Kim Kelderman: Yes. Thank you, Dan. The production constraints are really, really facing the output right now. We are really happy, first and foremost, that we see the demand that we would like, right, and then actually exceeding expectations. So that’s the most important fundamental. We do believe that during this quarter, the quarter we’re currently in that we will get very close to what our book is. But the real status quo where we can produce as many Comets as that get ordered will be in our first fiscal year quarter. So the third calendar quarter and then we will continue to reel in the backlog in the first half of our fiscal year. You asked about my enthusiasm in spatial, it’s huge. Obviously, it’s a very fast-growing market, and you’ve been – you’ve gotten used to ACD being a real winner in the reagent space, with all the benefits that we know about it.
And then Comet, it’s early days. But if we compare the system to other peer systems in the field, we know that Comet is the only instrument that has a full workflow automation, right? So there’s no manual interference or manual steps in the workflow. The Comet you can use any antibodies that you’ve used to utilize in your workflow. We have 50,000 RNA targets, a truly multiomic machine. So you can see your protein and your RNA targets sanely in the same slide. As you know, Bio-Techne has 400,000 antibodies. So there’s plenty of choice to pick from in order to boost our pull-through on the instrument. And as you know, we can run four slides in parallel, and there we have the highest throughput in the market. So I’m extremely pleased with our positioning from a reagent as well as from an automation point of view, and we will continue to work to make our reagents, our antibodies as what the system seamlessly working together from some preparation [ph] all the way to image analysis to eventually make it most convenient for our customers to perform their special biology test.
Dan Arias: Okay. And then, Jim, just maybe to round out your comments related to the finish to the fiscal year here. You touched on margins. I just wanted to ask about the top line. It sounds like you’re expecting similar conditions, but you have the slightly tougher comp overall, China notably hard. Does that translate to some modest growth in 4Q? What’s the outlook there?
Jim Hippel: Yes, we’re absolutely – we absolutely are helping on – stay in the black for sure, so in terms of growth.
Operator: Thank you. Mr. Arias, please rejoin the queue for more questions. Next question comes from the line of Matt Larew with William Blair. Please go ahead.
Matt Larew: Hi. Good morning. I wanted to follow-up on Lunaphore. And the investments you’re making today to scale up manufacturing, would you say that generally they’re within the bounds of what you expected to make just perhaps they’re pulled forward? Or I guess the flip side of that would be; do you have different or worse expectations about the long-term margin potential. So just trying to get a sense for whether this is scale up to meet accelerated demand or perhaps something you discovered once you did the deal?
Kim Kelderman: That was a very good question, Matt. No, fortunately, it’s not something we discovered. It’s truly an outpacing of the orders versus our initial projections. And we had lofty projections but the traction in the market is just overwhelming. And that means that we have to increase our in-house capacity, which, of course, is something that we’re very used to do. We have a fantastic operations team in Switzerland that gets supported by operations teams from the U.S. just as well and from across other businesses such as the ProteinSimple business, very much used to producing high-volume instrumentation. So I’m very confident we can increase that capacity. But as you can imagine, the pull-through also hit some of the vendors.
So also there, we have to make sure that we help out with the upscaling of certain critical parts that the vendors are having to get used to these new volumes, right? So overall, we just have to beef up the capacity. It’s a great thing. By now, it’s a good problem to have, and we’re very confident that we can resolve this and there is no other underlying constrained or issue that we are aware of.
Matt Larew: Okay. That’s great to hear. The next question is about ScaleReady and the components of that. So your own GMP protein business, partnership and Wilson Wolf; just curious now that it’s been out there for a little while. What kind of feedback you’ve been getting if there’s any way to talk about how that’s translated to win rates? Is that a driver of some of the pickup in GMP proteins? And obviously, Wilson Wolf has been some market leading technology. I think there probably is some looming competition out there. Beyond just integration to offer a more full and automated solution like you’re trying to do already, are there also additional areas for platform improvement with GRx or that broader suite as well?
Kim Kelderman: Yes. Thank you for the question. I just have to say that when I talk to our customers in the cell and gene therapy space, ScaleReady has a real good reputation. So it’s truly a brand now in that particular space. And of course, it has a full solution for cell and gene therapy customers. And that’s why I believe that you see such traction in not only the volume of the G-Rex and the revenue associated with it, but also in the pull-through of proteins the cytokines and chemokines that we – customers end up using in that setup. It’s a complete solution. It’s scalable, and it’s relatively easy to implement compared to some of the competitive workflows. And yes, I think that is a chicken and the egg, right?
ScaleReady is doing really well because that’s a fantastic solution. And the other way around, the customers do get to enjoy the solution because the ScaleReady team is really efficient in bringing it to market and educating our customers about the benefit of the solution we have.
Operator: Thank you. Mr. Larew, please rejoin the queue for more questions. Next question comes from the line of Catherine Schulte with Baird. Please go ahead
Catherine Schulte: Hey guys, thanks for the questions. Organic growth came in about four points better than what you’ve guided. You talked about China stabilizing, but that sounded like it played out as you expected. So can you just talk through what drove that upside versus your expectations? Was it really broad-based? Or was there a particular product category or end market that’s surprised?
