Good day ladies and gentlemen and welcome to Repligen Corporation's Fourth Quarter and 2020 Earnings Conference Call. My name Sarah and I will be your coordinator. All participations will be in listen-only mode. [Operator Instructions]. This event is being recorded. Please note that there will be a question-and-answer session following the company’s formal remarks. In order to accommodate all individuals who wish to ask questions there will be a limit of two questions at a time. I would now like to turn the call over to your host for today's call, Sondra Newman, Head of Investor Relations for Repligen.

Thank you, Sarah. Good morning everyone. We appreciate you joining our call. This morning we'll cover financial results and business highlights for the three months and full year period ended December 31, 2020. We’ll also provide financial guidance for the current year 2021. President and CEO, Tony Hunt will cover business updates; and our CFO, Jon Snodgres will cover our financial results and guidance. As a reminder, the forward-looking statements that we make during this call, including those regarding our business goals and expectations for the financial performance of the company are subject to risks and uncertainties that may cause actual events or results to differ. Additional information concerning risks related to our business is included in our annual report on Form 10-K, our quarterly reports on Form 10-Q, the current report on Form 8-K, which we filed today and other filings that we make with the SEC. Today’s comments reflect management's current views, which could change 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’re providing non-GAAP results and guidance. Reconciliations of GAAP to non-GAAP financial measures are included in the press release that we issued this morning, which is posted to Repligen’s website and also on sec.gov. The non-GAAP figures in today’s report include the following; revenue growth at constant currency, gross profit and gross margin, operating expenses including R&D and SG&A, operating income and operating margin, income tax expense, net income and earnings per share as well as EBITDA and adjusted EBITDA. These adjusted financial measures should not be viewed as an alternative to GAAP measures, but are intended to better enable investors to benchmark Repligen’s current results against historical performance and the performance of peers when evaluating investment opportunities. That’s it for me, now I’ll turn the call to Tony Hunt.

Great. Thank you, Sondra and good morning everyone and welcome to our 2020 year-end update. We're really delighted with the way we finished off the year with 47% organic growth in the fourth quarter, 25% (sic) [29%] organic growth for the full year, and overall 2020 growth for the company coming in at 36%. As we all know, 2020 was a remarkable but challenging year where we observed accelerated demand for products to support COVID-19 vaccine and therapeutic development. This came on top of very strong growth in non-COVID related revenue, which grew 18% overall for the year. We were also able to complete a series of strategic acquisitions to advance our systems strategy in addition, we launched innovative new products, we continue to gain traction across our industry, including gene therapy accounts. I'm especially proud as our team has risen to the challenges of 2020, showing a real drive to make a difference during the pandemic, making tremendous efforts to manufacture and deliver bioprocessing equipment and consumable products to our customers and to scale our operations to keep pace with accelerating demand. Throughout the year, COVID related orders increased and by Q4 COVID programs accounted for 22% of our overall revenue, which was up sequentially from 15% in Q3. For the full year, COVID customers accounted for 13% of our revenue and 17 points of 36% reported growth. Our order book also accelerated in the fourth quarter and finished the year up approximately 80%, with COVID programs contributing approximately half of this growth. Based on this order trend we now expect COVID related revenues to double from 46 million in 2020 to a range of 90 million to 100 million this year, an increase from our previous projections of 50 million to 70 million. Before jumping into our business…

Thank you, Tony and good morning everyone. Today, we are reporting our financial results for the fourth quarter and full year 2020, as well as providing our financial guidance for the year 2021. Unless otherwise mentioned, all financial measures discussed reflect adjusted non-GAAP measures. As you've seen in our press release this morning, we delivered record revenue and strong earnings growth for both the fourth quarter and full year 2020, supported by strong overall biologics markets and the significant influence we are seeing from COVID vaccine and therapeutic programs. We've also continued to execute on our vision of driving technology leadership in bioprocessing during 2020 through new product launches that drive efficiencies for our customers through the completion of three acquisitions that support our system strategy and through new applications for our products as we expand our use into a broader set of drug modalities. We also continued to deliver on our plans to expand our manufacturing footprint and capacity and to build out our IT systems to drive down lead times to enable delivery of increased volumes of our critical consumables, equipment, and systems to help our customer support growth we are seeing in the biologic drug development and manufacturing around the world. Now moving to our fourth quarter and full year 2020 revenue commentary. On our topline, we realized record revenue of 108.6 million in the fourth quarter of 2020, representing 56% reported and 47% organic growth. Within these figures reported growth includes a 3% tailwind from foreign exchange and a six-point tailwind from our 2020 acquisitions. For full year 2020 we reported revenue of 366.3 million, with 36% reported growth and 29% organic growth. The reported revenue results include a 1% foreign exchange tailwind and a 6% contribution from acquisitions. The incremental revenue from acquisitions is comprised…

