BioLife Solutions (NASDAQ:BLFS) Q3 2020 Earnings Call

0:00 Ladies and gentlemen, thank you for standing by, and welcome to the Q3 2020 BioLife Solutions, Inc. Earnings Conference Call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. I would now like to turn the call over to Roderick de Greef. Thank you. You may begin.

0:29 Thank you, Sadie. 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 2020. Earlier this afternoon, we issued a press release which summarizes our financial results for the three and nine months ended September 30th. As a reminder, during this call, we may make certain projections and other forward-looking statements regarding future events or the future financial performance of the company. These statements are subject to risks and uncertainties, that may 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 as forward-looking statements, I refer you to our periodic and other public filings filed with the SEC.

1:18 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. During this call, we will speak to non-GAAP or adjusted results. Reconciliations of GAAP to non-GAAP or adjusted financial metrics are included in the press release we issued this afternoon. These non-GAAP or adjusted financial metrics should not be viewed as an alternative to GAAP. However, in light of our M&A activity, We believe the use of non-GAAP or adjusted metrics provides investors with a clearer view of our current financial results when compared to prior periods. Now I'd like to turn the call over to Mike Rice, President and CEO of BioLife.

2:09 Thanks, Rod, and good afternoon, everyone. Thank you for joining our call. Q3 was another quarter of solid execution and growth, despite the challenges all of us are facing due to COVID-19. We grew top-line revenue over 70%, gained 56 new customers, and at the end of Q3, we put some of the capital we raised in our $86 million offering to work with the acquisition of SciSafe, a dynamic and growing biologic storage services company. Across the company, we made progress in engineering, manufacturing operations, and quality management. We successfully passed several key customer audits and broadened our customer base with continued leverage opportunities to cross-sell the various offerings in our portfolio to the cell and gene therapy market.

2:54 Our team has shown remarkable resilience and durability to sustain a high performance level despite the continued impact of COVID-19. We remain focused on smart execution to reach our interim revenue goal of $100 million over the next few years. Now I'll provide some highlights for each product line. Starting with biopreservation media in Q3, revenue was up 22% year-over-year and up 25% year-over-year for the first nine months of 2020. We gained 21 new media customers in Q3, including Goal Therapeutics, Marker Therapeutics, NanoGhost, Nutracega Therapeutics, Nurex Therapeutics, Sanna Biotechnology, Stability Biologics, and Synvivia Biotechnology.

3:39 Also in the quarter, we processed 22 new U.S. FDA Master Fire Requests to support the use of our fire preservation media products in new cell and gene therapy clinical trials. Some of these new master file requests were submitted by Amnio Technology, Aveda Biomedical, Kiatis Pharma, Kite Pharma, Legend Biotech, Mustang Bio, Nonquest, Talaris Therapeutics, and Triumvirate Immunologics. We now estimate that our media products have been used in more than 450 customer clinical applications. We're following potential approvals for several customer therapies over the next few quarters, and we'll update you on future calls about potential revenue contributions from approved cell and gene therapies that our media products are incorporated in.

4:25 Overall, our media franchise is very strong and we continue to take share from the homebrew paradigm as it relates to human clinical applications. For the first nine months of 2020, some key customers that drove our 25% year-over-year media revenue growth included Allogene, Bluebird Bio, Celgene, Janssen, Juno, Kite Pharma, NoncWest, and Squeeze Biotechnologies. Automated thaw revenue and EVO, cold chain management subscription revenue, were in line with our reduced expectations due to COVID-19 impact on in-person sales meetings. We gained seven new ThawStar customers and five new EVO customers. Our EVO cold chain management platform is now used in more than 100 clinical trials.

5:12 It's important to note that these are all early phase trials, so the shipment volume is low and hence the revenue is still relatively small. Regarding the commercial cell therapy company that has been validating our EVO platform, I'm very pleased to report that this work has been successfully completed and we're working to gain approval to disclose the company name and other details. Turning to our CBS freezer franchise, I'll remind you that COVID-19 has impacted us in two ways, in travel and onsite visitor restrictions at customer and prospect sites, and also a delay in approvals for large capital equipment purchases. Despite this environment, we gained 23 new customers that purchased freezers or related accessories in the third quarter. Key CVS customers in Q3 include AskBio, Enliven Therapeutics, Novavax, and NuvaGen.