Jim Hippel: Yes. Hi, Catherine, this is Jim. Thanks for the question. Yes. I mean, I think generally speaking, the broad-based market performed as we expected. As you mentioned, China overall those as we expected as well. I think there is – if you look within the Protein Sciences, it gets back to our growth pillars and how resilient they are even in this down cycle we’ve been in. So a two point I’d call out would be one was cell and gene therapy. So we always said that when biotech funding came back, we believe that cell and gene therapy will be one of the first places you’d see it. And I’m not saying there’s a direct correlation there, but definitely a positive sign. And it was a bit of a surprise for us how quickly cell and therapy rebounded for us here in the third quarter.
And again, we saw the same thing over, as Kim mentioned, in Wilson Wolf as well. So that was very encouraging. It was not necessarily in our outlook a quarter ago. The other growth pillar within Protein Sciences was within our instrument, proteomics instrument portfolio and even more specifically, Simple Western. Simple Western performed extremely well and actually grew double digit in instruments as well as consumables. So also a very good sign because we always figured that when the instrument market came back, that would be the first part of our portfolio that we would see it given it’s a broad base of applications. It’s also very used widely in cell and gene therapy, and it’s very the most underpenetrated of our three platforms. So that was not necessarily in our outlook a quarter ago, and it was very nice to see that come back so strong here this quarter.
And then if I turn over to our diagnostics and genomics business, there is, I’d call out the surgeon business. As we talked about the growth rates there, we’re pretty much nearing our EPI test with Exosome. And – so very – one of the highest growth rates we’ve seen with the surgeon since we’ve owned the company and they got some new product launches out there are performing extremely well, and we think that momentum will continue. So that was also very nice to see.
Catherine Schulte: All right, great. Thank you. And then was there any stocking contribution from the European Fisher deal in the quarter? Or will there be any in the fiscal fourth quarter just given the timing of when you signed – just curious if there’s any stocking related to that partnership.
Kim Kelderman: Catherine, thank you for the question. No, there were no such influences in this past quarter and don’t expect them in the next quarter either, specifically because the setup is that Fisher will bring in the leads, and we will ship directly from our warehouse. So you will not see any of those dynamics, if that makes sense.
Operator: Thank you. Ms. Schulte, please rejoin the queue for more questions. Next question comes from the line of Sung Ji Nam with Scotia Bank. Please go ahead
Sung Ji Nam: Hi, thanks for taking the question and congratulations on the quarter. Maybe just on the academic end market perspective at this juncture. Just kind of curious, if you guys have visibility into that market, especially in the U.S. and Europe. Obviously, you’re seeing continued stable growth there, but potentially more difficult comps ahead. So just kind of curious what your outlook might be for the coming quarters.
Kim Kelderman: Yes. I think that academic markets have – we’ve done pretty well in there. And overall, I must say we see a relatively stable environment, right, with the Horizon funding in Europe as well as in the U.S. So it’s a stable market. Of course, with the lull in the biotech industry, some of our innovative sales reps have found their way into some of the academic accounts as well and have started refocusing there. So there is a nice bump up for us by just having the right focus and the connections further developing between the customers in academic as well as the sales rep. So at the end of the day, I think this is not a something that is just for one quarter or two quarters. I think as long as the academic funding stays as it is or gets better, we will continue to see a benefit from that end market, and we will continue to be good or even better at serving it. So – and that’s what I expect for the coming quarters.
Sung Ji Nam: Got it. And then I also have a follow-up on Lunaphore and spatial bio. Just kind of curious, it may be early, but are you seeing competitive wins on Lunaphore currently? And just for the spatial bio addressable market in general, just kind of curious what’s driving the – other than your performance there, just from an end market standpoint, are there a disproportional funding going towards your addressable market, current environment, do you think? Or – just kind of any color would be great. Thank you.
Kim Kelderman: Yes. Thanks for your question around spatial biology end markets. I do believe that end market is under less pressure than other end markets. It’s just such an important tool into determining which biomarker you’re going after. It’s just a new way of doing your research and validating your results. So it’s here to stay, and that market will continue to grow significantly, and we believe that it will grow double digits for the foreseeable future. Yes, we see competitive wins, as I mentioned earlier, when Dan asked the question, there are tremendous benefits from a Comet automation system over other systems that are in the market are reagents, their antibodies are also in the lead and very unique in that market.
So that combination is just very strong. And if I look at some of the trends in the market, yes, we have been able to sell Comets into accounts that have experience with other systems. But an even stronger signal is the moment we found that customers want a second Comet, right? And then now we have several larger pharma companies that have ordered the third one. So that means it’s not only a good value proposition at the moment you buy it, but it’s still a really good value proposition the moment you use it, and that gives them real first-hand experience, and that gives me confidence that, that workflow is indeed a real strong value position compared to the other solutions in the market.
Operator: Thank you. Ms. Ji Nam [ph], please rejoin the queue for more questions. Next question comes from the line of Paul Knight with KeyBanc Capital Markets. Please go ahead
Paul Knight: Hi, yes Kim, thanks for the time and Jim as well. The Protein Simple business, could you kind of highlight one of the fastest-growing portions of the product line. How large is Protein Simple now as well? And just a refresh there would be great.
Jim Hippel: Yes. Paul, this is Jim. So thanks for the question. Good to hear from you. Not given the size of so much on the by product line anymore. We try to avoid that from a competitive perspective. But as I highlighted in earlier – as an answer to earlier question, I think the Simple Western platform specifically was a highlight of that portfolio this quarter with double-digit growth overall and double-digit growth in both instrument placements as well as consumables. That being said, our entire instrument portfolio has been very resilient through this downturn. Despite struggles with the instrument placements the last several quarters, the consumables on all three platforms continue to offset that to keep those product lines in a very stable state overall.
