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Biolife Solutions Inc (NASDAQ:BLFS)
Q4 2019 Earnings Call
Mar 11, 2020, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Q4 and Full Year 2019 BioLife Solutions, Inc. Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Mr. Roderick de Greef Chief Financial Officer. Thank you. Please go ahead.

Rod de Greef -- Chief Financial Officer and Chief Operating Officer

Thank you, Timmy. Good afternoon everyone, and thank you for joining us for the BioLife Solutions conference call to review the operating and financial results for the fourth quarter and full year of 2019. A few minutes ago, we issued a press release which summarizes our financial results for the three and 12 months ended December 31, 2019.

As a reminder, during this call we will make certain projections and other forward-looking statements regarding future events or the future financial performance of the Company. These statements are subject to risks and uncertainties that may cause actual results to differ materially from expectations. For a detailed discussion of the risks and uncertainties that affect the Company's business and that qualify as forward-looking statements, I refer you to our periodic and other public filings filed with the SEC.

Company projections and forward-looking statements are based on factors that are subject to change and therefore these statements speak only as of the date they are given. The company assumes no obligation to update any projections or forward-looking statements except as required by law.

During this call we will speak to non-GAAP or adjusted results and guidance. Reconciliations of GAAP to non-GAAP or adjusted financial metrics are included in the press release we issued this afternoon. These non-GAAP or adjusted financial metrics should not be viewed as an alternative to GAAP. However, in light of our M&A activity, we believe that the use of non-GAAP or adjusted metrics provides investors with a clear view of our current financial results when compared to prior periods.

Now, I'd like to turn the call over to Mike Rice, President and CEO of BioLife.

Michael Rice -- Chief Executive Officer

Thanks, Rod, and good afternoon everyone. Thank you for joining our call. 2019 was a remarkable year for BioLife on several fronts, we generated record revenue. Saw our media products embedded in 69 additional clinical applications, gained nearly 200 new customers, and through our acquisitions transform the Company from a single product supplier to a multi-solution provider of class-defining bioproduction tools to the high-growth cell and gene therapy market. We were early to realize that the base of bioproduction tools suppliers is highly fragmented, and also that cell and gene therapy developers are in desperate need of much better solutions in biopreservation, storage, cold chain management and sign.

Before we dive into the details of how our business performed in 2019, and what we expect for 2020 and beyond, I'd like to share some information about how we're managing through the current COVID-19 situation. Our corporate headquarters in biopreservation media production facility and warehouse are located in Bothell, Washington, just a few miles from the epicenter of the corona outbreak in the U.S. Over the last several weeks, we've been assessing a number of potential risk to our business. Including team member health and attendance, critical suppliers including some in China. Inventory levels, and our travel and visitor policies.

To reduce exposure risk for our team members and visitors, we're following the recommendations of the Country's health authority. And out of an abundance of caution, this week commenced to work from home directive through the end of March for all team members in the Seattle area, except those in customer care, production, QC and senior management. As with any contagious illness, any team members that exhibit symptoms have been directed not to come to work. We believe we have sufficient media inventory to meet at least six to nine months of previously forecasted demand. Our top priority is doing all we can to maintain the health of our team members and all locations and then to satisfy customer demand for our products. The COVID-19 event is dynamic and we're watching this very closely, and working proactively to reduce any potential impact on our business.

Now I'd like to start off with a recap of our value proposition to companies in the regenerative medicine space, which is comprised of cell and gene therapy and tissue engineering companies, the Alliance for Regenerative Medicine or ARM estimates there are nearly 1,000 companies conducting about 1,000 clinical trials of these novel treatment modalities. In 2019, $10 billion was invested in this space. So far, there have been just a few approvals, and it's important to remember that we're early in the progression of the market. But there is an important dynamic you've heard me talk about several times, the reimbursement environment for our customers has evolved into a pay for response or pay on cure paradigm with payment predicated on an initial and sustained patient response. This reality coupled with a very fragile and sensitive state of biologics source material and manufactured cell and gene therapies is driving companies to reassess traditional tools and to consider best practices in biopreservation and cold-chain management.

There are at least three environment of factors that can render a cell and gene therapy unfit to administer to a patient. These are suboptimal preservation media, temperature excursions during storage on transport and uncontrolled buying. Any of these conditions can result in a nonviable dose, which is given to a patient may fail to elicit the desire therapeutic response and again, in today's reimbursement environment result in non-payment. Fortunately, we have products in our portfolio to address all three of these detrimental conditions.

With this background, I'll expand on our biopreservation media franchise. Our flagship product CryoStor, a cell freeze media was invested. Several years ago by a small group of scientists, including our Chief Scientific Officer, Dr. Aby J. Matthew. Aby and his colleagues were among the first groups to observe and publish on preservation-induced cellular stress. And based on their findings, they engineered an optimized preservation media that even today continues to outperform the traditional home-brew cocktails and other commercial formulations. This improved preservation efficacy, evidenced by increased viability and functional recovery of sales and tenant [Phonetic] clinical use along with our quality management system and production processes has enabled us to drive CryoStor and our companion storage media, HypoThermosol to be embedded in around 400 customer clinical applications. CryoStor is used by Kite Pharma for their approved YESCARTA CAR T-cell therapy and by bluebird bio for Zynteglo.

