I hear about that. Yeah, it's been going every morning. Have some sort of. Hi, how you doing? Hi. Some sort of thing going on, so yeah.
Yeah.
I'll let you know how that turns out for him.
Yeah, just like my rocks.
He was not in a rock band.
Hi, welcome to our, our next Fireside Chat here with Maravai LifeSciences. Excited to have Trey Martin, CEO, and Kevin Herde, CFO, with us today. I'm John Sourbeer, one of the UBS's life sciences analysts. Joining me today is Elizabeth Garcia, my co-coverage. Trey, you know, I think this might be the first Fireside Chat you've done since taking over officially as the CEO role. Congrats there. You know, maybe just, you know, high level here while, you know, it's his first time on the Fireside Chat, just can you provide some color on, you know, your vision for Maravai's portfolio of assets? You know, do you see any change in strategy? You know, how are you viewing, viewing your, your strategy here now, taking over the, the CEO role officially?
I would say, part, you know, part of the situational assessment is what, what do you come into? Maravai has certainly had one of the more, extreme, I would say, COVID runs. Some great things happened through that, despite the fact that we're coming off of COVID and getting into the endemic phase. One is that the RUO CleanCap became a GMP CleanCap and, you know, was obviously clinically proven, in some of the first mRNA vaccines globally. The second thing is, that during the pandemic period, they reinvested proceeds in four world-class facilities, which I was thrilled to finally get to tour here. We've also incorporated 2 more acquisitions, a nucleic acid chemistry specialist company called MyChem, and a protein, production, specifically enzyme production, company called Alphazyme.
Those were really great resources, tools, and assets to bring in during that period. Better than I could have hoped for, honestly. What happened now with the acquisition of MyChem, adding to core holdings, Glen Research and TriLink, is that I can say confidently that Maravai has a very unique strategic advantage in nucleic acid chemistry, which is the base of most of my career and really the base of all of genomics. That nucleic acid chemistry can manifest itself through the entire workflow, from the chemistry itself all the way through to mRNA. Obviously, one of the chemistries that's been proven very well through the pandemic is CleanCap.
I would say that tool set, including now the capability of making enzymes in addition to making all the nucleic acid chemistry, is one I'm particularly excited to see where we can take it. Notably, we, we have launched a recent product called CleanCap M, you know, M6, which is a new version of the co-transcriptional capping chemistry that actually brings functional utility in addition to process utility. That's just, I would say, an early peak at where we hope to go with the unique advantages that Maravai brings to the market.
Thanks for that, you know, great overview there. I also wanted to mention, we have iPads here on stage, too. There's a QR code if you want to ask any question, feel free to do, and we can take it up here. Maybe bringing it back down here then to, you know, the near term. You know, starting off with 2Q and the guidance cut, can you talk about some of the dynamics you're seeing there? You know, macro headwinds have been pretty widespread across life sciences industry, but just, you know, what are you seeing that's resulting from those cancellations? Can you talk about the dynamics, maybe just even want to quantify with longer decision-making versus cancellations that's been impacting the business there?
Yeah, I think, and I'll hand to Kevin as well, but I think cancellations, we are seeing far less of than. You know, people have lots of different words for it, rationalization, conservatism. We want to do this, but not yet. We, we were going to do three, now we'll do one, that sort of thing, more so than outright program cancellations. I can give to you for more comments.
Yeah, absolutely. I think that there, there's different influences in each segment, but overarching, our, our guidance and where we were and where we are today, was, was really around four main components. One was the services business, our nucleic acid services business, which is sort of a solutions business for our customers, where we're manufacturing the mRNA along with our proprietary technologies such as CleanCap. You know, that had been our fastest growing segment within, within our nucleic acid production overall group, and it had grown, you know, faster than the, the overall CAGR for that segment. It grew over 75% last year and was kind of recognizing our, our leadership position in certainly manufacturing mRNA. When we got into this year, we still felt good about growth in that segment.
As we got further into the year, some of these, these prioritizations of programs, I would say a little bit of indecision, slower committing, and I just think an uneasiness from customers generally, gave rise to a slowdown in, in how we saw those programs gating out, and even some of those programs just going on pause. That was the largest component. You know, of our roughly $100 million takedown in guidance, about $40 million was tied to that, you know, lower 2023 expectation for the services business. We peel that back one more layer. We've talked a lot, certainly, about the demand for CleanCap, as it relates to COVID. That was the next biggest part of the takedown of the guidance. We'd, we'd estimated around $100 million was going to be a reasonable run rate.
