Scitech at TD Cowen Conference: Strategic Growth and Market Position

On Wednesday, 05 March 2025, Scitech Biosciences (NASDAQ: CTKB) showcased its strategic vision at the TD Cowen 45th Annual Healthcare Conference. Led by CEO Wenbin Zhang and CFO William Macomb, the company emphasized its leading role in the cell analysis market and financial resilience, despite challenges such as negative market growth in the life sciences sector and U.S. export controls.

Key Takeaways

• Scitech reported $200 million in revenue for 2024, with a 77% increase in adjusted EBITDA.
• The company maintains a strong cash position with $280 million and a $50 million share repurchase program.
• Scitech’s SiteCloud platform has expanded to 16,000 users, offering significant revenue potential.
• The company invests 20% of its revenue in R&D to drive innovation and market expansion.
• Scitech is strategically leveraging AI and expanding its clinical applications in China and Europe.

Financial Results

• Revenue and Growth: Scitech achieved $200 million in revenue in 2024, with a notable 77% year-over-year growth in adjusted EBITDA, reaching $22 million.
• Gross Margins: The company reported a gross margin of approximately 59% in Q4 2024, with expectations to maintain around 60% in 2025.
• Cash and Investments: Holding nearly $280 million in cash, Scitech authorized a $50 million share repurchase program, reflecting its financial strength and commitment to shareholder value.
• R&D and Service Revenue: Scitech allocates 20% of its revenue to R&D, and service revenue grew by 30% year-over-year.

Operational Updates

• Product Portfolio and Manufacturing: Scitech’s portfolio includes Aurora, Northern Lights, Sorter, and Amnis. The company operates manufacturing sites in Fremont, San Diego, Seattle, Wuxi, and Singapore.
• SiteCloud Platform: With 16,000 users, the SiteCloud platform supports panel design, data processing, and reagent purchases, offering a potential $160 million revenue opportunity.
• Global Revenue Distribution: Scitech generates 46% of its revenue from the U.S., 31% from EMEA, and 23% from APAC and other regions.

Future Outlook

• Revenue Guidance: Scitech projects revenue between $204 million and $212 million for the coming year.
• Strategic Focus: The company aims to grow recurring revenue streams and leverage the SiteCloud platform to enhance reagent sales.
• Market Expansion: Scitech is exploring merger and acquisition opportunities to expand market access and standardize manufacturing across locations to mitigate export control risks.

Q&A Highlights

• Revenue Breakdown: Scitech’s service and reagent business accounts for 30% of total revenue, while the instrument business comprises 70-75%.
• Export Controls: The company acknowledges uncertainties related to U.S. export controls but is diversifying manufacturing to manage risks.

In conclusion, Scitech Biosciences’ strategic initiatives and robust financial performance position it well for future growth. For a detailed account, refer to the full transcript below.

Full transcript - TD Cowen 45th Annual Healthcare Conference:

Brandon Smith, Senior Biotech and Life Science Tools Diagnostics Analyst, TD Cowen: All right. I think we’re gonna get started here. So, welcome back to the forty fifth Annual TD Cowen Healthcare Conference, day three. I am hope hoping everybody’s hanging in there. I’m Brandon Smith, senior biotech and life science tools diagnostics analyst.

It is my pleasure to introduce you to gentlemen from Scitech Biosciences. To my left, is the CEO Wenbin Zhang, and to his left is the CFO William Macomb. So they’re going to give, some presentation and a few remarks upfront, and then towards the end we’ll have a few minutes for moderated Q and A. But if anybody in the audience has any real questions that are kind of just burning through your pocket, feel free to send me an email, brandon.smith@tdsecurities.com, and I will I will work

William Macomb, CFO, Scitech Biosciences: it in towards the end of the conversation. So, gentlemen. So thank

Wenbin Zhang, CEO, Scitech Biosciences: you for joining us and to spend the next, thirty minutes to listen to the Scitech story. And so safe harbor statement, and you’re all familiar with. So, Scitech is a cell analysis company, enabling the scientific and medical communities with our advanced, procytometer products and the technology. And, we are in fact, the leading, procytometer technology companies out there and in a market which we what we called, in fact, mature market, very well established market with a great market size. And, now we are leading in that market.

And the comparing to many of the technology in the life science tool space these days, we are in a market which doesn’t really require us to convince our customers because this postcytometer is a basic life science tool used in almost every, biology labs today. And, this is a must have instrument. We are the most advanced tool right now out there. So, we are really driving the adoption and also our technology taking market share. And so this is what the company is.

