Bio-Techne Corp at Stephens Investment Conference Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Jacob Johnson - Stephens Inc. - Analyst : <_ALACRA_META_ABSTRACT>Short and sweet in to the point, must be the Dutch. Thanks, Kim. Maybe we'll start off on the macro on your first quarter call, you mentioned some pickup in demand from biotech customers. Do you think they're beginning to spend the funding they raised earlier this year, kind of what anecdotes are you seeing or hearing from this customer base? Maybe I'll pause there, and I'll have some follow-ups.

Question: Jacob Johnson - Stephens Inc. - Analyst : So Kim, Maybe diving in there a little bit further. A couple of questions. You highlighted the GMP proteins is a good guide. I want to come back to kind of cell and gene therapy, which is near and dear to my heart. But maybe first, just kind of -- maybe in the run rate kind of legacy proteins business. What is -- how is demand trending there? And I'm just kind of curious, generally across the customer base, how you think kind of biopharma activity compares now versus pre-COVID levels? Are there any differences? Are we getting back to where we were? Obviously, a lot transpired over the last five years.

Question: Jacob Johnson - Stephens Inc. - Analyst : Got it. And then just -- we talked a little bit about biotech, but just large pharma has been kind of the other topic detour this year and a lot going on in CRO land from those customers. But what have you seen from that customer base throughout this year?

Question: Jacob Johnson - Stephens Inc. - Analyst : Got it. We'll come back to that because there's a couple of follow-ups there, but I just want to kind of knock out the macro and maybe speaking of things will knock out maybe quickly. A few things going on last week. I guess there was an election at some point in the last couple of weeks, got new -- proposed head of HHS, which is, I think, led to a number of questions for you all. So maybe two questions, one that maybe you can answer and one that maybe it's too soon, but maybe on the first, you talked about that legacy RUO business focused on the research market. Can you just talk about kind of your exposure to the academic government end markets, maybe specifically NIH. And then I guess the second question, which is it's probably too soon, but just anything you've heard from your customer base around this or any change in their thinking?

Question: Jacob Johnson - Stephens Inc. - Analyst : Thank you both for that. Super helpful. And again, now I can just refer people to your comments on this, which I think is what I said last year about China when we talked about that last year, and it's been whack-a-mole with investor concerns. So maybe we'll go to the last big kind of macro subject, just China. It seems like it's kind of bouncing along the bottom. Latest thoughts on demand trends in that environment. And then I think there's -- we'll maybe put trade wars aside for now because that's difficult. But I think there's a hope or a view that we're going to see stimulus there next year, which will hopefully benefit the space. So kind of latest thoughts on that as well.

Question: Jacob Johnson - Stephens Inc. - Analyst : And maybe just one follow-up on China. I think cell and gene therapy in spatial did better in China last quarter. Can you just -- is this just innovative technologies, innovative therapeutic areas? Or what's driving that demand there?

Question: Jacob Johnson - Stephens Inc. - Analyst : So I think that's a good segue to kind of talk about some of your key growth verticals. And like I said, cell and gene therapies near and dear to our heart. So we'll start there. And also, as you mentioned earlier, good in the March quarter, not as good in the June quarter, good in the September quarter. I'm just curious, what drives this lumpiness? When do you think it could become more consistent? And maybe along those same lines, Jim, I think you mentioned you're now getting forecast from these companies. Why -- how did that change? Or why did that change? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Jacob Johnson - Stephens Inc. - Analyst : Maybe one follow-up there on just thinking about the growth profile. I certainly understand the caution about extrapolating 60%. But to your point earlier, it was broad-based. It wasn't just these large customers, they also came back. So I guess looking ahead, it would seem to me you probably have two key growth opportunities. One is that kind of same-store growth in those customers advancing or maybe adding new programs and then it's winning new customers. Can you -- how do you think about those two opportunities over the next several years? James Hippel - Bio-Techne Corp - Chief Financial Officer, Executive Vice President - Finance (technical difficulty) said better myself, They're both opportunities because we're still underpenetrated. I mean to put it in perspective, Wilson double the accounts that we are. We were in over 400 accounts, and they're in over 800 accounts even added longer, right? And there's over -- you probably know better than I would, Jacob, but there's well over probably a couple of thousand clinical trials globally in cell therapies. And then for everyone that's in a clinic, they got 5 to 10 behind it with regards to pre-R&D and getting ready for clinics. So we're still kind of at the tip of the spear of where this could go. The other thing I'll mention, too, is we know why it's so big and the opportunity set is so large is we talk about this a lot in the context of Wilson Wolf and CAR T and immunotherapies. But over -- slightly more than half of our GMP business and cell therapy is actually on the (technical difficulty) medicine side. And some of our -- couple of our biggest customers are in the regenerative medicine side. So that's another whole area of opportunity REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Jacob Johnson - Stephens Inc. - Analyst : I can ask you a follow-up on that last piece, so maybe I'll do that but I will try to bail you out. No. But on that competitive dynamic of it, there are some other people who maybe had a little bit of a head start on this. And obviously, this is kind of right -- was right in your wheelhouse. And so you have some people who maybe -- got a head start. Are you catching up to them? Are people more aware of Techne's GMP proteins? Are you getting more traction ? James Hippel - Bio-Techne Corp - Chief Financial Officer, Executive Vice President - Finance I'd surmise that we are. And I say that because the two leaders that were ahead of us in the wholesale and gene therapy space, but for us, in particular as it pertains to GMP proteins was [ Molteni ] and celagenex, both private European companies. And in that -- in the last five years, we've essentially gone from practically 0 revenue to $60 million in GMP proteins alone, another $20 million of other GMP reagents. And I doubt their growth rates have been the same. So we're taking that share somewhere. Now we've always said that to be successful in this space, we don't have to be the number one player. We don't have to take over the world. it's going to be a fast enough growing market where everyone wins. We always just said, we're the leader in RUO proteins, that's our reputation. Same on us if we're not at least one of the leaders in the GMP space. And so I think we've made amazing traction in a very short period of time.

