Thank you everybody for being here. This is, Tim Daley, Life Science Tools, Diagnostics and Pharma Services Analyst here at Wells Fargo. Welcome to the Healthcare Conference 2023 here in Boston. Pleased to have Bio-Techne here with us. We've got, you know, Jim Hippel, CFO, and David Clair, Investor Relations, here with us on the stage. We, you know, have a bunch of questions for them. A lot of hot topics that currently are, on top of mind, as well as on top of other companies' minds. You know, I'll probably leave a little bit of time at the end for Q&A. But, you know, just to, I guess, kick it off with the hot topic du jour, any update for us on August? You know, how are things trending versus July
You know, month-to-month volatility has been all over the place, depending on end market, geographical market. Any changes between-
Honestly, really nothing. No, no changes to report on since, you know, kind of the view we shared in our last earnings release. It's, you know, that's how it's playing out, you know, as we anticipated. You know, just to recall for everyone in terms of what we've talked about with regards to the fiscal year 2024 in total, but especially in the H1 of the year, you know, some of the COVID hangover, as we call it, headwinds that we faced, not just to us as a company, but as an industry, you know, haven't necessarily gone away. Those three, I think, main headwinds would be, China, China's situation, which I'm sure we'll get to in more depth.
Destocking from certain OEM customers, which is more acute for us than perhaps other customers, but nonetheless, still hurt us by about 10%--or sorry, 2%, each quarter, last two quarters, in terms of growth. And then lastly, the, you know, the quote-unquote, "slowdown in biotech funding" right? So those are the three main contributors, I would say, to the COVID hangover that we've had in fiscal year 2023. And the big question for everyone, including us, is: You know, how long does this hangover last, and when do we, you know, kind of get back to a trajectory we saw pre-COVID?
I'd say if you kind of go through those different three headwinds, one by one, you know, starting with the Biotech Funding, we were one of the first, I think, companies out there to talk about that as a headwind in the early part of our fiscal year 2023, and it has stabilized. It's stabilized now for the last three quarters. And what does that mean? It means it's not shrinking. It actually is growing for us. Not the kind of rates it was during COVID, but nonetheless, I don't think anything's growing at the rates it was during COVID. That's why it was a halo. But it's growing at rates that are more commensurable with, you know, what we saw pre-COVID. So, we're encouraged by that. The second item being the Destocking situation.
Again, for us, we're talking about six or so different customers that generally buy our antibodies for use as raw materials into their assays, that in some cases even compete with us, in some cases don't. They, like many others, were stocking up during the supply chain crunch of the peak of COVID, and they're working down their inventories. And we know this because these handful of customers or so that I'm speaking about, we also charge them royalties on their end unit sales, and we audit their end unit sales. So we get a sense for, you know, what their growth is like and what that burn-down trajectory might look like of our inventory if they're not buying from us, and they haven't been for the past year.
Based off what we see, we see a continued headwind in Q1, somewhat less in Q2, and potentially turning back into a tailwind in the back half of the year when they actually start repurchasing again. That was kind of what we laid out a couple months ago in our earnings release, and that view hasn't changed. Then lastly, there's China. You know, China has been a very volatile situation all throughout COVID, with rolling shutdowns and people getting sick, and now a situation in the post-COVID where there's a macro theme of a Chinese slowdown, and then there's some more micro themes within our space, specifically around file processing and CDMOs that are not having any new runs or moving back onshore to the U.S. or Europe.
And then even more acutely within our space, the delayed in government funding that many associate with the fact that they spent so the government spent so much money on testing and vaccines for the last two and a half years, that they're kind of refilling their coffers before they lay out the next round of outflows for budgets in their academic institutions. And then last but not least, there's the anti-bribery or corruption campaign that the government's putting on, that's now, I guess, finally hit our industry. It's hit a lot of other industries, and now it's hitting the life sciences space, namely the hospitals, and major academic institutions within China. So I would say it's the latter two of those situations that are impacting us versus our peers.
It's not to say our peers aren't being impacted by that either, but many of our peers have a higher proportion of their revenue more downstream into the biologic manufacturing, into the CDMO space, and that's being hit even more severe than the lack of annual funding that occurred in our academic institutions. Keep in mind, biotech and these business in China is largely what I call China for China. It's sold to Chinese institutions for Chinese research, ultimately for Chinese-developed therapies and vaccines for the Chinese people.
