A very good day to you, ladies and gentlemen, and welcome to Repligen Corporation's Fourth Quarter and Year 2013 Earnings Conference Call. My name is Nancy, and I will be your coordinator. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. [Operator Instructions] I would now like to turn the call over to your host, Mr. William Kelly, Chief Accounting Officer for Repligen. Please proceed. Thank you.

Thank you, and good morning. The purpose of today's call is to discuss our fourth quarter and full year 2013 results, to provide financial guidance for the year 2014 and to discuss recent business highlights. Joining me today is Walter Herlihy, our President and CEO. At the outset, I would like to state that this discussion may contain forward-looking statements. These statements are subject to risks and uncertainties, which may cause our plans to change or results to vary. In particular, unforeseen events outside of our control may adversely impact future results. Additional information concerning these factors is discussed in our annual report on Form 10-K, the current reports on Form 8-K we filed today and other filings we make with the Securities and Exchange Commission. Except as required by law, we assume no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. This morning, we reported results for the fourth quarter and year ended December 31, 2013. For the year, our bioprocessing product revenue was $47.5 million, an increase of 13.5% versus 2012. Our royalty and other revenue was $20.7 million, bringing total revenue to $68.2 million, an increase of $5.9 million or 9.5% versus 2012. For the fourth quarter of 2013, we recorded bioprocessing product revenue of $10.4 million, an increase of approximately 7% from the prior year. Total revenue for the fourth quarter, including royalty and research revenue, was $15.4 million, a decrease of $3.4 million from the fourth quarter of 2012, in which royalty and research revenue included $5 million from the license of our SMA program to Pfizer. For the year 2013, our gross margin on product sales was 52.7%, a significant increase from 40.3% in 2012. This improvement was the result of a restructuring of…

Thanks, Bill. I would just like to add that our confidence in our 2014 guidance is bolstered by the fact that we're off to a very fast start to the year and expect record product sales in the first quarter. I would now like to provide additional color on growth opportunities in our 3 product groups, starting with our Protein A business. We currently manufacture 7 distinct Protein A affinity ligands, which we sell to large life sciences companies to make Protein A media. In the past 2 years, we have completed 2 funded collaborations to develop new affinity ligands, diversifying our offering. These 2 ligands are now incorporated into new media products sold by our partners. In 2014, we expect that these recently launched products will contribute incremental revenue of between $1 million and $2 million. Both have strong growth potential over the next few years and affirm our leadership in this business segment. Turning now to our growth factor product group. For our lead growth factor product, LONG R3 IGF-1, we've been working with our distribution partner, Sigma-Aldrich, to gain better visibility into future growth potential at the level of end users. We are now aware that some of the recent growth for IGF-1 has been driven by its use in the production of clinical materials for several mid- and late-stage clinical products. If one or more of these products is ultimately approved by the FDA and successfully launched, it could significantly increase demand for our IGF-1 product. In our chromatography products group, we expect sales of OPUS Pre-Packed Columns to grow by 50% to 100% in 2014. Part of this growth will come from a new 45-centimeter diameter OPUS column that we plan to launch later this month. This product has greater capacity than any competitive product…

[Operator Instructions] We have our first question in the queue from the line of Drew Jones from Stephens Inc.

Walt, you talked a little bit about growth factor and the fact that you guys are in some late-stage clinical trials. Do you have any visibility as to whether or not any of those trials are related to a PCSK9 product?

Well, we certainly have seen some evidence that the growth factor is incorporated in the pipeline. Probably, Drew, I would be reluctant to comment on specific products or specific companies, since obviously, this is corporate information. But I guess the point I wanted to emphasize that is -- new information here is that clearly we're incorporated in one of the legacy blockbusters. We're incorporated in a recently launched commercial product. And now that we know we're incorporated in the late-stage clinical area, our job is to continue to just fill those early-stage projects, those Phase I to Phase II projects as well. I think that really portends well for the next 5 years of sustained growth for this product.

And is it -- I know Amgen has been a great user of IGF in the past. Are there new users that are coming on board?

We think so. It's -- we have partial information, but we do believe that there are additional companies who are experimenting, albeit, at fairly low volumes right now with IGF-1 in their development programs. Some of those companies are buying the IGF-1 directly. Others are buying it in preformulated media from Sigma-Aldrich, our partner.

