Conference Transcript - MRVI 2026-06-04

Matthew Stanton, Analyst — Jefferies

All right, great. I think we'll get started. My name is Matt Stanton. I'm on the Life Science Tools Diagnostics team here at Jefferies. Happy to have Marvai back at the conference with us again this year. Raj, thanks for being here today. Maybe just to kick off, if we go back, you were appointed CFO about a year ago. I think it was late June of 25. A lot of actions over the last year, cost side, operationally, commercial, R&D engine. And for those folks kind of dusting off the Marvai story, giving it a fresh look, what are two or three things, you know, you and the team are kind of most proud of the last 12 months as we look back? And then, you know, maybe looking ahead, what are some of the items you're most focused on, you know, the next six to 12 months?

Raj Asarpota, CFO

Yeah, great. Thanks for having us, Matt. So, yeah, kind of dusting back and looking at kind of what we've done over the last, now give or take, 12 months. We started out by taking more than $65 million of cost out generating EBITDA savings and exceeding our original target that we had of $50 million and basically did a financial and operational reset of the company. Importantly, I think more than that, we kind of looked at the organization and streamlined it, removed a bunch of layers that existed when we walked in. just to create like a much better alignment across all our different functions from commercial to operations to quality and ensure that as we were getting back into customer engagement, we were leveraging that whole restructuring process. On the commercial side in particular, you know, we established clear kind of accountability and ownership across product lines. And, you know, it's been a much improved execution initiative from when we kind of took over that, just in terms of the order visibility, mainly within GMP and discovery and getting that order trajectory filled. We felt really, really kind of good about that. On the innovation side, Mottail was introduced, and we're seeing tremendous kind of traction with the large pharmas and biotech with that. And so beyond clean cap, now that's become a pretty exciting thing for us. When you asked me what makes us proud, I think it's kind of reflected in all the changes we made in the first quarter, delivering $65 million of revenue in the first quarter, $20 million of EBITDA. And for the first time in six quarters, we delivered positive free cash flow. So all those things kind of, it feels like it's all kind of been put in place. I think going forward, as you look at the next kind of 12 months or so, or for the balance of the year, we're not changing the recipe. It's still about commercial execution, making sure that the operational discipline we have continues to translate through to favorable gross margins, free cash flow. You know, we've got a lot of exciting things on both Martell in terms of GMP introduction in, you know, by the time we finish the year, along with GMP enzymes for which we've already started to take orders. So that's another thing they're going to be focused on to make sure we kind of leverage that into our revenue growth.

Matthew Stanton, Analyst — Jefferies

Okay, that's great to level set. Maybe touch on the demand strength you've talked about a little bit, but 1Q, you know, nice beat and raise on the demand side. I think one thing that's maybe overlooked or a little underappreciated is that a lot of the demand improvement to date has been around the commercial execution you talked about, right? Biotech funding is better. Biopharmers may feel a little bit better. But a lot of that's been tied to commercial execution. You talked about it a little bit before, but just maybe dive a little bit more into what you've been doing on the commercial front. And is that true? It's been mostly commercial. And so maybe some of this biotech funding, et cetera, is still on the come in terms of the demand side.

Raj Asarpota, CFO

Yeah, agreed. You know, I think certainly the funding environment helps. That's an enabler. But really, before that macro shift happened, we really were focused on the execution. And that's kind of continued to work for us, both on the GMP consumable side and discovery. Like I mentioned, you know, it's been great in terms of getting order visibility. I think one data point I'll give you is on the discovery side, as we've mentioned before. We really started to, once we did the segmentation on what drives revenue there, we focused our book of business into orders that are under 15,000, orders that are greater than 15,000. Everything under 15,000, which is a long tail of customers resulting in very small revenue, has been relegated to e-commerce and marketing initiatives. So that enabled us to let our sales reps focus on driving the bigger orders and discovery. And that's been, you know, resulting in healthy order trajectory and order velocity that we've seen over the last few quarters. So, yeah, on the commercial side, that's been really the most of it.

