Hello, everyone. Thank you for joining us for BioLife Solutions Analyst Day event. Thank you for the audience in person and for joining us on the webcast. I'd like to remind everyone that management will be making forward-looking statements today. We urge you to read this safe harbor statement. I'd like to introduce Mike Rice, CEO of BioLife Solut ions. Mike.
Thank you, Jody. Good afternoon, everyone. I wanna thank all of you who traveled today to be with us and also to all of our webcast participants. I should mention that a small army worked very hard to put this event together, so I'd like to thank these folks. First, our storage services team for hosting us and getting this wonderful facility ready for today. Next, our marketing and IT teams for the slides and all the technology needed to pull this off. Next, our investor relations firm, LHA, for their support and logistics. Lastly, the members of our leadership team and board of directors who are here today. Here's an overview of our agenda. I'll make some brief remarks. After me, Aby Mathew, our Chief Scientific Officer, is gonna talk about the cell and gene therapy industry, evolution, and our value add, and how we can help customers.
After Aby, Garrie Richardson is gonna talk about our storage services platform. I'm sure he'll be augmenting some of the comments he made during the facility tour, so look forward to that. After Garrie, we'll take a short break. After the break, Karen Foster, our Chief Quality Officer, will come up and speak about quality in general at BioLife, and more specifically, the application of our quality management system to the Stirling ULT platform. After Karen, Geraint Phillips will talk specifically about our freezer platform recovery initiatives at Stirling, and Geraint is our VP of Global Operations. After Geraint, Troy Wichterman, our CFO, will come up and end the day with a financial recap of 2022 and also our 2023 guidance and outlook. We'll have some Q&A time and a formal session there, but please keep this informal.
During the presentations, if you'd like to ask some questions, I'm sure we have enough time to take a question or two in each session. With that, I'll kick it off. I'd like to start with, just a little bit about my own personal 17-year journey here. When I joined the company in mid-2006, you know, the company had revenue that year of just a little over $600,000, less than 10 people on the team, and the share price was less than $1.50. You know, fast-forward to today, the share price high peaked so far this year about $26. We've got almost 500 very dedicated and committed team members here working at BioLife across the enterprise, and we anticipate revenue in a range of around $200 million this year.
It's been a phenomenal journey. It's been my extreme pleasure to help build and lead this team and have such a dedicated, capable leadership team with me in the trenches, and we've gotten a lot done, and we're just getting started, relatively speaking, even after almost 20 years. A little bit of the company history, and I won't read all of this, but this company had very austere beginnings back in the late 80s as part of another public medical device company. In 2002, there was a reorg of that organization. The medical device assets were sold off.
What was left were some smart people, including Aby right here, and some proprietary biopreservation media formulations that Aby and his colleagues invented specifically related to cryosurgery. The application of that IP to some outside body preservation applications, including living cells and tissues, and for a while, solid organs. BioLife was a penny stock listed on the bulletin board up until the Q1 of 2014, during which we uplisted, we converted some debt into equity, we raised a little bit of money, did a reverse split, and have been a for-real reporting company since then. This is our mission. We are a leading now comprehensive provider of bioproduction tools and services.
We're serving the cell and gene therapy and the broader biopharma market, and our mission is to help our customers to complete their basic and applied research, and specifically, to help them with the commercialization of new therapies by supplying them solutions that can reduce risk and maintain the health and function of biologic source material and the finished products, specifically during this workflow that includes manufacturing, storage, and distribution. That's what we're about. Some key tenets of our guiding values, it's all about people. We like to say here that if we take care of our people, our people will take care of our customers, and our customers will take care of us, and that's a beautiful circle, and we live and breathe that every day.
To work at BioLife, you have to be capable. Additionally, this is about people who are intellectually curious and dedicated. This team would walk through a wall if that was the right thing to do to help us achieve our goals. Couldn't be more proud of these almost 500 strong team members that we have across the company. We expect no rock stars.
We expect people to be honest and to work with integrity and authentic communication and to be a nice person, and we like to say you have to display grace under fire or grace under duress because we all know in the work life from time to time, things are not perfectly rosy, things go wrong, and it's really about how do we treat each other during some challenging times, and that is a condition of employment here at BioLife. We challenge everybody that works here to be really intellectually curious and to walk around thinking about how can we do things better, faster, smarter, with more collaboration. I think you're gonna hear throughout the day, that's real, and we practice that, and I can think of several examples that I might mention here as I go through my own deck.
The quality environment at BioLife is something that can always be improved, and we do really focus on thinking about, okay, who are we benefiting? Well, ultimately, this is about patients, because if we take care of our customers, these developers of these therapies, then the patients will benefit. I'll talk more about a very simple connection of dots and why that's important and what our value proposition means to our customers as related to that. This is the quality policy. I won't read it, but you can take a minute and just look at some of the words on here. This is very important. Karen will expand on this in a few minutes in her section of the talks. This is about getting things done right the first time and having a culture of communication and visibility.
Visibility is a big deal depending on who you are in the organization. Everybody gets visibility. Some folks get a seat at the table. Some folks get a voice in decisions. Some folks, particularly Karen, as it relates to quality, get a veto. We will never, ever ship something that's not released or ready for use by a customer. This is the leadership team. You've gotten a chance to talk to several of these folks today. I won't go through this, but I would encourage you throughout the rest of the afternoon and even during the break, if there's someone in particular you'd like to get to know a little more, please do find them and have a chat. The rest of the folks here.
Okay, this is a slide that I'm particularly proud of just in terms of recognition of the culture and what kind of company BioLife is like to work for. You know, we've been a many time winner in making this list of the one of the best companies to work for in Washington state. What I wanna draw your attention to is in the 2022 list, for the first time, Seattle Business magazine let the applying companies open up the survey to everybody in the organization, not just Washington state employees. In 2013, 2015, and 2020, when we made this esteemed list, we had, you know, a team member count perhaps ranging from 40 to 80 or something like that in that range. To make the list last year, we had 80% of nearly 500 people respond.
This list and the winners are picked solely on the basis of team member feedback in response to survey questions. It really does, to me at least, give me some comfort and some pride that our ability to inculcate the culture of BioLife throughout the six acquisitions that we made is working to some degree. I wanna shift now and talk a little bit about the CGT space and our role in it and why we're so bullish about the space in general, and particularly how we can participate in the growth. This data comes from the Alliance for Regenerative Medicine . It's the most recent report they've put out, and I'm sure they're due to put out something in an update fairly soon. You can see this number of clinical trials.
I wanna draw your attention to the industry sponsor, which are on the left-hand graph, the orange sections of the bar graphs. These are the trials that we really care about because when we use this metric, you've heard us say many times that the annual revenue range for us of a therapeutic candidate where our media is incorporated or our Sexton solutions ranges from $500,000-$2 million annually. It's the industry-sponsored trials that we're speaking of when we say that. Not that we don't care about the academic and clinical center trials, but they're never going to turn out to be, you know, a commercial scale opportunity either for the developer or for us. Just keep that in mind. It's industry sponsored.
I'd also like to remind you about FDA's position on how bullish they are with CGT growth and what they're doing to keep up with demand for applications. Again, you've seen this from back when Dr. Gottlieb first put this out, and it's been reiterated more recently that the FDA expects between 10 and 20 new approvals per year by 2025. Keep that in mind when I get to the tally of the number of indications that we're in. For context, the FDA has approved a total of 27 CGT products since 2017. Lastly, to fill the gap and meet the demand, the FDA is hiring 132 new staff members this year and almost 100 over the next 3 years. They get it.
They understand their mandate and what they need to do to be able to support the number of approvals that they see coming. That's encouraging. Very encouraging for us. This is the what I call the so what slide. Why are we here? This is why. You know, the use of this living biologic material is very complicated. Any time you take biologic material outside the body, it starts to degrade. It's a race against time, literally, and we have to do the best we can to help our customers preserve it so it can be used in a clinical application and to not degrade dose potency. A lot can go wrong along the process, and I'll tell you why that's important. The current reimbursement environment is a pay on cure paradigm.
If the patient doesn't respond and sustain a durable response over time, then our customers won't get paid, which is horrible economically, but think about the patient. If the dose is dead, and let's remember, the dose is not allocated or assayed before administration, it's a flying blind validate and assume paradigm, this is a big deal. Dose potency is really important. If the dose is reduced, the patient won't respond, there's no economic reward for our patients. That's where we come in. A little bit about the products and services, and Abe will spend more time on each of these in a minute, but this is the integrated portfolio of cell processing, storage services, and the freezing thawing technologies. These integrate into the customer workflow this way. It's a bit of a busy chart on purpose.
It's meant to convey the number of sockets, so to speak, that we plug into in our customer's workflow. It's really, really important. We have a tremendous cross-sell opportunity here, and we've seen some really cool wins in that regard to sell more solutions to the same customers and take more of their wallet spend. Cell processing highlights, you can see the growth of the business. We gained over 100 new customers last year, 27 new US FDA master file cross-references. We're in up to 10 additional therapies that could get approved this year and next year. Our largest media distributor sold products to over 3,000 unique customers. More than 500 were first-time buyers. It's a fantastic partnership in the form of our friends up north in Vancouver, Canada.
On the Evo side, we're in four CAR T approved therapies, 43 new users gained last year, 13,000 shipments since we launched the platform. Over half of those occurred last year, and the Evo platform is in more than 100 clinical trials. Great traction there. The recurring versus equipment split in revenue last year, about 60/40 to the good of recurring high-margin disposable products and services. You know, our aspirational goal is to drive that to more than 70% by 2025. On the U.S. side, the clinical application's up from 450 to more than 600 now. This is the gift that keeps on giving. A lot of this business comes to us inbound through Aby's tireless work and the work of several others in the team on the cell processing side. This is a really cool slide.
For the first time, we're now telling you not only in the biopreservation media side, but on the Sexton products, how many trials they're in. To us, this is really impressive. This shows that we can repeat the preservation media playbook with the Sexton solutions. Each of PL and the CellSeal vials are in 60-plus clinical trials, and most importantly, the lower left of this slide, the potential annual revenue from the Sexton solutions is just the same range we're estimating for the biopreservation media at $500,000-$2 million. Lots of shots on goal here. This is a really quick geographic overview of the footprint where our facilities are. By platform, the split of direct versus distributor revenue.
You've heard us talk on earnings calls and in one-on-one investor analyst calls, a little more detail here, but again, we would expect these ratios to more or less stay the same for the next few years. I'll get to the meat here on the growth catalyst. Obviously, it's about leveraging this marquee customer base of cell and gene therapy companies. You've heard us talk about the number of shots on goals. Our belief, very bullish outlook, that CGT will be a dominant treatment modality for these large disease states. You can see that we've got these products embedded in 12 so far, with another 10 by the end of next year. Fingers crossed, these customers make it over the goal line.