Mm-hmm.
So it has very little impact with what's going on from a geopolitical or macro perspective between onshoring, offshoring, or anything in between. But nonetheless, they did delay their funding, and the question is: when does that funding come back? And they haven't said anything publicly about it, but so it can come back at any time. But if we look at history as a barometer for when it might come back, when the government has done off-cycle stimulus in life science area, it's typically been either in the October timeframe, when students come back from vacation and school restarts in their major institutions, or and/or it occurs often right after the Chinese New Year, when everyone comes back from vacation again and kinda kicks off a whole new year.
So those are the two timetables that we're keeping a strong eye on in terms of, you know, what's called green shoots. I call it, I joke and say it's a jungle, 'cause in China, nothing's a green shoot. It goes from bare into the jungle overnight. But those are the two timeframes that we're, you know, we're keeping a close eye on. In fact, Chuck and I will be over there in China in October and kind of see firsthand and talk firsthand with what the current view on that is. But as of right now, it's an unknown, which is why we said that will be a big trigger for us in terms of that combined with the OEM destocking.
That will be a determinant as to whether we can get back to double-digit growth in the back half of the year or not.
Okay. That was fantastic. Thank you for that update. You know, anti-bribery, that is something, you know, again, new to, I guess, the tools narrative right now in China.
Yeah.
So, you know, granted, you guys are more exposed there, but, you know, if we were to just first frame your China business in terms of, I guess, the channel, whether it's healthcare versus academia versus, you know, biopharma entity or other. How should we think about that split?
Well, and we purposely don't call that out, and then when we talk about, you know, X% of our business is academic, X% is biopharma we exclude China from those metrics. It's only really, it's really more only the US and Europe, and it's mainly because, it's a little bit blended everything in China. I mean, even in the entrepreneurial biotech sector within China, there's often a lot of government incentives.
It could be as simple as free land, or a free building, or a no-cost loan for equipment. So it, whether it's directly or indirectly, there's usually some government stimulus associated with the whole space, and so we don't even try to necessarily parse it out. But I'd say at least half of our business in China comes from the, you know, very large, strong academic institutions within China that are often associated with hospitals. So unlike maybe in the West, in China, their, a lot of their hospital systems do their own research and even do their own therapy, you know, development and sometimes even production. So they're all kind of fully integrated a lot of times. But that, I'd say 50% more or less comes from that, and the other 50% comes from what you'd think of as more industry, whether it's larger pharma or biotech, but even those, again, have some government influence.
Got it. Okay. And just, again, final thing on this anti-bribery. Just given you are in China, for China, is that you're gonna get hit harder on this dynamic? Or just trying to think of, you know, again, hypothetical bribe going out, is it going to a multinational?
You know.
Well, a couple things. So I'd say... I, I actually call it out because I think we'll be impacted perhaps a little bit less negatively than those companies that are more, have a larger percentage of their revenues, I call it downstream, in actual biologic manufacturing or CDMO production. Because as much as 80% of those Chinese companies that are doing that activity are for Western customers, for other Western companies. And so that's what's getting pulled back a lot, you know, whether it's called back onshoring or what have you. And so they're being impacted even more severely proportionally than we are. And I'm sorry, what was the second part of your question?
Just like, does is for China and China-
Oh
... the backward, like a-
Yeah
the negative now.
No, and actually, we see that, again, in this environment-
Yeah
... we see that as a positive.
Okay.
I mean, long term, again, for more than a decade now, and even more, even as, as recently as the last five-year plan, China has called out investment in healthcare as part of their national interest, national security, and they want to be a beacon, a beacon, a destination of choice for healthcare for all of Asia in the decades to come. And I can just tell you, being there firsthand twice a year for the past 25 years, they got a long ways to go-
Yeah, yeah
... to reach that aspiration. So, you know, all this noise that's occurred throughout COVID and now post-COVID has not wavered, it has done nothing to deter our view that long term, China will be a very, you know, strong market for life sciences in general and cell therapy development in China, for China.
Okay.
That's who we serve.
Got it. Last China question, I swear.
That's okay.