We were waiting to get the updates to our supply agreements that we have with our major customers. We received those in the Q2 , and as a result of that, there was no incremental demand, so we took that number down solely to reflect the purchase orders we have in hand for the year. That's going to roll out as we discussed on our last call. So that was the second largest part of that takedown.
The other two were really just sort of the, the run rates we were seeing with our normal customers that were, you know, instead of growing 10%-20% with a lot of our, our product lines, they were now buying at 70% or 80% of historical levels, or some hadn't started rebuying until late in the Q2 , just due to some of the overstocking that I think was pretty well characterized. Lastly, our expectations for China, which we're not overly exposed to. We've done, you know, between $20 million and $25 million of business in that country over the last three years. We saw it growing slightly, now we see it as a declining segment, and that's about a $15 million component of, of that overall takedown.
those are sort of the four main factors, all for slightly different reasons. you know, certainly these headwinds did not insulate any of our bus- We were not insulated from these headwinds in any of our businesses, as a lot of our peers are seeing as well.
Thanks, Kevin. Maybe just diving into some of those different pieces there. I think you quantified also on the 2Q call that emerging biotech, about 30% of revenues.
Yeah.
Is it fair to say that it wasn't just the emerging component that you saw headwinds, that it was maybe more widespread across the portfolio?
Yeah.
Basically.
It was. I don't think there was any of our divisions that didn't see the trend. I would say, as Trey mentioned earlier, you know, our CleanCap franchise, our CleanCap M6 for non-COVID indications, continues to do really well, even in the face of those headwinds. You know, that is one continuing interest across the board of people evaluating and really being comfortable with that product. I would say outside of that, it was a pretty, pretty systemic look at all the different declines. Were, were pretty tied to what we're seeing in the market, frankly.
You know, a question that I've received in, before the fireside was, just any color when you look at your, your order book intake, you know, any forward-looking metrics or anything you can provide on, you know, maybe what 3Q is looking like so far versus 2Q? Any way to think about that?
Yeah, we always, we always look at the order book heading into the quarter before the call. It informs our guidance. You know, we look at a combination of things, certainly the orders in hand, certainly what we've already shipped, of course, and recognize the ongoing commitments from our supply agreements. You know, what we're looking on the services business, those opportunities that is already scheduled or a probability-adjusted weighting of those opportunities, we roll that up and, you know, obviously guide within that range. I would say, when you look at our range for the back half of the year, I would say, you know, certainly the CleanCap number is locked in, so there would only be upside there. I think we feel very comfortable biologic safety testing business will come in the range of that $65 million-$70 million.
It's been floating around there roughly since the Q2 of last year, when we first saw some of the pressures from the China region that impact that business a little more disproportionately than the rest of our business. Then, you know, from there, I think we feel good about what we're seeing as far as, you know, that second half of the year, taking out the uptick we have for some of those COVID shipments to look, you know, a little bit like the first half, just, just slightly up, and that's reflected in our guidance range.
Maybe just one more on this topic that also came in. You need this commentary on, like, for, say, like, a monthly tracking during the quarter. I think, you know, we saw some drop off in the second half of the Q2 , pretty sharp there in demand. Any way to think about, you know, what that run rate is exiting the quarter and how we should think about then maybe from a revenue or margin standpoint, just any additional color you can provide about maybe the run rate in the quarter or exiting the quarter there?
You know, no, I think the, I think the first half of the year as it played out is, is a pretty good proxy for what we're seeing in the second half of the year. Unless there's a, again, another macro step down, which I don't think we feel is, is there at the moment. I'd say, you know, our range of revenues, I think, incorporates a couple different slight scenarios on, on either end of being flat to slightly down to slightly up on the base business, and I think that's consistent with our view right now, so we feel pretty good about that.
Yeah. Maybe, Trey, you know, moving beyond the macro headwinds, just anywhere you could talk a little bit more about the non-COVID biologics opportunity for CleanCap. You know, how many programs does the company serve today? Just any color on how some of these programs could mature to becoming larger, you know, revenue opportunities for the company.