The other catalyst related to increasing the number of doses in addition to de novo new applications getting approved, it's the existing commercial products being approved in new geographies for new indications, getting moved up in the treatment regimen, and also what we believe is to be an eventual transition to allogeneic therapies, which is going to significantly increase the number of doses manufactured. The last growth catalyst, the new stuff through the innovation here, not through acquisitive growth, but our own homegrown innovation here across our enterprise. Five new products and two new services to be launched by the end of 2024, including a particularly very exciting high volume, high margin cell processing consumable. You heard me talk about a little bit on the tour. Some new models of freezers, cloud monitoring, and our global field or technical services revenue stream.
The allogeneic opportunity, we're involved in many, many of the allogeneic players today. Again, the takeaway here is the number of doses to be manufactured, the number of patients to be treated will far exceed anything that we're seeing today from all the combined autologous therapies today that are approved. This is gonna be a real shift here and will require large volume freezers, such as our High- Capacity Rate Freezer, we can store thousands of doses in. I would imagine also some changes in cold chain management on packaging and even some administrative tools as well. Our focus and strategy, it's obviously to protect and to grow the core media franchise and the cell processing franchise. Optimize our own supply chain. Dwight will talk about that a little bit later.
The relentless focus on quality, you'll hear from Karen about that. To leverage our reputation and relationships, customers love to buy from us. We take really good care of them. They trust us. They want to buy more from us, and we take that really, really seriously. To increase our value add, so we can take more of their spend for tools and services used in their manufacturing, storage, distribution workflows. The thesis about making an investment consideration of BioLife. This is not a binary decision or a proxy for the broader cell and gene therapy space. Picks and shovels, that's the way to think about us. We've got a great portfolio of class-defining solutions. We've got this wonderful marquee base of cell processing customers. They're not all gonna make it, we get that, but some number will.
Just remember, we're in the early innings here in terms of our own revenue growth, our ability to increase margins. Cell therapies over the next 5 years will not look like they look today. The number of patients being treated will be astronomical. We're in just such a fantastic position to leverage that and participate in the growth. You know of our guidance for this year. Troy will cover that in a minute. Again, just to drive home the point about our relentless focus to drive in a revenue mix shift to high margin recurring revenue. With that, I think I'm more or less right on time. I'll turn the podium now over to Aby Mathew, our Executive Vice President and Chief Scientific Officer. Aby?
Thank you, Mike. For the folks that don't know me already, I was part of the founding team for BioLife Solutions. I co-developed our technology as part of this blessed adventure that is BioLife Solutions. I was part of our initial manufacturing team, set up our initial quality system, have helped a lot of our sales folks over the years in terms of those conversations. I've had the opportunity to wear a lot of different hats within our functions, and it's been, of course, as I say, a blessing and adventure, you know, for all of us for many of these years. To understand cell and gene therapy as an industry and BioLife's place in it might help also to kind of think about what was it before there was an industry for cell and gene therapy.
Cells have been used for cell therapy going back long before we were talking about this thing as far as an industry being cell and gene therapy. Red blood cells were used, you know, for transfusion, you know, going back, you know, to the, to the world wars, and that was even not necessarily considered cell therapy, but red blood cells are a form of cells, and that was one aspect. A lot of times folks forget, although maybe in, you know, the current environment we're starting to remember, that during the Cold War days, people were thinking about, well, what happens if there's a nuclear bomb, if there's radiation poisoning, things like that? How do you take care of folks that might have been exposed?
Actually, cells as therapy was part of the considerations going back to those years, even into the '50s. Back in the 1950s, you had some folks, who thought about, well, could you use cells from bone marrow to be able to replenish an immune system that's been impacted by nuclear radiation? Georges Mathé in France was one of the first folks to actually look at that, and there was an incident in Yugoslavia where folks had been exposed to nuclear reactor radiation poisoning, and relatives of those were able to donate bone marrow and be able to actually help treat those patients.
That was really one of those first things that were like, okay, cells rather than maybe just what might be considered traditional pharmaceutical drugs, might have a way of healing, or even if you think about thousands and thousands of years before that, various herbs or, you know, chemicals and nutraceuticals. Again, going back to the 1950s but now morphing into the 1960s, you had folks who were thinking about, well, can you take this bone marrow and not necessarily having to deal with coming from relatives, but can you take it from one person and give it to another person during when their immune system has been ablated, such as during a cancer treatment, when they've gone through chemo, and then you're hoping and praying that their immune system builds back up without catching an infection?
One of the leaders of this was Don Thomas, Donald Thomas. He actually had started some of his work in Cooperstown, New York, but is very much known for his time at Fred Hutchinson Cancer Center in Seattle, Washington. He was really one of the pioneers to be able to take bone marrow and not necessarily go through a big expansion step or what we might call engineering, but actually just take it from one person, isolate it, and then be able to transplant it, as they would say, or transfuse into another person who has been treated for cancer and be able to rebuild their immune system.
In that type of situation, what was traditionally done was they would take what we call these hematopoietic blood-forming, is what that would mean, progenitor stem cells, and they would put that into the patient. The timeframe around this eventually where it became more mainstream was around the 1980s. When they would do this, they would either do it in real time where the cells are non-frozen, or they might call it fresh, but let's say non-frozen, and then a handful of groups might have cryopreserved them using their local clinical center homebrew cocktails. If you look at this, everything I'm talking about is at that clinical center. There isn't a component right there that's really talking about this as a, as an industry per se or as a tools, you know, type of discussion.
Another example of this is Steven Rosenberg, who is at the NIH, and Dr. Rosenberg pioneered something called adoptive cell therapy. Again, in the 1980s, what he was doing, and ironically at the time, very few people were listening, but he was, you know, a pioneer being able to take immune cells that had naturally migrated into the tumor of if you know, God forbid, had gotten cancer and had a solid tumor, and those few tumor cells being able to take them out and now, you know, collect them and put them back into the patient and use them as a form of therapy.
Another aspect or vein of his research was to collect some of the cells from the immune system and be able to genetically transform them, expand them in culture, and then return them to the patient and use that again as a form of medicine and treatment for this cancer treatment. The point that I'm trying to make is that there was no industry around this. This was practice of medicine at the clinical center, basically between the innovator's lab and the patient who was, you know, on another floor. The clinical center would generally have their final product, cell product, non-frozen, or they would use their local clinical center homebrew that they would make in real time on hand and use to cryopreserve. Now let's take this into another level. This is purposefully complex.
You know, there's no test at the end to remember each of the components of these graphs. What it's meant to show is that as we start taking these methods of cell therapy and cell and gene therapy and start making them more into what we might be familiar with these days, there are a lot more steps. It's a lot more complex. On one hand, folks fear complexity. On the other hand, complexity equals challenges. Challenges equal opportunities, especially for innovations and tools.
If we're looking for opportunities for any of us as a business or tools, providers, suppliers, things like that, or innovators, that is where there is a lot more to think about, to drive and everything, as opposed to what might be considered the traditional cell therapies, which of course have value and everything, but that's one thing we hear a lot is, "Well, it seems like there's a lot of complexity to a lot of these cell and gene therapies." Yes, there are. You know what? That means that there's a lot of opportunities for those of us to work in that field. We get to this aspect of the industry and how you industrializing this process of cells as a therapy. If we take that example of Dr.
Rosenberg at NIH again, and you take two of the aspects that he was developing in his research, one being those tumor-infiltrating lymphocytes, and the other being the genetically modified T cells, each of them ended up being licensed off to a commercial company. The tumor-infiltrating lymphocytes were licensed off to Lion Biotechnologies, which became Iovance Biotherapeutics. Iovance is in the pool now for the groups that one is looking forward to their BLAs being reviewed and hopefully approved. Then the other genetically modified T cells or CAR T cells were what were licensed by Kite Pharma, eventually acquired by Gilead.
Kite Pharma, of course, is well known for Yescarta that became the second approved CAR T therapy in 2017 and was then, you know, commercialized and is really a model for success in all of that. Let's, of course, not forget, you know, going back to 2012, the commercial relationship between Novartis and University of Pennsylvania for their CAR Ts that eventually became the Kymriah product. Now you have an aspect where the pharma or the industry folks are now being incentivized to get involved and be able to commercialize and move it along. Where there are the commercial opportunities, the reality is that also brings more opportunities for the picks and shovels that come into that play. Mike showed this slide and, you know, the talk around this is the biopreservation challenges.
These cells that are needed, they're living drugs. They're living, you know, products. They need to be kept alive if you want them to do their job. They're not just something that are just a vehicle or that they're dumping something. They have to actually function, which is a very key part. That's where the biopreservation part is something not to be taken for granted and is a very critical aspect and part of why BioLife Solutions has also become a very critical part of our partners in the clinical side. Biopreservation stability as much of a challenge is a choice, and there are folks who choose not to necessarily use all the options that are out there. These are all case studies.
Now that we've had several years of history, it's good for us to weigh all the positives and all the challenges and learn from the history. Otherwise, you know, as they would say, you're doomed to repeat it. In this type of aspect, one of the early cell therapies that were approved that we were all glad that it broke the ceiling back in the late 2000s was PROVENGE from Dendreon. It was well known as being a non-frozen product with an 18-hour shelf life, and they had to put in a very complex logistics system to make that work. The aspect of it having a short shelf life was specifically called out in its regulatory reviews, which is, you know, given the short shelf life of the product.
That comes from the EMA public documents that were part of the review for that product. This final, you know, in the text box and everything was something that I found on the internet, and I probably couldn't put it in better words. I don't usually read right off of it, but I think this is really important. "The 18-hour shelf life of PROVENGE meant that multiple GMP manufacturing plants needed to be built to address the geographical constraints of such a short time window before expiry of the therapy. Recovery of the extraordinarily high capital cost of building this manufacturing capacity impacted the price of the therapy. In turn, this affected reimbursement rates and prescriptions and ultimately the success of the business." This is not a model that generally the current cell and gene therapy industry folks follow.
It is a case study and a lesson to be learned. Mike also showed this, and I'm gonna provide it in a slightly different light. The economic reimbursement environment is not the same as it used to be, and as we talk about this pay for response or pay for cure, there's a little bit more that's dependent on is it actually gonna work? Is it actually gonna function? How long does it last? It might still cost you the same amount to make it and deliver it to the patient, but if it doesn't do the job, you may get no reimbursement or you may only get partial reimbursement. That's a very complex economic model for these, you know, cell and gene therapy folks to try to consider. It's critical for them to make sure that their product is gonna functionally work.