And just a summary of what we have achieved so far. And since we first launched our product seven years ago, 2017, our first, what we call the full spectral profiling technology based instrument by now and eight years. And we have already deployed more than 3,000 instrument cited instrument in the field. And including, in fact, more than 2,300 publications by the academic users citing the use of cited instrument and serve for their needs, for their applications. And we have more than 2,000 customers today and, across more than 70 countries already, with Scitech instrument, Scitech technology.

Scitech is, cash flow positive, and, we have, now close to $280,000,000 in, cash. And now in fact and, with the revenue guidance, we guided 204 to 200, $12,000,000 about, in fact, with company is cash flow positive. So we are, in fact, using the cash generated from our opportunity today, buying back our own shares. And the board just authorized another $50,000,000 share repurchase for the year. And, of course, in the meantime, we are looking aggressively, looking at opportunities and through merger acquisition for the year now and to expand our market access.

And in addition to the organic investment into our R and D to drive more products to serve our customer base, about 20% of our revenue are in fact invested in developing new products and to grow organically. So just take a look at our performance 2024. Our revenue, dollars 200,000,000 and adjusted EBITDA, dollars 22,000,000. That actually affected a 77% year over year growth. So company has always been cash flow positive.

And on adjusted EBITDA basis, we have been profitable. We are one of the only very few companies, frankly speaking, in the lab center tool space like our size, which generates positive adjusted EBITDA. And our gross margin and 59% in Q4 ’twenty four. And in fact, throughout the quarters, this has been improving quarter by quarter and get to close to 60%. We expect we’ll continue to drive the nice 60% ish growth margin over 2025.

And now on unit basis, in fact, our unit overall deployment growth last year, ’24 is eight and a half percent growth and comparing to the previous year. And you may look at, okay, why revenue growth only 4%. By the way, in our life science space, the overall market was a negative growth. Okay. In fact, in this negative growth, we maintain the positive revenue growth year over year.

But our unit growth, in fact, is double the revenue growth. Of course, that also reflected in the mixture of products. We have a whole portfolio of different products and which I will show in the following slides. And now, in addition, among, our whole portfolio, our, solder, solder is basically looking at our product. Sorter is an analyzer after the analysis of the sale, and then you pick certain sale out, enable it to do so.

And then you can move over to the downstream further analysis for genomics or TCR, the type of studies. So you can pick those single sale out. That’s what SOTA does. And so our solar growth was 13% year over year. And then the Northern Lights.

Northern Lights is, entry mid level products and comparing to our early first generation, which is really for the high end of the application Aurora. Our normalized, in fact, last year, grew by 12% also year over year. So they all actually grow faster than overall, instrument growth. And the highest growth last year was our service revenue, 30%. And we expect the high growth of service will continue on because service is pretty much is based on the installed base growth.

And ’24, our total instrument growth was almost more than 25%. So that’s the kind of trend. Service basically is after the warranty. Normally, our instrument and has a carry one year warranty. After warranty, customer buying service contract on a year over year basis is very consistent.

So kind also recurring revenue. Looking at our overall distribution of our revenue. And now academic, our revenue actually is about 60%, what we call the commercial customers, pharmacy, hospitals, and then academic, normally university cancer research institutions, 40%. And then, geographically, US right now is 46%, a mere 31%, and APEC, and the rest of the world’s 23%, which including China, Latin America, Canada, all fall into this APEC and the rest of the world. This is actually quite healthy because overall and, in this market, in the photocytometry industry and, US is about 40% of the total market, Europe, about one third, and, the balance fall into the rest of the world and the APAC.

And we are actually moving gradually toward, that direction because Scitech started with % USA. Okay. Now we are moving more and more toward, the right direction. And so, in fact, last year, and Europe and the APEC has made a double digit growth comparing to the previous year on the revenue side. And, also, Geography Clay and the Scitech is headquartered in Fremont, California, in the Bay Area.

And we have, also manufacturing site in San Diego and Seattle, as well as, our service center in Bethesda for help supporting our customers in the East Coast. In Europe, our headquarters is in Amsterdam, but we do have presence in across almost all the European countries, specifically UK, Germany, France, Spain. And, in Asia, we have our site in Japan and, over there in Tokyo. And we have two facilities in China, Shanghai and Wuxi. Shanghai is our R and D center.

Wuxi is one of our manufacturing sites. Now just recently, we established another manufacturing site, in Singapore. So now we on the instrument side, we manufacture primarily in The US, Singapore, and, also China across those three areas to support our global customer base. Now, a portfolio of our products. And we have instruments on the top left side from full spectral profiling technology tools and then, also the imaging, flow cytometer, which is AMNS.