Some of our other notable clinical customers include Adaptimmune, Allogene, Celgene, Cellectis, Editas, Fate, Dometo Cell, Janssen, Juno, Iovance, non-quest, Orchard, Sangamo, Rubius and community. We also support several other customers directly and through the leading CMO was including Hitachi, KBI, Lonza, Master cell and WuXi. Furthering our reach into the cell and gene therapy space or some of our distributors including Thermo Fisher, Millipore Sigma, Stem Cell Technologies and VMR. In 2019, we process, an additional 69 US FDA master file cross-reference letters for the use of CryoStor or HypoThermosol in clinical trials. We're closely tracking seven potential 20 customer regulatory approvals that use CryoStor. These are bluebird bio Zynteglo in the US, Celgene's last, you know for at least for seven in the US. Gilead Kite for KTE-X19 in the US and Europe, Novartis/AveXis for ZOLGENSMA in Europe and Japan and Orchard for OTL Europe.

Lastly, bluebird bio, Iovance and Orchard have disclosed five additional potential regulatory filings in 2020. So it's clear we're strongly entrenched in both the autologous an allogeneic cell and gene therapy workflow streams and despite the last two fairly soft quarters of media revenue. We've built a great base of sticky customers that will continue to fuel our growth. On that point, it's worth reminding everyone that most of our media revenue is generated from a small group of late-stage customers. Our other 400 or so, early stage media customers don't use as much product. So the lumpiness we saw in 2019 is a factor that we expect to continue for some time until some of the customers I mentioned previously good over the goal line and their demand increases to support commercial operations.

We continue to add media customers and are taking share from homebrew and other non-optimized commercial preservation media products. Here's is an overview of revenue for Q4. Q4 total revenue was $8.3 million, an increase of 52% over the same quarter in 2018, Q4 media revenue was $5.2 million, down 5% year-over-year to media customers were down 1 million versus their Q4 forecast. One was a direct customer production demand was lower. So they consumed existing media inventory. The other was a large distributor. That was down about 500 K against our Q4 forecast, but for the year, this customer is up 6% versus 2018. And last year, they shipped our media products to more than 1,700 different end-users. Here again, the impact of concentrated revenue is clear. 4Q revenue from our thought evo and freezer products all met or exceeded our internal projections. Rob will speak to full year 2019 revenue in his remarks.

This is a good point to segue into our M&A strategy. We're in the early part of the S curve of cell and gene therapy adoption but it's future growth is clear. To support this growth, the industry needs a trusted supplier that can provide a portfolio, a risk mitigating bioproduction tools. Last year, we embarked on a plan to diversify our media revenue and to become this trusted supplier. We assembled a portfolio of class defining products that can help our customers ensure they don't administer a non-viable dose and risk therapeutic failure and economic loss. I'm very glad to share that through our acquisitions of Astero Bio, SAVSU technologies and Custom Biogenic Systems are now supplying a much larger number of cell and gene therapy companies with at least one product in our portfolio.

The first complementary products we acquired with the ThawSTAR line from Astero Bio in April last year. Astero had developed a proprietary automated water free thought product for cell and gene therapies frozen and cryogenic vials. Since the acquisition, we've shipped over 300 ThawSTAR bio products to a growing list of companies, dozens of which also use our media, evo and freezer products. At the time of the acquisition, the team at Astero had also started development of an automated water free falling product for larger dose cell and gene therapies frozen in Cryo bags. This product branded as ThawSTAR CB is now finished and has launched at the facilitate cell and gene therapy conference in late January this year.

Our team has delivered a truly innovative simple to use thawing product that can reduce the risks inherent and using a traditional water bath including contamination and over thawing. Both of which can lead to scrapping the dose or administering a dose that poses risk for the patient. We recently booked our first orders for ThawSTAR CB. Also in 2019, we purchased the remainder of SAVSU technologies that we didn't already own. The evo platform developed over the last few years by SAVSU is a class defining cold chain management solution for high value temperature sensitive cell and gene therapies.

This innovative solution includes a family of cloud connected shipping containers, covering the entire temperature spectrum and a cloud application that enable our carrier partners and end users to set up, manage and monitor shipments and receive shipment status alerts about the condition of the payload and potentially harmful environmental stresses, the payload has been subjected to. This platform is completely in line with and supports our mission to supply risk mitigating bioproduction tools to the regen med market.

Since the start of our carrier partner relationships, it completed over 1,000 shipments with Evo containers for about 100 different customers. Some notable customers include AveXis, who uses our evo dry ice, smart shipper for every dose of the ZOLGENSMA gene therapy, Atlas using an evo Dry Vapor shipper for their AUTO1 CAR-T cell therapy for ALL and Janssen using and evo Dry Vapor shipper for use in their J&J 4528-CAR T cell therapy for multiple myeloma. Other customers that have used the evo platform include Adaptimmune, Celliad, CRISPR, Mustang Bio and Zoetis.

One of our key objectives and evo adoption is to take share from the incumbent serving the major CAR-T cell developers. I'm glad to report that we've made real progress toward this goal. We look forward to providing an update on this in the coming months.

In retrospect, it's clear that the evo platform or subjected to a much more rigorous set of validation for IT area than the current dry for shipper in use. We believe that no other commercially available Dry Vapor for shippers to meet the stringent requirements. I'll end my remarks about the evo platform, by reminding you that BioLife is not a logistics company. To the contrary, we've partnered with the best logistics companies in the world that have decades of experience and a worldwide sales, marketing, and operation logistics footprint to serve the cell and gene therapy space. Our role is to supply the evo platform for the carriers and then to provide stellar technical support to them and the end users to ensure a positive experience.

One last note on the evo platform, our liquid nitrogen Dry Vapor for shippers are currently sourced from China. We have a project under way to qualify our customer biogenic systems to tort area production facility as a secondary supplier. CBS has been manufacturing Allentowns for years, and this was another strategic driver for that acquisition.