If you go from left to right on this graphic, what one hopefully will appreciate is these are not individual stresses. These are cumulative stresses, and so you can have them build on each other and eventually have a cumulative negative impact onto the final product. Not only from the manufacturer's perspective could this impact their product quality, their drug quality, as well as their reimbursement, but importantly also what is the potential impact to the patient and whether the therapy actually works or not, and ultimately, you know, that is a primary focus obviously to what we're all doing as stakeholders in this field. This is another complex graphic, and it's not meant to dig into the individual parts.
It's to basically just show that in a customer cell and gene therapy manufacturing process. From the source material all the way to the finished product, there are a lot of steps. It is not simple processing. There is transport, there's expansion, sometimes there's transfection, there's activation sometimes, cryopreservation sometimes, or any type of biopreservation. All of these different things are points, and they're points of risk in the process that could have a negative impact. Points of risk are many opportunities for optimization, and that's the story that I often talk about, not selling a product, but optimizing the process and how do you work together with our therapeutic partners to optimize the process. Now if we look at it more specifically to what might be the BioLife interest, which are biopreservation.
Biopreservation and bioproduction best practices, as we preach, are integral to the cell and gene therapy process, which is really the product also, as one would say. If you look across the top of this, the source collection, the shipping, manufacturing, all of those as you look down vertically, you'll see these opportunities for best practices, specifically to biopreservation and bioproduction. As I say, and I know I'm repeating myself, but part of it is also to re-emphasize specific points. There are many points of risk, but those many opportunities for best practices and optimizations, which also means many opportunities for BioLife Solutions. Again, taking another vein of this from the slide that I just showed.
not necessarily always, you know, picking on whether they use best practices or not best practices, but more in the fact that when the process might not be optimized and that there are obviously risks, there are still examples in case studies where the cell and gene therapy product did not necessarily turn out in the model that, you know, the manufacturer had originally planned, whether from a business model or a therapeutic model. There are examples known, with, you know, the obviously, you know, first to market, Novartis' Kymriah, that it did not meet manufacturing specs for a certain double-digit % of their products. Those are autologous products. Those patients are waiting for them.
Fortunately, because they were patient-specific, they were still able to be delivered to the patients, and they did have impact, positive impact to the patients. However, from the business side, the manufacturer, Novartis, was not able to get reimbursed. Yes, good for the patient, but not necessarily the best business model for Novartis. Of course, that was a point of improvement that I'm sure that they have focused on since then. You look at other aspects, even as far as gaps in knowledge about platelet lysate being able to be used in the culturing and expansion of cells. What about the different containers that are being used, bags versus vials?
These are all points that are points of risk, but points that folks are looking into, and of course, that BioLife Solutions has at least some expertise to be able to offer. We are well known for our biopreservation media platform. That was the foundation of what we had built many years ago, the foundation of what had grown into, making us as a successful organization and really facilitated being able to have this M&A process and opportunity to bring on other partners on board with us for additional platforms. That, of course, is most well known by our proprietary HypoThermosol and CryoStor.
We've also actually been able to facilitate relationships with our customers meaning a lot of these clinical centers and therapeutic customers, around generic formulations that they will still come to us because of the relationship that they value and for some of these that we've made available in the marketplace when others historically who had been the providers were not able to continue to supply. We have been a valued, and I would go to extend and say, cherished and valued supplier to a lot of these clinical folks. There's a lot of words on this, but part of why I wanted to bring this up is I've had the same conversation with a number of you.
What a common question, when the investors or the analysts will meet with us is what makes BioLife different? What makes a BioLife, you know, brand different that you just can't go to someone else, especially a bigger media company or anything like that? I try to break it down into three main buckets. The first bucket is the scientific technology. The solutions, the biopreservation media solutions are what we call intracellular-like. They are not isotonic solutions like saline or culture media. Saline and culture media are balanced for normothermic 37 degrees, 98.6, about Fahrenheit temperatures. They're not designed specifically for low temperature conditions or low temperature biopreservation. Scientifically, we are very different, and that's part of our intellectual property.
The second aspect, which are different layers of appreciation sometimes or even different layers that can be viewed from the outside or monetized as a metric for those of you who have to analyze us, I appreciate as a challenge, is our second one is our quality regulatory footprint. We raised the bar for biopreservation media used in regenerative medicine. That was ground break-breaking, we facilitated the integration process into customer clinical manufacturing. By raising the bar, we separated from others. We also make it very difficult and challenging for anyone else following to try to meet the same level of excellence that we have established. The third is the scientific technical expertise.
We have experience not just in the basic science aspect of cryobiology or cryopreservation or biopreservation or the engineering concepts, but the key part is the practical application of that that is utilized by these regenerative medicine cell and gene therapy companies. It's one thing if something works in a lab or an academic lab or it's small scale. It's completely different to be able to facilitate that into their GMP manufacturing process and to scale it up. That is a gap that a lot of other folks do not necessarily have the experience being able to translate. We provide the expertise on the technology and the methods modifications. These can tend to be at the forefront of the evolving Regen Med manufacturing space, or based on unique customer needs.
What that means is we are having those conversations, and those conversations predate when someone might publish it, when it might become, hey, someone form a committee at an industry society group and talk about this. We hear about it early, we start working on it early, and that's why you end up getting something like a High- Capacity Rate Freezer before anybody's even thinking about needing a High- Capacity Rate Freezer. Packaging something like a biopreservation media in a closed system with a sterile weldable bag when everybody else is still using a screw top bottle and working under, you know, a biosafety cabinet. That's the type of thing that may not be sexy, but it is one of those things that ends up translating from the early, you know, thinking process to the actual adoption process.
The biopreservation expertise related to what I call the biopreservation best practices, it allows for the early customer market feedback. The recognized expertise relationship, it's a feedback loop. It feeds back into the customer-supplier purchasing and revenue generation output. These are all difficult. You know, you sometimes try to wear your hat sometimes as analysts and investors, it's difficult to see from the outside, but practically these are things that are happening on a routine basis that keeps us basically at a forefront. Part of what we have done and we continue to do is we are facilitating paradigm shifts. That is not always a friendly concept for simple sales or for something that might be for, hey, quarter to quarter, how fast can we get this to, you know, get to market or get to sales increases?
Paradigm shifts are changing philosophies, but they're sticky and you're impacting the industry. This is what we did when we basically moved a lot of these groups from doing their manual home brews to actually using, you know, pre-formulated GMP manufactured designed biopreservation media that can go directly into their clinical manufacturing process, and yes, actually be successfully incorporated into commercially approved cell and gene therapy products. This also then translates back to some of the clinical centers who have experience with this now with some of this clinical trials and the cell gene therapy commercial groups. The clinical centers historically are the slowest ones to change some of their conservative methods and homebrew methods and things like that.
What we see now is now this trickling back to the clinical centers and a growing number of them transitioning to using the BioLife Solutions biopreservation media. Other aspects of this paradigm shift are where a clinical center, bone marrow stem cell transplants, the packaging of those in cell and gene therapy historically just going into bags, now looking into other packaging, rigid packaging containers such as vials and specifically here, the CellSeal vials, which is used in BMS's Breyanzi. You can see where this can translate give options. As I mentioned to a few other folks, if you think about traditional biopharma and pharmaceutical logistics, supply chain storage, most of them are far more familiar with vials than they are with bags.
Being able to facilitate this type of options towards packaging now then gives something that also might transition a little bit more easily for some of these folks that might want to then transition it to the pharmaceutical or biopharmaceutical companies. Another paradigm shift that is enabled is this aspect of traditional thawing. Anyone who's spent time in the lab with a cryopreserved vial or bag, generally what has been used historically is you take that cryopreserved vial or bag, you take it over to your 37 degree water bath, you hold it in there, you move it around, you hope to pull it out at the right time without overwarming it or underwarming it.
You hope that you don't contaminate it, you hope that obviously it's not cracked or anything, and then you go and have to bring it and, you know, get the contents out. Wouldn't it be a lot simpler if you had something that was automated and a machine that you could put the vial in or put the bag in and press a button and you don't have to have the water, potentially dirty water. You don't have to try to guess, "Did I do hold it for 30 seconds today, or did I hold it for 37.7 seconds today?" And you can actually have it very consistent. That is an aspect of a best practice, and a paradigm shift in practice. Another one is something that's early to market, but obviously something we've mentioned a few times that we have already thought ahead of.
When one is doing cryopreservation, and if they use a machine like a controlled rate freezer. A lot of times, once you get past the point of how many vials or bags can be held in that one controlled rate freezer, all they end up doing is they saying, "Well, we got to wait for this to finish and then start another run, or we have to buy more of those smaller size controlled rate freezers and then basically piggyback to do larger production volumes." It's what's known as daisy chaining in the lexicon. It's not practical or optimal, and one would argue whether it fits cleanly into full GMP or whether does that count as one batch, does that count as multiple batches from each of those freezers?
You know, looking ahead and obviously in early conversations with some of our partners, in industry, what if you could have a High-Capacity Rate Freezer that could hold much more and be able to do one freezing run and, you know, at a time? That's really the genesis of this High-Capacity Rate Freezer that we have talked about. Another paradigm shift, and you might notice a trend that each of these is touching on different aspects of the platforms that we have acquired, and we acquired the platforms for a reason, because they all had specific value and how they could be transformational. We take a look at something as far as the off-site storage, the temperature-controlled storage.
Part of the paradigm shift that is still very early, that the industry needs to learn about, is this aspect of taking all eggs in one basket, product storage, and which is high... You know, you're increasing your own risk and you're stretching your internal customer resources, and how can you now take advantage of dedicated off-site temperature-controlled storage services? This is gonna be a message that we continue to reinforce. It's an insurance policy. It gives flexibility. It frees up your own re-internal resources if you are that bio biopharma or cell and gene therapy company.
The other aspect that's not thought about, you know, outside of sometimes my own head is this aspect where it's not just about storing the off-site storage, you know, as a service or whatever, but how about where this warehouse can become carved out space for a regional depot for some of the Breyanzi, for some of the Yescarta, so that it doesn't have to go 3,000 miles from where it might have to be, but maybe the entire Northeast or at least the Boston-based area can be serviced from a product depot that's right over here and facilitated to be able to get much shorter transport times, much more immediate, so that the patients aren't waiting longer, the physicians aren't waiting longer.
It's a whole another aspect of it. If you think about it, when we get back to the individual companies, they would be saving having to build out their own capital expenditures and using their own internal resources. These are all theoretically, I think, valid options for consideration if you were a cell and gene therapy industry, you know, manufacturer. Another paradigm shift which can be underappreciated, you heard a little bit about over here on the tour, was this whole aspect of the Stirling engine base technology being energy efficient. Gary told you some of the numbers, you know, very different numbers between the compressor-based freezer and the Stirling engine-based freezer. You multiply that per month, per year, what are the dollars?