Now, if you attend, Seido, which is a top premier conference for a company like Scitech in our industry, Last few years, you can see there are only two major themes for SIDO. One is a full spectral profiling tool technology, which is what Scitech pioneered. And, the second part is, imaging for cytometry and, which is, AMOLEDX is, a part of that. In fact, AMOLEDX continue to be the best high resolution, imaging based flow cytometer, out there. So and, people call Amadex as a single cell high speed microscope.

That’s basically what it is. And, then, the second part of the business is religions as you can see. And, with our installed base, continue to grow. Reagent is another possible revenue stream for the company, which today is about, together actually, reagent and the service. I just mentioned about service is 30% growth year over year.

The region and the service together is about 30% of our business, which is recurring today. And the increment is 70%. And so that’s the kind of distribution, 70% of capital expenditure and recurring about 30%. We expect over the time, recurring is going to continue to grow towards more like 50% and capital expenditure about 50%. That become a more healthy distribution.

That’s a reason what you are going to see. Service, the region, and software, those will grow faster than the instrument over, over the time. That’s the kind of deduction. So just to summarize, and here, on the instrument side, and, we have this Northern Light Aurora Aurora cell solar. Those are full spectrum based tools.

And, Aurora is a cell analyzer, which was the first product we launched and continue on. And this is more for the high end of the research market as well as the pharmaceutical discovery applications. Then Northern Light is the entry level and, for and, many of the daily individual labs as well as actually for clinical. Okay. We do have Northern Light’s clinically approved for China and Europe.

Then, our sales order, which actually match exactly as the Aurora on the panel side. But Aurora sales order functions as an analyzer press sorting function to enable you to pick the individual sale out, right, one by one and when when you find something interesting. And then, the, Amlex and the Guava instrument and which actually we got this product portfolio two years ago through acquisition and from Luminess. At that time, we, the reason for that acquisition we pointed out is three reasons. One is for its imaging technology, which continued actually with the development over the last two years.

Clearly, we see and imaging is one of the key themes in the flow cytometry industry. And AMNS continues to be the best imaging flow cytometry out there. And the second reason for the acquisition was to enable us to have a larger install database to help improve our service operation efficiency. As you know, service, we have to have our people in the field and more density, better efficiency over there. And the last reason for the acquisition at that time is the Huaba over there.

Abnex has been in the field for twenty to twenty five years, has a large installed entry level product. And, we feel that customer base will enable us to grow into that space. And so coming together now, let’s take a look at what we have achieved over the last two years. First year is imaging. In fact, indeed, 2024, our imaging revenue grew by 14% compared to ’23, the first year of our acquisition.

So imaging indeed is growing faster than the overall revenue growth in our industry. And the second part is our service gross margin. Twenty twenty two, our service gross margin was 15% because that time only had Citec’s own instrument. And, now combining those two business, we are looking at 57% in 2024 for the service. Okay.

So that you can see the tremendous improvement and with the operation efficiency. Then the low end, I just mentioned, our Northern Light grow by 12%. Again, faster than our overall, instrument, unit growth. So we have achieved all the objectives of that acquisition. And, certainly, we would like to continue to repeat the success we had going forward.

And then, the revision part and as we know and as we continue to have our instruments in the field and we expect we should draw revenue and from those recurring applications. And, now due to the nature of our technology, in fact, now Scitech tool allow to use many regions conventional flow cytometer wouldn’t be able to support because conventional flow cytometer has fixed the grid while full special technology Scitech developed is very flexible. It can work with any wavelengths. And so Scitech internally has been focusing on developing certain regions to fill the gap of the conventional to enable us to expand the panel size, expand the parameters for the applications. In the meantime, we have been focusing on kits because for Scitech is we feel and, in what’s important is develop a certain specific large panel kit to help customers to make it easy for our customers.

And and then, we have also developed our one laser and two laser six color TB NK for the clinical, applications, especially for the single laser six color TB NK. TB NK is the largest clinical application using procytometer. And but the conventional TB NK application is two laser based. Okay. Now with Scitech technology that enable us to drive single laser six color TB NK, that’s a standard clinical, application with single laser as you can imagine, less laser, more reliable, lower cost, and data become more consistent.