6:04 Other key customers that bought CVS products in 2020 include Athersys, Blue Rock Therapeutics, Celgene, Fate Therapeutics, Kite Pharma, Lonza, and VWR. Product development on two new freezer platforms is continuing and we anticipate launches in Q1. We're also making good progress to vertically integrate and use our talented design and engineering teams at CBS to manufacture the EVO dry vapor shippers for our cold chain management platform. We expect to introduce CBS-made doers in the first half of next year. Now I'll talk a bit about SciSafe. As you know, we closed the acquisition of SciSafe on October 1st. CySafe serves the biopharma and cell and gene therapy industries by providing outsourced or off-site controlled and monitored storage of customers' temperature-sensitive biologic materials.

6:55 This division of BioLife is led by a dynamic leader, Gary Richardson, who has built a remarkable company anchored by quality service and high-trust relationships with customers. I spent quite a bit of time getting to know Gary and the business, and I can relay that I see tremendous potential for this new BioLife service offering. A few weeks ago, we issued a press release about SciSafe landing a nearly $3 million contract with a large pharma company for COVID-19 vaccine storage. This company also uses our biopreservation media. I'm glad to update you with news that this contract value has already increased and we can scale the service offering fairly quickly to support additional companies with storage needs related to COVID-19 vaccines. We're currently investing in SciSafe to support additional storage capacity in several new locations near strategic centers of cell and gene therapy development and or global logistics hubs to support commercialization of new therapies.

7:49 I'll conclude my remarks with some comments on our ongoing M&A activity. Continue to pursue additional opportunities to outright acquire or invest in novel, potentially disruptive technologies that fit very well in our portfolio and that would expand our offering and increase our value proposition for cell and gene therapy developers and the broader bioproduction tools market. We expect to announce additional transactions in the next few months. Now I'll pass the call back to Rod to present our financials for Q3. Rod?

8:18 Thanks, Mike. Revenue for the first quarter totaled $11.3 million, representing a 71% increase over last year's third quarter revenue of $6.6 million. Media revenue for the third quarter of 2020 was $7.4 million, or 66% of total revenue, representing an increase of 22% compared to last year. Revenue was also included, $277,000 of sales related to the automated thaw product line, $494,000 of evil cold chain-related revenue, and $3.1 million in freezers and accessories. While Q3 freezer revenue was up 27% sequentially over Q2, we believe both the thaw and freezer product lines will continue to face some COVID-related headwinds through at least the balance of this year.

9:08 Revenue for the nine months ended September 30, 2020, totaled $33.4 million, an increase of 75% over the same period in 2019. Media revenue for the first nine months of 2020 increased 25% to $22.8 million compared to the same period last year. We believe that the year-to-date comparison is the best reflection of how media revenue is growing. as it smooths out the quarterly lumpiness we witnessed throughout 2019 and earlier this year. Our adjusted gross margin for the third quarter was 57% compared with 69% last year. For the nine months, adjusted gross margin was 60% compared to 71% in the same period last year.

9:55 The decrease in adjusted gross margin for both periods reflects the lower margin profile of the automated thaw, EVO, and freezer product lines. Adjusted operating expenses for Q3 of 2020 totaled $6.8 million compared with $4.6 million in Q3 of 2019. For the nine months, adjusted operating expenses totaled $19.3 million compared with $11.8 million in the same period last year. The increase in both periods was primarily driven by additional expenses related to the acquisitions made in the second half of 2019, as well as an increased headcount and stock-based compensation necessary to support our overall growth objectives. Our adjusted operating loss for the third quarter of 2020 was $359,000 compared with $68,000 in the third quarter of last year.

10:49 Adjusted operating income for the nine months totaled $547,000 compared to $1.7 million in the same period last year. Our adjusted net loss for the third quarter of 2020 was $346,000 or two cents per share compared with adjusted net income of $41,000 or negative two cents a share in the same period last year. For the nine months, adjusted net income was $606,000 or three cents per share compared with adjusted net income of $2.1 million or 11 cents per share in the same period last year. Adjusted EBITDA in the third quarter totaled $1.7 million compared with $926,000 in the same period last year. For the nine months, adjusted EBITDA totaled $5.8 million compared with $4.3 million for the same period last year.

11:43 Our cash balance of September 30th was $109 million, which was reduced by $15 million on October 1st due to our purchase of SciSafe. Post the SciSafe acquisition, our cash balance was approximately $94 million. In terms of our share count, we currently have 32.7 million shares issued in outstanding and 35.7 million shares on a fully diluted basis. Finally, despite the challenging operating environment, we believe our financial results for the first nine months of this year, which includes total year-over-year revenue growth of 75%, media revenue growth of 25%, and adjusted EBITDA of $5.8 million, continue to support the rationale underlying the overall growth strategy.