Turning now to our acquisition of CBS. We completed this in November last year and so far, we're on track with our integration plans and the business is performing well and as we expected. Rob will provide details of revenue guidance for CBS during his remarks. CBS deal also completely supports our mission. We're already seeing leverage across the portfolio. Key CBS customers include AbbVie, Astellas, Fate, Fisher Scientific, Fuji Film, Glaxo, Hitachi, Juno, Kite, Landa, Mayo, Norwest, Precision Bio Sigma and Sorento. That's a wrap of our M&A activity and how we see the acquired businesses contributing to our objective of reaching $100 million in revenue. The guidance we issued today clearly speaks to our confidence to be able to achieve this goal in the next few years. This year we're focused on integrating to leverage our resources. We are pursuing some additional M&A targets in 2020 and we'll up and we'll update you as appropriate.

Now, I'll pass the call back to Rod to present additional financials for Q4 and the full year, 2019 and our guidance for 2020. Rod?

Rod de Greef -- Chief Financial Officer and Chief Operating Officer

Thanks, Mike. Starting with our quarterly results. Total revenue for the fourth quarter of 2019 reached $8.3 million, representing 52% increase over last year's fourth quarter revenue of $5.5 million. This quarter's revenue included $5.2 million in media sales, $480,000 of sales related to the automated saw products. 481 of evo related revenue and $2.1 million in freezers and accessories we acquired from CBS last November. Total revenue for the full year of 2019 was $27.4 million, up 39% over revenue of $19.7 million in 2018. Media revenue for the full year of 2019 was $23.4 million, up 18% over 2018. During the full year, media sales faced some headwinds with two of our Top 10 direct customers coming in $2.5 million less than in 2018. Excluding these two customers, 2019 media revenue grew 44% over 2018. One final comment on revenue on an unaudited pro forma basis, and that is assuming we owned all the revenue streams for all of 2019, total revenue for the full year would have been approximately $37.7 million.

The adjusted gross margin for the fourth quarter of 2019 was 65% compared with 69% last year. The decrease in gross margin for the fourth quarter reflects the lower margin profile of the evo and freezer product lines as expected. Adjusted gross margin for the full year of 2019 was 69%, which was essentially flat compared with 2018.

Adjusted operating expenses for Q4 of 2019 totaled $5.5 million compared with $2.7 million in Q4 of 2018. Adjusted operating expenses for the full year of 2019 totaled $17.1 million compared with $9.9 million in 2018. The increase in adjusted operating expenses for both periods is primarily the result of the acquisitions of the Astero, SAVSU and CBS and secondarily to increased headcount and stock-based compensation expense necessary to support our overall growth.

Adjusted operating loss for the fourth quarter of 2019 was $163,000 compared with adjusted operating income of $1 million in the fourth quarter of 2018. Adjusted operating profit for the full year of 2019 was $1.8 million compared to $3.7 million in 2018.

Adjusted net loss attributable to common shareholders for the fourth quarter of 2019 was $74,000, or essentially $0 per diluted share compared with adjusted net income attributable to common shareholders of $1.1 million or $0.04 per diluted share in the same period in 2018. For the full year of 2019, adjusted net income attributable to common shareholders was $2.3 million or $0.08 per diluted share compared with $3.6 million or $0.15 per diluted share in 2018.

I should note that GAAP net income and EPS for the fourth quarter included a one-time acquisition-related tax benefit of $1.5 million based on relieving our tax provision allowance. Adjusted EBITDA for the fourth quarter of 2019 totaled $1.4 million compared with $1.5 million in the same period in 2018. For the full year, adjusted EBITDA was $5.7 million compared to $5.5 million in 2018. We ended 2019 with $6.4 million in cash, which we believe is sufficient to fund our operations for at least the next 12 months.

With respect to our current outlook for 2020, we have updated the preliminary guidance we provided last November and now expect total revenue for 2020 will be between $48 million to $53 million, reflecting year-over-year growth of 75% to 94% on an as reported basis and approximately 32% on a pro forma basis. We have lowered our revenue guidance for the evo product line by $2 million to $3 million for 2020 to reflect the delays we have seen in the final validation of the technology by a large commercial cell therapy company.

We estimate that media revenue will grow between 20% to 30% and account for approximately 55% of total 2020 revenue. With CBS freezer line accounting for another 35% and the evo and thaw product lines, each contributing approximately 5% of revenue. The last comment regarding revenue guidance is that we expect to see sequential revenue increases throughout the year with an estimated 40% of total 2020 revenue coming in the first half and the remaining 60% in the second half of the year.

Our adjusted gross margin for 2020 should fall between 58% to 62% given the lower margin profile of the evo and CBS product lines. However, we expect sequential increases in gross margin throughout the year as higher margin products are introduced at CBS and the benefits of leverage are realized. We expect approximately $500,000 of acquisition related inventory step up charges to increased COGS in Q1 and Q2 of this year. We expect 2020 operating expenses to be in the range of $28 million to $30 million, inclusive of $2.8 million of intangible asset amortization expense. We believe that operating expenses will remain relatively flat on a quarterly basis throughout the year.

Finally, we expect to be positive on the operating net income and EBITDA lines on a GAAP and a non-GAAP basis for the full year of 2020 and exit the year with an adjusted EBITDA margin of 20% to 25%. Finally, we currently have $20.8 million common shares issued in outstanding and a fully diluted share count of $27.5 million.

Now I'd like to turn the call back over to Mike.