Thank you. [Operator Instructions]. Our first question comes from Dan Arias with Stifel. Please go ahead.

Hey good morning guys. Thanks for the questions. Tony wanted to start with a guide for the year. If I back out 95 million or so from COVID related revenues from the outlook, it kind of looks like you're more or less guiding to non-COVID growth that's on par with what you saw in 2020 and maybe a point higher but same ballpark. That seems like a pretty reasonable way to start things off. So can you just maybe talk to the puts and the takes that go into that view versus what you saw last year, are there market or product areas where you think you see something a little bit different than in 2020, where's the idea that you kind of probably see a continuation of the trends and the things that drove the non-COVID growth last year?

Yeah, so I think really it's almost like down looking at it over the last couple of years. I think we've traditionally been in that 10% to 15% organic growth range. This is even before COVID. But we're clearly getting increased traction for our products in the marketplace. We've done a nice job on the gene therapy side. And I think we're moving into that kind of that 15% to 20% organic growth for the company and for the foreseeable future, just based on what we see right now. And then you layer on COVID on top of that, and clearly, I think having the right portfolio of products and the right relationships with many of the COVID vaccine developers put us in a good position in 2020 and that's kind of carried over here into 2021. So I think you're right, we're right in that 15% to 20% sweet spot. I do think that there's a bit of a trade-off that goes on that I'm sure every other bypassing company will tell you is that there is a huge demand for capacity at the CDMO level. So CDMOs that are doing COVID related work, there's always going to be a trade-off, right. So other projects and programs will get delayed slightly. So, for us right now we think we're in that 15% to 20% organic growth for non-COVID and then the COVID revenue in that $90 million to $100 million range. And obviously, that's an incremental 55 million versus last year.

Yep, okay. And then just maybe on new products because you do have a bunch of those that are in the mix here, do you have a view on the contributions to organic growth that the stuff that's been internally developed over the last call it 9 to 12 months PFDS [ph], ATF controller, FlowVPE, what are you kind of penciling in for this year if you have a number and then specifically for TFDF, how is the launch of that product going now that we are a couple of quarters in, how are you feeling about taking share within the depth filtration market? And then if I could just also ask, what is the outlook there for selling gene therapy, I remember that Oxford Biomedica paper last year kind of making it seem like that could prime the pump for that product in that area? Thanks a bunch.

Yes, I'll start with TFDF. Obviously, this will be the second full year that we've got TF -- we put TFDF in the market. We started off with the chose strategy that continues to be probably the primary driver of growth right now. So we've got many evaluations that have gone on, very successful, like all products, though and I think we said this a year ago, we expect -- it's a business that we expect will double every year for the next few years. And we had set a target of a couple of million dollars for TFDF last year. We beat that, we're in that $2 million to $3 million in revenue. We expect it will double this year. Adding in the gene therapy piece of the Oxford paper that you reference, yeah, it has resulted in additional evaluations going on and we expect that that's going to be another catalyst and another application area for TFDF technology. So I think all of that is very positive. I think if you start to look at it purely from a what are we factoring in to our organic growth this year, coming from new products -- it's not much more than that.

Hello. Our next question comes from Tycho Peterson with J.P. Morgan. Please go ahead.

Hi, good morning. This is Julia on for Tycho. Thanks for taking the question. Just starting with the vaccine tailwind that you guided to, obviously it has been upped from a previous range of 40 to 70. I'm just wondering if you could elaborate on what kind of factors are driving the change, is it just scale up with your existing customers, is it perhaps a new COVID variant speeding up development of next generation vaccines or is it like incremental contribution from the new ligand or the next gen FlowVPE that you cut out earlier?

