Bruker Corporation Morgan Stanley 24th Annual Global Healthcare Conference

All right. Thank you everyone for being here. It is my pleasure to welcome the Bruker team to the Morgan Stanley Healthcare Conference. My name is Mike Fedele. I lead Morgan Stanley's life science tools and diagnostics practice in the healthcare investment banking side. I am joined here by Frank Laukien, Chairman and CEO, as well as Gerald Herman, the Chief Financial Officer. Frank, Gerald, welcome. Thank you for having us.

Thank you. Maybe just to start off, Frank, your father founded this company back in 1960 around NMR, when the ultimate kind of potential was far from clear.

I am curious, within Bruker's portfolio today, where do you see kind of similarities or where there is maybe a gap between what you view as having really strong scientific potential, versus what is well understood today?

Okay. Interesting question, yeah. I think we're in that inflection point where people are trying to understand biology much more deeply, disease biology, drug discovery, biomarkers that may play a role in diagnostics or MRD or whatever it may be. The biological questions, I think, more so than the technological questions, what magnet, what laser, what mirror, what mass spec do I need? There's a fast evolution there as well, but I think we're at that inflection point where people call it sometimes biology or disease biology 2.0. We've used or coined the term the post-genomic era of drug discovery and disease biology. I think that's where the biggest inflection point is right now, where people aren't quite sure yet where that will go and where there is a debate. We almost understand everything because we have the genes.

No, we understand 20% of disease biology and the complexity. I think it's more on the biology side than necessarily the technology side. Yes, we have better TIMS, TOF and magnets and whatnot coming out all the time. We're a technology powerhouse. But I think it's more important, and we've transitioned the company to really be also deep in disease biology and biomarkers and the biology 2.0 that's behind that.

Maybe for an investor that's newer to the Bruker story, double-clicking into what you just said about post-genomics, what exactly do you mean by that? How do you want an investor to understand about how Bruker fits into that ecosystem and where you're going?

Yeah. Genomics and sequencing are foundational, but in some diseases they make the big difference. In many other diseases, they've scratched a little bit more than the surface. But I think that maybe we understand 25% of biology and disease biology is sort of. Maybe that's almost a consensus or there's a range, obviously. So clearly proteomics, clearly bottom gene expression at the transcriptomic and proteomic level. But beyond that, even every protein, so-called protein, is a protein group, which is an average of 30 different molecules. They're called proteoforms, and that's where the function or pathology, as the case may be, occurs.

Understanding that with much higher differentiation, resolution, doing that at scale and with sensitivity is one of the key new important areas where function, binding of drug targets or protein-protein interactions, function occurs then primarily at the proteomic level, and also multi-omics at the metabolomic, lipidomic, small molecule levels. In addition, that's often embedded in a spatial context. So spatial biology has become very important. In addition, because it does get more complex and we might as well deal with it's a big market opportunity, and ignoring it has led to atrocious rates of translating discoveries into new drugs, right? They're still very poor. In addition, we need to understand binding and interaction and protein dynamics. Good old NMR is a crucial technology for that. That plays well with mass spectrometry, but also with other vendors, Cryo-EM or AlphaFold. So bringing together multi-omics, spatial interactions, binding dynamics.

I know you want me to stop, probably. Oh my god, it's a long list. But unless we really tackle the hard problems, and for that, AI is a foundational tool. It's an enabling tool. You can't do that anymore with human expertise only, and so the confluence of these factors is really crucial. I take that as, yeah, too bad for drug discovery and for diagnostics development. So many failures, so expensive, so long. But of course, wow, if you could get the insights from 25% to 50% or to 75% because you're not afraid of the complexity and the depth that's needed, and that's the hypothesis we're pursuing. Providing the tools to deal with that is an incredible opportunity. That's the biggest S-curve and inflection point for Bruker over the next 5 to 10 years. Yes, we do deep tech. Yes, we do diagnostics. But that's the really big opportunity.

We are pursuing, not all, but multiple aspects, usually with the deepest and best tools.

That's great. Where are you seeing the most demand, whether that's from what your customers are talking about or what's actually kind of pulling through on the one hand and what's taking longer than you may have otherwise anticipated?

Yeah. From a very fast growth phase for Bruker from post-COVID to about 2024, where we're very significantly outgrowing the market and most of the larger peers in the industry. Then some very significant headwinds in 2025 from currency to tariffs to academic spending, from which we're still in part recovering in 2026. Sometimes it's absence of headwinds as in U.S. academia, and in many areas we're seeing more and more in accelerating tailwinds. This year, something we normally haven't talked much about, non-life science deep tech, which is, if you include defense and energy, maybe $700 million of our revenue. So that's the fastest-growing and, by the way, typically very high margin, high incremental margin business. The life science indicators of academic spending outside of the United States growing strongly for us.

China growing on the order side for us, and now we actually do believe that there is a budget flush for NIH and NSF that's going on, and they'll put a lot of money into the system before the end of September. That should bode well then also for Q4 and maybe Q1 orders for us for some of these high-end research tools that people are ready to adopt. I didn't mention all of them because it's complex enough, but there is additional things for spatial 3D genomics and so on, where academic funding will really be welcome because I think some of these things are the early phases yet. Some of them are getting readily adopted by biopharma, like the timsOmni, others like 3D structural genome. What's that? Does that really matter? It's not just something we can sequence. No, it interacts. It has topologies.

It has proximities. For that, we need academic funding, and there the U.S. tends to lead. It's doing well in China, it's doing well in Europe, but the U.S. is now hopefully coming along as well.