Yeah, so we do a, we do an annual deep dive on program participation because we don't always get that information directly from our customers. We've been talking about how we have, only a, a minority percentage of our customers on, on, on License and Supply Agreements, what we call LSAs. So it, it, it involves a deep dive into program specifics and filings, to get, the real deep numbers. So we do that once a year, and we'll, we'll do that here probably in Q4. However, what, what I'm excited about in the future, which I appreciate, since I just formally retook the role a couple weeks ago here. The, the future I'm really excited about in that what, what we've already publicized the launch of what we call the CleanCap M6.
The reason that we're so excited about that is that CleanCap is a technology for co-transcriptional capping of mRNA. I think everybody knows that. The interesting opportunity that you have in co-transcriptional capping is the ability to incorporate all sorts of different chemistries to the cap structure itself and potentially optimize its functionality. What I would call the first generation of CleanCaps, are a process improvement that leads to better purity, a quicker process, and ultimately lower cost when compared to the other means of capping. What we add to that in the second generation, of which M6 is the first, is a higher functional output. M6, the modifier in that cap, gives you all those benefits of co-transcriptional capping, but adds the benefit of being like for like, dose for dose, a higher output of protein expressed in the cell.
A more effective, if you will, compound in vivo. That's the first of what I hope are many iterations around that theme, both on the cap and then other, structural elements of the mRNA molecules.
No, appreciate that. I guess, you know, while you're discussing M6, you know, any additional customer feedback or early learnings you've had there since the announcement on that product?
We've seen really good, and, and I believe the, the launch was specifically May, but we've seen really good uptake. We've seen reorders and good representation across the top 20 pharma there. The reorders in particular in that short cycle time are particularly encouraging. It's, it's ramping quickly, and, we expect to obviously bring a GMP version of that product offering, soon, just to make sure our customers are reassured that if they want to adopt that in their programs now, that there'll be a, an available path quickly.
You know, I think during your, during this presentation, you had a slide where it said that there had been about 30 non-COVID mRNA programs entering the clinic year to date. I think the company's previously talked about how COVID therapeutics could use much more capping agent than, let's say, a COVID vaccine. Can you just remind us there some of the details you had, and just how should we think about, you know, the capping requirements of some of these products that could be entering the clinic going, going forward?
Yeah, I mean, obviously, having your first proof of concept be a pandemic vaccine and billions of doses sort of.
Mm-hmm
S kews the scale. The, all the, the myriad uses of therapeutic mRNA that excite me, you know, across the spectrum, really, you know, the, the, pandemic level of infectious disease vaccine is, is a rare case. When you're talking about infectious disease vaccines, there's small doses like that. When you're talking about potentially, individualized therapies on the other end of that scale, it's, it's a different equation. Protein replacement is a different potential dose, chronic dosing. That there's a wide range of possibility there, and we hope, we hope that as there's more adoption of functionally, more active molecules, that we'll have the opportunity to change the economic scale a little bit, to capture more of the value being added and have it be less dependent on essentially the mass range for the dose, if that makes sense.
No, no, that's helpful on that. I guess, just, you know, when you think about, you know, CleanCap versus enzymatic capping, you know, any just additional color on, on market share you have there and maybe how that's been tracking, you know, as COVID's been rolling off into the other programs, coming in?
Yeah, it's staying steady at about a third, you know, of the market. Again, leaning on the opportunity to not only show the economic process benefits, but also the functional benefits of the next generation, is where I hope we can gain share.
I guess, you know, just also, you know, CleanCap gets a lot of talk, but there's other products in the NAP portfolio, other services. You know, just any, any updates on, you know, the directory or the outlook there, and maybe some of the other pieces, you know, plasmids, other services, how you think those-
Yeah
Y ou know, track in the second half and beyond?
Yeah. Plasmids, you know, plasmids for Maravai were, when we have been public for this, have always been meant to enable, you know, the realization of mRNA with strategic control faster for, for our customers. Our services really help with adoption of the products, if that makes sense, and that's why we say we're a little bit different. It's not, it's not. To come up with unique process that also helps the service to be better.
I guess, you know, maybe on, on lead times with customers, you know, anything changed there recently? You know, I believe that, you know, with COVID,
The era of mRNA medicines is coming. It, you know, all the major CDMOs have added commercial scale versions of that capacity. I mean, look, every, every aspect of the market and service levels is different, now than it was during COVID. You know, during COVID, there were, there was certainly much less consternation. There were higher approval levels than we see now, you know, where a $200,000 project required one approval, now it goes through multiple layers of approval, for example. Much more mRNA CDMO service capacity available to people for their programs. Again, we hope to, we hope to focus strategically on those programs that we can enable with our products.
