there will be examples then for, okay, we're CleanCap in this one of those four segments. We're fully serving this in one of those four segments, but we don't have enough phase one goes to two, goes to three, goes to approval in those four different types to even model it yet. And I know we have lots of sell-side analysts, and I know everybody wants a model. We would love, we would love to have a model. The reason Kevin and I are looking at clinical trial progression every other day is that we would love to be able to figure that out. The good news is that we can participate in all of those different ways. RUO to GMP, every product input, RUO to GMP, all services. And I hope that we have enough experience soon to be able to say what all four of those possibilities of service are for all four different types of modality improvement. You know, we're just not there yet. Like Kevin says, it's early days. The good news is, I mean, traditionally, a drug platform would go through that methodical process. Lots of preclinical work, decades of hard work. mRNA has done the same with Nobel Prizes having been awarded. Phase one, some failures, some learning. Phase two, some failures, some learning. phase 3, and so on, and you go through this decades-long process. Think about what we did in the pandemic. We went from early phase, preclinical, great foundational work, to billions of doses of vaccine, and it worked, which is incredible. But all of the learning, modeling, and capability that would come from that slow, methodical build process doesn't exist. The ecosystem to support high throughput discovery doesn't exist. It's something we hope to create. Yeah. What, you know, maybe close the loop on kind of pipeline pharma restructuring. You know, what does improved biotech funding year to date mean for your business? Are you seeing those dollars start to flow into, you know, phase one or preclinical spending, or is, you know, that more of a twenty-five story? Just how impactful is just that, that dynamic to your business, which skews very early stage, obviously. It does, and we have the two segments, right? So we see the biologics, traditional biologics funding largely on the BST side, where you have Cygnus's participation in all of the approved cell and gene therapy programs. But also, you know, the majority of their customer activity is still in traditional biologics. So there we are really a bellwether for program starts, and we're starting to pivot and see some growth there. It's not coming as quickly as we would all want for that segment, but it is coming. And then you have, you know, the mRNA pure-almost pure play of the TriLink business within NAP. And that you know, there, I would say we've been more affected by pipeline rationalization and other things, but that's because we participate at what is right now a very top-heavy industry, as we've been discussing, not a broadly diversified industry. So when a $3-$5 million order pushes out a quarter or two, it makes a big difference for us. So it's more noticeable in NAP, the industry dynamics we've been talking about. But largely, you know, funding, I don't know if you have anything to add to that, Kevin. Yeah, look, I think the interesting thing that we're in right now, I think, is funding is more selective. It's going probably to companies that are a little more responsible with their dollar, which I think ultimately is a good thing. You know, I think we saw a lot of companies that were in our space over 2020, 2021, 2022, get a lot of money from various sources, whether they were raising it privately, publicly, or getting funding from the Halo Effect or other things, and they spent a lot of money. Created a lot of business models, frankly, that are very upside down. I mean, we see this 'cause we do diligence, and we're still very active in M&A in our funnel, and we see a lot of companies that were able to find a little niche and create, say, $20-$30 million revenue type companies, but they're $20-$30 million EBITDA negative as well, and they're not sustainable. So I think we're seeing investments going into companies that are responsible, are sustainable, and would be good for the overall ecosystem that we're participating in. Interestingly, you know, we didn't have a lot of exposure to some of those companies that I just talked about. Our overall customer counts have been relatively consistent. When we look back the last six to eight quarters, active customers haven't changed much, which is a good metric. I think the one thing we're seeing to some of the headwinds you mentioned earlier, is a lot of them are just ordering at a certain ratio, less than 100% of what they used to. You know, so I think you're seeing people be a little more conservative. Definitely prioritizing, definitely addressing, simply put, lower budgets in discovery. That's not a surprise to anybody. But I think the good news for us is, you know, I think that's, we believe it's temporal because we like the customer base and we like the consistency, and we've always had a very sticky customer base across both of our business segments. And I think as that funding improves, you'll see a return of these larger orders that come through, and then you'll receive a return to growth in that steady