Core Viewpoint - Alpha Teknova, Inc. has announced a definitive agreement for a private placement of 12,385,883 shares of common stock at a price of $1.24 per share, aiming to raise approximately $15.4 million before expenses [1][7]. Company Overview - Teknova is a leading producer of critical reagents for the life sciences industry, focusing on the discovery, development, and commercialization of novel therapies, vaccines, and molecular diagnostics [1][4]. - The company has been innovating since 1996 and offers customizable solutions for various stages of the workflow, supporting sectors such as cell and gene therapy, molecular diagnostics, and synthetic biology [4]. Financial Details - The private placement is expected to close on or about July 12, 2024, subject to customary closing conditions [7]. - The gross proceeds from the private placement are anticipated to be approximately $15.4 million, which will be used for general corporate purposes [7]. Regulatory Compliance - The securities in the private placement are not registered under the Securities Act and may not be reoffered or resold in the U.S. without an effective registration statement or applicable exemption [3][8]. - Teknova has agreed to file an initial registration statement with the SEC covering the resale of the securities within 45 days of the definitive agreement [8].

Company reaffirms 2024 revenue guidance of $35-38 million Business and Financial Updates Clinical Solutions: Teknova has seen an increase in the number of Clinical Solutions customers since fiscal 2023, from 34 to 43. While the Company's overall revenue in fiscal 2024 is expected to be lower within the Clinical Solutions category compared to fiscal 2023, Teknova has successfully grown the number of its customers entering clinical trials and ordering its GMP-grade products, supporting the Company's thesis th ...

Company reaffirms 2024 revenue guidance of $35-38 million "I'm excited to share our sustained progress in executing against our strategy," said Stephen Gunstream, President and Chief Executive Officer. "I'm increasingly confident that we will continue to deliver through the end of this year and beyond, in particular as market conditions appear likely to improve, notably with recent FDA approvals of novel gene therapies and with a recovery in biotech and cell and gene therapy funding more broadly." Second qu ...

Core Viewpoint - Alpha Teknova (TKNO) has experienced a significant downtrend, with a 24.6% decline over the past four weeks, but is now in oversold territory, suggesting a potential turnaround due to improved earnings expectations from analysts [1]. Group 1: Technical Indicators - The Relative Strength Index (RSI) is a key technical indicator used to identify oversold conditions, with a reading below 30 indicating that a stock may be oversold [2]. - TKNO's current RSI reading is 22.19, indicating that the heavy selling pressure may be exhausting itself, suggesting a possible trend reversal [2]. Group 2: Fundamental Indicators - There is a strong consensus among sell-side analysts regarding an increase in TKNO's earnings estimates, with a 1.5% rise in the consensus EPS estimate over the last 30 days [4]. - TKNO holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a strong potential for a near-term turnaround [4].

Investors might want to bet on Alpha Teknova (TKNO) , as it has been recently upgraded to a Zacks Rank #2 (Buy). This upgrade primarily reflects an upward trend in earnings estimates, which is one of the most powerful forces impacting stock prices. The sole determinant of the Zacks rating is a company's changing earnings picture. The Zacks Consensus Estimate -- the consensus of EPS estimates from the sell-side analysts covering the stock -- for the current and following years is tracked by the system. The p ...