Great. you know, speaking of capacity, this is a great time to ask, just Flanders 2 is coming online-
Mm-hmm.
I believe next year, beginning to ramp. Just, you know. Any additional color you can provide on how that's coming along and just the capacity ramp into next year?
Yeah, we just actually hosted an investor bus tour of Flanders 2 yesterday. One is a GMP-only, chemistry-focused manufacturing facility that gives us obviously duplicate footprint, a different rooftop, but larger ability to make the plasmid for the mRNA template and then the mRNA. That's what Flanders 2 is focused on. Flanders 1 is ahead, but that was by plan.
Maybe even Kevin.
Mm-hmm.
Thinking about total capacity there, is it about $2 billion of revenue capacity? Is that the right way-
Yeah.
to think about it?
Certainly, Wateridge is already north of $1 billion. The first part of Flanders would be able to basically replicate everything we've done for clean. You add in the three dedicated GMP clean rooms, which will go up through late stage for our customers for drug substance, each of them has a pretty nice output annually. When you add all those things together, then we think pricing is going to remain relatively consistent, we certainly have the facilities to support our growth for a while. I think the one thing that is nuanced about...
No, it's probably close to $200 million of investments in our facilities, you know, over the last, you know, four years or so since we started raising Wateridge was, you know, that is not just capacity for the sake of capacity, but it's, it's really purpose-built capabilities. To us, again, it remains to be what we believe are table stakes to be participatory and where we think mRNA is going. You have to have these, and we've been able to fund them through our profitability over the last few years, while also bolstering our balance sheet, while also adding acquisitions and new technologies, and are, and are in a very strong position, certainly for a company of our size, to be able to capitalize on market movements and opportunities and differentiate ourselves from sort of the big box players.
I think that combination of uniqueness is what attracts people like Trey. It's great to have him.
Absolutely.
Several others that we've added to the management team, kind of during this transition period, which is exactly that. You know, I've, I've obviously been here for a while with Maravai, and, you know, we've brought in a lot of new leaders for the next phase of this company, which is going to be much more around, you know, a lot broader offering of products and services, a much broader customer base, and certainly taking us to sort of the next applications of these technologies, that when you go back six, seven years, when we were acquiring the companies to make up Maravai, particularly in mRNA, were fairly limited to a handful of customers that were really actively pursuing this technology.
is of a good place to be, and I think we're continuing to make sure we're keeping our eye on, you know, completing all of those investments. You know, as we sit here and are only a few quarters away from that, then we get the opportunity to leverage them, and that's where you're going to see really, as you've seen in the past with us, nice opportunity to expand margin as that revenue comes in.
You know, maybe just even to touch on just broader industry capacity. I guess, you know, just given, you know, maybe access industry capacity right now in this transition phase, and I believe, you know, the capacity.
In two facilities. Both the chemistry and the biological buildings were designed with multiple parallel programs in mind. There are, there are multiple suites, four in Flanders 1, and three in Flanders 2, with final fill, or with both fill, excuse me. We, we have the intent, like you say, that those. Really, the parallel capacity is more about scaling out and handling multiple programs at the same time, quickly, if that makes sense. Each customer program is going to be a little bit unique, but I understand the frame of your question is, you know, could we go into other adjacent spaces? We certainly could.
I'm hopeful and optimistic that our differentiated tech and the advantages we can bring will keep us busy, you know, in our, in our core markets. Yeah, I think one of the key founder-based scientists and very unique assets, and that's key to our DNA, and what we do, certainly. We want to be very participatory in those high margin, high science type of markets. We could do more on high volume oligos. There's some companies that do that very well. Same with, same with plasmids. There's some companies do high volume very well, same with siRNA and other things, that do that very well at very high volumes. That's not what we're going after.
You know, we participate in some of that where it makes sense to drive our broader offering forward, but we're going to stay, you know, in our areas where we're successful. Again, those are areas that are not, in my view, and I think Trey's view, not easily commoditized because of the, the technicality of them and the complexity of them. You know, making mRNA at the complexity that we do with our, with our proprietary technology that we've been improving upon for the better part of almost two decades, is not a commodity. It's, it's a very unique product, service, and skill set, and I think it's going to continue to keep us providing solutions that give our customers a best-in-class product, that's what we're really focused on.
Thanks. Elizabeth , did you want to ask a few questions?
