Max Smock

Birgit disclosed proposals up high single digits year-over-year in both pharma and biotech segments. Glenn added proposals have increased sequentially for 3 quarters in a row, signaling sustained positive momentum.

Birgit said AI-assisted drug programs are still a very small sample set but is personally optimistic. Noted AI-assisted companies tend to work on many programs simultaneously, which should increase preclinical testing volume over time.

Foster said China licensing is increasing but net positive for CRL since they hold principal market shares with major pharma and typically retain work when pharma acquires molecules from biotech.

Foster expressed strong confidence in pharma spending trajectory given contracts, proposal volumes, and completed restructuring. Biotech remains the principal growth driver for the next decade given innovation pipeline and complete outsourcing of CRL capabilities.

Foster declined to quantify but said they are being careful about adding headcount back, guardedly optimistic on demand stabilization. Pease noted headcount won't be up year-over-year but is increasing from start-of-year levels.

Foster attributed outperformance to pent-up demand from clients who paused programs in H2 2024, with favorable study mix. Pease added about half the beat was operational vs FX, with better-than-usual change orders and slippage.

Foster explained biosimulation works well in discovery for single-answer questions but moving to regulated safety assessment requires simulating complex multi-organ responses, which is a huge leap from whole animal systems.

Foster acknowledged difficulty predicting pace but emphasized NAMs evolution is not new, science will drive timing, and CRL will play key role in validation regardless of FDA leadership changes.

Flavia clarified the impairment was driven primarily by CDMO setbacks (client losses + lower growth vs acquisition assumptions), not biologics testing, which continues to perform well.