If you're the person who has one of these freezers in your academic lab, maybe it doesn't matter. What if you have a freezer farm like we have over here, you know, in the warehouse? What if you are, you know, the equivalent of the Amazon Web Services, but you're a freezer farm, and instead of having servers, you have to have multiple dozens, hundreds of these freezers generating electricity and heat. That is certainly something from an operational level that could be considered a paradigm shift and certainly material. You get to this aspect of shipping containers, certainly, the technology that we have from our SAVSU acquisition for the Evo base of technology, both for minus 80 degrees as well as for liquid nitrogen temperatures.
Key part being aspect of it is that we have it as a smart shipper. You're able to have it as cloud-based technology that allows for tracking and monitoring. There are a lot of other attributes in terms of it, you know, normally if a dewar fall falls on its side, you lose the liquid nitrogen and the cold capacity much quicker, but our technology is able to hold on to that much faster. These are the types of things that still fall back into what I would call best practices and risk mitigation. If you pull that all together into the BioLife Solutions tools and services, you can see these are bucketed at several different layers. You have it under what we might consider the cell processing or the storage and cold chain or the freezing and thawing.
Then you can take it down specifically to the biopreservation media platforms, which are under the cell processing tools that have combined with the Sexton Technologies. Now, the Biostorage, the freezers, thawers, the cloud-based shippers, and you can see at the bottom, obviously, the groups that were part of the acquisitions that led the technologies to translate to BioLife Solutions. You've heard Mike mention this word force multiplier, if you've listened to our investment calls. I'm gonna take a little bit different spin on it. The graphics are not meant for, you know, trying to pull out the individual names. What I'm trying to represent here is that is an increasingly larger number of these that are growing. If you look back at the CDMO industry for cell and gene therapy going about 20 years, there were a very small handful of players.
They were trying to figure out if you could really even make money in it. All of a sudden, in the last few years, there's been an explosion. Everybody and their sister wants to be a CDMO these days. You see a lot of these groups that were therapeutic companies that started and jumped early into doing their own manufacturing facility. Now, all of a sudden, they're not actually progressing as fast as they wanted, or they didn't actually progress at all for clinical therapy, and they're stuck holding their manufacturing center. Now they're either selling that off to a CDMO, or they're changing their business focus and becoming CDMOs themselves because they gain the experience of manufacturing these cell and gene therapies. That's happened in the US, that's happened in Europe, it's happening in Asia.
Each of those groups that are CDMOs, once they learn something that is a best practice, something that works, they then turn around and say, "These 10 clients that come to us, can we learn from the previous experiences and just go and use the experience we've learned?" The one experience becomes multiplied by 10, and that's one aspect of force multiplier. Another aspect which is completely underappreciated, and I understand will never be able to be monetized or metricked into your analyst reports is customer personnel turnover. Every time a group has experience with us, and then they go and jump to another new group or an existing group or whatever, they do not forget the experience and the relationship that they had with BioLife Solutions.
All of those folks that were with the early cell and gene therapy companies like the Kite Pharma, who all graduated to the other next generation of early cell gene therapy companies, they end up going from being junior level to mid-management level, and sometimes we are the first call or within the first week of them going to their new employer that they call us and they say, "Hey, I'm starting at a new place. I wanna basically get this and this from BioLife Solutions translated into the process. I don't wanna take the year or two years that I might have, you know, before. We wanna do this now, you know, as soon as possible." Great. Every one of that is in its own way a force multiplier.
If we go back to these biopreservation, bioproduction best practices being integral to the cell and gene therapy process. Examples up here, again, include where there are opportunities for, or where there are, I should say, have been demonstrated instances of variability or the cryopreserved cells did not perform as well as what might have been expected, where people saw variability in their clinical trials, which then allowed them to basically fail the trial and not progress. In each of those, the common theme, whether it was what made the difference or not, but at least one common denominator is that they did not use BioLife Solutions. One aspect of this is it's a chain.
If you look from left to right over this process of the customer cell and gene therapy manufacturing process, it's a chain of individual processes, and a chain is only as strong as the weakest link. As I tell a lot of the groups that we, you know, work with, do your self-analysis, your risk assessment, what is your weakest link, and then you can assess, you know, whether you need to strengthen anything up. As that has happened, BioLife Solutions and its technologies have become integral to customer cell gene therapy processes. This blue man, you know, logo is an old one that we used to use, but since I'm, you know, basically the keeper of the history probably of the company, you know, I still pull one of these out once in a while.
It's basically meant to visualize that from head to toe, our customers are touching a lot of these different therapies. You know, any of us could end up being ones that need these therapies or have loved ones that need these therapies. It's actually, in my opinion, as someone who was part of that founding group at the point of where there was N of 0, you know, customers, to get to the point that from head to toe, customers are involved in all of these different therapies is without being able to put even any type of metric around it, obviously is a profound source of pride, and accomplishment that we appreciate and everything. This slide right here is just to mention something else as far as our networking within the industry.
This is part of why we have a lot of relationships. We are not a vendor. We are recognized as peers within the cell and gene therapy community. We sit at the table with a lot of the groups who are the end customers, the key opinion leaders. Some of us sit on board of directors for, you know, various societies. It's a very different aspect from a lot of other suppliers who are working through a traditional process where they might be viewed as just a vendor, and they're dealing with the purchasing person, and they're just trying to, you know, get the best deal or something like that. That is very different in the conversations that BioLife Solutions have.
We appreciate it, and it also is an output of a lot of the work that we put into, obviously, engender those relationships. With that being said, I think we have maybe eight minutes or so, seven minutes or so. No? Yes? Yeah, five minutes. At least for now, if anybody has a few questions that they wanna throw out specifically on this topic, please do before we move on to Garrie's presentation.
Jacob has got his hand over there, so.
Thanks, Aby. I don't think investors get to talk to you all the time. You mentioned something about BioLife being synonymous with biopreservation, and you talked about some of the conversations you have kind of around the industry and where it's going, but I think you also spend a lot of time talking to customers about their biopreservation efforts. Can you just talk about some of the conversations you have with customers and what products within the portfolio it relates to, and if it relates to anything broader than that?
Thanks for that question, Jacob. You know, there's an aspect of it and, you know, as Mike jokes and I say and whatever, you know, I'm not a seller. There's an aspect of this that when I have the conversations with a lot of our customers, right or wrong, I'm looking at it from a different perspective. I start with the conversation with them, asking them, "What's your process? What are your problems? What is it that you might be having issues with?" Not so much about our products per se.
You know, a great story, and I'll just throw it in, is, you know, the first time Mike heard me give a talk back in 2007, I came off the podium, and he said, "Jeez, Aby, it took you to the last slide to actually mention our product names." That was a very early back and forth, you know, that I was learning from Mike as far as, you know, selling products and. In that aspect, I was sitting there, and I still do, is I talk to them about their process and their challenges.
Then I'll listen to them, and they might say, "We're having issues, let's say, with our source material surviving, you know, between when we collect it and when it has to go to manufacturing." Here are the options in the, you know, from an industry perspective, best practices, and this is specifically what we at BioLife Solutions can do. They might turn around and ask, "Great. Thank you. Do you mind if I ask you know, 100 other questions?" Sure, go right ahead. Then it might be, you know, something around the, "Hey, we're not sure. We see all these different freezers. What are the pros and cons of some of the different freezers options?" Then it might lead to that type of option.
We routinely get questions such as, you know, what type of packaging, you know, whether it's bags or vials, you know. When we pull it back even to the biopreservation, I'll specifically say the cryopreservation. The cryopreservation, we talk about the freeze media as a product, but the cryopreservation process is multiple steps, you know. It's 7 to 10 steps, depending on what somebody does. Each of those individual steps has room for optimization. A lot of times I will go through it with them, and I'll say, "Here's something to test, here's something to test, here's something to test." There's no product that directly comes out of that from BioLife, but their overall process improves, the relationship obviously improves, and certainly CryoStor is a part of that optimization.
For each of those, that ends up being what I walk through with them, depending on what they're willing to share. You know, that is always sometimes a limitation of it as what they're willing to share and how we go about those conversations.
Aby, I've got one for you out of left field. This question might be on some of our participants' minds, that relates to when we say that our cell processing customer relationships are really sticky, what do we mean by that in terms of they're embedding the technologies into their processes?
Yeah. Thank you, Mike. you know, stickiness aspect is really how quickly or how much incentive would someone want to maybe change or, you know, from what they're doing to something else. In the same way for a lot of years, it took a lot of time and effort for them to maybe think about switching from a home brew to, you know, using something like CryoStor. The same way now, once they've put in all that work, and especially the key part is it optimizes their process, there's a diminishing level of incentive for them to change the process.
The other level of it is as they progress through their clinical commercial development and get commercial approval, if they have to then go and change their process and a different reagent or something that they might be using, especially if used as an excipient part of their final drug product, they have to go back to the regulatory body. They have to explain why they're doing it. They have to justify it. The regulatory body might even turn around to them and say, "You need to go back and do another clinical trial." There is an aspect of this where it is a, it's a hurdle. It's a significant hurdle and obstacle for someone to change once you have implemented. With that being said, that doesn't mean you cannot.
Where does that work to BioLife's benefit sometimes is the FDA, a few years ago, after the Kymriah issues, issued a guidance or at least recommendation that said, "If you are at a late stage or even commercial and you have something that needs improvement, we are still open to that aspect of what might improve the process, especially if it improves the overall process for the patients." What that meant to us and what I've told a lot of customers are, "Just because you're in late stage or even commercial and you might use a home brew, does not mean that you cannot change. We can help you because we have the expertise to help you do that to optimize." At the end, a lot of it still feeds back into what optimizes your process.
For any of us, once we figured out what optimizes, why would we wanna change? How much incentive would have to happen to change?
Yeah. Thanks, Aby. A couple other comments about that. One, you've heard us talk about that, cell processing solutions are cited in the regulatory filings of our customers. Another really, really sticky aspect. The last part is from an economic perspective, these therapies are very expensive, as you know, but our contribution or portion of the per dose COGS or bill of materials is de minimis. Not only are there the extreme switching risks or switching costs Aby described, but there's really no economic incentive for a customer to try to grind us for a discount or to switch back to home brew, particularly if they're gonna end up with less potent, less viable cells, which may impact therapeutic effectiveness, which again, may impact reimbursement.
Just to throw one more on top of that, there are a lot of tools out there where, because of the pressures that might be on the pricing and what it might mean to the cost of goods, there might be a very firm ceiling for, being able to bear, you know, price increase from the supplier.