Financial Data and Key Metrics Changes - Total revenue for Q1 2024 was $9.3 million, a 2% increase from $9.1 million in Q1 2023, with an 18% sequential improvement from Q4 2023 [32][68] - Net loss for Q1 2024 was $8.1 million or $0.20 per diluted share, compared to a net loss of $8.8 million or $0.31 per diluted share in Q1 2023 [34] - Adjusted EBITDA improved to negative $3.8 million in Q1 2024 from negative $6.1 million in Q1 2023 [34][89] - Free cash flow was negative $6.7 million for Q1 2024, an improvement from negative $12 million in Q1 2023 [9][71] - Operating expenses for Q1 2024 were $10.2 million, down from $11.4 million in Q1 2023, reflecting aggressive expense management [8][10] Business Line Data and Key Metrics Changes - Clinical Solutions revenue increased by 7% to $1.7 million in Q1 2024 from $1.6 million in Q1 2023, driven by an increased number of customers [7][29] - Lab Essentials revenue remained consistent at $7.3 million for both Q1 2024 and Q1 2023, with a slight increase in customer count offset by a decline in average revenue per customer [60][32] - Gross profit for Q1 2024 was $2.2 million, down from $2.4 million in Q1 2023, with a gross margin of 23.8%, down from 26.6% [61][34] Market Data and Key Metrics Changes - The company reported a diverse customer base with no single customer representing more than 10% of revenue, indicating a stable market position [29] - Recent improvements in biotech funding and increased customer engagement suggest a more optimistic market outlook [67] Company Strategy and Development Direction - The company launched Build-Tek, a custom configurator for high-quality customizable buffers, aiming to enhance customer experience and operational efficiency [58][40] - The management believes that the market is stabilizing after a challenging period, with expectations for improved revenue recognition in early 2025 [5][31] - The company is focused on maintaining critical investments while managing expenses to achieve long-term growth targets [10][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the full-year revenue guidance of $35 million to $38 million for 2024, supported by a growing customer base [29][35] - The management noted that the company is seeing a positive trend in customer engagement and order patterns, particularly from previously conservative customers [82][29] Other Important Information - Capital expenditures for Q1 2024 were $0.1 million, significantly lower than $4.3 million in Q1 2023, marking the seventh consecutive quarter of decreases [94] - The company expects annualized savings of approximately $8 million from recent workforce reductions and cost-saving measures [72] Q&A Session Summary Question: Can you provide insights on the Clinical Solutions outlook for the rest of the year? - Management acknowledged the lumpy nature of the business but indicated a positive trend in customer numbers and engagement, suggesting a favorable outlook for Clinical Solutions [97][82] Question: What are the early ordering patterns from customers entering Phase III clinical trials? - Management noted that while specific details cannot be disclosed, there is ongoing engagement with customers, and they are optimistic about future orders as these customers scale up [50][25] Question: How does the company plan to manage capital expenditures moving forward? - Management indicated that while capital expenditures have decreased significantly, they expect to maintain a reasonable level of investment to support growth and operational needs [83][48]