Obviously, last week, we saw some stimulus, obviously, property sector. You just happened to mention there are some secondary or, you know, second derivative impacts potentially that come from government stimulus within the property sector. Is there anything that you think this could impact, or is this just, you know, more like just the bailouts are staving off-
Well-
Things getting worse?
I mentioned those two time periods for when stimulus is usually handed out in our space, not because we're expecting additional stimulus. We're just looking for the release of a normal budget.
Okay.
And so, you know, that's what we're lacking right now. So we're just looking at those two time periods because historically, when they would give stimulus above and beyond their normal budget release, which occurs in April or May, that's when it would typically occur. But what's happening right now, they haven't even released their typical annual budget.
Mm-hmm
... you know, funding that they do in April, May, and that's what we're waiting for.
Okay.
Any stimulus above and beyond that would be even, you know, even more gravy.
Okay, no, that's perfect. So, you know, now focusing on, you know, Western markets here, obviously hot topic with, with Abcam, Danaher just-
Yep.
You know, you guys have almost built the business by having not being exposed or overlapping with Danaher and now, you know, directly competing.
Mm-hmm.
Just how does that deal impact your view of the antibody market? You know, how big is it today within your business? You know, what is the growth rate expectations, and how does this, I guess, change the dynamic at all?
Yeah, not to be cocky about it, 'cause we're, you know, always paranoid about competition. If you're not, you're, you know, you're gonna get bit from behind, right? But, you know, we're actually quite comfortable with if this ends up being Danaher's asset, we're comfortable with that. We see it as a big hole in Danaher's life science portfolio, which is understandably why they would have wanted that asset. But for that same reason, we also don't necessarily see a situation where Danaher will do a lot to make it more competitive against, say, us.
Mm-hmm.
I think they'll do a lot from a DES perspective to continue to drive profitability, so I think it'll be a good acquisition for them. But we don't see where Danaher will add anything to Abcam to make it more competitive for us. And, you know, frankly, we said the same thing about PeproTech when it was acquired by Thermo a little over a year ago, and so far, that has played out as well. So, you know, I think at the end of the day, Danaher is a great, well-run company. We know them very well.
Mm-hmm.
We work with them in very, very different aspects and different across different product lines. But the other thing you hear about Danaher, too, is that their general business model, as you all know very well, I'm sure, is they run their different companies they acquire very independently.
Mm-hmm.
So yet another reason why we're not expecting a major change one way or the other. So if that's the case, then how have we been doing versus Abcam? I mean, you know, there's different product niches within their antibody portfolio that have done very, very well. But as a category in entirety, we believe we have taken share from Abcam all throughout the COVID era. And if the last reported results are any indication of that, and off the top of my head, so you can correct me, Dave, if I say this wrong, but, you know, I think Abcam reported double-digit growth in Q1, and then year-to-date growth more recently here, of, like, 5% or something like that.
Yeah.
Which would suggest that they didn't grow or even shrank in Q2.
Mm-hmm.
Our antibodies didn't shrink in Q2. So it gives us, you know, some... Not that, comfort's not the right word, but, some indication that we are still taking share from Abcam overall.
Got it. Okay, no, that's helpful. And, you know, I know you guys have quoted citations before, and Abcam obviously does as well, and we'll move on after this. But, you know, they toss out that 25%-30% of citation volume is related directly to their catalog. You know, again, they like to say that's the market share, but I don't know how-
Well-
reliable that is on their volumes or whatever, but like, what do you?
I can't imagine anyone claiming 25%-35% market share in antibodies, 'cause it's a massive space.
Yeah.
billion or $4 billion, and clearly they're not that big, right?
Yeah.
So it's, you know, the antibody market is extremely fragmented, and it's somewhat nichey as well. You know, there's Flow, which has its own, has its kind of its own niche. I can go on and on, even beyond my technical capability, to explain all the different categories of antibodies. I'd say when we think about our catalog of antibodies, we do consider Abcam a direct competitor, probably one of the most direct competitors we have, because they play in that kind of same space of a general primary antibody provider. You know, a full catalog, not necessarily focused on any one niche or any one area.
Okay.
I think they are, you know, clearly a top five in that, in that, in that particular space. But 35% of what? It's a question I can't answer.
Yeah.
They're more positioned on the academic side. That's why they quote the publication.