Matthew Stanton, Analyst — Jefferies

Maybe just jumping a little bit into the business, you know, TriLink GMP, I think TriLink overall is kind of expected to grow mid-teens this year. A big piece of that is the GMP consumables. Maybe just unpack for us a little bit kind of where you're seeing the demand in terms of either products within TriLink or also, you know, by customer. Is this all kind of tied to mRNA? Is it cell engine therapy, you know, oligo, some of these newer modalities? Where are you kind of seeing the biggest vectors of demand?

Raj Asarpota, CFO

I think if you look at from an order standpoint, clean cap, of course, gives us, you know, a lot of our revenue comes from clean cap. along with that you've got Modu we have some custom mRNA products beyond that as you think about GMP enzymes all it goes even though they're a smaller part of our business are still you know you know seeing some growth and then finally once you know from Motel and then subsequently again when we get to the GMP part that's going to drive some of the revenue in In terms of, a lot of that is still coming from mRNA therapeutics, cell and gene therapy, gene editing, a little bit more from kind of oncology, and it's, even though infectious diseases is now a lower, a lesser part of it, we're still getting some from that area

Matthew Stanton, Analyst — Jefferies

On orders, I think commentary there has generally been pretty upbeat. Maybe just unpack for us a little bit what you're seeing on order demand between Discovery and GMP on the TriLink side. Are you starting to see some of that biotech funding, you know, show up? And then also just maybe remind us, you know, in terms of, you know, from when that demand can, you know, is it two quarters, three quarters? Kind of what's been the historical lag between better funding and your business, which I think generally is shorter cycle relative to some other.

Raj Asarpota, CFO

Yeah, again, like I alluded to, you know, like from a commercial standpoint, just our focus and customer engagement on Discovery has enabled us to land orders faster. Our forecasting is better. We're getting larger repeat orders. So the Discovery business is filling up quite nicely. Same thing on the GMP side. our order volume and the deals that are going to make up the revenue number is pretty much locked and loaded at this point. In terms of discovery, you know, our line of sight is 60 to 90 days. So as that order volume is continuing to grow, we still have to keep an eye on ensuring that the variability in this business is managed. But having said that, we see just really favorable trends on the discovery side um and then um i'm sorry what's the second part of your question

Matthew Stanton, Analyst — Jefferies

on the discovery piece i think you guys have done a good job kind of segmenting that below 15 000 and that's what you've been picked up by e-commerce above yeah 15 000 um just help us with you know is the lower kind of academic government the the large orders bigger customers like how do we think about kind of the trends you're seeing between the lower tail and then And also those, I think, 15 plus.

Raj Asarpota, CFO

Yeah, like on the research side, you know, that's mainly kind of early stage and discovery. And funding there is stable, not great, but stable. And we've seen modest growth there. But again, if you look at academic, that's like 5% or less than 5% of our business. We're not kind of exposed to that. On the discovery side, the funding is a lot healthier. So when you take that funding kind of environment and then couple that with the execution, we're seeing a lot more kind of goodness in that uh part of the business okay and then can you

Matthew Stanton, Analyst — Jefferies

remind us on the discovery side i think historically you've kind of talked about a 60 40 split between no it's more like 70 30 okay so is that and that's a function of the bigger the 15 plus growing faster yeah absolutely absolutely and that should continue to kind of maybe mix shift up over time is that fair 100 okay yeah um you know if we think about 26 like i said earlier you know nice upside on 1Q, even setting aside kind of that $14 million of GMP clean cap that was pulled into the quarter, delivered in the quarter. You also raised the guidance for the year, $5 million top line, $11 million on the EBITDA side. As we look for the remainder of the year, you talked about kind of orders line of sight to what's spoken for. What are some of the additional pockets of potential upside? I think maybe China could be one, some of these newer product launches you have, maybe even better activity levels on the clinical side. How are you kind of thinking about some of the potential upside levers even after coming off?