Well, let's start with COVID, and kind of the customer relationships, you've kind of obviously, you know, just thinking about Pfizer, BioNTech, and do you guys have any color on kind of just an update on kind of the non-COVID programs there, and how to think about kind of work with these customers? Then could you just confirm, in the back half, what you are including in terms of the COVID guidance?
Yeah, sure. I'll take the first part of that, and Trey can splash in some, some color. you know, first and foremost, we did say on our call that our full year 2023 does not include any CleanCap revenue for our Pfizer-BioNTech collaboration that they have for COVID. That having been said, Pfizer and BioNTech are still ordering for other programs as they advance those forward. They are still customers, they are still active, they are still advancing their other mRNA programs. Under the, the construct we have specifically for COVID, in our $65 million that we see as the current year, man, includes zero from them for that.
As we look at that, I think that $65 million, which is all under purchase orders for the year, remainder, which will ship, I believe we said roughly $15 million in Q3 and around $22 million in the fourth quarter, on top of what we've already shipped, is for other customers that have generally in-country specific programs that we support. Our, our list of customers that are developing vaccines specific for COVID, which are probably getting to be fewer that because they're always looking at, these combination vaccines and others, but, make up that $65 million and have always been part of the demand we've seen over the past few years and will continue to be.
I think we have good relationships there, and I don't see anyone switching off of our, our CleanCap, certainly for the, the existing vaccines nor the boosters. I think that covers sort of what we're anticipating for COVID this year, and also answers sort of the question about Pfizer Medics still ordering for other programs, which we still continue to have a very good relationship with them there.
Great. Just one more from me.
Mm-hmm.
You know, Trey has spent some time at a previous institution where you're pretty infamous for a, a system, DBS. It would be just kind of great to, to kind of understand kind of what learnings you have there, how you think that might apply to Maravai. Additionally, you know, talk about rounding out the management team, how you feel about kind of the people that you've added, and where you think kind of the management team sits today.
Yeah. Well, DBS is a proprietary system, of course.
Yeah.
My whole career has been in automating, in lean operations. I, I started that way in 94 when I started at IDT. Scaling out nucleic acids and automating and, you know, continuous improvement is, is a way of life. It's, it's not just a, a, a talking point. That, that is something we actually have. You know, I've been fortunate to see a lot of great companies, and I've, I've seen that that is really a function of culture and encouragement and freedom and space to encourage people to, as we say, "Find a better way.
Well, and just to take that further, you know, I, I would say that the culture for Maravai really comes up from the fact that we are a, a collection of, of founder businesses. We never want to lose that spirit, that entrepreneurial attitude, and, and that passion for what we do and how to do it. You know, I think inherently, the, the people that have come up with a lot of the companies we have realize the value of each incremental dollar they invest and dollar they spend, just because it's, it's, it's a very important thing, because we're a small company, and there are 650 employees. You know, companies such as Trey's former employer, probably 75,000 plus, so it's a lot different atmosphere.
We have been bringing in a lot of people that have great experience from much larger companies across all of our peer set and others, and some of our customers, et cetera. They're bringing a lot of that understanding and knowledge...
We're not trying to change the culture either. We're trying to balance that out and really make sure we have, we have great business systems, we have good information, we have good discipline, but we also have a good entrepreneurial spirit to innovate and be creative and be nimble and be reactive to our customers, because we're relatively small versus a lot of the peers in our group, and I think that gives us a tremendous advantage.
Great.
Thanks. I know, I think about a little, maybe a little bit over a month from now or about a month, you're going to be-
Yeah, we, we think, we, we still believe that the mRNA space is going to be an advantaged, you know, area that the NAP, you know, reporting segment for us, you know, making nucleic acids of all types up to and including GMP mRNA. That's in the NAP reporting segment. We believe, yeah, with mRNA, that 20%, you know, high teens to 20% long-term market growth rate is, is the right way to think about it. It's not a matter of if, but when we return to that rate.
I guess beyond mRNA, there's also some, I guess, cell therapy, CAR T therapy products, too, that you would serve within that segment, too.
Yeah.
Is that, I guess, incorporated in the, the growth you're thinking there?
Yeah. Keep in mind that cell therapies are cells that have been engineered. Among the tool set you can use for that cellular engineering is mRNA and, and of course, CRISPR gene editing, in order to engineer the cell to be the therapy. mRNA and CRISPR are interesting in that they can be themselves a therapy, but also a tool set to engineer a cellular therapy, participate in both areas.