Michael Rice -- Chief Executive Officer

Thanks again, Rod. In summary, 2019 was a pivotal year and we effectively transformed the Company and have built a solid foundation for future growth. COVID-19 is a wildcard of unquantifiable magnitude and duration or running the business to achieve success in 2020 despite this factor.

Now I'll turn the call back over to the operator to take your questions. Jimmy?

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Paul Knight with Janney Montgomery. Your line is now open.

Paul Knight -- Janney Montgomery -- Analyst

Hey Mike, could you talk to the distributor relationship, they are down in your comments in the press release. Is there an alternative being provided by that distributor. And can you talk, is there a competitive situation we should be aware of.

Michael Rice -- Chief Executive Officer

Yeah Hi, Paul. Really good questions. No, none whatsoever. This distributor grew phenomenally year-over-year, they pushed the product to nearly 2,000 different end customers. So it's really just a question of their internal forecast ability and how they're going to perform against that. They're normal pretty good, but in this particular quarter they surprised us. But nevertheless, if you look at the year in total versus the year before, they're just killing it. We're really pleased with the relationship.

Paul Knight -- Janney Montgomery -- Analyst

And then the direct stage customers that were down $2.5 million in '19, are they at zero now, I mean what's the magnitude of those large customers now and what do you expect out of them in 2020?

Michael Rice -- Chief Executive Officer

Yeah, I can just -- I can speak to ones, particularly, Paul, and I can name them, but we expect that they're going to double revenue in 2020 versus what they did in 2019. And that's based on some -- later part of the year, potential approvals and they're ramping up the inventory to meet that anticipated demand.

Rod de Greef -- Chief Financial Officer and Chief Operating Officer

And the other one, Paul, we're assuming for internal purposes, zero from that customer, although we will definitely get some orders from them, but given their miss in the last -- in 2019, we're not confident of taking a forecast from them at this point.

Michael Rice -- Chief Executive Officer

Yeah. And just to tag on to that, that doesn't mean that there is something wrong with their therapy or then going out of business to the contrary, they just burning through existing inventory that they had ordered previously.

Paul Knight -- Janney Montgomery -- Analyst

And you're guiding the media growth of 22% to 30%. Can you split that -- what do you think your -- without commercial approval, what do you think that customer base grows at or do you -- can you split it and do you split it out like that?

Michael Rice -- Chief Executive Officer

We really don't split it out like that, Paul, we do a bottoms-up of the Top 50 customers, many of which we do have forecast from four to six quarters out, and then we look at the historical trends of the balance of the customers. But quite frankly the Top that top 50 accounts for about two-thirds of the revenue. So we've identified those that have -- are in the late stage, and I think that the lower end reflects delays on the part of that clinical process and the higher end of that range would reflect on-time delivery and reasonable uptake.

Rod de Greef -- Chief Financial Officer and Chief Operating Officer

Yeah. And I think Paul, I would add that with the pending seven potential approvals this year that use the media, which is going to take us a few quarters to see those approvals get gained and then see how those customers will behave in terms of their demand. So I would anticipate next year with those plus some others will be in a better position to split that out and to answer question with some detail regarding, how much media is coming from approved products versus non approval of the whole clinical trial basket of customers.

Paul Knight -- Janney Montgomery -- Analyst

Okay, Thanks.

Michael Rice -- Chief Executive Officer

Sure.

Operator

Thank you. Our next question comes from Suraj Kalia with Oppenheimer & Company. Your line is now open.

Suraj Kalia -- Oppenheimer & Company -- Analyst

Good afternoon, gentlemen, can you hear me all right?

Michael Rice -- Chief Executive Officer

Hi, Suraj, you're little bit late, I think we're getting it, but a little bit late.

Suraj Kalia -- Oppenheimer & Company -- Analyst

Can you hear me now?

Michael Rice -- Chief Executive Officer

Now that's worse.

Rod de Greef -- Chief Financial Officer and Chief Operating Officer

Let's try this, Suraj. We can hear you.

Suraj Kalia -- Oppenheimer & Company -- Analyst

Okay. I'll just go ahead and hopefully. So, Mike, the slowdown on by the slowdown on the media side, as you said, it has been going on for a few quarters, now. Obviously, there are different dynamics. Just to follow-up on Paul's comments is there -- can you frame this within the context of inventory in the field. I guess, is there some of their excess inventory that could be absorbed. But that could progress let's say into Q1. That is one thing. And the second part of my question is the slowdown -- this happened before coronavirus. Are you building in a buffer for FY '20 vis-a-vis coronavirus, everything going on, because relative to our numbers for FY '20 media is basically the entire delta. Any help there would be good.

Michael Rice -- Chief Executive Officer

Yes, sure. Thanks Suraj. Well, I think it's important to remind the listeners of a tidbit that Rod mentioned, and that is extra two customers that were down in the rest of the customer base grew at 44%, which is really encouraging and it speaks to all the customers we're adding, the master files we're adding. But again, as a basket, they're early, so they don't buy as much as the later stage companies. I think the lesson as from a look back perspective is this. It was such a concert revenue from a small number of customers in late stage. They were going through their own sort of analysis to figure how much they were going to need. They didn't have a perfectly a crystal ball anyway in terms of their clinical trial enrollment or even after approval, the pace at which physicians would prescribe these novel therapies. Layer into that some potential production issues they may have had or not and other reimbursement challenges, all that kind of stuff to my mind just swirled together to say they did the best they could, they gave us a forecast that they thought they were going to need and all these other factors came into place, which caused them to not have to consume as much. So there is that side of it. And Rob, you can speak to the second part of Suraj's question, what are we doing with regard to corona to build a buffer to make sure we have plenty of demand, inventory of media.