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Condensed Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Condensed%20Financial%20Statements%20(Unaudited)) This section presents unaudited condensed financial statements for Q1 2024, highlighting a net loss and substantial doubt about the company's going concern status Condensed Statements of Operations (Q1 2024 vs Q1 2023) | Metric | For the Three Months Ended March 31, 2024 (in thousands) | For the Three Months Ended March 31, 2023 (in thousands) | | :--- | :--- | :--- | | Revenue | $9,290 | $9,121 | | Gross Profit | $2,209 | $2,423 | | Loss from Operations | $(7,986) | $(8,946) | | Net Loss | $(8,097) | $(8,817) | | Net Loss Per Share | $(0.20) | $(0.31) | Condensed Balance Sheet Highlights | Metric | As of March 31, 2024 (in thousands) | As of December 31, 2023 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $21,596 | $28,484 | | Total current assets | $38,823 | $45,660 | | Total assets | $120,817 | $128,587 | | Total liabilities | $37,439 | $38,551 | | Total stockholders' equity | $83,378 | $90,036 | - Management has substantial doubt about the Company's ability to continue as a going concern for the next twelve months due to recurring net losses of **$8.1 million** in Q1 2024, an accumulated deficit of **$99.9 million**, and the risk of not meeting debt covenants[35](index=35&type=chunk)[36](index=36&type=chunk)[38](index=38&type=chunk) - In January 2024, the company implemented a workforce reduction of approximately **35 positions**, incurring **$1.3 million** in severance and termination benefits[40](index=40&type=chunk) Revenue by Product Category | Product Category | Q1 2024 Revenue (in thousands) | Q1 2023 Revenue (in thousands) | | :--- | :--- | :--- | | Lab Essentials | $7,266 | $7,257 | | Clinical Solutions | $1,718 | $1,609 | | Other | $306 | $255 | | **Total Revenue** | **$9,290** | **$9,121** | - On March 8, 2024, the company amended its credit agreement with MidCap, reducing minimum net revenue requirements for 2024 from **$42.0 million** to **$34.0 million** and increasing the minimum cash requirement from **$9.0 million** to **$10.0 million**[63](index=63&type=chunk)[66](index=66&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2024 financial performance, noting revenue growth, declining gross profit margin, reduced operating expenses, and ongoing liquidity concerns Results of Operations Comparison | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | $ Change (in thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $9,290 | $9,121 | $169 | 1.9% | | Gross Profit | $2,209 | $2,423 | $(214) | (8.8)% | | Loss from Operations | $(7,986) | $(8,946) | $960 | (10.7)% | | Net Loss | $(8,097) | $(8,817) | $720 | (8.2)% | - The decrease in gross profit percentage to **23.8%** from **26.6%** was primarily driven by increased overhead costs, largely depreciation expense, following the completion of the new manufacturing facility[105](index=105&type=chunk) - Operating expenses decreased due to reduced headcount, with Research and development expenses falling by **38.4%** and Sales and marketing expenses by **28.9%**, while General and administrative expenses included a one-time **$1.3 million** charge for the workforce reduction[106](index=106&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk) - The company's liquidity is constrained, with **$21.6 million** in cash and cash equivalents as of March 31, 2024, raising substantial doubt about its ability to continue as a going concern due to insufficient capital to meet obligations over the next twelve months[114](index=114&type=chunk)[120](index=120&type=chunk) Net Cash Flow Summary | Cash Flow Activity | For the Three Months Ended March 31, 2024 (in thousands) | For the Three Months Ended March 31, 2023 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(6,558) | $(7,684) | | Net cash provided by (used in) investing activities | $13 | $(4,312) | | Net cash used in financing activities | $(343) | $(25) | | **Net decrease in cash and cash equivalents** | **$(6,888)** | **$(12,021)** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the company is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, Teknova is exempt from providing quantitative and qualitative disclosures about market risk[134](index=134&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal controls - Based on an evaluation as of March 31, 2024, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[135](index=135&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[136](index=136&type=chunk) [PART II. OTHER INFORMATION](index=38&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company is not party to material legal proceedings but has accrued **$0.3 million** for a pending former employee labor claim - In August 2023, a former employee filed a claim alleging violations of California's labor, wage, and hour laws, with a mediation scheduled for June 6, 2024[88](index=88&type=chunk) - The company has accrued its best estimate of potential loss related to the labor claim in the amount of **$0.3 million**, which is included in 'Accrued liabilities'[88](index=88&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) Updated risk factors highlight the company's history of operating losses and potential stock price dilution from available shares - The company has a history of operating losses, including **$8.1 million** for Q1 2024, and may not achieve or maintain profitability in the future[142](index=142&type=chunk) - A significant portion of the company's total outstanding shares are available for immediate resale, which could cause the market price of its common stock to drop significantly[143](index=143&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered equity sales and confirms full utilization of IPO net cash proceeds as of March 31, 2024 - There were no unregistered sales of equity securities during the quarter[147](index=147&type=chunk) - As of March 31, 2024, the company has used all of the net cash proceeds from its IPO[148](index=148&type=chunk) [Item 3. Defaults Upon Senior Securities](index=40&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - None reported[150](index=150&type=chunk) [Item 4. Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[151](index=151&type=chunk) [Item 5. Other Information](index=40&type=section&id=Item%205.%20Other%20Information) The company reports no other information for this item - None reported[152](index=152&type=chunk) [Item 6. Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the 10-Q report, including credit agreement amendments and officer certifications - The report includes a list of all exhibits filed, such as corporate governance documents, credit agreement amendments, and officer certifications[153](index=153&type=chunk)[154](index=154&type=chunk)

Corporate and Financial Updates 1 Exhibit 99.1 Teknova Reports First Quarter 2024 Financial Results First quarter 2024 total revenue was $9.3 million, up 2% from prior year Launch of Build-TekTM Custom Configurator Company reaffirms 2024 revenue guidance of $35-38 million HOLLISTER, Calif., May 13, 2024 – Alpha Teknova, Inc. ("Teknova" or the "Company") (Nasdaq: TKNO), a leading producer of critical reagents for the discovery, development, and commercialization of novel therapies, vaccines, and molecular di ...