Question: Jacob Johnson - Stephens Inc. - Analyst : Maybe two follow-ups on that. One, you talked about, I think, the clinical share Wilson will have but you could remind us commercial exposure. And then on those pro packs that you've launched, the cell and gene therapy industry was trying to move towards closed and automated solutions. You're trying to close any other efforts on that piece of it? Or was that the big lift? James Hippel - Bio-Techne Corp - Chief Financial Officer, Executive Vice President - Finance I'll take the first, you get the second. So yes. So there's, I believe, 10 cell therapies that are currently approved for commercial use and Wilson Wolf is in five of them. And Wilson's five are very recently approved. And so a little bit, I'll share with you in terms of getting back to you, remember, your other questions, you grow in customer base, so you grow with the customers to give you a sense of how you can grow with the customers. These five customers have given some initial forecast for their first year commercial launch. And just that first year commercial launch alone would give Wilson over 30% growth in year one with nothing else growing.

Question: Jacob Johnson - Stephens Inc. - Analyst : Got it. Maybe I'll pause there if anybody has any macro cell and gene therapy questions. All right. We'll get to some of the other growth verticals. Maybe on the instrument side of things, obviously, kind of a mixed bag there across the broader space in terms of instrument demand this year. But I think you grew last quarter, really driven by consumables and services. So maybe can you just unpack that performance? And then too, I'm kind of curious, the mix of ProteinSimple revenues in terms of instrument placements versus consumables now versus maybe a couple of years ago?

Question: Jacob Johnson - Stephens Inc. - Analyst : Maybe just two follow-ups on the various platforms. Just one Tim, you mentioned ELA for diagnostic applications. I think that opportunity is still largely in front of you if I'm not mistaken. Can you just talk about the outlook for that? And then two, just on the LEO, remind us of the timing of that and maybe how impactful that could be. (multiple speakers)

Question: Jacob Johnson - Stephens Inc. - Analyst : The ELA opportunity for diagnostics. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Jacob Johnson - Stephens Inc. - Analyst : Got it. Well, we're 30-something minutes in. And Ken, we haven't talked about the division you used to have, which I must call D&G, but I forgot it has a fancy new name. So DSP, I guess if we can try to use that, diagnostics, and spatial biology. Maybe on the -- what got added to that was spatial. I think some peers in that space, may, you've seen a bit of a slowdown in demand in the current capital equipment environment. Can you just talk about how ACD utilization is trending? And then maybe kind of your view for the spatial biology market over the next couple of years?

Question: Jacob Johnson - Stephens Inc. - Analyst : We just have a couple of minutes left. There's two topics I want to get to maybe quickly. Just on Exosome, Kim, Yes. I think last quarter, you mentioned a preference to launch exosome test using Asuragen kits and you've worked to kind of integrate those businesses. I think that was an issue you probably kicked off. But you did partner off the kidney rejection test a couple of years ago if I'm not mistaken. Is that a change in thinking where you want to take more of these tests to market yourself? Or has anything changed on that strategy?

Question: Jacob Johnson - Stephens Inc. - Analyst : Well, thanks for that, James. Since we didn't get to the margin question, so I'm glad we at least touched on it. Just last quick question, maybe it's not a quick one, but we'll try to make it quick. Just on M&A, that's been the top priority for capital allocation. You've got the Williston Wolf deal coming at some point in the next couple of years. We'll see. Just how should we think about M&A between now and then? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Jacob Johnson - Stephens Inc. - Analyst : Well, that's a perfect place to end. Kim and Jim, thanks for being with us here.