Good day, ladies and gentlemen and welcome to the Repligen Corporation’s First Quarter 2016 Earnings Conference Call. My name is Regit and I will be your coordinator. At this time all participants are in a listen-only mode. [Operator Instructions]. Please note there will be a question-and-answer period following the company’s formal remarks. In order to accommodate all individuals, who wish to ask questions there will be a limit of three questions at a time. I would now like to turn the call over to your host for today’s call, Sondra Newman, Senior Director of Investor Relations for Repligen.

Thank you and good morning. The purpose of today’s call is to discuss our financial results for the first quarter of 2016, to provide updated financial guidance for the year 2016, and to discuss recent business highlights. Joining me are Tony Hunt, our President and CEO; and Jon Snodgres, our CFO. Our comments today will include forward-looking statements, regarding business goals and our expectations for the financial performance of the company. We caution you that such statements are subject to risks and uncertainties that may cause actual events or results to differ. In particular, unanticipated events outside of our control may adversely impact future results. Additional information concerning these risk factors is discussed in our annual report on Form 10-K, the current report on Form 8-K which we filed today, and our other filings that we make with the SEC. The forward-looking statements in today’s discussion reflect management’s current views and may become obsolete as a result of new information, future events, or otherwise. The company does not obligate or commit itself to update forward-looking statements except as required by law. During this call we’ll be presenting our financial results and providing guidance on an adjusted or non-GAAP basis as well as on a GAAP basis. Adjusted figures will include the following; revenue growth at constant currency, adjusted operating income, EBITDA, adjusted EBITDA, adjusted net income, and adjusted fully diluted earnings per share. A reconciliation of GAAP to non-GAAP financial measures is included as an attachment to our press release issued this morning. While these adjusted financial measures should not be viewed as an alternative to GAAP measures, the company believes that the use of these non-GAAP measures better enables investors to benchmark its results against historical performance and the performance of peers and to evaluate investment opportunities. With that I’ll turn the call over to Tony Hunt for a business update.

Thank you, Sondra. Good morning, everybody. Overall we’re very pleased with the performance of the Company in quarter one. Given the breakout year we had in 2015, where our overall revenue grew 38%, it is very encouraging that our end-markets have remained strong and we achieved 21% top-line growth and a record quarter for revenue of $25.1 million. Our direct sales products, particularly our ATF filtration systems and OPUS pre-packed chromatography columns, were the clear drivers of growth in the first quarter, with our ligands and growth factor businesses coming in on target. We also delivered strong operational performance for the Company in the quarter. While our gross margins were a little bit below our full-year guidance range, we were able to leverage the investments we made in 2015 in SG&A, which resulted in 20% year-on-year growth in adjusted net income, and $0.02 higher to $0.14 on adjusted EPS when you exclude the nonoperational FX expense impact. Before jumping into the business details and the highlights of Q1, I want to spend a few minutes on our strategic priorities for the year and, in particular, the acquisition of Atoll GmbH. Going into 2016, a key priority for us was to strengthen our core businesses through acquisitions or strategic partnerships. Our M&A strategy is very focused on bringing new technology offerings to our customer base and market leadership in several core areas. In the case of Atoll, this acquisition brings us technology and market leadership in pre-packed columns in the high throughput process development labs, which is an area we did not address with our OPUS portfolio. The acquisition moves us into the market leadership position now for pre-packed columns. The demand for these products is accelerating rapidly, and our customers will now benefit from end-to-end solutions from process development through…

Thank you, Tony. Good morning. Today we are reporting our financial results for the first quarter of 2016 and updating our financial guidance for the year. I will start with our first-quarter results. Our financial results for the first quarter of 2016 were highlighted by strong sales of our bioprocessing products. We reported product revenue of 25.1 million, an increase of 21% at constant currency and as-reported compared to the first quarter of 2015. In the quarter, we realized strong growth in our OPUS and ATF product lines. Geographically, we experienced double-digit sales growth in each of our primary regions of North America, Europe, and Asia. Our product gross profit for the first quarter was $14 million, an increase of $1.3 million or 10% over the first quarter of 2015. Our product gross margin was 55.9% in the first quarter of 2016 compared to 61.2% in 2015. The change in year-over-year gross margin is a result of product mix, predominantly driven by higher sales of OPUS, and from the impact of operational investments made in our facilities starting in 2015 to support the growing demand for our products. Now moving on to operating expenses, research and development expenses were $1.5 million for the first quarter of 2016, consistent with the first quarter of 2015. We expect R&D expenses to increase in the following quarters as we continue to invest in key product development and validation programs, including single-use ATF and OPUS. SG&A expenses increased to $7 million in the first quarter of 2016 from $6 million in the first quarter of 2015. The year-over-year increase was driven by Atoll acquisition costs of $0.4 million during the first quarter of 2016 and the increased investments made in 2015 to expand our commercial organization, operating teams, and systems infrastructure to support the…