12:30 Now I'd like to turn the call back over to Mike.

12:33 Thanks again, Rod. In summary, we logged another very solid quarter and we look forward to further execution, consolidating the tool space to drive growth. We very much appreciate the opportunity to serve the cell and gene therapy space and are focused on building BioLife into a much larger class-defining company. Now we'll turn the call back over to the operator to take your questions. Sadie? Yes, sir. And as a reminder, if you would like to ask a question, press star 1 on your telephone. Again, press star 1 on your telephone if you would like to ask a question. We'll pause for this moment to compile the Q&A roster. For our first question, it's from Chris Lin from Collin.

13:26 Chris Lin, your line is open.

13:30 Great. Hi, Mike and Rod. Thanks for taking my questions.

13:32 Hi, Chris.

13:33 Thank you. Just to start on the media business, if I look at the progression of new customer ads, I think it was 16 in Q1, 14 in Q2, and 21 in Q3. So really encouraging ramp in spite of various travel restrictions. So, you know, with that in mind, can you give a sense of how you're driving solid new customer ads during this period? And could you also share how the new customer pipeline or funnel is tracking for the next few quarters?

14:01 Well, I can certainly take the first part, Chris. So, with media, the sales dynamic is different, you know. We're really being able to leverage and take advantage of much broader exposure and awareness of cryo stores specifically as it relates to an optimized tool for cell and gene therapy clinical trials and commercial production. and all the work we've done over the last nearly 15 years to build that quality reputation and those personal relationships in large part driven by our Chief Scientific Officer and SVP, Dr. Aby Mathew. So Aby's really connected. He does a great job taking care of customers and prospects and, you know, that word of mouth is really paid off and particularly as people move from company to company and they take that knowledge of a positive experience at CryoStor from their former gig to wherever they're going to land or where their new Thank you very much.

15:12 because people aren't there or they've got severe or strict travel visitor restrictions, so a completely different dynamic there. We get many, many inbound inquiries from media. We have an Ask a Scientist button on our website, which allows folks to ask Aby and some other folks personally specific questions to their applications, and clearly that's paying off in converting some of those inquiries into customers, so that's been really, really helpful. a lot of leverage there. Nevertheless, we continue to invest in additional sellers. Got a couple openings right now for more U.S.-based biz dev and sales folks who can at least present the entire portfolio, so we're going to continue to do that to make sure that we can keep up with the pace of new companies and opportunities.

15:57 Chris, to the part of your second half of the question about the pipeline, well, I think We want to speak to the here and now. So what we know about is we know orders and we know master file requests, right? And then Aby, through his discussions, email and verbally with new prospects and some of the sellers, they have some look into, you know, who might be adopting coming down the road, but nothing that we would want to monetize or get into the habit of monetizing. I think as it goes right now, the flow of new customers is just phenomenal, and we think we're taking share from homebrew. So, you know, our numerator in that equation, you know, we're adding more clinical trials faster than the number of trials is growing, and particularly in the oncology space with some type of T cells to treat various cancers. So that's what I could say on that. Good question.

16:43 All right. That's fair. And then congrats on that EVO validation work. Are you sure if this customer is converting over exclusively to EVO, or are they diversifying their supply base? Additionally, how do you think this competitive win will impact your EVO sales efforts with other customers going forward.

17:01 Yeah, Chris, I'd love to be able to share all those details. Some we actually know with really good specificities. Other we have a little less clarity on. But we certainly know some dynamics about percentage of shipments and timing and start. But until we get approval from this customer to disclose some of that stuff, we're just not going to do it. We're not going to blow that relationship. We worked really hard to build this trust up. But I can appreciate you asking. Just not in a position to do so right now.

17:26 No, that's fair. And maybe just for my last question, how would you characterize the management capacity and readiness for additional M&A deals in the near term? And how do you ensure that additional deals do not impact your ongoing cross-selling and integration efforts? Thank you.