That's great. You know, maybe switching to the biologic safety testing...
Yeah
The T segment, where you spent some time-
Yeah
before recent in the, the role of CEO.
Yes.
You know, maybe start with the near term. You know, I think there was, during the call, some talk of China headwinds.
Mm-hmm
in the quarter. It sounds like China is maybe a large portion of the softening demand. Can you just talk about what you're, you're seeing there on near-term dynamics?
Absolutely. Yeah. Yeah, I, I really enjoyed actually my, my, seven or so months in BST, because that's an area that I was less familiar with. Biochemistry is still biochemistry, though, so that was great. What a wonderful business that is, that really set the gold standard for host cell protein detection. You know, again, as Kevin Herde said, a scientific founder-driven startup that became a category leader. There, much more so, as Kevin Herde described earlier, a great deal of the pandemic era growth for BST came from China. You know, the, the, as some call, the halo effect, you know, of the- on the whole industry, we felt that in BST specifically. China was the fastest growing area for them, in 2020 and 2021.
When China dropped off, we felt that more acutely in BST than we did in- across the rest of the business, for which it was a much smaller percentage, as Kevin said. I actually went to China and attended some biologics conferences, visited some customers in June, and saw multiple, I would say, overlapping themes there, many of which now have been well-publicized. My, my memo to everybody when I came back in June sounds a lot like what you've been hearing from the, from, you know, from many of our peers who have reported there are macro issues, there are industry-specific issues. And there was, I would say, an atypical level of overbuying of gold standard inputs during the pandemic, which, you know, becomes an inventory hangover.
We have earned our way out of that, I would say, in BST now, simply because there's a one-year expiry on most of those ELISA kits, and we saw, we saw China significantly slow for BST. We've been very public about that, really in the second half of last year in 2022. There were multiple overlapping factors, and I could go deeper and deeper, but it's, you know, everyone else is seeing in biologics in all geographies. It's just that we saw it first in China and BST.
Got it. Maybe just, would you be able to quantify what % of is China and BST and what % maybe overall or NAP segment as well?
Yeah, we haven't broken that out from our APAC. Roughly thereabout. Again, it's, it's gone from a growth factor to a leveling more than anything, and we're not, we're not assuming it to grow. Then on the flip side, you know, we're not, we're not exposed, and we don't hardly source any products from China either. You know, the dynamics that are going there, albeit have impacted BST more acutely over the last 4-5 quarters, we're really not seeing it, other than on the, on the fringes kind of impact, how we, how we move forward with the business. That in BST, keep in mind, actually, all of Maravai is consumable, so we have no equipment revenue of any type. There's no capital cycle going on there.
As you've heard us say publicly many times, we live, we hope to win in discovery. We live on what we call the front end of the funnel, and that means that when discovery activity slows down or is deprioritized or whatever it might be, we see that very quickly. On the flip side of that, when it returns, we see that very quickly. The, and, you know, the BST, the Cygnus kit purchase cycle is a matter of days or weeks. It's not, it's not a quote and a, and a, you know, a PO and, and two quarters later kind of delivery. It moves- For BST, for Cygnus, and the, it's a model I really love, which is a small business inside a business.
That group has been building out the product portfolio for what is a new, a new type of, of biologic testing, where obviously, host cell proteins, by definition, are the proteins that could come along with, the drug substance when it's isolated from the host cell system. The longer term and expensive study. The MockV product line allows you to spike in similar, viri to the endogenous virus to check your clearance as you're doing your process development. So it's an in-process, which allows you to have a much better, much more confidence as you go into that final viral clearance. You know, because you've tuned it through your whole development cycle.
We think that there, that that value prop is intuitive to a lot of people, and we just have to get the word out, which Cygnus, you know, as the gold standard for host cell protein for the last 20 years, hasn't had to do a lot of getting the word out. That's where we're leaning on our shared services and the marketing across Maravai.
Yes, it's, it's very. It's been great to see. You know, I haven't I need to go back and see The opportunity again to scale, to leverage, to offer more services, not just for host cell proteins, but for all contaminants and investigational work. Now, working in it, and, you know, our, the original founder, Ken Hoffman, came back, and we dedicated a conference room to him and all those sort of. Just to see that and his, he just couldn't believe what this business is today from where he started it.