Coupling on, you know, what Mike was saying, there's still a fair amount of flexibility, you know, based on where we are in the cost of goods for some of these cell gene therapy suppliers, that as costs increase, as we've been talking about, you know, inflation during the last few years, it is something that we have not necessarily had to have a hard ceiling on our prices, and that's why we have still been able to kind of keep moving forward in that aspect of not only revenue, but also improving the gross margins that we've been working towards.
Aby, I was wondering if you could talk a little bit about innovation. Two questions there. One is, what are the needs that you're trying to resolve from a customer perspective, but also how do you, over the long term, protect the core CryoStor and HypoThermosol products with IP?
Yeah. Thank you. I'll answer the second one first. You know, the core IP, and we have various patents, you know, some of them will expire at different times, you know, so to speak. That also goes right back into, you can't just read our patents and replicate all of the scientific expertise, all of the quality regulatory footprint, all of that. That is a lot of very big reasons, and that's, that is part of what keeps us head and shoulders above a lot of anyone else, you know, that might be theoretically coming along. You know, in terms of innovation, there are a lot of aspects. There are opportunities for innovation that we haven't even thought of right now, and that's one of the other aspects, is just keeping an eye out.
You know, you look at things like bioreactors, you look at things like software that might be needed, there's still room for a lot of innovation. We're continuously, you know, innovating even on the equipment that we have, you know, right now and a lot of these that we have gotten with the acquisitions. Those are, to a certain degree, almost to us, first generation, and we've already been moving towards the next generation. I think, you know, we're obviously being careful about what we say about what might be coming down the pipeline, you know, not to set unexpected expectations, but, you know, Mike has mentioned, you know, the large volume container, you know, that one aspect. We inherited more projects from each of these acquisitions than, you know, one could probably really get out in a short term.
The fun part about that is we can just keep working from that, even if we didn't pick up any more, and we can. We'll have plenty of work to do and be able to roll out other things for the next few years. We always keep an eye out. Certainly, if you ever hear of anything, please let us know. You know, we obviously certainly, you know, keep an eye out for a lot of the activities and things like that. At least for right now, I think we're relatively comfortable with our position of where we are in the space and, at least I can speak for myself that I am not losing any sleep of someone displacing us from where we are in our cell gene therapy industry anytime in the near future.
Our next speaker is gonna be Garrie Richardson, who you've heard from the tour and everything, of course, and Garrie will jump in and talk a little more.
Great. Hi, everybody. Interestingly enough, I think that's what we strive for, is a client coming to us and consulting with us on what is their problem and how do we solve that, right? That's very aligned with kind of the BioLife mantra, and I think stickiness is also something that we see in our clients. If we do a great job for them, it's very difficult for them to change track, and we work hard to not give them that reason. Interesting alignment there. We've met before, Garrie Richardson. I'm the General Manager of SciSafe Services. A brief few slides, and after that we'll take a short break. I've been in the biorepository business for 15 years now.
I founded SciSafe in 2010. Fortunately became part of the BioLife organization two and a half years ago. What do we do? We store our clients' most precious research and samples. That's what we do. We do them at all different temperatures. Anything from some of our sites do very hot and humid conditions, all the way down to ultra-cold. That trend changes. We look to change with those trends. Today, we do cool to very cold. That's really where we see our market. We talk about first generation, again, what Aby discussed of product. This is our next generation of product. This is our new service. This is evolving as the market evolves. As you can see, that's cold and very cold. This is really the story.
The first thing I would say that's a little different from the, you know, the evolution of the company is my PowerPoint presentation patient didn't used to look this nice. Certainly the marketing team has helped us in great amounts. 12 years, we've been doing this a long time. That's a big solid hammer for us. 12 years, 8 sites, well over 200,000 sq ft, 1,000 pieces of equipment. That large 1 behind you, the large walk-in refrigerator counts as 1. We have a variety of very big and walk-in and reach-in freezers. Significantly north now of 300 clients and over 50 million individual samples under management. When I have this discussion with my clients, this is one of the main slides that we share because experience, knowledge, these are essential when you come to secure storage of samples.
What do we store? Very briefly, we store reagents, very, very much in and out samples. Cell lines, pretty static. Preclinical and research samples, lumpy. They'll stay with us for a while, and then they'll get very active. Clinical trials, DNA, vaccines were an interesting part of our story for the last couple of years. Stability storage, which is hot and humid. Anything that you have, any medication, OTC or prescribed as an expiration date, stability storage is how they work that out. Hot and humid, temperate, they test the products in environmental chambers. CAR T second dose, we see a great deal of that today. Bulk materials, hence very large walk-in rooms. People are forward buying some of their supply chain. That's an evolution in the marketplace that we definitely see today.
Mike suggested I put something in this presentation about why we win. I think we discussed this earlier. For the greater audience, it all comes down to trust. You have to trust us to store your millions, sometimes billions of dollars' worth of samples with us. There's a lot that goes into what that trust is built off. It all winds back to that one word. Infrastructure. That's what you see today. Experience. The knowledge that we've been in the marketplace for a very, very long time. The team that we have built over the last 13 years, that core team remains with us today. We've picked up some amazing team members along the way. The experience sells.
When we tour these facilities with our clients, as we did today, we have a team of experienced people that can answer the questions that are so critical to our clients. Competency goes along with that experience, of course. The dedication to the client, the willingness to build the solution that they need. Again, what Ab said, which is, "Listen to the client, and the answer is yes." Can you do this? Yes, and we'll find a way. We'll find a pathway to build you the solution that you need. Compliance, that is our core IP. That is what the business is built from, and that is our quality system. That is the tool that I use every day to sell our services. Of course, pricing is important to most of our clients. How do we look at this? Just very, very briefly.
We surround your samples with many layers of protection, and that can be, again, the facility, eyes on our facility at all times, card scanning access, alarm systems, generators, transfers, which is so many things that go into physically protecting the samples. The compliance level that we need, the accreditations, it all goes into protecting that single sample. We've built that. The experience over the last 13 years that our team has had has allowed us to build excellent systems that lead the market. I always say this, you know, we have client audits twice a week, every single week, and it's free consultation to us. How can we tweak our business to get better and better and better? That's what we do. We're an organic, evolving organization. The case for outsourcing is pretty straightforward.
If I'm looking at a client that does this work in-house, the cheapest thing that they can do is buy the freezer. It's everything else. It's the equipment, the calibration, the monitoring, the monitoring personnel, the backup power. The list goes on and on and on. When you get to the bottom of that list, you go back to the top and do it all again. We manage all of that for our clients, and we all know that freezers, older fleets of freezers have their challenges, and those freezers only fail at midnight on a Saturday night. Take all of that worry away from them. We manage that. We have the systems to calmly manage every situation. Product gets better every day. The future outlook, what are we seeing in the market?
Of course, I'm part of the market consolidation, but there are bigger players in the market. Some of the things that we have shared today in the tour are stretching our services a little bit, and that is sample services, some of the more basic lab services that our clients really are looking for us to do. The last-mile cold chain. Stretching, again, around the core of biorepository services and sample management. As we grow, we have to remember what got us here. We weren't one of the giants for most of our history. Today, we're getting there, but we have to remember that we need to run between the legs of the giants and create the solution our clients are asking us for. Rigidity does not become part of our future.
Of course, the most important thing is continue, as AB says, the paradox and the paradigm of the family of products, is to continue to build that brand, build the family, share this facility with all of our affiliate organizations. That's happening on a weekly basis, and continue to do that. That's our family. Any questions? I know we've had multiple questions this morning. Are there any questions further that I can answer for you at this point? Great. Okay. I think we have time now for a short break. We'll be back in around 15 minutes.
It is my absolute pleasure to have the opportunity to speak about quality to this audience and what it means to the BioLife Solutions program. My name is Karen Foster. I am Senior Vice President, Chief Quality Officer at BioLife Solutions. Well, I've been a team member of the company for almost exactly 7 years now to the day. You can see from my bio just some things about me, that I completely value the scientific method. I love to learn, I love to do, this isn't my first rodeo. My journey with BioLife Solutions began, I think, in about 2008, 2009, early in the tenure of the life of BioLife Solutions.
I attended the same scientific conferences as Aby and Mike Rice and got to know them through those venues, quite frankly, because how visible they were. It was the booth that got the most attention. It was the booth that had the best tchotchkes. Thank you, marketing team. It was the booth that everyone wanted to talk to, and it was clear that they were a trusted partner to that industry. I found myself as a fellow member of the cell and therapy industry. That I needed to stop making my own cryopreservative.
I reached out to BioLife Solutions and found them very quickly to be the trusted partner that I needed, and we moved on, and I was very happy to be able to rely on my ability to obtain my supply of cryo preservative from that particular organization. I even conducted an audit there, customer audit at one time, and there's a very special vibe in that organization. When I had the opportunity in 2016 to become a team member, I knew it was a great opportunity, and I, and I haven't looked back since. I want to tell you a little bit about how we think about quality within BioLife Solutions. While I don't want to be the quality professional that quotes the historical gurus like Dr.
Juran, I do reserve the right to go all Ted Lasso on you. My philosophy of quality management is, I think about what Dr. Juran would call the big Q versus the little q. The big Q was more about the squishy stuff in an organization, how you ran your business, right? We rest in a very exciting industry. We provide a portfolio of products and services that are in very high demand. What becomes just as important is how we execute to our goals day to day, and how we deliver reliable, robust goods and services. That's what I call big Q. Little q to me is more about what's your specification? Have you tested your specification? Do you accept it or do you reject it? We think about quality as much more than that within our culture.
As we set out to think about with the rest of the quality leadership across our landscape and with our executive team, how do we plan for quality from a strategic perspective within our business. We coined four C words, or maybe five, and one of them is not compliance. We think about culture, we think about customer focus, we think about consistency and control, and we certainly think about continuous improvement. The initiatives that we're working on is to improve our corporate training program, to recognize frontline manager as our force multiplier. How have we onboarded that very important resource into our quality culture and enable their ability to really engage in their work process and with their teams to make improvements. We are working on establishment of a quality management system for our ULT product line.
We are putting astute attention to right first time process outcomes through a working QMS in what we call visual factory, stealing from the lean lexicon, if you're familiar with that. We don't mean putting up flat-screen TVs flashing data. We mean plant layout, right? You look around this facility, and you can see exactly what's going on and what the status of everything is, and that it's under a state of control. You actually can hear the state of control if you listen for a couple of seconds, and it's a very important point when you think about what's going on in this facility. Right the first time doesn't just happen. There's an infrastructure of people and process and equipment and data. Are we measuring the right things?