[Cautionary Note Regarding Forward-Looking Statements](index=3&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section warns that forward-looking statements are subject to substantial risks and uncertainties, and actual results may differ materially - Forward-looking statements involve **substantial risks and uncertainties**[10](index=10&type=chunk) - Statements cover financial condition, results of operations, plans, objectives, future performance, and business[10](index=10&type=chunk) - Actual results could differ materially from forward-looking statements[12](index=12&type=chunk) - Company undertakes no obligation to update forward-looking statements, except as required by law[14](index=14&type=chunk) [Risk Factor Summary](index=5&type=section&id=RISK%20FACTOR%20SUMMARY) This section summarizes key speculative risks for common stock investment, covering operating losses, market fluctuations, competition, and IP challenges - Incurred operating losses in the past and may incur losses in the future[18](index=18&type=chunk) - Operating results may fluctuate significantly and be difficult to predict[18](index=18&type=chunk) - Significant capital invested in manufacturing facilities; scaling efforts could be disruptive[18](index=18&type=chunk) - Natural disasters, geopolitical unrest, war, public health issues, or other catastrophic events could disrupt operations[18](index=18&type=chunk) - Dependence on maintaining customer relationships and recurring revenue sources[18](index=18&type=chunk) - Faces intense competition from larger life science, pharmaceutical, and biotechnology companies[18](index=18&type=chunk) - Future capital needs are uncertain, and additional financing may not be secured on favorable terms[18](index=18&type=chunk) - Risks from recent workforce reductions include morale issues and ability to meet demand[18](index=18&type=chunk) - Reliance on trade secret laws for intellectual property protection, which may be vulnerable[18](index=18&type=chunk) - Credit Agreement terms may restrict operations; failure to comply could lead to accelerated debt[19](index=19&type=chunk) - Telegraph Hill Partners controls the company, and its interests may conflict with other stockholders[19](index=19&type=chunk) - Material weaknesses in internal control over financial reporting could lead to inaccurate financial results[19](index=19&type=chunk) [PART I](index=7&type=section&id=PART%20I) [Item 1. Business](index=7&type=section&id=Item%201.%20Business) Alpha Teknova is a leading producer of critical reagents for life sciences, known for its adaptable manufacturing processes and ability to deliver custom, high-quality products quickly - Leading producer of critical reagents for discovery, development, and commercialization of novel therapies, vaccines, and molecular diagnostics[21](index=21&type=chunk) - Proprietary processes enable manufacturing and delivery of high-quality, custom, made-to-order products with short turnaround times[21](index=21&type=chunk) - Achieved an annual customer retention rate of approximately **96%** for customers purchasing more than **$10,000** annually in 2023[25](index=25&type=chunk) - Participates in high-growth market segments including cell and gene therapy, mRNA vaccines, synthetic biology, and molecular diagnostics[26](index=26&type=chunk)[27](index=27&type=chunk) - **ISO 13485:2016 certified**, enabling products for diagnostic and therapeutic applications[32](index=32&type=chunk) [Overview](index=7&type=section&id=Overview) Alpha Teknova is a key supplier of critical reagents for life sciences, known for its adaptable manufacturing processes and ability to deliver custom, high-quality products quickly - Over **2,500 customers** across life sciences market[21](index=21&type=chunk) - **96% annual customer retention rate** for customers purchasing over **$10,000** annually in 2023[25](index=25&type=chunk) - New custom products moved into production in weeks from order receipt, compared to months from alternatives[22](index=22&type=chunk) - Products used in high-growth areas like cell and gene therapy, mRNA vaccines, synthetic biology, and molecular diagnostics[26](index=26&type=chunk)[27](index=27&type=chunk) - FDA approvals for gene therapies: **5 (2017-2022), 7 (2023), estimated up to 17 (2024)**[26](index=26&type=chunk) [Our Portfolio](index=8&type=section&id=Our%20Portfolio) Alpha Teknova's portfolio spans from common research applications to highly customized formulations for genomics and bioproduction, including GMP-grade products Revenue Contribution | Category | Revenue Contribution | | :--------------- | :------------------- | | Lab Essentials | ~**79%** of total revenue | | Clinical Solutions | ~**18%** of total revenue | - Product types include pre-poured media plates (Lab Essentials only), liquid cell culture media and supplements, and molecular biology reagents[33](index=33&type=chunk) - **ISO 13485:2016 certified** for diagnostic and therapeutic applications[32](index=32&type=chunk) [Competitive Strengths](index=12&type=section&id=Competitive%20Strengths) Alpha Teknova's strengths include expertise in complex custom chemical formulation, rapid delivery, quality, regulatory compliance, and strong customer relationships - Proprietary production system designed for rapid manufacturing and quality control of complex, custom chemical formulations[39](index=39&type=chunk) - Typically moves new custom products into production in weeks from order receipt; ships