And so now both single laser and the two laser six color TVMK reagents are approved for clinical use in China. Our single laser six color also is approved for clinical applications, in Europe. And then we have a whole bunch of certified clinical single bio kind of reagent and applications out there. Those covers all the regions out there we have today. And, looking at our overall revenue and other region sides, kits today continue to be the most popular region for our customers simply because of the, reason I have just mentioned, ease of use and make our customer easier over there.

And then one of the, growth over the last two years, we launched this, two years ago, is SiteCloud. SiteCloud and help our customers with regarding to panel design and panel optimization and data processing, data management, data analysis. And this is, areas that grow so fast. And, just in two years, that’s like a 16,000 users already developed towards the end of the q four. And in fact, just 2024, our user base improved by 60%.

And SiteCloud also allow and, our customers to purchase reagents through that platform after the panel is optimized. So this is a great opportunity, great value assets. Think about this. Right now, on-site tech cloud, we have many of our partners’ reagents on that platform allow customers to purchase. And, looking at this 16,000 users, just think about, let’s say, 10,000 reagent, every year they use.

That’s hundred $60,000,000 potential. So that’s what we are seeing. In fact, on average, a flow cytometer, every year, users about hundred thousand dollar agents they do. So so this is you see how powerful it is and, with this platform going forward. And then I just already mentioned about, our clinical, applications.

This system, this is the only, full special technology based clinical instrument in China and Europe. And one of the nice best feature with full spectrum is because of the number of parameters it supports, it actually can help many of the application due to its sensitivity. For example, like MRD. Typical MRD is and you require 10 to the minus six kind of resolution. And normal flow cytometer, although flow cytometer has been used for leukemia diagnosis, 50% of the time that has been used.

But the sensitivity is just not good enough. And for MRD, those type of applications. That’s a reason why people need to go to other technology. Now with Scitech’s, instrument, due to the sensitivity it has enabled, it can get to the kind of level and the sensitivity. Now you see the benefits, for that type of, applications.

And, yes, postcytometer is cost slower. It’s much faster. In a couple of hours, you have all the results. So there are lots of benefits with regarding to, leveraging what we have and for clinical application. In fact, due to the instruments cleared for China and Europe, that’s where they have been used today and over there.

And that also helps us to drive the reagent kit application in those markets. So let’s look at, overall and offering. Another part which is, very differentiated with CITEC’s instrument comparing to conventional years. In our instrument is the only flow cytometer. That technology enables the standardization across many different labs in different countries.

That’s very important for pharma, when they get into clinical trial. And so that’s a reason why you see the application during the research stage. They started with Scitech technology. Then today, pharma, when they do the study, they actually not just do this in one lab. They have labs globally, multiple institutions, and they want to ensure the data coming from different labs, different institutions.

They are all consistent, trust them, worthwhile. So, so our technology due to the capability to be able to be standardized and can be harmonized. So today, farmers are getting to jump onto Scitech technology exactly for that reasons to support their future applications and for their job discovery. And as well as going to clinical harmonization, standardization in clinicals mandatory. And, you you don’t want the data coming from different lab is different.

And but, unfortunately, conventional flow cytometer exactly plays that low and it’s very difficult to standardize. But CITES two does provide that capability. And there are, of course, other application, in the industrial setting due to the standardization and harmonization capability coming out of the Citec technology. And so as you can see, Citec has been adjusted EBITDA basis being profitable and cash flow positive. And, in fact, we have also hit a really inflection point.

And, our operation cost pretty much stay flat and as you can see through the last four quarters. And as we continue to go on, you can see that just a somewhat revenue growth. You can see most of those converted into our net income and adjusted EBITDA growth. That’s a reason you can see our adjusted EBITDA growth has been so fast and more high double digit growth versus our revenue. And that’s the exact reason going forward.

That’s where Scitech is going to be a small revenue growth and will drive large increase in adjusted EBITDA. And we are in the right time and, in that inflection point. And so, I think, firstly, Citek really is a technology leader in our industry. We are taking market share. And especially, we started with high end now moving toward entry level and mid level.

And we are in a large market, established market, and no market. We don’t need to go to convince customer why you need our technology because we are the best in a established market, in a growing market as well. And Scitech, financially is very powerful, very strong. And, as going forward, we are in a position as the market come back, and we are going to test time to grow and to capture that, overall growth. So thank you.

Brandon Smith, Senior Biotech and Life Science Tools Diagnostics Analyst, TD Cowen: You hear me? Alright. Great. Thanks for thanks for that. I think that’s a fantastic way of, the outlook for Scitech.