Are we empowering and engaging our frontline team members into that so that they learn themselves how to execute right the first time? Just a little bit of side note. I had the opportunity to visit the SciSafe New Jersey location a couple of weeks ago. First time I'd been there in a little over a year, and I've had my next opportunity to come out here to the Boston locations. There is this vibe that's going on, and I don't know if you all notice it, but I did from the moment I walked through the front door at the New Jersey facility. I was greeted. "Hi, Karen. Good to see you." People engaged with me. They knew me. It was clear that they trusted me.
Here today and yesterday while we were here planning for today, I saw this whole spirit of what I like to call not on my watch. You see the team members who work here every day hovering in the background, and they're watching. They're excited they're here. They want you to have a great experience. While that is not what BioLife Solutions delivered, the point is there's this spirit of caring about that work that they put into this facility, the work they put into your visit here today, it matters to them. That, to me personally, is a good day at work, seeing that kind of engagement and not on my watch. They want this to go well for you today. They want whatever is in those freezers to always be safe and secure. Is that quality? To me, that's quality.
You can create all the specifications in the world that really define customer requirements and test to them in a perfect way. Yeah, that's quality, and that's important too, but that's what we call the little q. You wouldn't be able to ensure right the first time an engagement, and there's Seeing opportunities for improvement unless you engage every member of the team to do so. We are working on that through our quality initiatives, also supporting our operational growth initiatives. It's been quite the ride with BioLife Solutions in the seven years that I've been there through a program of very exciting, both organic and inorganic growth.
We're also focusing on process control, working with our engineering partners to understand what are the critical to quality elements of our process and what are astute points of control, are we ensuring that we hand off those processes from new and legacy products to our manufacturing partners, that they understand what's critical to control and how to control it. We're working on harmonization of our quality system procedures, right, through our platform of, I don't know, 7 different businesses, they've all come with their own CAPA management system. We don't need 7, we need 1. We've been working really, really hard to harmonize to 1 quality management system.
Through the visibility that both our legacy media products experience as well as this program here, we can say that those harmonized procedures are now audited by very discerning customer base approximately 6, 7 times a month. Proven, right? We get great marks in our quality audits. We look at our quality management system as one of those force multipliers. We are really working hard to measure what matters and to ensure that we are making database decision-making. We're all really smart people, and we're really good at making a hypothesis, but what's the data? What does the data say? Of course, we're working really hard to support our engineering and marketing partners with new product introduction portfolio with robust quality plans.
We're also working on the cost of quality program, understanding how poor quality affects our cost of goods, or how implementing B-Big Q could reduce our cost of doing business. We're building and reinforcing our supplier management program. As I've already said, we're really working across all of our platforms to create a visual factory. Mike has shared with us a BioLife Solutions quality policy. You all in this room have an opportunity to listen to more CEOs than I do, but I know that not all of them start off their presentation with an audience like this to talk about quality and the quality policy first and foremost. Is there anything unique about our quality policy? Every company has one. We could simply write, "Make good stuff," right? We make good stuff, we do good things, because some companies do that.
We've been mindful in the word choice in our quality policy in stating that quality really isn't a function, it's everyone's job. Here's what we mean by that. Every team member in the organization is responsible for ensuring product quality and exceptional customer support. We recognize that continuous improvement is here to stay. Complacency is not an option, right? Where are the opportunities to get better, and how do we train each of our team members to be able to identify an opportunity for improvement and empower them with the right tools and processes to move forward and make those improvements under a state of control?
Wanna talk a little bit about our guiding values, and Mike mentioned this as well, and this gets at the people factor, which is real, and you feel it whenever you walk into, through the front doors of any of our facilities. As Mike was talking about this earlier, I was reflecting on this, on the SciSafe business and at the time that we became married with the program, and I was in need of hiring a head of quality for the SciSafe program. It was pandemic, and I lived 3,000 miles away. It was an adventure. As I always do faced with an important recruiting decision, I get out of my office and I literally stand in front of this particular placard and I use it for my recruiting efforts, right?
I look for all of the right qualifications and I look for, you know, the right attitude in the interviewing process, but I do ask myself, is this someone who will thrive in a performance-based environment? Is this someone who displays aspects of honesty, integrity, authentic communication? Does this team member, potential team member have the energy to make it happen? I also reflect on Garrie's consistent message in all the months, now years that I've known him. He always talks about how quality leads with his program.
One of the team members that I have seen lingering in the background, very, very concerned or excited about this program, concerned it goes off well under the umbrella of not on her watch is Narine, and I'd like to thank her for everything that she's done to build this program and to bring these guiding values here and to help us with our program of the BioLife Solutions way. What are we working on? Force multipliers. We look to create more consistency amongst this portfolio of businesses in building visual factory, controlling change. Change is inevitable. We need to change. We need to continually improve. How do you do it under a state of control?
We recognize that supplier management, just like every business in this particular economy, needs to work on supplier relationships and recognize our part in ensuring healthy relationships with our suppliers, engaging our teams, not just within our own four walls, but across all of our platforms. Do we have processes that are controlled and stable? If they're not, that's where we start. Working with our marketing partners and our engineering partners, are we designing and developing new products in an excellent way? These are our focuses that I would like to call business system management than simply quality system management. These are how we define quality within BioLife Solutions. I like to talk...
This is my last slide, but I'd just like to talk about the opportunity that we have within our business as we continue to do this and implement these business system parameters that have been around for decades, is we're now seeing, for example, in our ULT platform, that there are major buckets of contributors to opportunities for improvement that include how the product was designed and developed. Do we have proven specifications? When we're placing orders for parts with our suppliers, are we giving them specifications that are proven? Do we know what stack tolerances are? Our manufacturing team members, do they understand critical to quality elements, and are they provided the environment to ensure that they're performing that work with the right training and qualifications and without any distractions so that they can focus on what's critical to quality?
Our service team, who've been working over the decades to respond to customer service issues, right, it's a piece of capital, and things happen, and their first response is always to correct the problem in the field, which is important to do. How do we really collect that data and identify what caused that problem in the first place, so that we can go back into our laboratories with our engineering partners and our manufacturing partners to understand how we could prevent this problem from ever happening again.
With a lot of diligence and collaboration, I'm very excited to say, as leader of quality, that we have our service function really focused on creating visual factory on what's going on with our customer usage model and how do they use and treat their freezers, and how do we support them with preventive maintenance and service programs to prevent them from having a problem. Those efforts are underway. Our engineering department is focused on now on critical to quality elements and understand the elements of good design and development that we need to be producing and communicating to our manufacturing team and to our suppliers to enable them to deliver right the first time. Of course, our suppliers now understand much better the requirements for the parts that we purchase from them.
Every quarter, we have a robust executive level management review of the effectiveness of our quality management system throughout all of our platforms. Our executive team patiently sits through, I don't know, I think there's 6 of them every quarter, and the metrics are really proving it. You know, this back office quality person will give you 1 forward-looking statement, and I will say this in conclusion: It's nothing but opportunity. Thanks for your attention.
Okay. Good afternoon, everybody. My name is Geraint Phillips, I'm the senior vice president of Global Operations here at BioLife Solutions. That really means I am responsible for all of the manufacturing operations and the supply chain activities around our business. There could be no better place for me to showcase the capabilities of my team than to bring them to a biorepository as we've been to today, and to be sitting alongside the products that the manufacturing and supply chain team work on from a day-to-day basis. Thanks for everybody for coming and being able to see what we do. Just to give you a little bit of background about myself. I have worked for over 30 years in manufacturing operations and supply chain.
I spent 10 years at Monsanto back in the 90s working in chemical plants. Worked in automotive and telecoms, spent 15 years of my career at PerkinElmer working in the analytical sciences industry, running operations for the analytical sciences part of PerkinElmer. Moved from there and worked for Azenta, which was Brooks Life Sciences at the time back a few years ago, joined BioLife Solutions or Stirling Ultracold actually in December of 2020. What I'm gonna do today I'm responsible for manufacturing and supply chain across all of the products that you've seen today. I'm gonna focus the discussion around the ULT freezer business.
you know, the ULT freezer business, there've been some challenges in that business, and I wanna be talking about the challenges, but also talking about the path to recovery and really a path to excellence around the ULT freezer business going forward. A little bit first of all about our main manufacturing operation in Athens, Ohio. You may say, "Well, why Athens, Ohio?" The technology associated with our products, the Stirling freezers, is all Stirling engine related. The Stirling cycle was originated and patented back in 1816 in Scotland. It's merely a 200-year-old innovation.
Back in the early 1800s, it was just a real crucible of invention and innovation in the north of England and in Scotland, which really spurred a lot of the Industrial Revolution. The Stirling thermodynamic cycle was one of those innovations that lacked an application, in particular when the internal combustion engine came along and offered much higher power conversion than the Stirling cycle. Whilst it is the most efficient thermodynamic cycle ever invented, it did not have an appropriate application.
In the 70s and 80s, Ohio University had an engineering team that was led by William Beale, who looked at this technology again and identified a new element of innovation called the free piston Stirling engine, which was really being able to operate the engine in a frictionless environment. Again, that was an opportunity to utilize the innovation. David Berchowitz, who was the founder of Stirling or Global Cooling, saw an opportunity to use this technology in ultra-low temperature freezers. We were founded in Ohio University. Our facility in Athens is a couple of miles up the road. This is the layout of the facility you see on the top right-hand side. It's a pretty self-contained facility where we have engineering, customer service, quality, manufacturing, supply chain in one facility.
That really helps us in being able to support each other, in driving more innovation, supporting engineering, quality, manufacturing. I'm not sure what all of you were doing at the end of 2020, but there was a lot of talk in the media about kind of the business shutting down or the country shutting down because of COVID. I can tell you that in the ULT freezer industry, that did not happen. The opposite happened because at that time, as the pharma companies were developing solutions through vaccines for the COVID virus, they quickly realized that they needed to store vaccines and distribute vaccines at ultra-low temperatures. There was a huge demand for Stirling freezers, as well as our competitors' freezers at that time.
Whilst many people were sitting at home watching Netflix, the manufacturing teams for all of the ULT freezer businesses were extremely hard at work. I can say that for the Stirling team in Athens, Ohio, it was 10-hour days, 7-day a week manufacturing. A lot of challenges from the supply chain being able to ramp up to the requirements of additional demand. You can see the demand in this chart across the three different platforms. The large upright freezers were being used for large volume distribution hubs to be able to store vaccine ready for distribution. The under-counter model that you saw out in the lobby earlier was being used in pharmacies, where space is quite limited normally for them to store large quantities of vaccine product.