approximately **70%** of custom RUO products less than three weeks from order placement[41](index=41&type=chunk) - Customers frequently integrate Teknova's validated components into their production processes, leading to long-term relationships[40](index=40&type=chunk) - Leading provider of research and GMP-grade bacterial cell culture media and specialized chromatography solutions for cell and gene therapy[43](index=43&type=chunk) Supplier Concentration (2023) | Supplier Type | % of Total Inventory Purchases | | :-------------- | :----------------------------- | | Distributor supplier A | **40%** | | Direct supplier C | **10%** | [Our Markets](index=15&type=section&id=Our%20Markets) Alpha Teknova operates in diverse life sciences markets, benefiting from industry preferences for customized, high-quality products with short turnaround times - Key market growth drivers include expansion of cell and gene therapy, development of mRNA vaccines and therapies, and growth in molecular diagnostics and genomics[47](index=47&type=chunk) - Additional factors benefiting core markets: increased R&D funding, development of new therapeutic/diagnostic modalities, and favorable demographic trends[48](index=48&type=chunk) - Supplier to approximately **110 leading cell and gene therapy organizations**[48](index=48&type=chunk) Average Customer Spend Increase in Cell & Gene Therapy (vs. Phase 1) | Clinical Trial Phase | Spend Increase | | :------------------- | :------------- | | Phase 2 | **1.4 times** | | Phase 3 | **3.2 times** | | Commercial Production | **29.8 times** | - Global molecular diagnostics market estimated to reach **$27.0 billion** by 2030; global genomics market expected to grow to **$94.9 billion** by 2030[51](index=51&type=chunk) [Our Strategy](index=16&type=section&id=Our%20Strategy) Alpha Teknova's strategy focuses on accelerating therapeutic and diagnostic development by increasing product integration and providing superior customer service - Goal is to provide products necessary to accelerate therapeutic and diagnostic development from basic research to commercialization[52](index=52&type=chunk) Customer Expenditure Increase (2023, vs. Catalog only) | Product Type | Average Spend Multiplier | | :-------------------------------- | :----------------------- | | Custom products | ~**19 times more** | | GMP-grade products | ~**62 times more** | - Investing in automation, facilities, and operating infrastructure to increase manufacturing capacity, improve efficiency, and reduce delivery time[53](index=53&type=chunk) [Competition](index=17&type=section&id=Competition) Alpha Teknova operates in a highly competitive life sciences market, differentiating itself through custom formulations, rapid turnaround, and technical expertise - Operates in a highly competitive environment with diverse competitors, including large established life science companies (e.g., Thermo Fisher, Millipore, Cytiva, Hardy Diagnostics, Lonza) and smaller niche competitors[55](index=55&type=chunk)[56](index=56&type=chunk) - Competes with customers' established in-house production capabilities[55](index=55&type=chunk) - Differentiated by ability to offer customer-specified RUO and GMP formulations with short turnaround times, Teknova brand reputation (**25+ years**), and technical expertise[56](index=56&type=chunk) [Government Regulation](index=17&type=section&id=Government%20Regulation) Alpha Teknova's products are marketed as ancillary reagents, exempt from direct FDA regulation, but comply with ISO 13485:2016 standards and customer requirements - Products are marketed as ancillary reagents for research or further manufacture, not subject to direct FDA regulation under the U.S. Federal Food, Drug and Cosmetic Act[57](index=57&type=chunk) - Voluntarily built quality system to comply with specific sections of **ISO 13485:2016 standards** to meet customer requirements[59](index=59&type=chunk) - Complies with 'Research Use Only' (RUO) labeling guidance, ensuring products are not intended for clinical, therapeutic, or diagnostic use[61](index=61&type=chunk) - Subject to federal, state, and local environmental, health, and safety laws and regulations[62](index=62&type=chunk) [Intellectual Property](index=18&type=section&id=Intellectual%20Property) Alpha Teknova relies on trade secrets and contractual protections for intellectual property, acknowledging challenges in protection and enforcement - Relies primarily on trade secrets, including know-how, confidential information, unpatented technologies, and other proprietary information[65](index=65&type=chunk) - Protects intellectual property through confidentiality and non-disclosure agreements with employees, consultants, and contractors[65](index=65&type=chunk) - Does not currently own any issued patents but may file patent applications or acquire/license IP rights in the future[173](index=173&type=chunk) - Maintains physical and electronic security of premises and IT systems to preserve trade

Alpha Teknova, Inc. (NASDAQ:TKNO) Q4 2023 Earnings Conference Call March 11, 2024 5:30 PM ET Company Participants Jennifer Henry - Senior Vice President of Marketing Stephen Gunstream - President & Chief Executive Officer Matthew Lowell - Chief Financial Officer Conference Call Participants Mark Massaro - BTIG Jacob Johnson - Stephens Steven Mah - TD Cohen Madeline Mollman - William Blair Paul Knight - KeyBanc Operator Hello, and thank you for standing by. Welcome to Teknova Fourth Quarter 2023 Financial Re ...