state foundation that exists under the active customer account that we have. And I think that's... You know, I think these things ebb and flow, and I think, you know, we're confident we're in the right space, and again, we have a good sticky customer base that's very loyal, because we have good quality. We're known as, you know, certainly the experts in a lot of things we do, and we have, you know, really, really good relationships there. So, you know, I think overall, I think the funding environment is improving, but I think it's also improving in a manner that it's going to probably a little bit more responsible owners of the dollar than we saw for the last three years. Gotcha. I do wanna touch on the BST business just briefly. I mean, I feel like a lot of people have just kind of lost all grounding in what this business should do and whether or not it should actually track, you know, underlying volume of biologics. And, you know, just what is the right midterm growth outlook for this business? China has been a surprise to the downside again, in the second quarter. Is that a single distributor that's just not buying product anymore? You know, help us understand kind of where BST should be long term, and, you know, how much of a, of a drag China will continue to be maybe? So, I'll talk about near term, and then Kevin can talk about historical and future maybe. So Cygnus and BST had very, like, COVID halo, like we're talking about, had significant growth during the pandemic as people started new vaccine programs and other things, and a lot of the growth came from China. I would say there was probably as much lift in China as anywhere else in the world during COVID. Then what we really saw there was a slowdown in the second half of 2022, so we're going back into the pandemic here. And we saw a relatively flat, actually extremely flat, percentage of BST coming from China for actually five quarters in a row. The Q2 surprise you talk about was the first leg down we had seen for over a year in the order volume there. And it is a single distributor relationship, but it's. I have visited their customers with them and watched their activity. They're very active. But I think the thing to remember about Cygnus' position in the market is that people order more Cygnus kits when they're starting programs. So it's really a bellwether for starts in biologics, more so than a traditional. It's the inverse funnel. You know, we have a lot more kit activity and a lot more technical activity with people who are starting developing their runs, doing the process development. The great news is they do process development, they get their approvals, and that kit stays with them. And it remains the gold standard. Again, 23 approved cell and gene therapies, all 23 use Cygnus for host cell protein detection. But we see more ordering when there are generally more program starts. So we'll stay with every program, but that's the dynamic to remember there. So it's an early signal of market movement. And China, we had to call out because it was and again, for this is a $70 million company that's on its own, that's in its own reporting segment, which is a lot of pressure. So if they have a $1 million surprise, we have to call it out and flow it through, which is what we did for Q2. But Kevin, maybe talk about their historical growth versus market, you know, let's say pre-pandemic, to set some context there. Yeah, I mean, the historical growth there for the biologics safety testing segment, you know, has always been better than the market growth. You know, we saw the market growing in that low, kind of low to mid-teens, 13-15% there for years. We were doing, you know, 16%, 17%, 18% CAGRs, and then adding on with services, adding on with our MockV acquisition, a lot of other things. So we saw really nice performance. And I think, you know, the last three years, because of China and a few other things, it has been a relatively flat business. But ultimately, we see biologics safety testing, biologics and biosimilar manufacturing globally, you know, being around a 10% CAGR going forward. And I think, you know, we should be able to map to that, if not slightly, do slightly better. There continues to be pricing, there continues to be a good relationship with CDMOs that reflect to, you know, want to use the gold standard, and, you know, that continues to be a good dynamic for us. I think, you know, we're also seeing, and what's hard to parse out of the China number is that, is it China for China? Is it because of the lack of stimulus, or is it truly global international companies not wanting to go into that country with their outsourced manufacturing because of BioSecure in the U.S. or other things? And will you see that move to other areas of Asia or other part- geographies globally? We're fine with that because the Cygnus kits will travel with the programs- and with the larger manufacturers that want to use the best kit that's available, but there'll be some disruption in the short period of time while that migration happens. I don't think we've circled which two dynamics is causing that slowdown right now, and I think that's a close thing to monitor. You know, we continue to kind of hit our numbers in North America and in Europe, but you know, certainly the Asia region's been disruptive, so I think we'll see where the growth returns first. And I think that some of that might come from that migration from some of the multinational companies not outsourcing biosimilar manufacturing in country, and then obviously we'll have to look to see if there's any stimulus for China market. But overall, it's not something we're gonna look to for growth. It's $15 million a year for Maravai as a whole. 