The portable units were being used to distribute those vaccines into small clinics and regional hospitals. For our whole of our product range, there were specific applications that were met using our products. 2021 was a particularly challenging year. I would say, and I will I'll talk in a minute about some of those specific challenges. But also the virus didn't stop spreading, and the requirements for ultra-low temperature storage to support vaccine distribution didn't stay at the borders of the U.S. That demand flipped over into 2022, particularly for global customers in more remote parts of the, of the world that required vaccines to get into those areas.
We're still living through some of that to even today with customer requirements for doing that kind of service and providing those products. Overall, you can see the under-counter and the portable systems just had explosive growth. Okay, this is 60%-150% growth year-over-year. Some really specific things that we were dealing with during that time. I do wanna recognize all of the manufacturing team members that we have across the organization who quite frequently have to give up weekends and evenings in order to be able to step up to the challenges that these kinds of situations present. They do this every day, every week in order to satisfy our customers' needs.
I wanna talk now about the specific areas where our margins in particular have come under pressure. I want to talk about three different areas. First of all, materials. In this environment, we were, where we were looking to ramp up production, suppliers had their own challenges in getting people to work, getting hold of their own sub components and materials. We saw a significant increase in the cost of steel, which is, if you look at our products, a significant commodity within our products. We saw a significant increase in steel pricing. We also, in electronics, we saw an allocation period where we were not able to easily access the components that we had previously utilized.
Also we were coming under pressure, I would say, from other industries who trying to get access to the same components, and this is in a backdrop of trying to increase production. During that period, we recognized that with this explosive growth of the under-counter and the portable products, that we would not be able to do everything within the 50,000 sq ft footprint. In 2021, we took the opportunity to move those two products out to a contract manufacturing company, still in Ohio, in Southwest Ohio. Really we needed to do that to make sure we could hit the higher output targets. Moving to labor.
First of all, we as a business, as we were acquired through BioLife, we made the decision to increase the hourly rates to be more prominent in our local market. Also, as I mentioned, the amount of overtime that we put in as an organization and the demands on our team were significant, we did pay for overtime. Particularly, we had to send people home when materials were not available. We had to bring them in on weekends when materials had become available. You know, customers were extremely demanding as they should have been during this period. We were going to go the extra mile to be able to satisfy customers. Finally, on the warranty side, we were dealing with an issue which required a field update to 6,000 freezers.
I think Mike and Troy have talked about this in earnings calls. In order to manage that, we certainly needed to further ramp up requirements around electronic components. If I was to put a notional split of the proportions of these three categories on margin erosion, I would say probably 70%-80% was on the material side, 10%-15% on labor, and likewise on warranty. That's the backdrop of where we were. Now I wanna talk about kinda where we are and where we're moving to. First of all, I'm gonna talk about supply chain optimization. We're fortunate now to be part of a bigger family with a much more broad set of requirements around supply chain and a larger spend on key commodities.
One of the first things we've done is to establish a company-wide strategic supply chain team. With that, we are leveraging our global sheet metal requirements and consolidating supply down to a smaller supply or supplier base. This is benefiting not only the ULT freezer business, but also the cryo freezer business in Detroit. We expect the impact margins to be high and the effectiveness date when we will expect to see that impact on margins is in Q3 of this year. The work is already done in terms of negotiating and finalizing agreements.
It's just that flow-through of inventory, over the next quarter or so, which will drive that effectiveness date. We see that with a company that's really acquired a number of different businesses over the last few years, there's a great opportunity to consolidate not only on the sheet metal side, but other commodities. That's what we're doing at the moment. This is very much a continuous activity for us to look for opportunities to consolidate suppliers and really drive the ones that are world-class from a quality, cost, and delivery perspective, and also from an innovation perspective. I won't go through every one of these items.
Suffice to say that the key things we're looking at doing is consolidation of vendors, but also second sourcing where it makes sense, but also looking at every category of material that we buy and look for opportunities to optimize. These really represent that 70%-80% of margin opportunity that we see for the business going forward. Next, I'm gonna talk about manufacturing labor improvements. Now, I previously said that we had increased our hourly rates to get to market and to be a little bit more attractive in our local market to bring new team members on board. That's kind of baked in to our existing cost structure. However, historically, the business has not focused so heavily on lean manufacturing opportunities and driving productivity and efficiency gains.
That's the focus for my team going forward. We have already kicked off a number of lean Kaizen events, providing training for all of our team members and driving improvements on specific processes. Now, I told you a few minutes ago that our one of the big drivers for labor cost increase was overtime. I can tell you that based on the work that we've done so far, we virtually eliminated overtime in the manufacturing team. That's really within 3 months. I'm really excited about the potential for this program within the business, and we're also looking to expand it beyond the Stirling operation across all of our other manufacturing operations too.
There are a number of other improvements there that may or not on the face of it appear to be manufacturing labor improvements, but material availability is a key issue for us. If we can make sure we have the right materials in the right place at the right time, then that drives labor. That drives labor efficiencies and productivity by making sure everybody's productive every minute of the day. Last on this list, I just wanted to point you in the direction of the value in process engineering initiatives. You know, as we've gone through this journey over the last couple of years, we've stabilized the platform, we've standardized our processes, and now we're looking to apply best practices around manufacturability in order to increase the value to customers without increasing or by decreasing cost internally.
We've made some progress on that, and we continue to work with our partners in engineering and quality and operations in order to drive further improvements in that area. It will also drive improvements on the materials utilization. Manufacturing operations and supply chain is not a static world. There's always the next challenge in order to face. We're looking at other opportunities for us going forward. I don't have a particularly strong definitive timeline for this, and a lot of these initiatives are yet to start. These are areas that we're looking at and looking at very closely, and I think some of them we can translate into results very quickly. First of all, leveraging our digital assets.
We have a lot of information around service, components, supply chain, production output, and so on. I think there's opportunities for us to use that in order to drive further improvements in how we plan our products and how do we optimize our supply. It also gives us the opportunity to do much more predictive analytics around service, and we think there's some opportunities to leverage that with a different line of business within service which we're not leveraging today. Automation is a key for us. It's interesting to know that the Stirling engine application that we have is probably the only one that's ever been done to scale.
We do that, we build thousands of freezers a year at scale, but we do it with only limited automation today. We see some opportunities to use automation to improve things like alignment of our engines and repeatability of our products. Some improvement in assembly, so make sure the alignment is good even before we test. Also to do some improvements on our test processes. We currently, you know, utilize a large space in our facility to do test. We think we can do that in a much more efficient way going forward. I've added sustainability in this list, but mostly to recognize that, first of all, Stirling was one of the forerunners of sustainability in the industry.
The first company to get the ENERGY STAR rating. We spend a lot of time looking at sustainability in all aspects of the business up to this point. We think there are other opportunities for us to think about sustainability from a logistics standpoint, a product sustainability and recyclability standpoint. More to come on the sustainability side for the business. Lastly, you know, given that we have gone through a major shockwave in our industry and across all industries with supply chain disruption, we wanna make sure that the supply chain is resilient going forward. We think we're doing that by picking the best suppliers available, and we're also making sure though, that it's not so much the historical use of things like supplier audits and checklists, but also are we really checking on the suppliers, sub-suppliers?
Are we checking on their cybersecurity, aspects like that. A lot more to come, I think, around next, the next stage of innovation, around our operational enhancements. With that, I'm gonna pause for any questions.
Thanks for the update, maybe this question related to you and Troy as well. Great to see you guys break down the margins area you guys can improve on. Just want to think about, you know, investor are keen to understand the margin profile, trajectory from here to year-end 2024, or maybe by year-end 2023. With all these measures, you know, different, progress we are making here, by year-end 2023, can we improve by, you know, 2 points, 2 to 100 basis points, or it's more? We know that for the Stirling business, the margin is lower than the overall margin portfolio. Just want to understand, you know, how this measure will contribute to the margin improvement. Thank you.
Yeah. I'll cover more of that in my presentation as well for our aspirational goals in the margin bridge. As far as 2023 goes, you saw on that slide Geraint had of the material costs going down in the second half. We'll see some improvements in gross margin in the second half of this year, and then further improvements through the initiatives Geraint's taking throughout 2024.
Any chance you can quantify the measures you were conducting here, like maybe 200 points, 500 basis points?
Yeah. I will just quantify that the margin at Stirling is very challenged right now, right? We're not gonna give exact quantification of what we think we can get it to, but we do not think it takes much to get to that, the goals we're gonna share here in 2024 to get to our aspirational goals.
Yeah, got it. Thank you.
Who has the next question?
It's me. How are you? Just a quick question on what's the level of confidence that you can hit those timelines for all those margin improvements going forward? Thank you.
Yeah. Great. Yeah, thanks for asking. You know, we've been working on these initiatives really since joining the company. You know, obviously, the focus early on was on making sure that we were dealing with any issues we already had in the business. Most of those initiatives have had some attention for 12 to 18 months at this point. I'm confident that we're gonna be able to execute. Of course, you know, we have a limited resource, but I think it's a very effective resource to be able to deal with a number of opportunities in the business. I think the other balance here is that we've got to think about our existing products, but also next generation products and where we're gonna place our bets.
We may drive some cost reduction on existing platform, but lose focus on a new product. That's always a trade-off for us. Any other questions? In which case, I'm now gonna hand off to our Chief Financial Officer, Troy Wichterman.
Hi, everyone. Good afternoon. Thanks for joining us. I'm Troy Wichterman, Chief Financial Officer of BioLife. I've been in the CFO role. Great. Is that better? All right. I'll start over. Troy Wichterman, CFO of BioLife. Been in the role just over a year now, and I've been with BioLife over eight years. Prior to BioLife, I was doing M&A work for a healthcare REIT called Ventas in Chicago. Here's our revenue recap from 2021 to 2022 and then 2023 guidance. As you can see, we've gone under significant growth in the past two years and expect a really nice growth trajectory going forward as well. Going to the next slide. The important visual here is the cell processing platform, looking at 2021 to 2023 guidance. This is our fastest-growing platform in terms of absolute dollars and %.
As a reminder, this is the high margin recurring revenue stream within our product portfolio. You can see growth rates of 30%-35% is through the revenue guidance of 2023 on the cell processing platform. Freezers and thaw, 9%-8%, and then storage and storage services, 0%-13%. As you'll recall, we had significant COVID revenue in our SciSafe facilities throughout 2022. If you strip out that COVID revenue related to SciSafe, growth rates of 64%-86% in that platform. Here is the 2022 revenue numbers. We came in the year at $161.8 million, which was 36% year-over-year growth and 38% organic growth. Again, I'll point you to the cell processing organic growth of 45% year-over-year with guidance of 30%-35% in 2023.