Yeah, it's essentially just increased demand for those vaccines and therapeutics that we are involved in. And as we went through, as Jon pointed out, when you look at our Q4 performance, 75% of the beat came from COVID that came from increased demand from vaccine developers, from the therapeutic companies that we're working with. And that's what's really driving the increase again here in 2021. We've more visibility, Julia now to what's required in 2021 versus three months ago or six months ago. And, we'll see as we go through the year, how that plays out, but I can say there's very little that is around next generation vaccines or therapeutics, it's really the processes and opportunities that we're in today.

Got it. And then regarding your product level guidance for 2021, I'm just curious because obviously the filtration guidance is significantly stronger than for the other product segments. So just wondering what really is allowing filtration to benefit that damage more significantly, from COVID vaccine therapeutics? And then separately for the protein outlook, we see very strong outlook for 2021 but I also remember that the prior expectation for the Cytiva contract was by the end of this year, so has that been extended out or how should we think about the influencing expectation?

Sure, on the filtration front, if you think through some of the comments we made already this morning, 60% of our COVID revenue in 2020 came from filtration. So, if you also look at what we have in our filtration portfolio, it's the biggest portfolio of products that we have. If you look at chromatography as a sort of an example, the main driver in chromatography is our prepack columns OPUS. If you look at filtration, we have hollow fiber technology, we have flat sheet technology, we have systems, we have the fluid management pro-connect product line, we've got new products coming in from ARTeSYN and EMT and NMS. So, it is just a bigger portfolio, Julia and as I said, we've benefited on the COVID front from our filtration portfolio. We are obviously selling our Opus prepack columns into those applications as well and we're selling our solo and FlowVPE technology into those applications. But there's a lot more shots at fil because of the depth and breadth of our filtration portfolio. And that's really the reason why it's growing faster than the other product lines. On your proteins question, yeah, we've said that our goal is by the end of this year to work with Cytiva to extend our contracts, we are continuing to have those discussions and we'll update you guys as we move through the year.

Thank you.

Our next question comes from Paul Knight with KeyBanc. Please go ahead.

Hi, Tony. On the whole fiber filtration technology, is that an alternative to Protein A or is the technology there yet?

Yeah, so on the hollow fibers side, Paul, it's really the main application is downstream. It would be after the Protein A step. So it's more like a di-filtration, ultra-filtration type application. So they're connected but they're not replacements for each other.

Right. And then the -- what do you worry about this year, are you getting enough raw materials, supply polymers, etc.?

Yeah, I would say if you speak to the bio processing industry, everybody is hiring as fast as we can. We're all trying to build out excess extra capacity. Everybody's got pretty strong order books and it's really around execution.

Right. And then lastly, do you think customers are building for the equivalent amount of vaccine production in 2022 or can you even tell?

Based on what we see right now I would say that what they're building is what's required. And every company is trying to produce more and I think that's part of the increase we saw in Q4. And obviously I think it's a big part of the guidance that we're putting out today. But I don't think it's 2022, I think it's all 2021.

Right, okay, thanks.

Thanks, Paul.

Our next question comes from Jacob Johnson with Stephens. Please go ahead.

Hey, thanks. In terms of the COVID orders you're receiving right now, how much visibility do you have today for full year 2021 demand, it sounds like guidance assumes these revenues are maybe heavier in the first half of the year, if we see customers continue to manufacture in the second half of the year, would that be additive to your outlook and I guess how should we think about the cadence of COVID related revenues in 2021?

Yeah, it's definitely some accounts we have visibility for the full year, but orders placed for the first half of the year, others we have visibility through the first half of the year. Our guidance is based on where we see 2021 playing out especially on the COVID side. But we don't have full visibility, Jacob to what's going to be required by various companies that we're working with. We have a good sense. We have definitely got orders from some of the companies that go out through Q4 others. Others we have orders that are in the first and second quarter.

Got it, that's helpful. And then it looks like the defense production act worked to secure a variety of inputs for vaccines. That actually included tangential flow filtration products. Can you just talk about demand for those products relative to your capacity right now and if you're having to prioritize these products for vaccine customers?