Raj Asarpota, CFO

Yeah, I think we'll continue to see growth on the GMP consumable side. You know, we've looked at kind of conversions from, you know, like from discovery to GMP, and we're seeing, you know, 22% growth in customers year over year. And so as that has been kind of transitioning, we feel pretty good about some, you know, upside developing from that. And then, you know, I think additional upside could come from, although we've modeled in very modest growth from GMP enzymes, we could see a little bit more growth coming from there. we have not modeled anything yet for GMP Mottail but just Mottail in general so far what we've seen in terms of 70 plus customer customers that have been buying bigger orders and placing repeat orders you could see a little bit of upside from that as well and then you know I think along China is going to come back we've talked about Cygnus missing in the first quarter but that's going to be made up so we see some upside from that as well um so yeah i think from a geography standpoint and then as we continue to get traction on both discovery and gmp we'll we'll get a few upside levers there okay i want to touch on china in a minute but maybe to

Matthew Stanton, Analyst — Jefferies

go to mod tail you know you talked about it's a product you launched last year 70 plus ordering customers as a one q i assume it's probably even higher today i think the launch is seemingly tracked i had expectations maybe just talk about launch to date where you're seeing the the most demand and you know customer feedback why is this product kind of seemingly resonating so strong so

Raj Asarpota, CFO

so quickly with folks it is basically with the larger larger pharmas is where we are seeing you know a lot of uh uptick from uh you know from martel um and then as we think about the feedback that we're getting from customers in vivo carty applications is where there's a lot of positive feedback that we're getting from customers um and again we've been getting demand for uh as customers kind of move to gmp there's a demand for that and that was a voice of customer that we kind of channeled into making sure that we're going to have gmp capability in the ballot in the

Matthew Stanton, Analyst — Jefferies

second half of this year okay yeah um on the gmp launch later this year um you know i guess how big a good deal is this is there a margin lift from this as well how should we think about kind of the the deployment of this and then is there any way to kind of quantify I guess the the opportunity here right is this a you know a couple million dollars out the shoot is it tens of millions of dollars it sounds like the demand is is pretty strong but how do we kind of dimensional yeah

Raj Asarpota, CFO

you know the demand is robust and it's too early to call out um you know what the outlook is going to be, but we feel pretty confident that as it starts to get traction, why this product couldn't have the same kind of cadence and growth level as clean cap. So that's kind of what we're thinking about. We're doing some modeling right now, but really I think for the future as long as this continues to get traction and we have both it in preclinical and as you kind of move through GMP, it's going to create a nice growth engine.

Matthew Stanton, Analyst — Jefferies

And maybe just one more, you know, last one, I was just 70 ordering customers. How do you think about kind of adding more customers versus going deeper? It sounds like a lot of these are larger pharma. So is there kind of an opportunity to go both more customers but also deeper at these customers? Do you have a visibility in kind of how many programs they're using?

Raj Asarpota, CFO

There's penetration with existing customers and potential for new customers. In fact, you know, I think I know you're going to touch on China, but during our recent trip to China, we think that Motel has the opportunity for us to get to some of that product differentiation and price challenges that you face in a country like China. So if you bundle Motel with clean cap and mRNA, we think that that can help us overcome some of those challenges in China.

Matthew Stanton, Analyst — Jefferies

So I guess on China, near term, you talked about earlier distributor timing in 1Q. Just to be clear, you expect to recoup that the remainder of the year have a pretty good line of sight on that is that fair uh absolutely

Raj Asarpota, CFO

yeah yeah you know it had nothing to do with kind of underlying demand it was all you know we've got plenty of line we've got line of sight to the demand it was just really kind of a timing pattern so that's coming back we expect china to be uh mid single digit growth for cygnus and the cygnus business is also going to stay on track to that level okay um and maybe before we get into kind

Matthew Stanton, Analyst — Jefferies

of the opportunity you had on China, just maybe remind folks today, you know, your presence in China, it's like high single-digit percentage, I think there's maybe some confusion, trialing, BS, or, you know, Cygnus, just level set us on kind of what you're doing in China today before we kind of hop into the opportunity.