Yeah, the publication.
Yeah.
Okay, that makes sense.
Yep.
Yeah, I was always scratching my head at that. Okay, so that's, that's helpful. And then, if we were to just zoom out a bit within proteomics, you know, the, the research reagents versus the analytical tools, and we think about kind of the midterm growth here. You know, I think, I think you guys kind of size up the, you know, I think it's the reagents in kind of a mid-single digit long-term growth in the tools side of things, so kind of ProteinSimple, more on the high single digit side of things. So just curious, you know, how the near term is. You know, we're a lot of hype, a lot of excitement, a lot of strength in academia and government, a lot of, you know, buzz getting thrown around about proteomics.
Just curious, are we in a, you know, more of a near-term above that growth rate, scenario?
Yeah, I mean, you, you will hear more about this in our Investor Day in a couple of days, but just to give you some little bit of preview on that, I mean, you know, I think we're gonna talk about our core proteomic reagents being kind of in that 5%-7% range. I'm going off the top of my head here, but something like that. So mid to, mid to high, but higher mid maybe is the way to put it. But our, you know, our, our instrumentation and the consumables associated with that instrumentation. So keep in mind, like, our ProteinSimple franchise is our, is our instrument platform. There's four, you know, three or four major product categories we have there.
Instruments, pure instruments, make up 10% of our total company revenue, but the actual consumables that are used specifically for those instruments make up another 10%. So said another way, our ProteinSimple franchise makes up roughly 20% of our revenue... and that, you know, even in this fiscal year 2023, in the midst of this COVID hangover, our ProteinSimple franchise grew double digits. In fact, all of our key growth platforms, whether it's our proteomic instrumentation, our spatial biology, our liquid biopsy, and our cell and gene therapy, all grew double digits, even in the COVID hangover. So that's what gives us a lot of confidence that we are positioned extremely well, you know, for the future.
As those businesses continue to grow, become a bigger proportion of the company, if they can grow double-digit in an environment like we just had this past year, there's no reason why we can't expect nice double-digit growth from those same categories for the next decade, and higher growth, higher double digits than we saw most recently.
Okay.
Now, the very near term is getting back to some of those core questions we just asked in terms of when it's trying to, if that point of biotech, get back to full strength. You know, we'll see. I think one of the green sheets I look at, just at a very high level, is from a biotech perspective, is, in general, you know, how much money is still out there in the private equity world? And is that increasing, decreasing? I can just tell you on the M&A side, where we're up against them all the time in certain deals, there's still a lot of money out there-
Mm-hmm.
and a lot of interest in life sciences in general. And I always see biotech as being kind of one of the early places that new money gravitates to, because it's just an exciting space, and the upside is always so huge. So I think when overall when private money starts to accelerate again, it's going to accelerate in our space first.
Okay.
That's my view.
Well, that's really helpful. If I were to just kind of pose that same question that I asked about proteomics on the spatial biology front-
Mm-hmm.
You know, moving over to the exosome genomics, again, that's the other kind of hot area du jour on the upside basis in terms of the broader tool use, tools universe.
Yeah.
So, you know, within ACD, just, I think long-term, low double digits, if... Could you just kind of walk us through that same exercise on, you know, near-term puts and takes within spatial?
Again, our spatial franchise has done well. It's just, you know, it's been buried through to the core and some of the OEM destocking in China and all that. So it, it's done well. I think with the, you know, with the Lunaphore acquisition we just announced, that will be a true accelerator of growth for that platform. I think if there was one hindrance to even higher double-digit growth than what we've experienced out of ACD the past five years, it's been that lack of automation. I mean, to, you know, to run our, our assay, you know, can take a week to two weeks, depending on how many times you're collecting it.
Mm-hmm.
An instrument like Lunaphore can do it in a day. I mean, so it's a dramatic-
Okay
... dramatic difference in terms of the efficiency. And we knew that, which is why we've been very, you know, quite vocal about it the last couple of years. That was a top priority, was if we were to find an instrument that could work with our assay and make and work just as well as it does on a standalone basis, we would be all over it. And in the meantime, we're going to partner with all the instruments out there and be rather agnostic. That still is our strategy, is to be rather agnostic, but if we found the perfect one, we were going to buy it, and we think we found the perfect one with Lunaphore. And, and so that, you know, that now there's knocking down that barrier of speed to answer-
Mm-hmm
... we think will be the game changer that can really take this to the next level of growth, even beyond low double digits.