Maybe let me just double click a bit on, let’s start with the 4.25 guidance, right? I think you laid out really nicely the rationale for diversification of your revenues on a global level. Obviously, there’s some conversation with The U. S. China panel earlier this morning.

But maybe give us just a sense of what’s your process for building guidance in FY 2025? And could you really just walk us through some of the scenarios that could get you to maybe the upper versus the lower end of the

William Macomb, CFO, Scitech Biosciences: Sure. So we think about the business in three buckets. The service business and the reagent business, which is about 30% of total revenue. We disclose services. It’s around 25.

And then the, the the products or which is basically the instrument business is the remaining seventy, seventy five. Of that, about 40% are markets outside The US, and US represents around 30% of the product or the 30% of total revenue, so a little bit less than half the product business. So as we look at those three buckets, we we thought that, we’re gonna continue to see solid growth in the services business because, we’re adding meaningfully to the installed base. Last year, if you look at our the unit, placement data that we release, there were about 500 new units that were delivered in 2024 that will become candidates for service contracts and TNM in 2025 because we have a twelve month warranty. So the universe of new candidates is is is that, those those units that were shipped a year ago.

So we we would expect to continue to see solid growth there. That universe of new service candidates is about 20%, increment to the existing installed base. So that’s that’s how we thought about the growth of that segment. The the product business outside The United States grew double digit in 2024. It’s not impacted by the NIH, obviously, and we continue to see solid growth there.

And then the remaining piece, the remaining 30 ish percent piece is The U. S. Products business. And that’s where there’s more uncertainty. There are more, you know, there’s a range of different scenarios that could play out there.

That’s where perhaps more of the disruptive changes could slow decision making. But if The U. S. Business is contracted in 2024, if that were to just stabilize or to start to grow, then that would get us to the upper end of the revenue range.

Brandon Smith, Senior Biotech and Life Science Tools Diagnostics Analyst, TD Cowen: And I guess just maybe you touched on this a little bit, but I do want to address maybe what are you hearing at this point on U. S. Export controls? What can you kind of tell us about maybe why did they target these high parameter postcytometers, number one, and what that kind of looks like today? I know it’s a moving target.

William Macomb, CFO, Scitech Biosciences: We don’t know anything more than what we read in the press release and what what was in the undersecretary’s press release was a concern about human performance enhancement. I got no idea why The US is concerned about that. Anyway, I won’t go any further on that topic. As it relates to, to Scitech, we have three manufacturing facilities around the world. We have Fremont in US.

We have Wuxi, China, and we have a new facility that we just opened in Singapore. And and, you know, our goal is within a short period of time to be able to make all the products in, in every location so that we would be able to supply, you know, all our customers around the world from, from one of those three locations.

Brandon Smith, Senior Biotech and Life Science Tools Diagnostics Analyst, TD Cowen: And I know you’ve you’ve all touched on on the Singapore plant too. So I think that’ll be great for future growth.

William Macomb, CFO, Scitech Biosciences: Yeah. Look, we have we have a lot of flexibility. We we have the ability to, we can we believe we can train our workers in Singapore to be able to make all the products, be able to do that quickly. That would give us a lot of flexibility. And, you know, we therefore we should be able to supply, what the market needs from us, from one of those three locations.

And so that that that’s that’s helped.

Brandon Smith, Senior Biotech and Life Science Tools Diagnostics Analyst, TD Cowen: Yeah. And I think just because it’s a, a recurring theme throughout the conference and, frankly, in a lot of the work that we do, I noticed on one of your slides, you touched on it as well, when we’ve done just AI, right? I think a lot of your newer offerings and the technology itself really lends itself to at least integration moving forward. So maybe just speak a little bit to how you’re positioned to kind of capture some of that and obviously stay ahead of the curve as the flow cytometry space continues to evolve?

Wenbin Zhang, CEO, Scitech Biosciences: For AI, there are two parts of the AI. One is the utilization of AI and for the data analysis, especially for the imaging flow cytometry. We launched actually released a software, data analysis software, just exactly for that objective and to streamline the imaging flow cytometry data analysis. And so second part of the AI really is to help improve the efficiency of our operation, and so across the board. And in fact, we are also addressing locking area part of the needs as well.

Brandon Smith, Senior Biotech and Life Science Tools Diagnostics Analyst, TD Cowen: The internally and within the product offerings. Yeah. Yeah. Okay. And I think with that, we are just a little bit over time.

So I wanna thank everybody for listening in. Thank you both for joining me. It’s always a pleasure to see you. I know we have a lot of great content left over the course of today, so hang in there for the last day three of the conference. Thanks, everyone.

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