Yeah, look I don't think we're any different than anyone else in the industry. We're all trying to prioritize COVID vaccines and therapeutics and at the same time trying to balance getting product to all the other customers that we have. So that's really the challenge that everybody's facing in the industry. So it's a balancing act. The demand for COVID is based on vaccines and therapeutics and whether it's TFF or it's chromatography resins or it's prepack columns or whatever the product line is there's a real strong demand right now. And everybody is trying to prioritize the COVID customers as high as we can, but at the same time still trying to provide to all the other customers that we have in our portfolio and company.

Got it. Thanks for taking the questions, Tony.

Our next question comes from Matt Hewitt with Craig-Hallum Capital Group. Please go ahead.

Good morning. Congratulations on a fantastic year. Just a couple for me. First off, once you've finished integrating the ARTeSYN system, we should start to see some pull through for chromatography and some of the other products in the portfolio. Has that been baked into guidance or would that represent upside?

Yeah, when you look at our -- yeah, the pull through, probably not baked into any of the guidance. But when we look at our -- we just like every deal we've done over the last six, seven years, year one, which is really this year is all around building out the infrastructure. So we need to build out the commercial team for systems. The good news is that because we sell hollow fiber systems, we do have a very strong team of folks that are out in the field that are specialists on systems. So we just need to expand that group and build it out. At the end of the day, we've set some targets for ourselves, the revenue synergy has pulled through, really won't start to kick in until 2022. So this year is around getting all the foundational pieces right, making sure we have the right funnel of opportunities, make sure everybody's trained, make sure the customers that ARTeSYN has spent many years nurturing and developing that they're taking care of. And we just expand that overall customer base. So that's the goal and yeah, I think it'll be 2022 before we start to see kind of pulled through opportunities.

Okay, great. And then regarding FlowVPE, I think you mentioned in your prepared remarks, you're up to 20 clinical evaluations now, how -- maybe walk through the ramp there, what did that look like maybe in Q3 and then what does that, I don't know if it's not necessarily order book, but how are the discussions ramping up I mean, are you adding 10 to 20 a quarter or just maybe help us directionally think about that business? Thank you.

Yeah, so FlowVPE is something that I'm a huge fan of. And I just think that -- and this goes back to even my own role in the 1990s at companies like Preseptive Biosystems. There's a real need for inline process monitoring and FlowVPE solves a major problem that's out in the marketplace, which is can you measure antibodies, proteins, nucleic acid, at very high concentrations without having to do any dilutions. And that's what Flow brings to the table, and you get those results in seconds. So, I think as we've increased our team, right in terms of commercial and applications, people, we've got a dedicated team focused on Flow. They continue to have technical discussions with big players in our industry about implementing a technology like this and I think where we were 12 months ago versus where we are today is night and day, right? I think there's a lot more customers who absolutely see the value. They'll go through evaluations at the process development level, and eventually they start to move into the clinical sort of manufacturing arena. So we expect that the business will ramp this year, but I would say 2022, 2023, 2024 is where we're going to start to see a lot more FlowVPE especially the next gen version of the technology, being put into the manufacturing and going all the way through to commercial manufacturing of drugs.

Got it, alright. Thank you very much.

Our next question comes from Puneet Souda with SVB Leerink. Please go ahead.

Hey, thanks Tony. So my first question is on and I don't know if this was covered before, but in terms of gene therapy, what are you seeing obviously a strong growth there and wondering what you're baking in for the full year here in the guide?

Yeah, so probably a similar year. Again, I think there's a little -- when we look at the gene therapy customer base for us in 2020, there was a significant number of companies that are actually working on COVID based viral vector drugs. So we excluded those in terms of our calculation. So we're around that 30% mark, we expect will be in that 25% to 30% growth. Again, there'll be some trade-offs. But we really, really liked the portfolio of products that we have. Our customers really see the value and we're going to continue to focus in this area like many players in bioprocessing. We see this as one of the growth drivers for the foreseeable future. So yeah, it'll be in that 25% to 30% range is our guess right now.

Okay, that's great. And then, if I could ask on capital deployment, I mean you obviously have been very active here ARTeSYN, EMT, other acquisitions that you've made, as you look at the current landscape, Tony valuations wise and overall the demand in the market, what are you seeing out there and just help us understand if anything has changed in your strategy in terms of acquisitions and inorganic growth as well as if Jon could talk about the capital deployment broadly, that'd be great, too?