Okay. No, that's helpful. And I guess just, you know, the faster speed, higher throughput that this facilitates, you know, the Lunaphore acquisition, is the market there? Is the market, you know, of that size? Is demand there for that speed?
We believe so, yes. I mean, because again, there's, you know, our people out on the street, you know, on knocking on doors and working to sell our ACD solution, they say, "You know, they could sell a lot more if it was automated.
Yeah.
So yes, we do believe there's a, you know, it's tricky because it's an evolving market.
Mm-hmm.
So, say, let me compare it to our proteomic instrumentation. Our proteomic instrumentation, a lot of that is converting a market that already is out there from a manual to an automated solution. Whereas spatial in itself is a whole new market.
Mm-hmm.
So therefore, it's a little more lumpy in nature in terms of fits and starts, and growth chasms, and all that kind of stuff. But, you know, I think it's undeniable that it is. Talking to researchers, they want to understand a holistic solution. When they're looking at a tissue, it's one thing to understand the expression of the protein, but then also understand before that, you know, the molecules that cause that expression and how it all ties together in the tissue and how it progresses to the disease. They want to know both, and it gives them a lot more information. So, you know, IHC, which is just part of the answer, is a billion-dollar market plus just in itself.
And the DNA, RNA side of things, the genomics side of it, is still very nascent and new, and we're at the forefront of that with our ACD solution. And now with Lunaphore, it provides the really only true capability of multi-omics, looking on the same slide at the same time, and seeing on that slide, in that tissue sample, the interrelationships between the genomic side of it and the proteomic expression side of it. And again, our customers are telling us this is what they want, and now we're going to give them a tool that provides it.
All right, great. Well, that's helpful. You know, sticking within, diagnostics, genomics, can you just kinda give us an update of, of the, I guess, materialization curve of the, you know, of the exo TAM, if you will? You know, for a couple of years, a little bit below the curve, and then now seems like we're finally hitting that inflection point.
Yeah.
Like, where are we today? You know, how much, you know, I guess, near-term significant sequential growth, are we sure?
Sure.
Should we be expecting?
Let's just talk specifically about the ExoDx Prostate test. That's the commercialized test we have out there right now. Where we're at today is where we thought we'd be one year after the acquisition, three years ago.
Mm-hmm.
three and a half years ago, which sounds bad, but the reality is that, you know, we had massive headwinds that faced us the past two and a half years, the biggest one being COVID. I mean, throughout most of COVID, no one's even going to the doctor, right? So it was bad for all general diagnostic companies, and that's no different. So the worst timing ever in terms of trying to launch a new test, really. You add to that the essentially two-year delay we had in getting full coverage under Medicare, and when I say full coverage, what I mean is the same coverage that the NCCN Guidelines say the test should be used for, to get to that total addressable market that's out there. And not even that, to just get... take down those barriers that doctors have.
If doctors have to, like, have this exception, that exception, next, they don't want to mess with it.
Mm-hmm.
It's too tedious, right? Where you can say, "All the barriers are gone, you can just prescribe this based off of this parameter and go," you know, it makes a world of difference. We didn't get that until this past year, you know, after two successful sets of rounds. We got it incrementally, but not completely until this last February or January, right?
Mm-hmm.
So, those were kind of the market headwinds that were against us that were major. But the other piece of it, which was, we fixed internally in terms of, a more internal issue, was our go-to-market strategy. And we bought, you know, Asuragen a couple years ago, and they were experts in this area. They took the whole platform over, immediately changed the, messaging around, rather than being just strictly a patient-driven message, that this will help prevent you having an unneeded biopsy. It made it an equally doctor-oriented message that says, "This will actually encourage patients who should get a biopsy to come in and get one." Because basically, we've done studies that show up to 60% of all patients who are recommended by their doctor to have a biopsy, never show up for it.
Mm-hmm.
If you have a test that says, "Hey, you have a high probability of having high-grade cancer, you better get that biopsy," they're going to show up.
Yep.