90% of that's in the biologics safety testing segment, so it's, you know, 15%-20% of the revenue in any given quarter, and I think we're gonna see that be relatively flat for a while. Do you consider BST a core business? Sure. I mean, we, our mission is to enable the next generation of medicines, and like I said, 23 out of 23 cell and gene therapies, QC by Cygnus. You know, it's a great business, you know, it's still- Not that it's a bad business, b ut you're very focused on building out s omething very unique in NAP, right? You came from that world, right? They're two very different type of businesses. Not to say the BST is not, I mean, it's got 80% EBITDA margins. This is an awesome business, right? Seventy, yeah. But is it core to your priorities in NAP? I mean, we are, you know, we're roughly $270 million-$290 million, I believe, our guidance dollar company. We can only do so many things at the same time, you know, and we, as Kevin said, we've been active inorganically. We would love to add to both segments very much, but we can only execute so many things at the same time, and certainly, we are ahead of the wave in capability for the next generation of medicine coming from mRNA, with completely unique position to capture our unfair share of that market, hopefully. So we have focused there just, you know, in a world of limited resources and execution capability. Cygnus is a fabulous business, and it enables, you know, cell and gene therapy. So we don't have favorite children. We can just only focus on big developments. You know, Flanders has been over $100 million of capital investment, for example. Cygnus has a brand-new building as well. We've built four or five, I guess, buildings in the last five years, thanks to the lift in the business from the pandemic. Acquired a chemistry business and an enzyme business in the last two years. So yes, admittedly, a lot of that activity has been in the NAP segment, and we have a unique opportunity ahead of the curve there. But, you know, Cygnus, for example, has the possibility to make a new standard. Cygnus was essentially key in creating the standard for what host cell protein detection is today, twenty years ago. Now, we have the opportunity to do the same thing in viral clearance detection, and there was a small technology acquisition that was tucked in there that we're really excited about. When you hear us talking about MockV, that's what that is. There's another growth vector. We're doing strategy right now, and there are other growth vectors for Cygnus as well. They get plenty of attention. One of the things we just actually released this last week was we actually used TriLink BioTechnologies to help with the DNA detection kit at Cygnus. So it's the first combination product where we actually see the two segments come together and collaborate on a product for the market, so we do have a little bit of innovation going on between the two companies. It's the first time we've done that, but you know, I think that just shows that you know, there are some opportunities to collaborate there, but they are you know, admittedly, they're pretty separate businesses. In the last thirty seconds or so, your guidance implies revenues in the second half, kind of flat with the first half. If you just think about Flanders 1 and 2 opening for a full year in twenty-five, utilization ramp is likely to come there, is that enough to get you back to some modest level of growth in 2025? Like, no shocks to the market. Like, just opening those two facilities and, and the funnel that you already see of interest there. Yeah, we look at top and bottom line, of course, and one of the things to remember is that $100-plus million investment in Flanders 1 and 2. We've been bearing the occupancy costs for that for almost a full year now. And so the costs have been borne. ... in the EBITDA you're seeing now, and so every essentially incremental order is upside from that perspective. But we, you have to have that capability, you have to have the facility and the staff ready to go, as a right to play. And since all people have seen, you know, in the industry, have seen the potential of mRNA, there are now many more competitors from a service perspective, what we call the service side or the CDMO side, that are in the business. But as Kevin said, we have this history of over a hundred GMP programs produced, the history of supplying chemistry for Nobel Prize winners, the history of technical consultative help for our customers. What we didn't have was the capability to take them all the way to commercial approval, and now we do. It was a necessary right to play, but we're starting to fill it up, and that's where the real upside comes from. Super. Unfortunately, we're out of time. Great, Kevin, thanks so much for being here. You bet.