Yeah. So on the M&A front, nothing's really changed in the sense that, the strategy we've deployed over the last four or five years is the strategy we're going to deploy over the next four or five years. It is highly competitive, as you know. Everybody is looking for technology assets. So it may be a little different than three, four, five years ago when you might be competing with one other company when you look at potential targets. But there's a lot of banker activity out there, there are a lot of technologies that are available. We'll continue to select the targets that we think makes the most sense for Repligen. So I don't think the pace is going to be any different Puneet and I don't think -- I think we've got a good strategy. We have a strategy for each of our divisions and so each of those divisional strategies, have an M&A element to it. And as we see, targets or opportunities to execute we'll go ahead and execute. And obviously, being able to do capital raise back in December puts us in a pretty good position from a cash perspective.

And I can talk to capital deployment. So Puneet we finished the year with about 717 million in cash. It puts us in a really nice position. Obviously, we're going to continue to look at M&A opportunities, and opportunistically continue to work on those things. The other things that we're doing this year with capital, obviously we're reinvesting quite a bit in the business to build out capacity and across all of our filtration franchises, systems, even in proteins we're looking at opportunities to expand capacity, both from a footprint and equipment perspective, but also from headcount perspective, and we're adding headcount pretty quickly. And then I think the third thing that we're putting an emphasis on is, obviously, we want to make sure our part of the supply chain is not being disruptive to our customers. So we are making investments in working capital and areas like inventory as well. So you should continue to see those strategies be active throughout 2021. And obviously, we'll continue to, to relook at things as we get through the year 2021 and into 2022 about what we need for the future. Just to support obviously the current growth we're seeing, but also the future growth we expect.

That's very helpful. And last one if I could, just Tony asked on the Navigo proteins that you launched, the spike resin that was launched recently. What's the expectation there obviously, these vaccines productions have already started, so could you just give us a sense of how they get plugged into the current productions and what's your expectation for that product this year?

Yeah, so we have not built a lot of revenue in for the spike resin and it's not like we're not excited about being able to develop and bring that to market. But you're right, I mean, anyone who's in a commercial process it's going to be challenging for them to go ahead and swap out. So I think it's really going to be around next generation vaccines. And just for everybody on the call, this particular resin does not work with mRNA based vaccines or viral vector based vaccines all based on protein, protein based vaccines such as spike protein. So it binds the spike protein, so that's the target. So the subset of vaccine manufacturers is smaller than the total set that's out there.

Okay, that's great. And great to see what you're doing here for the vaccines. Appreciate it. Thanks, guys.

Thanks Puneet.

Our next question comes from Brandon Couillard with Jefferies. Please go ahead.

Good morning. Tony, in terms of the gene therapy customer base and the recent unexpected growth in the market, I'm curious if you're able to characterize the contribution from new accounts as opposed to existing customers to whom you're selling more products into and maybe taking a greater percentage of wallet share, it really -- call it 75 core customers, if we look at maybe like the top 10 or 15 are they buying a fraction of the portfolio, or they kind of buying sort of a full suite of products?

Yeah, a great question. I would say that it's definitely a subset of the portfolio. So we've attended -- I would say that our ATF technology, prepack columns, hollow fiber technology system so it's probably at least half our portfolio is definitely selling into these accounts and especially the bigger accounts. They're buying and utilizing multiple products in our portfolio. I don't have the exact breakdown on new account contribution but, my just recollection is, you're going to have every year accounts that were, let's say in that top 75 significant accounts in let's say 2021. Probably some of those will move out and they may be slower in our let's say last year 2020. In 2021, they may slow down, some of them might slow down but you'll see others coming in. I think what's really encouraging Brandon is the fact that we were adding that 10 to 15 new accounts per quarter last year. The contribution from those accounts is going to be pretty small in terms of revenue in 2020 but they'll start to pick up here in 2021. Those accounts, some of those will definitely move into our top 75 or our top 100 as we go through the year. And I think to me it's a little bit like just build the funnel, because I think if we build the funnel then we have more shots at gold and we'll continue to see the growth in this part of the market for Repligen. So really encouraged. I think a year ago, we had probably 50 significant accounts. Now we have 75. So I think we're heading in the right direction.