So there's that. There's also a bunch of other nuances that Asuragen brought in because they have experience in this area, about how to work with doctors, make the, the monetary side of it as seamless as possible, where we take the burden of dealing with the patient and, and reimbursement and getting paid, and not the doctor. Sounds like small stuff, but these are things doctors don't want to mess with, right? So what's, what's happened as a result of that, this past year, we had 90%+ growth in tests. I'm sorry, revenue. We had 70% growth in test, plus in tests. We have 100,000 tests cumulatively in the market now.
And here's my favorite part of the story, is that with, specifically with the prostate tests, we estimate that only about, well, less than 20%, somewhere between 15%-20% of all urologists have even tried the test once. So there's a whole 80%+ of the market to still go after. But even there, within that 15%-20% of the doctors who've used our test, we keep track of the average usage and how that usage increases over time. And our doctors that have been with us the longest, on average, prescribe the test about 20 times, more than 20 times a quarter. Our overall average is 6.
Just our existing doctor base, getting it more ingrained in their workflow as they get more acceptance for the test and get up to the average of our doctors who've been with us the longest, there's a 4x potential just there alone, not to mention the other 80% of the doctors to go after.
Mm-hmm.
So there's still the opportunity for that test is still as great as we ever thought when we first bought the company. Now, you add to that, you know, it's a platform, not a test, the Exosome platform. You're going to hear a lot more about this on Friday, for those of you who pay attention. But what I'd ask you to pay attention to, for those that are interested, is it's a three-pronged strategy. You know, it's the urology test strategy, because we already have that model built in. We've got the sales team built out. That infrastructure is in place, that LDT model. But then there's other indications like colorectal, Sjögren's disease. There's a whole line there of things we're going after, some more near-term than others.
But we're not going to build out an entire separate sales force for that. We're going to partner, like we did... And a good example of that is ExoTRU for kidney transplant, that we did with Thermo. We will collect very nice royalties. And there's a third-prong strategy that involves taking our superior exosome technology and applying it towards the cancer monitoring market, so post-diagnosis. There's already tests out there for it. We believe our technology will allow for faster diagnosis of something going wrong, and we can use the existing Asuragen channel to sell those tests into the reference labs and hospital labs.
Okay.
So, it will allow for a lot more near-term, you know, revenue possibilities coming out of that platform.
All right, perfect. Oh, yeah, I'm not going to make it Friday. I'm here, so I'm trying to get all the previews I can get. But, yeah, you know, we've got five minutes left. If anybody in the audience has anything, let me know. All right. One thing I did want to touch on here is kind of higher level, you know, year-end budget flush, calendar, year-end budget flush.
Yeah.
But you know, you guys, obviously it's academic, and pharma have their own dynamics, but you know, if pharma—like, what is—when do we know if pharma's going to have a year-end budget flush? Like, is there timing? How—is there signals? Are there conversations? Do they happen in September, October?
Yeah. I'll be honest with you, we don't pay too much attention to it.
Really?
It's not to say we don't get some ancillary benefit from that.
Right.
We probably do. But generally speaking, year-end budget flushes, and I know this from my years at Thermo, when I was in the cath lab consumables division for a while, which was all, you know, pipette tips and beakers and bottles and things like that... that behaves more similarly to our reagents business, our consumables business. And I work in the mass spec business, which was very expensive. I call it iron, you know, $1 million instruments. And the lab consumables business never paid attention to budget flush, didn't, saw no difference. In the, in the mass spec business-
Yeah.
-paid a lot of attention to it, right? So we're 80% consumables.
Yep.
Doesn't impact us that much, and even our instruments, not to say it doesn't help a little bit, but again, our, our average, you know, our instruments are pretty much, for the most part, under $200,000.
Mm-hmm.
Most of them are even under $100,000. You're not using budget flush for that. That, that fits into your normal budget.
Yep.
Right?
Yep.
So.
In terms of the OpEx, CapEx dynamics, you know, a lot of people have been kind of throwing out the rule of thumb, $100K and above, $100K and below.
Mm-hmm.
You know, 100K and above is where we're seeing weakness, softness, pauses, whatever.
Yep.
You know, words you want to use to describe it, but is that, you know, fully playing out? Is that kind of clean cut, consistent in your guys' businesses or?