Rod de Greef -- Chief Financial Officer and Chief Operating Officer

Yes, I think just to elaborate on those two customers. One, we have a level of confidence that Mike just referred to increasing orders through the second half of the year based on their clinical activity and the other I mentioned, that we're just assuming zero. So we don't see any downside, if you will from the zero piece. I terms of the coronavirus, Suraj, we have not factored anything specific into these numbers, because it's just impossible to try and come up with some 5% factor or 10% factor. So we've gone with what we think is our best estimate based on all the information we have, which includes a lot of customer forecasts and we're just going to have to watch it as it evolves dynamically. Anything else I think would be completely arbitrary on our -- from our perspective.

Suraj Kalia -- Oppenheimer & Company -- Analyst

Got it. Rod and Mike, the evo validation by the large customer -- if that is delayed, that should be that should be fine. But how confident are you of switching over this customer?

Michael Rice -- Chief Executive Officer

Suraj, I can say that I'm personally involved and managing that relationship at the highest level, and I've seen the internal validation documents that specify the evo product by name. I am also aware of this customers potential filing amendment schedule, which will also site the evo technology platform by name. And so I'm feeling really and where as a group, we're feeling very confident that after the countless hours of validation work this customer and a courier partner put into this relationship and this project, which is, it's not minimal by any means. This is a big deal for them. They've got real pain they're trying to alleviate and to solve and some real problems with the incumbent that this is a high degree of confidence that we are going to win this opportunity. It's just -- we're a lot closer now than where we have been. It's a little too soon or to speak to the details. But personally, I'm feeling very confident that the evo technology platform is shining and it's completely outperforming the current technology in use.

Rod de Greef -- Chief Financial Officer and Chief Operating Officer

And just to be clear, FY '20 you all have not factored in contribution from a potential partnership that could move the needle quickly. Am I right in saying that? yes, that's a fair comment. If it happens, it will happen in the back half of the year, call it Q4 it would start. And so, given the monthly rental model, the actual impact on overall revenue is going to be de minimis in 2020. The other aspect of it. Suraj, was that we expect that the validation from this particular customer will sort of loosen the floodgates if you will, for a lot of other customers who are waiting in the wings to see somebody big validate. It's not that different from when Kite started to utilize CryoStor and we had a huge number of companies pile on based on that validation of that marquee customer.

Suraj Kalia -- Oppenheimer & Company -- Analyst

Fair enough. And final question, Rod. Gross margin guidance for FY '20 seems a little lighter than what we were forecasting. Can you just give us the moving parts on this? Obviously, there are four different businesses. What's moving in it from the 62%, low '60s to the 58% to 62%, if you could, kind of, carve set out that would be great. Thanks for taking my question.

Michael Rice -- Chief Executive Officer

You bet. Thanks Suraj. The fundamental driver there is the lower revenue associated with evo which has a negative impact on the gross margin because the gross margins are generated based on capitalizing overhead on a per unit basis and the fewer units were producing getting out into the field. The higher cost if you will, is there. Also we've been reasonably conservative on the CBS product line. I think we can do better. I think we saw a little bit of that in Q4. But I don't want to go out and pin our hat that yet. So as we see things evolve throughout the year, we will definitely try to move that number up based on actual results. Thank you.

Suraj Kalia -- Oppenheimer & Company -- Analyst

Thank you.

Operator

Thank you. Our next question comes from Jacob Johnson with Stephens. Your line is now open.

Jacob Johnson -- Stephens -- Analyst

Hey, thanks for taking the questions. Mike and Rob, I hope you...

Michael Rice -- Chief Executive Officer

Hi, Jacob.

Jacob Johnson -- Stephens -- Analyst

Hey, and hope you and your employees are staying safe. First question just on guidance really quickly, just want to make sure I'm thinking about this the right way. The base of the entire reason for the adjustment and guidance related to lower assumptions around evo.

Rod de Greef -- Chief Financial Officer and Chief Operating Officer

It's exactly that same number. We were at 52% to 56%. We're now at $48 to $53, reflecting a $2 to $3 million drop in the evo revenue guidance.

Jacob Johnson -- Stephens -- Analyst

Got it. Thanks for that. Rod. And then Mike, you mentioned taking share from incumbents and evo, I imagine it's still kind of early project these things, but how much share could you take from one of these incumbents if you win some of that business.

Michael Rice -- Chief Executive Officer

That's a great question, Jacob. Well, we have a really good visibility into who is using the various incumbents and there are just two or three. Not many people are self managing fleets of doers. So the universe of competitors is quite small and we have a good sense of who's using who but we really believe that the evo platform is class defining it is the next state of innovation in terms of cold chain management for these really expensive temperature sensitive shipments of both biologics source material and the manufacturing doses and frankly with the pay for response or pay nature paradigm reimbursement environment our customers are not having to deal with. You can imagine that one last shipment or one dose it has to be scrapped as one too many to speak nothing of the patient impact. So there's real pain out there. These developers are in desperate need of better solution. So we're bullish about how the evo adoption will grow once this sort of pipe cleaner or linchpin, catalytic conversion can be talked about. But nevertheless, despite that evo was used with at least another 100 customers, all in their own gestation stage of clinical trials and so we look for each of those customers usage to ramp up over time as they progress to later phases of clinical trials and certainly as they get approved. So, it's all, it's really kind of predicated on at least optically being able to talk about this win, but in the background, we've got a lot of really great opportunities.