That's very helpful. And then just one more on the COVID side. Tony, the revenue contribution, talking about the breakdown between COVID vaccines as opposed to lab [ph] based therapeutics. And if that makes any difference between last year and 2021?

No, I think it's about -- I don't think there's any real difference in 2021 versus 2020 on a percentage basis. The vast majority of our COVID revenue is coming from vaccines.

Got you. Thank you.

[Operator Instructions]. Our next question comes from Ram Selvaraju with H.C. Wainwright. Please go ahead.

Thanks so much for taking my questions and really impressed with all the solid performance over the course of 2020 during a really challenging and disruptive time for most people, which doesn't seem to have broken your stride at all. Wanted to ask two things. Firstly, regarding the vaccines, can you give us a sense of which types of vaccines in particular you're most likely to have your technology be applicable to, if you can maybe cite specific products that would be very helpful, but I understand if you're not in a position to do that? And if you can also talk through a little bit about the sustainability of these revenues given all the discussion around how COVID-19 is going to be an endemic problem, the emergence of these new coronavirus variants which appear to indicate that vaccines for COVID-19 are going to be part of the landscape for a very, very long time? And then I had a follow-up on the gene therapy side of the business. Thanks.

Yeah, on the COVID front, we haven't come out and said, oh, we're in vaccine X and Y. But, I think when you go back and look at what I said in my prepared remarks, we are in the majority of the late stage in commercial processes. So we're definitely working with viral vectors and mRNA and protein based vaccine manufacturers. And all our products, if you think about it, anyone who's working on viral vectors, all the work we've done in the gene therapy space, that those technologies worked just as well as if it's a viral vector that's in gene therapy or viral vector that's going into a vaccine. On mRNA, we've been working on the mRNA front for a number of years. Again, majority of what we're doing there is probably filtration based and prepacked columns. And then on the protein side, we're working on what companies on that as well and again, it goes across the board in terms of products, whether it's our products in our filtration portfolio, in our prepack columns, and down the road hopefully the spike resin will be something that'll be used for next generation vaccines. In terms of where the frequency of vaccination, it feels like a bit of a roller coaster over the last nine months. I think six to nine months ago everybody was like going well, maybe it's a shot every two to three years, some people were thinking every five years. Now everybody's thinking it's every year. I just don't think we know. And, what we're doing right now is just focused on 2021 on the execution that needs to happen to support the customers that have asked us to work with them, who have basically adopted our technologies at the same time trying to also to get the products out to all our other customers on our list. So that's really our focus where it plays out Ram on the frequency of vaccinations and whether, we'll have additional vaccines for variants and whether that'll be an annual shot or every two years. I just don't know right now, I don't think anyone really knows. And we'll see how that plays out as we go through 2021.

Ram I would just add on that, on the capacity side, we're taking a longer-term view of that. But certainly on -- we don't know how that's going to evolve in terms of recurrences of vaccines coming through.

Okay, and then just very quickly on the gene therapy side of the business, I was wondering if you could give us a little bit more color on your sales and marketing process, as you reach out to potential new gene therapy customers and what is the principal thrust of the sales argument for potential gene therapy entrance, gene therapy companies to utilize Repligen systems, Repligen suite of applicable products? Thanks.

Yeah, and the world has changed in the last 12 months. So a lot of what we're doing now is virtual, right. So a lot of the marketing is digital marketing. So we were focused on technology seminars to get initial interest in place. And then that's followed up a lot with applications based work by our field applications team. And once all that's done, then that results in a decision at the customer level whether, a technology that Repligen has outperforms the technology that comes from one of the other bioprocessing players or we solve a problem that hasn't been addressed before. I think for us, we're focused on improving the overall efficiency of a process and improving overall yield. So if we can -- if we stay focused on those two things, then it allows us to have really good conversations with customers. But, 90% of what goes on in our industry comes down to a bake off, in other words a technical evaluation and a decision based on data. So that's really how we play, that's how we win. And I think we're happy with the portfolio of products that we have.

Thank you so much.

This concludes our question-and-answer session. I would like to turn the conference back over to Tony Hunt for any closing remarks.

I just want to thank everybody for joining us today. Obviously 2020 was an outstanding year for the company. Clearly we have set some high expectations for ourselves for 2021 and look forward to jumping back on a call in May and bringing you guys up to speed on where we're at. So thanks for joining.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.