Oh, I mean, I don't know if $100,000 is, like, a magic number-
Yeah
... but there's no question that the sales cycle for instrumentation-
Mm
- has lengthened. Now, relative to what?
Mm-hmm.
Is what I always like to ask. Relative to the COVID halo days? Yes. COVID halo. During the COVID, everyone was so concerned about getting anything, it's like they would, you know, they would order, like, "Can, you know, can you deliver tomorrow," right?
Mm-hmm.
We've gone back and looked at what our average time from, you know, in our pipeline to close an instrument sale is, and it's pretty much back to where it was pre-COVID. We just forgot-
Mm
... that was the normal.
Got it. Got it.
You know, and in fact, we've even seen it a bit in terms of the dynamics throughout the quarter, because in an instrument business in general, usually your last month of the quarter is, like, half your revenue or more, and in mass spec, it was, like, two-thirds. Because you build your pipeline all quarter, and then, you know, and then by the end, you try to close a deal by the end of the quarter. That's just the way the instrument business works in life sciences.
Mm.
During the COVID halo, we saw instrument sales that were almost proportional every month of the quarter.
Hmm.
People weren't even. They didn't want to wait. They wanted to get their hands on it because they were afraid something, there'd be a part missing, and they wouldn't get their instrument or whatever. So it's just returned back to the way it's always been.
Yep.
That's all.
Okay. And you guys aren't seeing any difference in... Was there ever a difference in ordering patterns in consumables in particular areas, or, I'm just thinking of the broader kind of COVID supply chain allocation fears that we were just talking about?
Like I said, you know, as a company, we never had a supply chain issue. We never gave our customers ever a reason to have a supply chain concern, but there was overall a general concern. And the only place that made sense for any customer to stock our products was those handful or so OEM customers. Because you gotta remember, otherwise, you know, generally speaking, our customers are the researcher itself, and they're buying a particular reagent that's only good or used for a very particular experiment they're doing on a given day.
Yep.
So there's no rational reason for them to stock up on any, any one reagent, because they may never use it. They may not even use it again for another year, so why would they stock up on it? But, you know, as opposed to another company who needs a lot of it-
Right
... as a key ingredient into their product.
Yeah, and they can freeze and last forever.
They can freeze, it'll last forever and all that.
Yeah. Okay. All right, great. So I guess just one more thing I wanted to touch on is this kind of timing of stimulus in Eco Gov. You know, there was some stimulus in Europe in 2022. Obviously, there was some in China that did not repeat.
Yep.
are you guys still seeing the tailwinds from that? And, you know, how long will, I guess, that-
In Europe, yes.
Mm.
There's that Horizon Europe.
Yep.
And, our academic performance in Europe has been very good the past three or four quarters, and we expect that to continue for, you know, foreseeable future. So, in Europe, in particular, the academic is very, it's been strong. You know, in the US, you know, there's talks about NIH-
Mm-hmm
... you know, slowing down or maybe even going backwards a bit in funding. Now, I'll just, I'll say this, say this: when there was double-digit increases in NIH funding during COVID, I didn't hear any of our peers bragging about double-digit growth in academic, and neither were we, okay?
Yep.
In fact, ironically, the strongest two quarters we've had in the U.S. academic were our last two quarters-
Mm
... during the COVID hangover, so and all the concerns about budgets in you know going forward in academic. So why is that? My theory on it, and I've had some of our top scientists I talked about, and they kind of they're the ones that gave me the idea this is how it works. It's for us it's almost arguably more important where the money's being spent than the absolute funding. Now, higher funding lifts all boats, but as long as they keep budgets relatively flat, those double-digit increases went to support COVID research.
Yeah, yeah, yeah.
That's not our strength. And so if they keep dollars flat, that means that money is being redirected back to other traditional areas like oncology, neurology, immunotherapies, and that's where our strength is. So we, I'm not signing up for it, but I'm saying we could actually see a stronger academic performance in the year to come, even on flat NIH budgets, if that redirection occurs.
All right. Perfect! Now, that's, that's super helpful. And we're on time here, so thank you everybody for, for attending here. Hope you guys have a-
Yeah
... good time, rest of the conference, good meeting, productive, and look forward to listening to the replay.
All right. Thanks, Tim. Appreciate it.
Appreciate it. Thanks.