Jacob Johnson -- Stephens -- Analyst

Got it. Thanks for that, Mike. And then last question. I just be interested, I'm not sure where you are in the process, but could you update us on the efforts that manufacture the evo shippers at the CBS facility? Just remind us sort of what the timeline might look like there. And then is there the potential for this, but to lower some of the cost of producing evo shippers?

Rod de Greef -- Chief Financial Officer and Chief Operating Officer

Yeah, so relative to the last part of your question, Jacob. Yes, we believe there could be a material cost savings on that. We kicked off the plan mid-February. It's going through a formal product development process that Scott multiple folks from both Detroit and Albuquerque and here in Buffalo involved on the team and we expect the product to come out of the Detroit factory at the end of Q4 could happen a little bit earlier. But that's, that's kind of our planning time window.

Jacob Johnson -- Stephens -- Analyst

Got it. Great, thanks for taking the questions.

Rod de Greef -- Chief Financial Officer and Chief Operating Officer

You're welcome Jacob. Thank you.

Operator

Thank you. Our next question comes from Thomas Flaten with Lake Street Capital Markets. Your line is now open.

Thomas Flaten -- Lake Street Capital Markets -- Analyst

Great. Thanks guys for taking the question. Just two from me. Mike in your prepared remarks, you mentioned that you had some Chinese suppliers. Could you add some more color to that maybe quantify or qualify what that means relative to your overall supplier base and what the impact might be?

Michael Rice -- Chief Executive Officer

Sure Tom. It relates to supplies used in the media manufacturing and Rod, any additional color you can speak to would be helpful.

Rod de Greef -- Chief Financial Officer and Chief Operating Officer

Yeah, you bet. I think Tom, I don't know you may not have been following us long enough, but over the last sort of 18 months, we continue to articulate a strategy, an objective of putting aside building and putting aside offsite at least six months of finished goods inventory, at the time thinking about the risk of this being an earthquake zone as opposed to a viral zone. But nevertheless, the product is outside in Reno at GMP warehouse. In addition to that, we have about a quarter's worth of finished goods here in Bothell and it's particularly the one ingredient raw material that we get out of China, we have just over a year's worth of raw material of that specifically because it comes out of China. And so that's really the only piece. We also found that gloves and masks were something obviously come out of China. So we stocked up on those and have about a year's worth either in-house or on the way relative to the utilization we have in the manufacturing process of those items.

Thomas Flaten -- Lake Street Capital Markets -- Analyst

That's great. And then switching over to CBS from loosely speaking, it was about a flat year 2019 over 2018 for CBS. But the guidance implies pretty substantial growth around 50% at the mid point or so. Can you talk a little bit about that -- what those drivers are? I know there are some higher price units coming out, but kind of a mix of your sales force versus new products.

Michael Rice -- Chief Executive Officer

Yes, you bet. It's really, CBS historically has been focused on a relatively passive sales and marketing approach using distributors. We've added a handful of direct sellers who are going to focus a large amount of their time on that marketplace in that product line. And we think that alone will have a significant increase in revenue in 2020 say, let's say, maybe half of the increase we're looking for with the balance coming from new products that John Brothers in his engineering team there have under way, which will be launched in the second half of the year.

Thomas Flaten -- Lake Street Capital Markets -- Analyst

Great. Thank you so much. Thanks so much.

Michael Rice -- Chief Executive Officer

Thanks, Tom.

Operator

Thank you. Our next question comes from Jason McCarthy with Maxim Group. Your line is now open.

David Ranaudo -- Maxim Group -- Analyst

Hi everyone. It's Dave on the line for Jason. Thanks for taking my questions.

Michael Rice -- Chief Executive Officer

Hi, Dave.

David Ranaudo -- Maxim Group -- Analyst

I was hoping you could -- Hi. I was hoping you could shed some color just in a general sense on the potential impact that the kind of buyers -- may have perhaps on cell therapy clinical trials enrollment, possible supply chain disruption, as well as your customers exposure to China and how this may impact you guys moving into 2020. I I know you guys, I think -- I believe someone else asked a question regarding the coronavirus impact on you guys mentioned that this wasn't specifically factored into your numbers right now. But if you could maybe provide just a general overview of this and I've two additional questions after that.

Michael Rice -- Chief Executive Officer

Sure, Dave. I'll take that one. So based on our planning, we think we've got a really good sound business continuity planning effort to engage at various levels based on triggers and how we see things unfolding including rotating folks through here. So they're not all in the plant at the same time and other risk mitigating plans. Now with respect to customer demand for media in earlier this week we sent the communication advising our customers where we're located and to ask them to reassess their inventory levels so on and so forth. We've seen some orders in response to that. Not at a point to quantify what that means to us over and above baseline. But there's no doubt there's been some pretty strong reaction to that and it's driving increased demand so they have some safety stock, if you will.

We haven't heard anything from customers saying, hey, corona is going to decrease clinical trial enrollment, which will then translate into a decreased demand for our media products. So nothing yet, although we are trying to keep in touch with our main customers to ask these questions so that side and Rod just to speak to the evo and the freezer side as well. At least at this point, it's all planning to be cautious, but no negative trends or indicators that we've seen so far from the field.

Rod de Greef -- Chief Financial Officer and Chief Operating Officer

No, we've gotten no feedback from the field about any kind of impact at this point. But as we all know it's dynamic, and it's fast-moving. So we're, again, we're just going to have to play it by year. I think from a supply standpoint we're OK. And it's really remains to be seen whether there is going to be a demand impact of all of this.