[Operator Instructions] Our first question comes from Drew Jones, Stephens Incorporated.

OPUS, with it being such a strength lately, I wanted to dive a little bit more into that. You talked last quarter about the capacity expansion in Waltham. Just to clarify, is that going to be done by the end of 3Q, or is that incremental capacity you’re adding in 3Q? Also, could you give us a little more color on potential capacity expansions in Weingarten, the Weingarten facility for OPUS?

Drew, in terms of our capacity plans, when we got together at the Q4 call, talked a little bit about how we going to increase capacity for the year. We made a decision early in Q1 that we wanted to accelerate a new suite that we were adding in here in Waltham, so that came onboard actually at the end of April. We’re going to add two more production suites by the end of Q3 here in Waltham, which will give us a total of five production suites for OPUS. Our plans for Weingarten, although not quite finalized today, would be in the first half of next year to add in production suites where we could produce the full line of pre-packed columns, so OPUS all the way through to the Atoll columns, and have that serve our European customers. So that’s the plan.

Then as far as the commercial organization obviously having an impact here, are you where you want to be? And are the expenses for what you’ve added today, are they fully baked in, in the first quarter?

Yes, if you look at, I think the key to, honestly, our success over the last 12 months, it’s really been the investment we made in the commercial organization. They really didn’t come onboard until early Q2 last year, and we started to see the increased activity and the broadening customer base in the second half of the year. That’s definitely what we’re seeing again in Q1. We like what we have in North America. We’re adding some people in Europe and also adding individuals in Asia throughout Q2 and Q3. But it’s not a significant number of heads. Not baked into our Q1, so we haven’t hired the people yet. But it is baked into our overall guidance for the year. So I think we’re in a good position. I think from a sales point of view, we’re very close to the blend that we need across the regions. We’ll be looking at field applications people as we go through the second half of this year and into next year, because that’s really the next area for us to invest in, to match up with the commercial team that we’ve already brought onboard.

Our next question comes from Matt Tiampo of Craig-Hallum.

Congratulations on the solid start to the year. I just wanted to drill down a little bit more on gross margin if we could. How much of the decline in gross margin year-over-year is from , if you could quantify at all, from a mix shift, and how much is tagged to the operational [indiscernible] you are making?

Roughly, Matt, you can assume about 50-50 between mix and investments.

Our next question comes from Paul Knight, Janney Montgomery Scott.

You mentioned China. I haven’t heard China mentioned much in the past. Is this new for you? I know Asia has been good, but can you update us on what’s happening in China? It seems incrementally more positive each time you speak.

Yes, I think it goes back to the Refine acquisition that we did two years ago. Part of that acquisition was we brought onboard a couple of distributors that are doing very well for us both in China, Korea as well. As that team in China and also in Korea has gotten to know Repligen a little bit better, we’ve been able to work very, very closely with them. They’ve made investments into their sales force, and our China distributor is also now adding demo labs into their facility in Shanghai. So we’re seeing a lot more activity. We have, obviously, a lot of interaction with the customers in China, and our ATF product line in particular is resonating quite well over there. So when you look at the success that we’ve had second half of last year, Q1 this year, it’s a lot of the seeding that was done let’s say 12 months ago, and it’s coming through to fruition now.

Also, Tony does the OPUS 60 increase your addressable market size by going to the larger size?