Raj Asarpota, CFO

Yeah, today in China, it is Cygnus only. We have no trialing sales in China. The long-term opportunity, given the research level that's happening in China, the number of you know companies that are engaged there it's a significant amount so we think that's an opportunity which is why we were there talking to customers and figuring out what our manufacturing commercial and distribution footprint can be in you know for trialing so more to come on that but at least we're kind of laying the foundation and doing some kind of diligence work right now okay

Matthew Stanton, Analyst — Jefferies

Yeah, and then maybe, you know, you're doing the diligence now. How do we think about kind of cadence in terms of before this becomes a reality? Do you need local manufacturing? Can you ship and use a distributor? Like how soon could we, you know, see TriLink in China?

Raj Asarpota, CFO

Yeah, I don't think you'll see anything meaningful this year. But as we start to lay the foundation for both commercial manufacturing distribution footprint, that's going to be more of a 27-story.

Matthew Stanton, Analyst — Jefferies

Okay. And is any of this tied to kind of the licensing deals we've seen, or is this more just pure demand within China?

Raj Asarpota, CFO

Pure demand within China.

Matthew Stanton, Analyst — Jefferies

Maybe shifting gears over to Mach-V, still fairly small today, but a product that's been growing, you know, very healthy. I think double digits, maybe even triple digit clip here and there off a small base. Talk about demand trends in Mach-V, ability for this to remain kind of a durable, healthy, double-digit growth driver ahead.

Raj Asarpota, CFO

Yeah, so I think one bit of good news on Mach-V, first of all, is we were granted like a new U.S. patent. So that enables us to continue strengthening our IP mode there on Mach-V. It's growing off a small base, but again, growing extremely well, and it's very robust. We continue to see repeat orders. We continue to see Cygnus getting traction with mock. We really kind of pleased with where that's going. I think some of the regulatory stuff has been going well. As you think about, you know, can mock, we replace some of these expensive viral clearance services. So that part is continuing to go well. Right now it's still, you know, kind of a little bit of a wait and see in terms of, you know, how we can clear those regulatory hurdles. But most of the activity is in the post-IND kind of pre-BLA. And then we are getting, you know, some companies that want to work with Cygnus on kind of post-BLA type of activity with Mach-V. So at least that's encouraging.

Matthew Stanton, Analyst — Jefferies

And for those who are less familiar with the viral clearance market, kind of what's the value prop of Mach-V? It sounds like it's, you know, these existing kind of legacy viral clearance studies are very expensive. Is it cost?

Raj Asarpota, CFO

Yeah, it is cost and kind of early detection and early kind of indicators on, you know, that these companies would face. And if you've got a product that helps you kind of navigate that, that's the whole game there for Mockley.

Matthew Stanton, Analyst — Jefferies

Okay, and then just on the regulatory front, is this all, I think you talked about IND early stages, do you kind of need to get in there and spec in, or could we see a case in a year or two where this is, you know, moving into a phase one, phase two, or do you kind of need to start early and plant the seeds and see a move through the clinic? The latter. You touched on it a little bit earlier when we were talking about some of the discovery stuff, but just, you know, I think e-commerce has been a big focus. You know, you kicked off with that. Where are you in the e-commerce journey? How big a deal has pulling those 15,000 and under orders onto there been? Maybe just give an update on kind of where we stand with e-commerce today.

Raj Asarpota, CFO

Yeah, so e-commerce has been a great story for our orders under 15K. And like I said today, under 15K, there's no sales touch whatsoever. So all the order processing, the coding process itself, like any friction in the system has been completely removed. We saw record Q1 revenues that flew through that channel, but it's a small base, right? So we're now kind of starting to turn that on. You know, we did a launch for Europe through e-commerce. We're adding like oligo products to that channel and just broader kind of workflow automation. So all those things will continue to evolve, you know, with e-commerce.