Michael Rice -- Chief Executive Officer

That's right. Earlier today, the governor, you probably read has banned all public events of over 250 people that doesn't affect the plant here, workplaces are exempt. We don't meet that trigger anyway. And so in terms of keeping the plant open and running, we think we're in good shape. We have good practices in for hygiene and keeping folks away from the plant if they are sick. So we continue to make product, we're building against our production schedule. And so, so far so good. But as Rod mentioned, very dynamic and unfortunately the magnitude and duration of this thing just can't be quantify at this point. All right. I think we're doing all we can to make sure we can mitigate any impact on the business.

David Ranaudo -- Maxim Group -- Analyst

Great, thanks for that. And just a couple of other additional questions here. I wanted to hear your thoughts on the potential application of cell therapy itself in coronavirus treatment. For example, the other day, we heard that Mesoblast would be developing a Mesenchymal Stem Cells therapy targeting the rest to our component of the coronvirus pathology. Do you think that the entry of cell therapy companies entering the coronavirus space could potentially be a larger opportunity for you guys given the logistical and shipping needs that we would see with widespread shipment -- or sorry, distribution.

Michael Rice -- Chief Executive Officer

Yes, really good question Dave. So initially, I would say that any application of cell or gene therapy to target corona either as a vaccine or as a treatment will be small scale in hospitals, in the form of clinical trials. We know of at least one customer that we believe has confirmed their use of our media in a cell-based clinical trial, treating at least the acute respiratory distress syndrome -- symptom related to corona but remains to be seen. There's a lot of interest in that regard. There is now no publication, but also some pressure on the use of NK cells and MSCs to treat corona again either as treatment or a vaccine. So we'll be following that closely. We are in pretty good contact with most of the clinical customers. So, but early days here, but no doubt there is a high degree of interest to think about that as a potential treatment modality and our vaccine.

David Ranaudo -- Maxim Group -- Analyst

Great, thanks. And just one last question here. Could you provide some granularity on the number of late-stage customers you guys have as well as the number of customers that you guys have with pivotal readouts coming out in 2020?

Michael Rice -- Chief Executive Officer

Yeah. So I think Dave, I'll just remind the listeners that you know because we sell through distributors, we really just we don't have full clarity on who the distributors clinical customers are. In some cases, we do because we provide some scientific protect support, but in other cases we know we're not because we get some counts and we're just not plugged in there. And so what I'm about to say are just estimates, but there are nearly 400 clinical applications using the products, the number of master file cross-reference request is the most prudent indirect evidence we have that, that number of pending clinical trials will be increasing as those trials get under way and that's been growing over the last three to four years at a really strong clip.

But nevertheless, the Phase III count it's dozens of Phase III trials. There are many more in the Phase II and many more in Phase I as we go that way. So that's where we are with that. But no doubt we've built a great base of clinical customers and in addition to the the seven potential approvals this year and the five additional filings, there are many other customers who will have readouts and it's a good question, I'll see if I can follow up. I'll go back to the ARM full year 2019 data report, in fact, I might want to wait until they published their Q1 because they will have a slide in there that will have potential data readouts by clinical phase for the region met space, and I'll cherry pick off who our customers are. So you could look at that as a potential update from us on our Q1 call.

David Ranaudo -- Maxim Group -- Analyst

Great, guys. Thanks a lot. Appreciate it.

Michael Rice -- Chief Executive Officer

Thanks, Dave.

Rod de Greef -- Chief Financial Officer and Chief Operating Officer

Thank you.

Michael Rice -- Chief Executive Officer

Our best to Jason.

Operator

Thank you. Our next question comes from Raghuram Selvaraju with HC Wainwright. Your line is now open.

Edward Marks -- H.C. Wainwright -- Analyst

Good afternoon, this is Edward Marks on for Ram. I appreciate you guys taking the question. A couple of broader ones from us. Firstly, are you seeing any attractive acquisition targets after a big year last year? And just wondering, if you're planning to pull the trigger on anything near term and if so in what general area are you thinking about?

Michael Rice -- Chief Executive Officer

Hi, and yes, this is Mike. So as I mentioned, there are some additional M&A activities under way. I could just speak in limited remarks, so they're in the tool space. I'll just keep it to that point. Anything more, we'll probably be too revealing. But no doubt, some additional activity. And at the right time if we get some of those done, then we will be really excited to share that. You bet.

Edward Marks -- H.C. Wainwright -- Analyst

Perfect. And then secondly, just wondering what the status is of the revenue diversification effort and specifically what percentage of your Company's revenues based is currently account for by the largest customer? And how do you envision this evolving going forward?

Michael Rice -- Chief Executive Officer

Yes. So, we've had -- as I mentioned, on the media side, it's kind of concentration where the top, let's just say, 20 or so customers can account for 50% or more of media revenue. The concentration is less on the ThawSTAR product line and the CBS product line. It's pretty concentrated relative to evo and that there is just a handful of Courier partners that we have as customers, however, that's mitigated by the fact that they obviously have a number of end user customers. So that -- that's some diversification there. I think that one of the reasons behind the overall M&A strategy that we embarked on was to derisk that media customer concentration. And if you think about the fact that just out of the chute in 2020, we're expecting media to be just over half the business. Right there, we've already accomplished a significant amount of diversification from a customer perspective.

Edward Marks -- H.C. Wainwright -- Analyst

Makes sense. That's all from me. Thank you, guys.

Michael Rice -- Chief Executive Officer

Thank you very much.

Operator

Thank you. And our next question comes from Marc Wiesenberger with B. Riley FBR. Your line is now open.

Marc Wiesenberger -- B. Riley FBR -- Analyst

Yes. Thank you very much. How many new regenerative medicine customers did you get in the fourth quarter?