17:42 Yeah, fantastic. Really insightful question, Chris, and something that we think about a lot here, management bandwidth and, you know, at what pace do we actually start to bring in more talent from the outside, even though our preference is to give everybody here, you know, first dibs at it. stepping up and taking on additional responsibilities. But I think we have a good sense of where we are now with our own capacity to do more. Clearly, if some of the deals we're looking at can bring talent, then we're going to have a preferential option for those. So thinking about a lot of that. But right now, we're in good shape. And the things that we have in the pipeline here that we're talking about, or at least referring to, would be wonderful bolt-ons and not something that would would cause a staff to stop and say, don't do it because we don't think we can manage it. We're really confident in the team right now, but always looking to add more talent to the team to help us run a much larger enterprise.

18:32 Okay, great. Thanks for taking my question. Sure, you're welcome. Next, we have Jacob Johnson from Stevens. Jacob, your line's open.

18:43 Hey, guys. This is Mason on for Jacob. Hey, Mason. Hey, so just a couple quick ones from me. For your media business, could you remind us where manufacturing capacity stands and how much does a new line cost and how much revenue would that bring online?

19:03 Go ahead, Rod.

19:04 Yeah, so our current capacity is somewhere in the neighborhood of, as round numbers, $40 to $50 million as we sit today. And as we sit today is two aseptic clean rooms in Bothell, Washington. running one shift. The obvious thing to increase capacity would be to go to two shifts, and you're not going to just double capacity, but certainly you'd get up to around the $70 to $80 million mark. After that, it's about increasing our batch sizes from the current 100 liter level to the 250, and then beyond that, the 550. So we have some relatively simple ways to increase capacity that are understandable. We've already planned those out, and the capex associated with that is very, very minimal. I'd say less than a million dollars.

19:55 Got it. Got it. That makes sense.

19:57 So for CVS, you had previously guided to $17 to $19 million of revenues from this business line in 2020. Obviously, guidance has been pulled. But if we return to some level of normalcy, is there anything that has changed your mind about the revenue generating capacity of these assets.

20:23 Rod, do you want to take that?

20:24 Yeah, no, I think just the opposite. As we are continuing down the product development path and the introduction of the high capacity rate freezer which has a very high ASP somewhere in the neighborhood of $300,000 to $500,000 depending on the model, we feel very comfortable that Once the selling and the customer side of things gets back to normal, whatever that's going to be and whenever that's going to be, we definitely feel good about the ability to drive this business.

20:57 Great. Thanks, guys. That's it for me.

20:59 You bet. Thanks, Jason. For our next question, it's from Thomas Flaten from Lake Street Capital. Thomas, your line is open.

21:09 Thanks so much. Thanks for taking the questions. Just one question around the cross-selling opportunity. I think this has come up on calls previously. Are you prepared to disclose which customers buy which lines, you know, buy one, two, or three, or four? Where are we on that, or is there anything you can provide in terms of insight around that?

21:29 Yeah, great question, Tom. So not yet. You know, still looking to integrate some of the various CRM systems so we can have a holistic dashboard view of that so we can speak to that. But I think if you just refer back to some of my prepared remarks on this call, you'll hear or you'll see several names that are common to different parts of the portfolio. So I'd say it's going well, but as far as visibility and the model of intersecting circles that I described when we started to talk about this stuff, it's taking obviously longer than we would like to put that together, but we'll get there.

22:01 No, that's great. And I think it was on the second quarter call, there was commentary around, I'm sorry, first quarter call, there was commentary around some of your customers buying safety stocks of media. Have you seen them kind of work through that, or are they maintaining safety stocks given the continuing uncertainty with respect to the pandemic?

22:20 Yeah, go ahead, Rod, and I'll fill in if needed.

22:23 I think what we've determined, Thomas, is that right after Q1, we were not clear whether it was a permanent safety stock or simply demand pull forward. I think what we've seen as we sit here in November is that it's definitely more the latter than the former, which is why I pointed out that if you're trying to get a read on how media growth is going, to me, the right number to look at is the nine-month over nine-month period. because not only this year did we have that big bolus of orders in Q1 and it slopped a little bit over into Q2, but last year also we were relatively lumpy on a quarterly basis. So I think that 25% growth rate year over year based on the nine-month timeframe is the right number to take a look at when you want to think about how media is going.

23:11 Got it. And then just a quick one on SciSafe and their customers. Are you able to characterize a little bit the types of customers that are seeking off-site storage? Is it by customer type? Is it by application? Perhaps both? And is there a competitive sell there with respect to selling them on CBS versus SciSafe? Or are those two completely different sales? I'm just trying to understand the customer a little better.