Matthew Stanton, Analyst — Jefferies

And then you touched on it a little bit, improving friction. Is there any other benefits, margins, attach rates, you know, ability to kind of track reorders or target folks? Like what's some of the other kind of benefits on the revenue or margin side from successful deployment e-commerce?

Raj Asarpota, CFO

Yeah, I mean, I think you're right. You know, as you get those efficiencies and the less kind of touch that we have, the more automated you can make it. and the broader mix of products that you flow through this channel is going to result in margin improvement for us.

Matthew Stanton, Analyst — Jefferies

And do you have a theoretical benchmark of where the e-commerce mix could go someday or just continue to kind of mix, shift it up, or is there a benchmark? Yeah, it's going to continue to evolve.

Raj Asarpota, CFO

It's a little too early to say how big this can get. But really, again, with that type of automation and the focus that's on AI today, that's going to continue to get more efficient and we can pump more stuff through it.

Matthew Stanton, Analyst — Jefferies

On gross margins, you know, 1Q, mid-60s, obviously the benefit from the $14 million clean cap, but even excluding that, gross margins are still in high 50s, right? You know, remind us, what are you penciling for gross margins for the year, and then how are you also thinking about kind of the pathway ahead after some of the cost actions? Obviously high 50s is pretty good based on where we were not too long ago but just kind of pathway ahead how you're thinking about

Raj Asarpota, CFO

further expansion yeah I think you're right so in Q1 we benefited from a really nice rich mix of GMP consumables coupled with the fact that we had that COVID clean cap order but again if you normalize for that we were still in the high 50s as you said I think for the balance of the year and where we'll end up it'll kind of remain in that high 50s coming off a year where we were in the 40s you know last year um you know i think as we continue to um grow our gmp franchise and discovery that mix is going to continue to be favorable on gross margin so as we kind of look ahead um i think that mix is going to drive gross margins a little bit higher but that's that's kind

Matthew Stanton, Analyst — Jefferies

of where i see it going okay and outside of mix is there anything operational or do you feel pretty I mean, is there sites or is there other little things?

Raj Asarpota, CFO

Yeah, I think from an operational standpoint, given that we've kind of restructured the business, we've said based on our current model, we've got so much leverage to scale this business up, literally. And every dollar that we pump through the P&L now adds zero cost, and 70% of that falls to the bottom line. So as a function of continuing to drive that revenue up, coupled with the mix of products we have, we'll start to generate incremental margin profile, improve that profile rather.

Matthew Stanton, Analyst — Jefferies

And on that, you know, margin profile, the incremental, I think you guys have signed up for 70% drop through. Just talk about, in terms of, you know, we talked about some of the R&D engine earlier. Are you spending kind of, does that need to move up any higher? Do you feel kind of good about what you're spending on R&D today and kind of what's coming out of the pipeline and cadence?

Raj Asarpota, CFO

Yeah, we feel pretty good about it. Although I definitely in terms of, I think in terms of initiatives that we want to drive within the company, R&D is one place that will get some incremental dollars to make sure that the innovation will continue to fuel our growth.

Matthew Stanton, Analyst — Jefferies

Circling back to the commercial initiatives we didn't cover earlier, just, you know, is there an opportunity to better cross-sell, you know, either Cygnus or Tri-Link, Tri-Link to Cygnus? within their respective franchises. I think, you know, ModTail customers, you got noted, a majority of those are ordering other TriLink products. But how do we think about kind of the cross-sell opportunity either within either respective business or together for ModTail?

Raj Asarpota, CFO

Yeah, I think within TriLink, again, the amount of focus that we've put on commercial execution, the tools that we've given our sales teams, All of that is, you know, we're getting organized our own customer workflows and making sure that our customers recognize that we're not just a clean cap company. We've got a portfolio of products and the way our sales teams are now approaching that with our customers and engaging with them has already started to, you know, get that cross selling opportunity fulfilled to the point that you made. with people that are buying Mottail are also starting to buy other products. So just the innovation engine coupled with the customer focus that we have through our sales teams is driving that. Now, cross-selling between Cygnus and TriLink, I'm not seeing much of that, but I think within those two businesses, there's definitely, you know, like within TriLink, we're definitely seeing that, and that's what we want to see anyway.