Michael Rice -- Chief Executive Officer

Yes, hi, Marc. This is Mike. Boy, I just have the number. Just a minute ago, just give me a second, I'll see if I can pull that out. And Rod is that disclosed in the press release?

Rod de Greef -- Chief Financial Officer and Chief Operating Officer

We typically do.

Michael Rice -- Chief Executive Officer

Yes. Standby for a second, Marc.

Marc Wiesenberger -- B. Riley FBR -- Analyst

All right.

Michael Rice -- Chief Executive Officer

Well, for the year, it's 69 additional clinical trials and 200 new customers. [Speech Overlap] The bulk of them in regen med [Speech Overlap]

Marc Wiesenberger -- B. Riley FBR -- Analyst

Sure.

Michael Rice -- Chief Executive Officer

But Marc, I know we've got our call coming up after this. So I'll have the number for that call, all right?

Marc Wiesenberger -- B. Riley FBR -- Analyst

Okay. Sure. With regards to the evo shippers as you're looking to take share, what are some of the pain points that you're solving relative to the incumbents that your customers are specifically talking about?

Michael Rice -- Chief Executive Officer

What a great question, Marc. So it really relates to two areas of risk. The first is poor performance and maintaining the health and vitality of these really precious biologic materials either the source material or the manufacturer dose. And the current shippers really haven't been innovated for 50 years or so, maybe not that long, but clearly the right for innovation. And so what can happen using the traditional shippers is the cells of the gene therapy can get just on the ground [Phonetic] inside due to insufficient insulation, it can be exposed to temperature excursions. In fact, the traditional shippers if they're tipped on their side, they start to warm up and the cells can be exposed to a hazardous or a complete detrimental temperature, which can render them unusable.

Now the evo driving for shippers the DV line, DV for Dry Vapor, has a number of innovations which can solve that or at least reduce the potential for that including some patent pending features around both that can itself to do and also the smart cap, which is the lid for this shipping container. Additionally, we have a price advantage in that we're not a logistics play. So the cost of leasing or renting the evo container is built into the Courier charge per shipment that they charge the developer or the end customer, and we know based on how we've done market assessments that we do have a cost advantage, which would hopefully put the curves in the cost advantage as well as they're responding to RFPs and putting quotes out and winning the business with these leading cell and gene therapy companies.

And then lastly, I would speak to the evo.is. So the evoIS the cloud-based application that all these shipping containers talk to and they're continually spinning out their data of location and payload temperature and ambient temperature and various alerts that can help the couriers and the end users surveil the condition of the shipment. Not only how soon it's going to arrive and other factors that would be very helpful to help them intercede if something goes awry, but also to help them plan patient administration and logistics and so there are a number of features in the evoIS some of which are patented through a granted patent application that we received which are very unique and innovative and then really put the evoIS apart from the other portals that folks have been using for a while. So all things together, it's really about protecting the precious biologic payload better and there is a cost advantage and then there is the whole IS -- IoT component to the evoIS, which is really state of the art.

Marc Wiesenberger -- B. Riley FBR -- Analyst

That's really helpful. Thank you. And along the same lines as you work with the specialty couriers, are you advising them on with additional instructions to take precautions in cleaning them and maintaining in light of the coronavirus and could that potentially impact shipments or delay -- cause any delays?

Michael Rice -- Chief Executive Officer

Yes, good question. I think the comment I would make, Marc, is that, our carrier partners are experts in this, they have been doing this for years and despite some competitive noise that our couriers don't know what they're doing and so you want to stick with a particular incumbent, that's ridiculous. These couriers know what they're doing and they have validated SOP cleaning procedures -- procedures to check the temperature performance of the year of the evo doers to recharge the liquid nitrogen and so on and so forth. So I think on all the stuff completely wired in but we're certainly available to help them do that. In fact, training is a big part of the component of our service offering and that's been recognized as how we can stand apart.

Marc Wiesenberger -- B. Riley FBR -- Analyst

That's very helpful. Thank you, and one more for me. I'm wondering if you could talk about the cash position, maybe expected burn in 2020? And you did talk about some potential M&A and how would you think about funding those? Thank you.

Michael Rice -- Chief Executive Officer

Yeah, great. So, Rod, you can speak to both of those, if you like.

Rod de Greef -- Chief Financial Officer and Chief Operating Officer

Sure. I think on the M&A side, it's going to be a combination of cash and stock, it completely depends on the deal itself. I think with respect to just operating, we may dip down to $4 million or so throughout the year, but that would be the anticipated low point. So we feel very comfortable with the cash balance that we have.

Marc Wiesenberger -- B. Riley FBR -- Analyst

Great. Thank you very much.

Michael Rice -- Chief Executive Officer

You bet.

Operator

Thank you. And I'm showing no further questions in the queue at this time. I'd like to turn the call back to Mike Rice, CEO, for any closing remarks.

Michael Rice -- Chief Executive Officer

Thanks, Jimmy, and thanks again everyone for your interest in BioLife. Stay safe. We look forward to speaking with you during our follow-up calls when we report our Q1 results. Good night.

Duration: 54 minutes

Call participants:

Rod de Greef -- Chief Financial Officer and Chief Operating Officer

Michael Rice -- Chief Executive Officer

Paul Knight -- Janney Montgomery -- Analyst

Suraj Kalia -- Oppenheimer & Company -- Analyst

Jacob Johnson -- Stephens -- Analyst

Thomas Flaten -- Lake Street Capital Markets -- Analyst

David Ranaudo -- Maxim Group -- Analyst

Edward Marks -- H.C. Wainwright -- Analyst

Marc Wiesenberger -- B. Riley FBR -- Analyst

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