This is where I'd like to spend most of the time. This is related to our Q4 2024 aspirational goals of $250 million in revenue run rate, 50% gross margin and 30% Adjusted EBITDA. I'll start out by saying a little bit more about the Q4 margins compared to Q3. On the earnings call, we did mention stock-based comp increased about $1 million or 2 percentage points of Q4 revenue. The other three things I mentioned had an equal, if not greater, impact on Q4 margin, which includes scrap material, the customer product mix at our LN2 freezer line, which is related to a specific customer buying an outweighed amount of a certain accessory they get a large discount on, and it had a significant impact on our overall gross margins.
The last thing I mentioned was the COVID revenue at SciSafe. When the COVID revenue dropped off, we were actually increasing our infrastructure expenses to satisfy the demand we think we'll see here in 2023 and through 2024, as Garrie has mentioned. We're seeing a lot of good demand out there, some good customer wins, and we have a really high confidence rate. We're gonna win a lot of customers this year in that business. Again, that had a large impact on Q4 margin. Here's the bridge to where we were at Q4 of 2022 to our aspirational goals of Q4 2024 and how we're gonna get there. As you can see, the biggest impact is related to our cell processing platform.
That product mix shift of 30%-35% continual grower, if not more, over the next four to five years, will have an outweighed impact on our consolidated gross margin. The gross margin in this platform is significantly higher than our current gross margin. With that flip of product mix, we'll have a material impact on our consolidated margin going forward. The next piece is the Stirling improvements, a lot of this which Geraint already mentioned. We should see improvements in material costs in the second half of 2023. There's other improvement initiatives like no overtime, lower warranty costs, service revenue coming online in 2023 that will have a higher gross margin than a freezer sale.
Getting to a number that is not the historical gross margin of Stirling. There's further upside if we can get material costs reduced in 2024 to meet historical gross margin numbers that business line has seen. As Geraint pointed out, the cost of materials on this business line since we acquired it has over doubled on the BoM, which had an outweighed impact on our overall gross margin and the gross margin in this product line. Next is the SciSafe utilization we've mentioned. As you can see, there's a lot of leverage once you can get revenue into one of these facilities. It doesn't take a lot of people to service the sample storage and the sample pulling. It's really about that revenue dropping to the margin line once you can fill up these facilities. As you can see to the Billerica facility, right?
There's a lot of capacity here that we'll see will fill up throughout 2023 and margins normalizing at the SciSafe business in the second half of 2023 and further into 2024. The next piece is the LN2 freezer line. That's again, the Q4 impact with the product customer mix. We'll see some price reductions as well on materials on the LN2 freezer line in the second half of 2023. This is just really a normalization of back to historical gross margins on the LN2 freezer line. The last bucket is other, but that's primarily related to moving the EVO business, which was in New Mexico, up to our northern Detroit facility where we produce our LN2 freezers.
There's a lot more efficiency there, less scrap, better way to manufacture, different quality system, so they'll have a slight impact on our overall consolidated gross margins to get to our goal of 50% by Q4 2024. On the Adjusted EBITDA side, obviously that's to where we are today to get to that 30% big impact on the gross margin. Really it's about controlling OpEx at High single-digit growth around 10%. You got to think about, well, that seems a little unrealistic maybe if you think about how fast we're growing. If you think about our sales and marketing, for instance, on the media side, almost all of that is inbound, and we can handle it through distributors as well. There's a lot of leverage on our sales and marketing.
The SciSafe team, once you fill up these facilities, it's all about concentrating that sales and marketing team on the next facility 'cause the customer base here is really sticky. You don't need to expand your sales force as you expand your sales because of that stickiness of that relationship. On the freezers and thaws, we use a lot of distributors there right now. Our current sales force that's integrated, we do not need to make a lot of investments on the sales and marketing throughout the freezer platform. With R&D, we're spending a lot of money on R&D right now. Not to say that that won't continue in the future, right now we are spending a lot of money developing new products, we don't see that kind of hypergrowth going forward as well.
There's a lot of OpEx leverage there as well. Then G&A will grow, you know, more in line with historical norms. That's the end of the presentation for me. Does anyone have any questions?
Hi. Just on your last comment, I'm just wondering, when does it make sense in the economic model to move to direct to consumer?
Yeah. That's a good question. It's about timing and how much we wanna spend and invest in our sales force versus the returns we're seeing in the productive distributor channels we have now. It is a timing thing, and depending on how big we can grow our revenue base is when that decision would be made.
Hey. Hey, Troy. Going back to that last slide, the 10% margin improvement from cell processing is probably a bit larger than I would have thought. Could you maybe just talk about how much of that is mix and any kind of benefit from the Sexton side of things? Just on Stirling, maybe a bit lower than we thought. It sounds like you're not assuming it's gonna get back to historical levels. Can you just talk about conservatism there? Thanks.
Yeah. Sure, Jacob, you know, we don't know what 2024 is gonna bring on material costs. To get back to the historical gross margins at Stirling, it's just too early to tell. There is a lot of focus on the Stirling line. There's improvements. We are seeing material cost reductions, overhead cost reductions. Warranty is now under control. There is some conservatism in that number. If there's, you know, get back to that, call it 30% gross margin for historical, there's further room for growth in our gross margin there. The point on cell processing. If you look at our historical financials when we were just a biopreservation media business, you'll see high 60% gross margins. You can assume that holds true today.
The Sexton business, not quite that high, but again, as you leverage that revenue, you get that operating leverage as well to get to a lot higher gross margins than our current profile. As a reminder too, the cell processing mix, media, right? The preservation media is most of that revenue right now.
Thanks. You know, it's been a while since we actually talked about the cross-selling opportunity of the entire platform. I'm just wondering, I mean, I guess it ties a little bit back to my direct to consumer question, because I'm just trying to figure out how right now we tie all of the innovation, all of the growth, and kind of the stretching at the edges, into a more cohesive story as you think about addressing the customer base, the broadening customer base.
Yeah. Thanks, Dawn. Good one. Well, it really depends on platform, and we, you know, we do that sensitivity analysis regularly. The cost of hiring reps, how long it takes them to be productive versus the current slate of distributors, how productive they are, how much of their mindshare we get, can we really influence their management teams on down to drive their distributor rep behavior to focus on our products, relatively speaking, with everything else that's in their portfolio. You know, right now it's working pretty well. For example, on the biopreservation media side, you know, you saw in my deck, STEMCELL Technologies, right? Finding 3,000 new customers, or 3,000 unique customers that they ship media to with more than 500 being unique. They enjoy a pretty healthy discount.
Nevertheless, we sort of view that as a sales and marketing expense because they're planting so many seeds, we'd never make the investment to try to hire enough reps to go find, you know, 3,000 end users who are only gonna buy 1 bottle of media a year. Some number of those customers will grow up to be real meaningful customers, and that's a really. It's a good mix. I mean, that's working really well. I would say, just with respect to where is there room for opportunity and where are we a bit short? It's Asia-Pacific, clearly. We have a lot of thought underway about what is the right enhanced go-to-market strategy within APAC, and particularly China, Japan, Singapore. We have some distributors across the portfolios who are doing a decent job.
We think we can either find better ones or help our current distributors do more. In some cases, add feet on the street. Not necessarily to compete with distributors, but to be distributor support people in the form of tech support, scientific support, some marketing resources like that.
Yeah. I think a really compelling case was made today for the importance of outsourcing storage. You also have business lines that are selling in part to those customers who might be outsourcing. Can you help us think through that dynamic and the interplay between those two trends, both outsourcing but also buying for internal use?
Yeah. I think, Thomas, it's a really cool question because it gives me a chance to speak The opportunity we have in this current sort of softening of capital equipment purchases, which we all know is affecting everybody who's selling instruments into the space, at least for us, because we have this wonderful storage services business which is highly valued, centered on quality, as opposed to, you know, having to hear a customer say, "Oh, we'd love to give you an order for the freezers, but that project is canceled or it's delayed. Call me in a year." We can immediately, in the moment say, "You know what?
Why don't you let us store your biologic material for you in our freezers, in our facilities, and try to convert that into an immediate storage services win, as opposed to having to say, "Okay, well, I guess I'll just put a note in my file, and I'll call you in 1 year and see if your budget got freed up." Something like that. We've been running that scheme throughout this quarter, and I'd like to be able to think that, you know, throughout the year that'll be successful here because, you know, we can't get around the fact that in an economic downturn, where capital is very precious, equipment is the first thing to get stalled. First or second, perhaps after a new plant build-out or something like that. Yeah.
Hey, thanks. just wanted to dig a bit into the Stirling margin slide. you know, there was supplier consolidation highlighted in one area as a margin tailwind and then dual sourcing also highlighted as a margin tailwind. I think one Stirling, one's other materials. Could you just kinda dig into that concept a little bit?
Sure, Tim. You know, I think we look at all of this, the commodities, and look at the opportunities in front of us there. In some cases, it does make more sense to consolidate a very broad set of suppliers into a smaller subset. Single sourcing is dangerous, we would never really consider going down to a single source for anything unless it's a proprietary piece of technology that we're acquiring, where we may not have any other opportunities. Dual sourcing is like minimum requirement for us. We will consolidate large, broad supply chain, but in most cases, Tim, we'll only go down to one or two suppliers, but we'll look to create that competition of two or more suppliers if it makes sense for that commodity.
All right. Well, let me just thank you again for... I'm sorry, Jacob, one more, please. He's saving the best for last, right?
All right. Thanks, Mike, for appeasing me. Thanks for everything we covered today. We covered a lot. Maybe the one thing we didn't explicitly talk about is capital allocation. I'm just kinda curious, as you look across the 3 segments that you have, from maybe an organic, inorganic perspective, anywhere that you're focused on investing or is more of a priority in the near term. Thanks.
Yeah, sure. Good question. Thanks for the nudge. A few buckets come to mind. One will be clean room expansions, rebuild retrofits in Bothell. We're also gonna be thinking about enhancing the Indianapolis facility for media because we are taking the generic preservation media solutions formerly made in Bothell and moving those to Indy so we can free up those very precious slots in Bothell to make our proprietary media and particularly CryoStor. That's one bucket. Second would be allocations at least maybe toward the last half of this year about where the next bio repository is gonna go. You know, those buckets will spend our lease commitments and freezers, backup generators, things like that, right? I think those are two main areas to focus on.
Clearly, on the R&D side, we've got some decisions to make on timing of spend for molds for new innovative products that are plastic and also some other long lead time committed buys we have to make for some of the new stuff that's coming out. We can let you go. Thank you everyone for traveling today. Really appreciate your attention today. Really great questions and thanks for your support and interest in BioLife. Have safe travels back home and good rest of the evening. Thank you very much.