Good morning and welcome to the Bio-Techne Earnings Conference Call for the Third Quarter of Fiscal Year 2025. At this time, all participants have been placed in a listen-only mode, and the call will be open for questions following management's prepared remarks. During our Q&A session, please limit yourself to one question and a follow-up. I would now like to turn the call over to David Claire, Bio-Techne’s Vice President-Investor Relations. Please go ahead.

Good morning and thank you for joining us. On the call with me this morning are Kim Kelderman, President and Chief Executive Officer; and Jim Hippel, Chief Financial Officer of Bio-Techne. Before we begin, let me briefly cover our Safe Harbor statement. Some of the comments made during this conference call may be considered forward-looking statements, including beliefs and expectations about the company’s future results. The company’s 10-K for fiscal year 2024 identifies certain factors that could cause the company’s actual results to differ materially from those projected in the forward-looking statements made during this call. The company does not undertake to update any forward-looking statements because of any new information or future events or developments. The 10-K, as well as the company’s other SEC filings, are available on the company’s website within its Investor Relations section. During the call, non-GAAP financial measures may be used to provide information pertinent to ongoing business performance. Tables reconciling these measures to the most comparable GAAP measures are available in the company’s press release issued earlier this morning on the Investor Relations section of our Bio-Techne Corporation website at www.bio-techne.com. Separately, in the coming weeks, we will be participating in the BofA Securities, RBC Capital Markets, Benchmark, William Blair, Jefferies, and Goldman Sachs healthcare conferences. We look forward to connecting with many of you at these upcoming events. I will now turn the call over to Kim.

Thanks, Dave, and good morning, everyone. Thank you for joining Bio-Techne's Third quarter conference call. I'm pleased to report that we delivered yet another strong quarter with 6% organic revenue growth while operating in a relatively uncertain macro environment. Our differentiated performance was evident across our product portfolio, namely within our core reagents, our automated analytical solutions, and in our cell and gene therapy offering. This result was once again delivered with an emphasis on profitability as the operational efficiencies we continue to put in place led to an adjusted operating margin of 34.9%. The team continues to do an excellent job of balancing investments to position the organization for future growth with initiatives to drive efficiencies. And by doing so, we are maintaining our industry-leading profitability. Our performance by end market in Q3 was led by low double-digit growth in pharma, which we expected to return to historical growth rates in calendar 2025, following the realignment of their R&D pipelines during much of 2024. We saw early signs of this improvement in our fiscal second quarter with that positive momentum continuing into our third quarter. Going into calendar 2025, we did not anticipate the major US policy shifts impacting the academic end markets. This started on February 7, with the NIH issuing guidance of a flat indirect cost reimbursement rate of 15% across all NIH grants. With the incoming NIH Director announcing that he will be evaluating the impact of the proposed 15% cap, along with the federal judge implementing a permanent injunction on this policy, it remains to be seen how this will play out. In the meantime, however, our US academic customers are facing uncertainty around the future funding of their research projects. This can impact purchase decisions, particularly around capital equipment. Another policy shift that has been announced by the new Secretary of the Department of Health and Human Services is getting a much higher priority around combating chronic diseases like cancer, diabetes, and neurological disorders. Once the dust settles around the overall level of the NIH funding, Bio-Techne stands to benefit from the NIH grants geared towards these diseases as our product portfolio is perfectly aligned with those research areas. Now, let's discuss our growth drivers in the Protein Sciences segment, where strong execution drove demand for a market-leading catalog of research reagents, protein analysis tools and cell therapy workflow solutions, which resulted in 7% organic revenue growth. Starting with our core portfolio of research use only proteomic agents, I want to highlight that over the last 49 years, we have amassed a catalog of over 6,000 proteins and 400,000 antibody types. This biological content is relied upon by our global customers to gain novel insights into biological pathways to develop and manufacture advanced therapeutics to enable precision diagnostics. In addition, we license and supply our content to other life science tools companies for usage in their assays and consumables. Looking ahead, we are encouraged by the FDA's recent announcement to advance public health by replacing animal testing in the development of monoclonal antibodies and other drugs with more effective human-relevant methods. The FDA's emphasis on reducing animal testing opens an opportunity for Bio-Techne's organoid solutions for both making and analyzing organoids. Organoids, which better mimic human physiology than traditional cell cultures or animal models, offer an ethical, cost-effective, and faster alternative for assessing drug efficacy, toxicity, and mechanisms of action. Annually, we sell over 50 million of our core reagents, including proteins, small molecules, and media for organoid solutions in a market that has been growing north of 20%. With this recent announcement by the FDA, we expect that the growth of organoid solutions will accelerate and that this will also be a tailwind for our GMP reagents once these solutions advance into the clinic. Staying with our GMP agents, here we saw growth in the high-single digits in Q3. We serve over 500 customers who rely on our GMP reagents for their cell therapies across all stages of development. As a reminder, customers in late-stage clinical trials can make large, less frequent orders, making a trailing 12-month growth metric more reflective of underlying demand. Our GMP reagents business sits just over 13% growth on a TTM basis. The next growth driver in Protein Sciences for this quarter was our protein analytical instrumentation business, especially in our biologics platform, Maurice. As a reminder, Maurice is specked into bioproduction processes for protein identity, protein charge, and protein purity testing purposes. The Maurice family of instruments is enjoying robust growth from our pharma and CRO partners and is gaining traction as a gene therapy QA/QC platform. Biologics grew double digits in the quarter with broad-based strength in both instrument placements and consumables pull-through. Now we will move to the growth drivers within our Diagnostics and Spatial Biology segment, which delivered 2% organic revenue growth in the quarter. The growth across the divisions in the segment was, in general, consistent with order timing having a significant impact on our OEM diagnostic reagents business as well as on our Asuragen carrier screening and oncology business. The underlying markets and our performance remained healthy with year-to-date growth in the high-single digits for the diagnostic reagents and low double digits for the Asuragen portfolio. Asuragen continues to launch innovative products that leverage its proprietary chemistry to resolve difficult-to-analyze genes. For example, we launched the AmplideX Nanopore Carrier Screening Plus Kit, which utilizes Oxford Nanopore’s long-read sequencing technology to directly capture many complex genomic variants in a single workflow. Also within this segment, we continue to drive ongoing utilization and penetration of our ExoDx prostate cancer test, which increased over 30% for the fiscal year-to-date. Spatial Biology, which has the highest exposure to US academic end markets within the company, has been most impacted by the NIH uncertainty. However, despite this uncertainty, our COMET instrument was still able to achieve double-digit growth in this quarter. The COMET platform provides full automation and multiomic capabilities. These remain key competitive differentiators and enable new scientific discoveries and accelerated drug development. During the quarter, we made excellent progress upgrading the COMET installed base with multiomic capabilities, which provides images of RNA and proteins on the same tissue sample. This positions the system for a steady ramp in consumables pull-through of RNA scope reagents as well as our portfolio of newly validated spatial antibodies. Before I hand the call over to Jim, I would like to address the most recent dynamic around tariffs, which has impacted the global economy. While the tariff escalation, which began in April has understandably had an impact on our life science tools industry, it does represent a clear opportunity for Bio-Techne. We may not be immune to tariff escalations, but by utilizing our global operational footprint, we are extremely well positioned to mitigate most tariff impacts to our bottom line very quickly. Jim will provide more details, but we mobilize a small, specialized, and highly effective team within our company to focus on several work streams. One work stream is around the optimization of our global footprint for regional production, which is, of course, not subject to cross-border tariffs. The second work stream is to focus on the utilization of our global supply chain. And we also initiated a work stream to make targeted price and/or surcharge adjustments with the intent to minimize impacts to our customers. The output from this team has yielded excellent results, which we believe will fully mitigate the cost impact of the tariffs as currently configured by the end of the current quarter, which happens to align with the start of our fiscal 2026. The work done will also position us very well to quickly minimize the impact of future tariff changes. This approach allows the vast majority of our 3,000 employees to continue to focus on our strengths, which include providing our customers with the highest quality products, to offer productivity tools to automate our customers' workflows, which will help offset some of the tariff-related cost pressures they may face, and we will continue to bring meaningful innovation to the market. And last but not least, we provide access to an expert commercial team that enables our customers to quickly choose the right products and the right solutions to enable their success. With that, I will pass the call over to Jim.

Thanks, Kim. I'll start with some additional details on our Q3 financial performance and then give some thoughts on the financial outlook for the remainder of the fiscal year. Starting with the overall third quarter financial results. Adjusted EPS was $0.56 compared to $0.48 in the prior year, with foreign exchange having an immaterial impact. GAAP EPS for the quarter was $0.14 compared to $0.31 in the prior year. Q3 revenue was $316.2 million, an increase of 6% year-over-year on an organic basis and 4% reported. Foreign exchange was unfavorable to revenue growth by 1% and divestitures also had a 1% impact on revenue. By geography, North America increased low-single digits year-over-year, driven primarily by our pharma customers. Europe increased mid-single digits year-over-year, led by strength from academic customers. And China decreased mid-single digits as the economic situation there is still challenging. Encouragingly, the rest of Asia increased mid-teens with our team executing very well on improving market conditions. By end market in Q3, biopharma increased mid-single digits, while academia was flat in the quarter. Below revenue on the P&L, total company adjusted gross margin was 71.6% in the quarter compared to 71.9% last year, down slightly due to unfavorable foreign exchange. Adjusted SG&A in Q3 was 29% of revenue compared to 30.3% in the prior year, while R&D expense in Q3 was 7.8% of revenue compared to 8.5% in the prior year. The decrease in SG&A and R&D was driven primarily by the benefit of structural streamlining and diligent expense control, which was partially offset by ongoing strategic growth initiatives. Adjusted operating margin for Q3 was 34.9%, up 190 basis points compared to the prior year due to the impact of favorable volume leverage, productivity gains, and cost control partially offset by the impact of foreign exchange. We continue to execute cost containment measures and prioritize our growth initiatives to drive efficiencies throughout the organization with the goal of maximizing operating leverage while we are in this dynamic macro environment. Looking at our numbers below operating income, net interest expense in Q3 was $0.8 million, decreasing $2.3 million compared to the prior year due to lower net debt levels. Our bank debt on the balance sheet as of the end of Q3 stood at $330 million. Other adjusted non-operating income was $3 million in the quarter, an increase of $1.4 million compared to the prior year. The increase was driven by the foreign exchange impact related to our overseas cash pooling arrangements. Moving further down the P&L, our adjusted effective tax rate in Q3 was 21.5%, down 50 points compared to the prior year due to geographic mix. Turning to cash flow and return of capital. $41.1 million of cash was generated from operations in the quarter, and our net investment in capital expenditures was $10.1 million. Also during Q3, we returned capital to shareholders by way of $12.6 million in dividends and $100 million through stock buybacks. Also, our Board of Directors has recently approved a new share repurchase program, authorizing the repurchase of up to $500 million of common stock. We finished the quarter with 158.9 million average diluted shares outstanding. Our balance sheet finished Q3 in a strong position with $140.7 million in cash, and our total leverage ratio remains well below one times EBITDA. Going forward, M&A remains a top priority for capital allocation. Next, I'll discuss the performance of our reporting segments, starting with the Protein Sciences segment. Q3 reported sales were $227.7 million, with reported revenue increasing 6% compared to the prior year. Organic revenue growth was 7% for the quarter, with foreign currency exchange having an unfavorable impact of 1%. The segment's organic growth was driven by large pharma customers across the portfolio. Operating margin for the Protein Sciences segment was 45.6%, an increase of 140 basis points compared to prior year, primarily due to the impact of favorable volume leverage, cost management, and structural alignment initiatives. Turning to the Diagnostics and Spatial Biology segment, Q3 sales were $89.2 million, with both reported and organic growth increasing 2% compared to the same quarter last year. Segment growth was consistent across the businesses with stronger performance in our automated spatial instrument COMET as well as continued strong growth in our ExoDx prostate cancer test. Moving on to the Diagnostics and Spatial Biology segment, operating margin at 9.4%. The segment's operating margin was relatively consistent with the prior year's 9.3%. We anticipate improvement in the Diagnostics and Spatial Biology operating margin as the COMET platform continues to scale. In summary, Q3 was a solid quarter overall, and our teams executed extremely well, especially considering the turbulent market conditions induced by NIH funding and tariff uncertainties. Up to this point in the year, our overall top-line results have been in line with our expectations at the beginning of the fiscal year, while our bottom line has exceeded guidance. However, as we approach the finish of our fiscal year, there was no way to predict last July that our market will be facing the uncertainties of future NIH funding and tariffs that we are now experiencing. These uncertainties have only increased in April with the escalation of tariffs that began on April 2, followed by the recent Trump administration's proposed fiscal year 2026 budget, which includes a 40% cut to NIH funding. Let me frame up how we think about our exposure to these two major uncertainties and explain why we are so well positioned to turn these lemons into lemonade. First, on the uncertainty of NIH funding. As a reminder, approximately 12% of our annual revenue is from US academic customers, and we estimate that roughly half of that is sourced from NIH grants. Also during Trump's first administration, he proposed NIH cuts ranging up to 20% every year. However, in each of those four years, Congress actually passed increases to the NIH budget with bipartisan support. So we view the potential for severe cuts to NIH funding over the next four years as rather unlikely. However, even in the most severe scenarios, the decrease in funding would have an immaterial impact on our overall long-term double-digit growth rate expectations. And that's before you consider our lemonade, which is that Bio-Techne stands to benefit from a potential shift in NIH's emphasis on areas of research where our products are the most impactful. Next, I'll address the uncertainty swirling around the ongoing tariff war. As it stands today, if we were to take no action to absorb all tariffs, the recent increases in global tariffs would amount to approximately $20 million annual impact on our adjusted operating income. Most of this exposure is coming from Chinese tariffs on our proteomic analytical instrument platforms imported into China from the US. As Kim stated in his remarks, we have focused teams who are driving work streams to negate the tariff impact on Bio-Techne and our customers with the highest priority on leveraging our global footprint to regionally diversify our instrument manufacturing. Our lemonade with respect to tariffs is the speed by which we can negate the impact of these tariffs on our bottom line and position the company even better to mitigate any further tariffs should they escalate from here. This speed will allow us to not be distracted internally but rather double down our focus on our customers, especially as they are facing the same uncertainties. As we close out the remainder of fiscal year 2025, the additional macro uncertainties around tariffs and potential budget cuts that arose this past month are likely to cause further distraction for our customers. Thus, we expect our growth momentum will temporarily slow to the low-single digits in Q4. With respect to the bottom line, there will likely be a temporary headwind due to tariffs, resulting in adjusted operating margins being 100 to 150 basis points lower than Q4 of last year. However, we are confident that the bottom line impact of current tariffs will be fully mitigated by the time we start our fiscal year 2026, positioning us extremely well to continue our differentiated financial performance. That concludes my prepared comments. And with that, I'll turn the call back over to the operator to open the line for questions.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. The first question comes from Puneet Souda with Leerink Partners. Please go ahead.

Hi, guys. Thanks for taking my questions here. Maybe the first one on the guide. Could you provide more context into that, Jim, in terms of the impact you're expecting on academic? I mean, it's a meaningful reduction versus what you had before. And what you're seeing in the quarter. So it does beg a question, was there a pull forward that you saw on the pharma side? And as a result, you're seeing more impact in the fourth quarter? Also on the pharma side, if you could clarify. I think you said low double digit at first, but then mid-single for biopharma. So could you just clarify what was the growth in pharma and large pharma?

I don't remember specifics about biopharma, but to clarify, we experienced double-digit growth in large pharma for the quarter. Regarding the comparison between Q3 and Q4, Kim mentioned that our reagents, which are also supplied to other life science tools companies as ingredients in their products, received some nice orders from those customers who primarily serve our clients in this recent quarter. We don’t expect those orders to recur in Q4, which will contribute to a decline in organic growth. In terms of academia, we began Q3 strongly in January, but there was a significant slowdown in February due to various announcements, which stabilized in March. We anticipate this stabilization will continue into Q4, although at lower levels than Q3. The key point to emphasize is our cautious outlook for the pharma sector. Expecting double-digit growth in pharma for Q4, considering the tariff environment announced on April 2, which didn't substantially affect Q3, represents a significant difference compared to our Q3 performance. Despite being aligned with initial expectations year-to-date, the way we reached these results has varied. Large pharma has exceeded our expectations thus far, whereas we didn't foresee the challenges arising from academic policies in the U.S. As for smaller biotech or pharma, while we observed gradual momentum in the first half of the year, that momentum is now somewhat stalled in Q3. It's not a regression, but the growth has paused, likely due to overall global economic uncertainties, making our biotech customers more vulnerable in terms of their future revenue prospects. This sensitivity to the broader economic environment is what we are witnessing. I hope this provides clarity.

Yes, Puneet, this is Kim. Good morning. Thank you for your question. And you mentioned pull forward, right? In Q2, we posted 9% organic growth, but I have mentioned that three of that were probably because of early demand by our customers. So we are very transparent in that. And this quarter, though, we do not see that. So we do not have a carve-out related to pull forwards. We do think this was really based on momentum in the end market of large pharma.

Got it. That's helpful. As we approach fiscal year 2026, I'm curious about what you can share regarding the situation, especially considering the uncertainty with China, NIH, and tariffs. I appreciate you quantifying the gross impact, but how should we look at 2026? Specifically about China, I believe it's a 50/50 split between instrumentation and consumables for you. What should we expect regarding the growth rate in China for 2026? Thank you.

Yeah, Puneet. Yeah, 2026, we usually do a soft guide at the beginning of a fiscal year, which is about three months from now. And one thing that we feel relatively certain about is that we expect that there will be more clarity from the different headwinds in our end markets over those three months. It seems to be that, of course, a lot of turbulence has been installed upon NIH, as well as on the tariff situations, but we think that more clarity will come in the coming months, coming quarters, and that will definitely help us quantifying the impact for Bio-Techne in the coming year. Your question around China, I think tariffs, as I mentioned in my prepared remarks, fortunately, are very negatable for Bio-Techne. I'm positive about how we can offset the tariff impacts and negate them. And we'll just have to see how the Chinese economy holds up and how their internal funding works. We definitely saw a little bit of a step back from our initial guide, right? So we had mentioned that China was stabilizing earlier in the fiscal year. We had mentioned that it would call back to the black and it was definitely on that trajectory. But this last quarter, with all the turbulence, you could certainly see a step back into mid-single digits negative. And that's very much driven by the tariffs and by the local economic activities.

Thank you. Our next question comes from Dan Leonard with UBS. Please go ahead.

Thank you. My first question is on tariffs. I would love to understand your exposure a bit better. I mean China is 9% of your revenue. And I think you quantified the analytical instrument exposure into China. But as Puneet mentioned, you saw more than analytical instruments into China. And I would assume that most of that is manufactured outside of China. So any color commentary, Kim, you can provide on why that tariff headwind is not larger?

Thank you for your question, Dan. Yes, China accounts for 9% of our revenues, which is a valid point. In recent years, the mix between consumables and instruments was often about 50/50, but that has shifted a bit recently. For instruments, we still consider it to be approximately 50%. We have a clear and efficient plan to relocate some of our instrument manufacturing currently based in the US to another site that won't incur import fees into China. This is made possible by our global presence. Additionally, our consumable products experience a different tariff situation. In fact, we've observed recently that we do not pay any tariffs when importing those, which significantly reduces our tariff exposure related to exports to China.

Not all instruments and cartridges are currently manufactured in the U.S., so the exposure isn't fully aligned. This situation also facilitates a smoother transition for instruments not made in the U.S. to be relocated to the facility producing instruments for China.

Understood. Thank you for that clarification. And then just a follow-up. Does the current tariff situation impact all your thinking on having more of a local manufacturing footprint in China?

The tariffs have not altered our strategy. We have always focused on the China market specifically. In fact, last year we mentioned that Bio-Techne had opened a new facility in Shanghai to cater to the Chinese demand. We're pleased to have established this presence, as it may prove useful in the upcoming quarters if needed. We are satisfied with our current setup, as local manufacturing in various regions helps reduce cross-border tariffs, providing us with a favorable advantage at this time.

Thank you. Our next question comes from Matt Larew with William Blair. Please go ahead.

I'll just circle back on the first question actually. As you really built the guide for this year, which I think you've called fairly well, it was exiting the high-single digits. And the street are used as a proxy for fiscal 2026. As you alluded, too much has changed. But to the point Jim on sort of lemons and lemonade, it feels like maybe the lemons are accumulating near-term and the lemonade it takes a little longer to squeeze out. So, at 8.5% street organic growth for next year and maybe the way you're guiding us for fiscal 2025, at least more reasonable starting point than the street's at today?

What I'm saying is that while the changes we're experiencing right now are quite sudden, we all hope they will be somewhat temporary. Our momentum heading into the third quarter was very strong. We were on track with our projections for smaller biotech, progressing well in China. Academia had been performing consistently until the last couple of months, and pharma was exceeding our expectations. The current situation is really a temporary jolt of uncertainty due to proposed changes in policies and tariffs. I believe that once this uncertainty is cleared up, regardless of the outcome, we will be in an excellent position to resume our previous growth trajectory. Whether that clarity comes in a quarter, six months, or a year, I hope we will gain more insight in three months. Eventually, the uncertainty will turn into certainty.

Okay. And then obviously, the margins were very strong, the strongest in a couple of years here. And year-over-year, that was mostly driven from spending leverage. I think OpEx up something like 5% year-to-date as the top line has recovered you've mentioned it in the comments, but can you just speak to sort of the tension between ongoing cost containment and investments and where you're seeing additional opportunities to drive leverage?

I mean the teams have been doing a great job actually for a couple of years now. And with regards to managing that balance between investments and cost containment alignment of our structure according to the various profiles of our business. And that has just basically continued. And we've been especially been diligent on the call discretionary cost side. The past three months or so, especially with the increased uncertainty that we've been seeing in our end markets. At a time of uncertainty is the last time that you want to shift gears with regards to accelerating investment or any kind of discretionary spend. So I think the outperformance we saw in our margin was a combination of the revenues coming in as we had expected, but really holding back on the cost, seeing the kind of uncertainty build throughout the quarter that we did, just to make sure that we're extremely well prepared for fiscal year 2026 in particular, when these uncertainties start to become more certain.

I believe that there is not really tension here; we've always been cautious about our cost position. As Jim mentioned, we've been careful in our spending discussions. At the same time, we have focused on improving efficiencies. We have streamlined our management processes and integrated some of our acquisitions to enhance efficiencies. On the digital front, we've explored ERPs and various software solutions to achieve efficiency gains. Additionally, our operational processes have significantly boosted our margins. These factors have certainly contributed to our results. Meanwhile, in terms of R&D, we have a detailed evaluation process, which we refer to as characterization, to prioritize our investments in various R&D projects. This ensures that we fund those that are strategically important and offer good returns on investment. We have a clear understanding of where to invest, allowing us to manage the balance effectively.

Thank you. Our next question comes from Daniel Markowitz with Evercore ISI. Please go ahead.

Hey. Thanks for taking the question. The first one I had is based on the guidance, it seems like 4Q margins are expected in the 32%-ish type range, and that's before tariff mitigation flows through. Is it fair to assume that fiscal '26 margins at that 4Q exit rate of about 32% makes sense? Or should we be more prudent, given the macro could imply that '26 organic needs to come down a few percent?

Yes, we're not going to comment on guidance for fiscal year '26 at this point in time, again, given all the uncertainties we're still dealing with. And so similar to the top line, hopefully those uncertainties become more certain or less uncertain, three months from now, and we can provide some more direction than all I can share with you today is that I think this quarter demonstrated that we are positioning the company extremely well for whatever fiscal year 2026 brings from an end-market perspective.

Great. And then just one follow-up. On A&G specifically, just using peer comments, it implies that the US academic and government end market could see like 10% to 15% incremental headwinds in calendar 2025. Is there any reason to believe this wouldn't be an appropriate way to think about it? Is your exposure a little bit different? And then just what are the kind of cost offsets and a reasonable decremental margin profile on these US academic and government revenues?

Yes, I can't comment specifically on the 10% to 15% expectations, but our perspective is that the funding currently being utilized in academia largely comes from grants that have already been approved. Therefore, we are mostly considering the effects from 2026 and beyond in relation to decisions made about NIH budgets. Historically, we have seen situations like this in previous administrations where proposed severe cuts were countered by bipartisan Congressional increases in funding each year. Consequently, I believe the concern regarding the budget's impact may be exaggerated. However, it’s understandable that our Board members from academia are worried about the uncertainty, which creates distractions as they look for future funding sources for grants. Certainty regarding budget allocations will be vital to stabilizing the academic market. It's important to note that the significant increases in NIH funding over the last four to five years, following COVID, have mostly targeted areas like infectious disease and vaccine development, which are not our primary focus. We have heard from the administration a desire to shift focus away from these areas, and if cuts occur in those segments, it may have little to no effect on us and could potentially benefit us as funding could be redirected toward traditional chronic diseases such as cancer, diabetes, and neurology—areas where we excel. That is how we view the situation.

Yes. And Daniel, thanks for the question. Let me add to that, that fortunately, Europe academics were really, really strong, right? So it's interesting to see that dynamic, which we might continue to see. But in the meantime, think about our portfolio and how it also maps towards the academic market. Arguably, you would think that instrumentation is probably more impacted than our consumables. And we've seen that in our numbers. Our consumables are relatively flat in the US academic markets. 80% of our revenues come from consumables, 10% from services. And that's obviously a very favorable mix. If you then look at the other 10%, that's instrument-related. Now these instruments are actually on a relatively low price point around $50,000, which then also you would expect is a little bit different decision-making process, so lower CapEx. But then in the meantime, they are positioned to automate very clunky yet fundamental processes in your laboratories and basically take cost out and increase your efficiencies which might be something that you really would like during times of constraints. So the positioning of those is just really, really, really good. And then last but not least, we're just really happy that we also have fantastic commercial excellence, right? So we have consultative selling from our team that a team of experts that can help you pick the right reagents really quickly and make sure that your experiments are repeatable and give you the right results. And in the meantime, for convenience, we have a very, very much a valued partnership with Thermo Fisher Scientific where we utilize the Fisher channels for ease of ordering. And with that, the academic market, we feel that from all angles as well positioned as you could be.

Thank you. Our next question comes from Dan Arias with Stifel. Please go ahead.

Hi. Good morning guys. Thanks. Jim, I'm sorry, but I think I need to go back to the academic stuff here. You're calling out the headwinds there, which makes total sense, and then you're guiding organic down next quarter partially with that in mind. But I think your comment was that even under the most severe scenarios, funding would have an immaterial impact to getting to double-digit growth long term. So if the budget over the next couple of years is down 20%, 30%, 40%, which is in line with the proposal for 2026, is the idea that you can still get back to double-digits once the smoke clears on the other macro element? I think I just need a little help with how you're framing that over the 2026, 2027 period?

Yes, of course, Dan. Thank you for your question. Ultimately, when we consider our strategic plan, the academic sector is an essential component of our business as it supports biotech and pharma, among others. However, it has never been our primary growth driver. Our forecasts have not anticipated academic growth in double digits but rather projected it to be more in the mid-single-digit range, which has been its historical performance. Therefore, I factored in the most severe scenario, which would involve a 40% reduction in our academic revenue across the board. Following that, I expect a gradual return to historical growth rates of 3% to 5%. Even with this conservative approach, we still anticipate an overall double-digit growth rate over a five-year period. So yes, I have considered the worst-case situation and still expect that we can achieve a double-digit growth trajectory based on our strategic plan.

Yes, Dan, the cell and gene therapy product line, we talk about the trailing 12-months, right? And that was a little over 30% for the 12-month period. And as you know, we had quarters where it was 90%, 60%, 10% and the swings in between, and that's just because the customers further along in the clinical process. So in Phase III, they order less frequently and larger orders, and that makes it lumpy. So that's why we always look at our 12-month trailing and that it's north of $30 million.

Thank you. Our next question comes from the line of Thomas DeBourcy with Nephron Research. Please go ahead.

Hi, guys. Thanks for taking the question. My question is just on the Diagnosis and Genomics organic growth. I know you have more difficult comps in the second half of the year. But I would have expected, I guess, Asuragen overall to kind of be more, I guess, unaffected by changes. And so just curious whether there's I guess, just timing issues related to some of the diagnostic and genomic portfolio?

Thank you, Tom, for your question. In my prepared remarks, I mentioned that we have closely examined the situation to understand why the growth rate has been lower than usual. Specifically, the dip in the diagnostic reagents division and Asuragen is largely due to larger orders where timing plays a crucial role. We've analyzed it on a counter-by-counter basis and confirmed that we are not losing market share and that there is no indication of a market slowdown. Therefore, the decline in those two areas appears to be timing-related, which is not uncommon. Looking at the year-to-date numbers, both divisions are performing healthily with growth in the high single to low double digits. From an EPI perspective, our diagnostic test for prostate cancer has been showing strong growth, consistent with previous quarters, at around 30% for the year. Additionally, our Spatial Biology division is facing challenges due to issues with NIH funding. This division is significantly exposed to the NIH market and has not achieved the growth levels we have seen recently. However, upon review, we have a strong offering, our instrumentation is competitive, and we are winning deals in our competitive landscape. The struggle in that division is purely driven by end-market dynamics. This overview provides insights into the performance of our four divisions.

Thank you. Our next question comes from Patrick Donnelly with Citi. Please go ahead.

Hi, guys. Thanks for taking the questions. Maybe one on the biopharma piece, I think you talked about mid-single-digit growth this quarter. Can you break that down a little bit? I just wanted to talk about the biotech piece in particular. I know you talked a little bit about GMPs, but can talk about what you're seeing from the biotech customer base certainly been a concern across the industry just given the volatility of the funding backdrop. So curious what you're hearing from the customers there and expectations on that front?

Yeah. Thank you, Patrick. We certainly know that large pharma continues to be ahead of biotech in the recovery, right? Biotech is 30% of our revenues and large pharma is 30%, and biotech was flattish in Q3. And we believe that biotech funding is, obviously, very sensitive to capital markets and those are very sensitive to economic uncertainty. And that typically leads to more frugal spending, and that's what we saw this quarter and that we expect next quarter.

Yes, Patrick, this is Jim. Thanks for the question. So, yes, Wilson Wolf continues to perform very, very well. They had growth very solidly into the double-digit growth rates this most recent quarter. So, they were projecting to have a very, very strong year in what will be calendar year 2025 for them going into calendar year 2026 and so far, they're right on track for that.

Thank you. The next question comes from Sung Ji Nam with Scotiabank. Please go ahead.

Hi, thanks for taking the questions. I wanted to ask about the pharmaceutical and biopharmaceutical sectors and the tariffs currently being discussed. I’m curious about your thoughts on how significant capital expenditures in the U.S., aimed at expanding domestic manufacturing and reshoring, might impact early-stage or discovery development work. How is Bio-Techne positioned in this environment, and what are your views on how the tariffs might affect the situation? Thank you.

I'll start off. This is Jim. Thanks for the question. Part of the ongoing discussions from the administration regarding tariffs for pharmaceuticals contributes to our guidance for Q4. There is currently a level of uncertainty concerning our pharma customer base. We've observed how uncertainty affects other segments of our markets, so we anticipate something similar for pharma, at least for a while. It’s hard to predict how things will ultimately unfold since we don’t yet know what the tariff proposals will be for the pharma sector. Last year, pharma companies invested significantly in aligning their pipelines with the IRA Act, which is a substantial undertaking. Most of our customers indicate that this process is now behind them. While we expect adjustments in capital expenditures, pharma companies are generally in a strong financial position. Even if they need to increase capital spending to rearrange manufacturing lines, it doesn't necessarily mean they will cut back on R&D spending. It's a relevant question, and we will have to wait and see how it all plays out.

Let me add to that. Overall, I mean, the early-stage Bio-Techne with the core reagents was very much research-oriented. But over the years, we have definitely diversified our portfolio, make sure that we can continue to join a customer in their downstream processes into clinicals and into eventually treatment. So, we have now our products way more distributed along the different stages. And you can see that in some of our presentations, where we definitely play in discovery all the way through manufacturing and of course also have a portion of our company aligned with the diagnostics and treatment of the diseases. So, our portfolio is much more distributed than it has been a long time ago. So, that means that even though there might be some shift in where the pharma spending is, we feel that we're nicely distributed and therefore, will benefit from the overall spend level.

Got it. That's helpful. And then just quickly on the Spatial Biology side, thanks for the color there and the exposure to the academic market, I was wondering about the academic market outside the U.S., whether Spatial could be growing faster? And then also the recent launch of spatial protein proximity detection capability. I was curious if that could be also utilized within pharma? And kind of if you could talk about the competitive dynamics there for that particular application. Just not familiar with it. Thank you.

Thank you for bringing that up. I believe we are seeing strong double-digit growth in instrumentation. Our win/loss rates are very satisfactory, indicating we are not losing market share. In fact, we are performing well with our placements and have a competitive product offering. Our fully automated instrument can operate across multiomics, integrating our antibodies and RNA scope for RNA detection. On the consumables front, we now have the ability to display proteins alongside RNA and also analyze protein proximity, which helps us understand protein interactions crucial for disease development and treatment. We are developing a multiomics approach that combines RNA, proteins, and protein interactions, setting us apart from competitors who focus solely on RNA and proteins. This unique offering holds significant value for our customers, and we are pleased with our competitive standing in this area.

Thank you. That was the last question for the day. I would now like to hand the conference over to Kim Kelderman for closing remarks.

Yeah. Thank you very much for your insightful questions. And before we conclude the call, I'd like to formally welcome Dr. Amy Herr to the Board of Directors of Bio-Techne. Dr. Herr is currently a Chancellor's Professor of Bioengineering at the University of California, Berkeley, and she also serves as the Vice President of the Zuckerberg Biohub Network. Dr. Herr's appointment completes a two-year process to identify and appoint successors to retiring director Randy Steer, who retired in 2024 and Dr. Roeland Nusse, who will be retiring later in 2025. Dr. Herr's deep biological and engineering experience is an ideal fit for our Board of Directors and the strategic direction of the company. Welcome, Dr. Herr. And to conclude the call, I want to say that I'm extremely proud of the team's continued execution in what has proven to be a prolonged period of uncertainty in our end markets. Our differentiated financial performance is a testament to the value our customers place on our uniquely positioned portfolio of research reagents, proteomic analysis tools, cell therapy workflow solutions, and diagnostics and spatial biology products. This portfolio unlocks cutting-edge discoveries and significant efficiencies for our customers. It also provides a strong foundation for sustainable value creation within Bio-Techne, while we pursue our mission to improve the quality of life by catalyzing advances in science and medicine. Thank you very much for attending our call, and have a great day.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.