23:34 Yep, really good question. They are different sales, different decision makers. The types of customers are, as you know from the recent press release, a biopharma company who's looking to have some offsite storage for COVID-19 vaccines, right? And I mean, we think that could be just a really unfortunate, but a really phenomenal opportunity for the company, no doubt, not only with this company or this customer, but with others of that ilk. So that's what's going on there. There are cell and gene therapy companies who are doing some planning for offsite storage. And then the traditional biopharma companies who have other temperature sensitive biologic material where they're either looking to de-risk by having not all their eggs in one basket, or they're just out of internal capacity. And so it's a lease space or build a building and buy freezers and hire people to manage that space kind of decision for them, build or buy. And so SciSafe and Gary in particular have done a great job articulating a value proposition and then proving it over time through performance that it does make really good sense for many of these companies to outsource.

24:40 That's great. Thanks so much for the questions, taking the questions. You're welcome. Next, we have Jason McCarthy from Maxim Group. Jason, your line's open. Hi, everyone. It's Dave on the line for Jason. Thanks for taking my question. Just given the potential synergy that exists between custom biogenic systems and SideSafe, I was just wondering if the biostorage space was a sector that you guys were particularly focusing on building up.

25:11 Most definitely. But we're going to be pretty picky about it. We're not looking to turn SciSafe into sort of a generic biorepository space. That's fairly well dominated, and there's a lot of companies doing that. We want to be focused on biopharma and cell and gene therapy so we can stay close to the core group of customers that we have in common and really leverage everything in the offering to them. These types of customers, you know, through a lot of hard work, not only from Gary and his team, but from Dr. Matthew here and the rest of us at BioLife over the last many years, we've built some great relationships. both on trust and performance, and these companies want to buy more stuff from us, so we're going to go for it. I mean, we're going to find more ways to add value and de-risk their processes and take much better care of them, even though we're doing that great right now.

26:00 But there's clearly a preference for people wanting to do business with BioLife versus, in some cases, much, much larger companies. So that's the opportunity in front of us. That's the reason that we're driving this M&A strategy. Great, thanks. And then just one other quick question here. So just as the pandemic continues to sort of unfold here, I just wanted to see if you could, you know, shed some color on which product lines you think will continue to be sort of impacted.

26:28 Yeah, go ahead, Rod. You know the rap. It's all about CapEx and list prices and selling prices and that, right?

26:34 Yeah, it's just basically the automated thaw device and the freezer line. Although, again, the freezer line made a nice comeback. Q2 was a very tough quarter for the freezers because there's a lot of logistics involved in delivering those because they're large. And so a lot of customer sites were simply closed in Q2. That opened up in Q3, hence the 27% sequential increase in freezer revenue from Q2 to Q3. But there's no doubt that the sort of attenuated selling process, which has to be done over Zoom, is definitely impacting the uptake of that. So those are the two product lines that are going to be impacted. Great. Thanks to the additional caller. Appreciate it.

27:20 You're welcome. Next, we have Mark Weisenberger from DRotley Securities. Mark, your line's open.

27:31 Thanks. Good afternoon. Appreciate you taking the question. Following up on that last question, can you talk about the budgets across your cell and gene customers? Are you hearing that COVID disrupted spending early in the year and maybe there's some money left over that does need to be put to work before the year end? Where would you expect those incremental dollars to fall within your operations?

27:55 Not so much as a trend, Mark, certainly in some specific cases. We've heard that, but we've also heard in other cases, you know, continued delays, delays in being able to accept freezers and to make some other decisions in that regard. So I wouldn't say that directionally we see a trend in that regard.

28:12 Understood. With regards to SciSafe, it looks like they're operating across all their facilities at around kind of I'll call it 53% utilization. And in 2019, there was EBITDA margins that were around 18%. Can you talk about the operating leverage as the business scales and kind of what are some expectations for steady state margins for that business?

28:35 Yeah, go ahead, Rod. I'm not sure what Mark's referencing in some detail, but go ahead.

28:39 Yeah, Mark, I think that until we issue the audited financial statements, which they'll be coming out shortly here, I want to defer that question because as we talked about, the company has not been historically keeping their books according to GAAP. and so, again, before I provide any more detail in GAAP, I want to make sure that we're on the same page with those audited financial statements. In general, however, there's no question that the increased volume revenue has very little additional incremental cost to it. There's a stair-step variable related to employees that manage the number of samples.