It's just those sort of stories with our founders, and that's not the only one, but, certainly just, just really make you feel good about how we've taken these businesses and invested in them and made them much more than even the founders envisioned, which is, you know, what we plan on continuing to do.
You know, you mentioned a couple of times, the company's had a strong history and track record of acquiring founder-led businesses, integrating them into the portfolio. You know, Trey, we've gotten your, your vision for the broader company management. You know, just like to hear your, your thoughts on M&A as well. What has there anything changed there? Would the company look at larger deals, different type of deals? Just where do you see that, that happening?
Yeah, we are definitely active. That's one of the first things I jumped into after I was renamed, was to find out what was going on in that funnel and see where I could help. Obviously, my entire career history started, you know, in, in a very special, scientific founder-driven company. That, that is something we're extremely active in and hope to be, you know, hope to be opportunistic here shortly. We have a nice balance sheet. As Kevin said, that's one of the many benefits as we have come out of the pandemic, and we intend, as, as Kevin just said, to continue on that path as described. We have a lot of great tools, a lot of great technologies, and a lot of great people that have come with them.
We're not done building that, for sure.
I guess just, you know, looking at some of the recent deals, any updates on Alphazyme or, like how, how the integrations are going there?
Great. All greens on the scorecards for those integrations. We, Alphazyme, too, has seen the same industry dynamic of, you know, a $250,000 project used to be approved right away, now it has to go through 2 levels. Once they approve it, sometimes it might go to another quarter. They're seeing that same sort of, budget consciousness that everybody in our whole industry is seeing. What's particularly compelling and exciting for me is that Alphazyme is working with TriLink, for example, on the, the enzymes used in processes. Our, you know, our, our experts, our nucleic acid experts, and now our enzyme experts, are working together to improve, service capability. The output of that, those projects is gonna ultimately be more products that we can bring to bear for the industry.
You know, we want to have the products, no matter what. We want to enable the products' adoption through the service.
Y eah, and we've gotten pretty good at this. you know, we had them up and, up and integrated fully on our ERP system in 45 days. This is something that's become a, kind of a core skill for us, and, and rolling them over to all of our, you know, the benefits and, and back officing what is painful for scientific leaders to do, and that is, things that I, I don't know if I enjoy doing them, but I, I do them. The accounting and finance and IT side of the, the house, and the legal and administrative efforts that we have, and get them focused on the science, on the products, and on the customers.
Through all our acquisitions, that's been a great formula for us to accelerate growth and, and making them a much more meaningful contributor to where we're going. You know, we're in a good spot, and I think all of our acquisitions, because of that, that formula and focus, have, have gone really well from an integration perspective, both from our sides, but I think if, if you were to ask the employees there from all of our acquisitions and the founders themselves, I think they would all agree with that statement.
Yeah, I, I was thrilled, as I said, to see the reinvestment in world-class facilities that can be leveraged for the next 5 to 10 years. I was thrilled about the balance sheet, thrilled about the acquisitions, but also that every operating business is completely harmonized on the same ERP and reporting systems, and, you know, CRMs and everything else, so that there's no, there's no technical debt or legacy stuff to clean up here. It's all already synced.
Well, we're just about out of time, but just actually 1 clarification for Kevin, investor question here.
Yeah.
On the margins, you know, I guess, during COVID, company had very solid, you know, margin, 8%.
Yeah, that's pretty solid.
On the high side, anyway.
Yeah.
You know, that, that's come down.
Sure.
I think, you know, maybe in May-ish, you know, the, the margins maybe turned negative, but then. How do we think about the trajectory into the quarter, maybe rebound somewhat in, in June? You know.
Sure
more on the trajectory, even if you give us any more bandwidth.
Yeah, yeah, certainly. I mean, I think, you know, we're guiding to, to low to mid 20% EBITDA margins, which in a down year is still very good. You know, we saw 22% in the first half of the year. Again, we brought up some big facilities. You know, it's, it's gonna be a revenue game over this cost structure ultimately for us. The good news is, we have what we need for a while, and we have the capabilities as well as the capacity, and I think we'll be able to pull that through. As you, as you see, both on the downside and certainly on the upside, our variable COGS, as we drive through these revenues, are very manageable and allow us to leverage what we have.
I think as, as revenue ramps, we'll continue to see margin expansion from what we're currently seeing.
Okay. Well, Trey and Kevin, thank you very much for joining us today, and thank you for the audience for listening in.
Thank you.
Thank you.