The media opportunity, I feel like it's something that we haven't really fully appreciated. Could you maybe firm up the products that are coming out a little bit this year and the product opportunities that you expect to -- market opportunities you expect to be able to attract over the next 12 to 24 months, kind of where it fits into the process?

So I assume you're referring to the chromatic graphic media I alluded to for the OPUS columns. And so after the introduction of the large OPUS column later this month, we hope to, sometime towards the end of 2014, introduce additional chromatographic media that we could also sell on OPUS columns, much as we have with one of our legacy media products in the past quarter. It will be no surprise to you that Protein A media will be the top of our list of the types of different media we might want to develop and begin to sell in certain discrete segments of the customer base that are particularly value oriented. And the overall estimates, worldwide estimates, from third parties on the size of the Protein A market are between $300 million and $400 million per year. That's all Protein A media. So that's the market segment we hope to begin playing in, in 2015.

And then, I guess, my last one is on OPUS. Can you talk a little bit about -- I know in the past you've said you've had 5 blue-chip customers with recurring -- placing recurring orders. Is that number still the same? Is it growing? Can you just -- kind of a feel for what the end market look like there.

Yes, I think it is incrementally growing. I can't give an exact number, but I do know that we are in active discussions with more than 20 companies right now, whether it's a singular product or their first order or their repeat order, all sort of recognizable biotech or pharmaceutical companies. So we see the customer base broadening out. That's certainly one of the things that's going to drive the anticipated growth in 2014 as our message gets into additional customer laboratories and development plans.

We have our next question from the line of Michael Wood from LSA.

One of the things you've talked about in the past is the trend towards factories of the future or flexible factories that you're seeing in biopharma manufacturing. Can you expand on this and let us know what it means for Repligen and what opportunities there might be here?

I think for just -- to back up for a second and define factory of the future, we see an opportunity in this transition that is beginning to occur in pharmaceutical bio production where steel, hard-plumbed factories are being replaced by plug-and-play, single-use, plastic disposable components. And the feedback we have from customers is that OPUS may be a perfect fit for a factory of the future-type manufacturing, given that we are able to offer customers the broadest range of sizes and media, and in a size that fits well with desires of customers to potentially replace single, large chromatographic columns with arrays of smaller OPUS-sized columns. So we see that as very much a fit. It's not that we need to develop a factory of the future to grow the OPUS business; it could fit quite well in existing factories, but we see that as a long-term growth opportunity. And it's certainly directed our M&A and internal product development thinking as to how else could we exploit this paradigm shift, which will take place over the next decade, and get out in front of that, and provide other types of products that could be used in that type of environment.

[Operator Instructions] We have Drew Jones on line next.

Walt, one more question on the PCSK9 front that seems to be getting a lot of publicity right now. Can you talk a little bit about the expected lead times for Protein A and just the difference in Protein A consumption for that particular monoclonal versus those that already exist? Is it significantly different?

Well, the -- we don't know, of course, what -- how many metric tons ultimately of PCS -- assuming it is approved by the FDA and successful -- how many metric tons will be ultimately required at peak market. But it's quite clear that the patient population for PCSK9, which is targeting elevated cholesterol, is far larger than any patient population that's, to-date, been treated with a monoclonal antibody -- far larger than rheumatoid arthritis, any of the cancer niches that have been driving the business so far. So I don't believe there's any reason to suspect that there isn't going to be a linear relationship to the extent the world metric tonnage of antibodies produced is increased by PCSK9, that it won't also be reflected in our output.

And just for fun, would it be a similar impact to growth factor that you would see on Protein A, or is there anything we're missing as far as the consumption of growth at the front end?

No. The consumption is fairly linear, whether it's a Protein A resin, a growth factor or a chromatographic media. It's fairly linear with product output, so I think that's a pretty solid correlation.

[Operator Instructions]

Okay. I would like to thank everyone for participating on today's call. And as always, if you have follow-up questions, feel free to contact the company directly. Thank you.

Thank you. Ladies and gentlemen, that concludes your call for today. You may now disconnect. Thank you all for joining. Have a great day ahead.