29:27 There's also a bit of a stair step in utilities as you add more freezers in the facility. But by and large, you're going to see a pretty decent flow through. And I don't see any reason why over time and at scale that the overall, let's just call it adjusted EBITDA margin, would not be the same or better than the one we have on the BioLife side with a three on it as a consolidated. So it should not be dilutive to that overall blended average.

29:58 Understood. Appreciate that. And then final one, can you maybe provide some of the details on what was actually involved in the validation and qualification process for your potential marquee EVO customer? Are there any remaining risks to this relationship before it really moves forward? And when can we maybe see some of these revenues hit in the top line? Thank you.

30:20 Yeah, right on, Mark. I think in a word, no, but we certainly look forward to being able to say yes and give some detail just a little early. So again, as I mentioned earlier, we're just not going to get out over the tips of our skis and disclose some things that our customer, pending customer, would be upset about. So we're going to treat that with the utmost respect. And again, when we can get some approval to make some selective disclosures, we're going to do that. But you can hear in my voice, I'm just ecstatic in the way the validation was completed and It was a ton of work by this customer, one of our courier partners, and also a bunch of people here at BioLife, including some round-the-clock, you know, 724 for weeks on end, monitoring of some shipments. So we're going to have a real good time to celebrate and earnest here once we can actually get the news out, but internally feeling really good about it.

31:16 Okay, Sadie. For the next one, we have Mike Oat from Oppenheimer. Mike, your line is open.

31:24 Good afternoon. Thanks for taking my question. One that Suraj and I were wondering about is, are you seeing much European COVID impact in terms of end customer demand?

31:36 Some, although I would tell you that, and Rod, you can help me out here, but geographically, you know, what, 75 plus percent of the revenue is North America. So that's a fair range, Rod, correct?

31:47 Correct.

31:48 Yeah, so with that, you know, whatever's going on that would have a limited, you know, impact overall on the business, but there's certainly some stuff going on, and I think, again, it would be in the areas of freezers and then in the more expensive thaw device, the bag version.

32:05 Okay, makes sense. Thanks, Mike. And then maybe a modeling question for Rod. For CySafe's $9 million contribution expected in fiscal 21, is there any seasonality to that, really, or is it fairly even across the quarters?

32:17 Yeah, what's nice about the business is once they bring on a new customer, it's fairly consistent revenue and basically recurring revenue. So the thing that's a little tougher to peg is when the new customers will be coming on board. So there will be some stair-step increases in the revenue, but not seasonally related, more just about the timing of landing a customer and signing that contract.

32:43 Okay, makes sense. Thanks so much.

32:45 You bet. For the next one, we have Carl Burns from Northwind Capital Market. Carl, your line is open. Thanks for taking my question.

32:57 I just had a quick follow-up with respect to the $2.3 million contract that was awarded to SciSafe. You mentioned that that had been increased. Can you quantify that at all? And I know it speaks to the last question a bit, too, how might that contract Peanutbutter Out in terms of revenue recognition over the next two years.

33:19 Hi, Jeff. Hi, Carl. Yeah, good question. We're not going to quantify the increased dollars yet because there are other conversations ongoing with the same customer to increase it even more. So when we can get that sort of wrapped up and tell a cogent story, we will. But nevertheless, it's a fantastic opportunity. It's a current customer we've known for many, many years, and we know them really well. So feeling really good about that and also the contribution from that one customer to the SciSafe revenue scheme. With respect to the layout, Rod, I think all we've said is the 2.7 was over two years, and we haven't given quarterly or what's in the first year or the second year chunks, correct?

33:56 That's correct. And, Carl, the revenue recognition is pretty straightforward. The contract is entered into. Once the samples are starting to be stored in the freezers, that's when a monthly billing scheme comes into play.

34:12 Understood, thanks. And so the $9 million contribution in 2021 from SciSafe then would be inclusive in this contract, if I recall correctly. Is that right?

34:21 Up to the $2.7 million we discussed, yes.

34:24 Exactly. Okay, cool. Thanks so much. You bet. Sure, you're welcome. Again, if you would like to ask a question, press star 1 on your telephone. We don't have any further questions. Mike Price, please continue.

34:42 Thank you, Sadie. Thanks again, everyone, for your interest in and support of BioLife. We're hoping your loved ones can stay safe and healthy during this pandemic, and we look forward to speaking with you during our follow-up calls and when we report our full year 2020 results. Good night. Ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect.