Alpha Teknova (TKNO) Stephens 26th Annual Investment Conference | NASH2024 summary

Business overview and market environment

• Supplies reagents for life sciences, with half of business in biopharma and the rest in life science tools, ag, food, and academia.

• Company transformed over four years to scale custom reagent manufacturing, focusing on small-batch, rapid production for personalized medicine.

• Over 40 clinical customers, with capacity for $200M+ revenue and no need for new facilities.

• Biopharma demand has stabilized compared to last year, with some customers resuming activity and others still cautious.

• Biotech funding is a key leading indicator, with revenue trends lagging funding by about four quarters.

Product portfolio and innovation

• Expanded from catalog and custom products to significant clinical manufacturing capabilities.

• Launched Express-Tek for expedited orders and RUO+ for flexible, GMP-like manufacturing at lower cost.

• RUO+ helps customers transition smoothly to GMP, with strong uptake and daily use.

• Proprietary AAV-Tek products developed for gene therapy, with future R&D and partnerships planned as market improves.

• Custom manufacturing is a core differentiator, with about half of lab essentials business being custom.

Financial performance and cost management

• Catalog business grew high single digits in Q3 after being down in Q1 and flat in Q2; overall lab essentials growth historically 12%-13%.

• Large pharma and some tools customers showed lower volumes, but impacts are limited to a few accounts.

• Cost reductions over two years resulted in $19M annualized OPEX savings, with lean operations and focus on automation.

• 70% of incremental revenue expected to drop through to gross margin and adjusted EBITDA.

• Clinical solutions have higher contribution margins (60%-80%) than lab essentials (40%-60%), with RUO+ in between.