Yes, absolutely. When you -- the whole idea about launching OPUS 60 us to give us that full portfolio of products that really matched up with glass columns. When you look at Phase 1, Phase 2, early Phase 3 trials you definitely have some columns that are going to be 60-centimeter diameter. So it was very encouraging for us to get OPUS into the first commercial process. What was nice about that opportunity was we had a customer who had a disposable facility that hadn’t used OPUS before, but knew about the reputation that we’ve established over the last one to two years. And they moved right into putting us into the commercial process specifically because of the scale that they were operating at and the availability of the 45 and the 60-centimeter columns. Without those we wouldn’t have been in that process.

Okay. And with the ATF product, are you seeing more uptake from existing or newbuild projects?

Yes, when we look at it, it’s definitely newbuild projects because -- when you say newbuild, Paul, are you talking about new facilities being built out? Or are you talking about new opportunities within existing accounts or new accounts?

New facilities being built out, Tony.

I would say, it’s existing accounts and new opportunities that are coming from those existing accounts. There are absolutely opportunities as well from new facilities, but I would say the majority is coming from customers who have used ATF, adopted ATF, and now are platforming ATF for multiple processes at their facilities.

Our next question is from Brandon Couillard with Jefferies. Your line is open.

Hi, this is Sachin in for Brandon. On the Atoll investments will you elaborate on the, like 1.5 million investment cadence through 2Q and 4Q?

Sure. This is Jon. I can certainly answer that question. The 1.5 million is really related to acquisition costs as well as integration costs to integrate that business into the operations of Repligen. So not really -- those aren’t necessarily CapEx investments but actual expenses that we’re going to incur to pay the parties that assisted us in the transaction, along with costs associated with travel back and forth for the integration, and other things like that.

Got it. What is the longer-term growth rate for this business?

I think when you look at the Atoll business, obviously they’re pre-packed columns; they’re down in the process development lab area. They’ve had really nice growth over the last few years, so we would expect that it’s going to move nicely into our whole portfolio of pre-packed columns and be in the growth ranges that we’re seeing for OPUS.

Got it. Then for the single-use ATF product, what are your expectations to the contribution to the 2016 composite organic growth? And what is the incremental TAM associated with this product offering?

So for single-use ATF the contribution that we expect from a revenue point of view is going to be marginal in 2016. It’s all about getting the product out there which is what we’re doing today with our beta site customers: getting the feedback, making sure that the product we’re bringing to market is the right product. The rest of this year is really going to be focused on expanding that customer base so we get more key accounts evaluating. In terms of increasing TAM, I think it’s maybe a little early on that one right now. But I think what we’re going to find is that customers who have looked at ATF in the past and have not tried it out simply because you need autoclaves in your facility to do that, that the barriers to trial are going to go down. So we would expect that as that product comes out that we’re going to have lower barriers to trial, and we will have the opportunity to broaden our customer base. So I think in another quarter or so, we’ll be able to give you a better idea of the overall total addressable market and what we think that might increase by over the next couple of years.

[Operator Instructions] our next question is from James Gowen with Kalmar. Your line is open.

Morning, Tony and Jon. Just touching base on OPUS again can you talk about the capacity increase as far as what annual volume you might be able to do from that? Then could you also just talk about the commercial implementation of OPUS as far as what those annual volumes might look like? [multiple speakers]

In terms of -- if you just think about our Waltham facility we have two OPUS suites today. By the end of the year we’ll have five so clearly we’re going to increase our capacity by double to -- 2 to 2.5 times, right? We’ll see as we go through next year what that’s going to roll out in terms of total number of columns, because we have some other opportunities as well to increase overall throughput. Could you repeat your second part of your question just so I can answer it correctly?

Yes. You referred to the 60-centimeter columns being integrated into a commercial process.

Yes.

In terms of a typical annual volume where you get designed in like that, what might that be?

Sure. It really does depend on the number of campaigns that a company would run. Obviously there is a suite of columns that will be used, that will be run for a campaign. And then, depending on the number of campaigns a customer would run in a given year, then those columns would end up getting a repeat buy. So we don’t know what that is, but obviously it’s just great to have the technology into a commercial process with multiple 45s and 60s. We think that’s a very positive sign for OPUS going forward.

I’m not showing any further questions. I’ll now turn the call back over to management for closing remarks.

Thanks, all, for joining the call this morning. If you do have any follow up questions, feel free to contact me by the Repligen website or you can email me at investors@Repligen.com. Thanks again. Have a great day.

Ladies and gentlemen, this does conclude the program. You may all disconnect. Everyone have a great day.