Matthew Stanton, Analyst — Jefferies

Okay. Maybe quickly we could touch on just balance sheet capital allocation. Yesterday, you guys announced kind of a refinancing, pushed some of the maturity out. Maybe just run through quick logic behind that, and then I guess just refresh us on what exactly you did and why that made sense.

Raj Asarpota, CFO

I mean, just there was some overhang on the whole refinancing. financing. It was going to be current this year, and people were asking, what are you going to do with this? And I think the outcome that we landed with right now, given the current market conditions, we're super pleased with what happened, right? So our long-term debt went from 243 now down to 150, plus we have a revolving line of credit to pull on. So I think the rates that we got are the best we could have done. You know, we had SOFR plus three. Now we've got SOFR plus five. So we just feel good about kind of just removing that overhang that we, you know, had out there. Now that's it. Yeah, we're pretty good about it.

Matthew Stanton, Analyst — Jefferies

So no major impact kind of P&L. It's more overhang removal and risk removal.

Raj Asarpota, CFO

But just kind of improving our risk profile and making sure that wasn't really, yeah.

Matthew Stanton, Analyst — Jefferies

Okay. And you talked about the revolver, just where the balance sheets stay. I mean, how do you think about capital allocation? Are you guys, you know, a lot of heavy lifting the last year or kind of smaller tuck in something you're looking at? You know, how are you guys kind of thinking about and prioritizing M&A?

Raj Asarpota, CFO

I think as I've maintained over the last six months or so, like, you know, when we first started, really organic growth has been the focus and kind of resetting the business. M&A was not on the cards. But I did mention once we kind of got past that, we would start to think about how, you know, if we should allocate capital and deploy it, if should we see something that makes So, you know, we are, we're just going to be opportunistic. There's nothing on the horizon that we're, you know, that warrants any attention. But if there is a complementary portfolio that we can get, we will certainly look at that.

Matthew Stanton, Analyst — Jefferies

Maybe just going back to some of the demand strength from earlier on, I think you talked a little bit about mRNA, but maybe just talk a little bit about indications, right? I think we've moved well beyond just vaccines, right? there's oncology, there's other one or two kind of areas you'd point folks to in terms of where you're seeing incremental demand, you know, setting aside kind of a legacy vaccine demand that has, you know, you and the team most excited because there is a much more diverse customer and clinical pipeline today than a few years ago.

Raj Asarpota, CFO

Definitely. I think from moving away from vaccines more into kind of oncology is, and, you know, other cell and gene therapy but mainly oncology is where we see the next um kind of readouts and opportunity and programs advancing that's kind of where we are seeing some goodness and then maybe

Matthew Stanton, Analyst — Jefferies

just talk um briefly just in terms of pricing of the portfolio i mean kind of what annual pricing looks like for you guys today is there any difference between the two businesses how do we think about kind of pricing within some of that attractive incremental margin profile you

Raj Asarpota, CFO

write out yeah yeah so let's let's take it business by business Cygnus as you know is kind of like the gold standard and you know given how much traction we have with customers and Cygnus's stickiness enables us to kind of leverage price and get some premium so that happens on a yearly basis. And then on TriLink, it's more kind of product differentiation dependent. And as we get more newer products, you know, as we've launched whether it's GMP enzymes, it's Mottail, IVT kits, we'll continue to make sure that we get that price premium where applicable.

Matthew Stanton, Analyst — Jefferies

And is it fair to say generally kind of bioproduction market type pricing a few points a year is kind of the zip code I think going forward? All right. With that, we're just about out of time, so I think we'll leave it there. I appreciate it.