Good day ladies and gentlemen and welcome to Repligen Corporation’s fourth quarter of 2021 earnings conference call. My name is Chad and I will be your coordinator. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. Please note that there will be a question and answer session following the company’s formal remarks. To ask a question, you may do so by pressing star then one on your telephone keypad. In order to accommodate all individuals who wish to ask questions, there will be a limit to two questions at a time. Please also note today’s event is being recorded. I would now like to turn the call over to your host for today’s call, Sondra Newman, Head of Investor Relations for Repligen. Please go ahead.

Thank you Chad and welcome to everyone listening in today. On this call, we’ll cover business highlights and financial performance for the three and 12-month periods ended December 31, 2021. We’ll also provide financial guidance for the current year 2022. Repligen’s President and CEO, Tony and our CFO, Jon Snodgres will deliver our report and then address questions. 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, 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 are 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 on SEC.gov. 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, contingent consideration, 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. Now I’ll turn the call over to Tony Hunt.

Great, thanks Sondra. Good morning everybody and welcome to our 2021 year-end update. We are delighted with the way we finished off the year with 69% organic growth in the fourth quarter, 71% organic growth for the full year, and overall 2021 growth for the company coming in at 83%. Our base business continues to deliver above-market growth with 42% growth in the quarter and 38% for the year, reflecting accelerated demand for our products on top of COVID tailwinds. Overall, 2021 was an outstanding year for the company as we continued to execute on our core business strategy of enabling our bioprocess customers with highly differentiated technologies. Let’s cover some of the key highlights. On the M&A front, we strengthened our market position infiltration with the Polymem deal, in proteins with the Avitide acquisition, and in fluid management with the BioFlex Solutions deal. We are well positioned as we enter 2022 to take additional market share with strong brand recognition, a reputation in our industry as the innovation leader in bioprocessing, and a growing portfolio of new products, many targeting gene therapy. Operationally, we increased our capacity between three and nine-fold across all our major product lines. This allowed us to support in a very meaningful way the ongoing fight against the pandemic with the company delivering approximately $190 million in product to the leading COVID vaccine manufacturers. The increased capacity also supported our base business growth, which was exceptional with adoption by gene therapy customers being a key driver of this growth. Our total addressable market increased significantly from $3.7 billion in 2020 to over $8 billion in 2021, driven by COVID market expansion, base business acceleration, and M&A that has allowed us to expand our markets. Finally, 2021 was all about increased commitment in the area of…

Thank you Tony, and good day everyone. Today we are reporting our financial results for the fourth quarter 2021, as well as providing our financial guidance for the year 2022. Unless otherwise mentioned, all financial measures discussed reflect adjusted non-GAAP measures. As emphasized in our press release this morning, we have again delivered record revenue of $186.5 million in the quarter and $670.5 million for the full year, as well as reporting strong earnings growth. Our base business strength was a highlight, up 42% in the quarter and 38% for the year. We also continued to support COVID vaccine and therapeutic programs with our technologies with COVID programs accounting for 33% of our total revenue in the quarter and 28% of the total revenue for the year. In addition to delivering outstanding revenue growth of 83% year-over-year, it has been an incredibly fulfilling year at Repligen as we’ve executed on our numerous capacity expansion initiatives. In 2021, we spent approximately $71 million in capex, of which about 80% was investment in capacity. We also brought several new innovative products to the market through our internal product development initiatives. We continued to spend approximately 5% of our growing revenue base on R&D and 25% of our revenue in 2021 came from major product launches over the last seven years. In addition, we continued to expand our relationships with gene and cell therapy customers who in 2021 represented 11% of our total revenue. Finally, we have continued with our significant progress in acquiring and integrating new businesses and technologies. We are also pleased to have closed on our acquisition of BioFlex Solutions on December 16, expanding our portfolio of fluid management products and bringing a previous supplier in-house. The BioFlex acquisition adds to an already impressive year in M&A with our strategic…

[Operator instructions] The first question will come from Dan Arias with Stifel. Please go ahead.

Good morning guys, thanks for the questions. Tony, on filtration, obviously that franchise is doing quite well. Can you just sort of put some color to your outlook for 25% to 30%, just thinking about the fact that obviously the comp is very difficult but the market dynamics that got you to 100% growth are still looking pretty in place, so maybe just touch on some of the things that you think are the lynchpins that determine where that business lands in terms of growth, and then is filtration one of the areas where you think you might be able to take some share? You made a comment about potential gains there.

Yes, so the projected growth for filtration, Dan, is 25% to 35% here in 2022. Outside the COVID component, when you look at the base filtration business, I think we’re seeing real traction with our flat sheet cassette business, we’re seeing real traction with ATF. As maybe noted, we go into a number of commercial wins in the last three, four months of the year, which is a very positive indication, so I think when you think about our filtration franchise, we’ve had, I would say over the last three or four years, a lot of clinical success, and now it’s beginning to move into the commercial side. So yes, we think 25% to 35% is a good number. As we move through the year, we’ll probably be able to see if we revise that up in any way, shape or form, but I think to maybe reiterate, it’s our ATF portfolio, it’s our flat sheet cassette, and it’s our systems. We’re really happy with the way our systems business has filled out. We talked a little bit down about the R&D element of last year. We launched 11 products last year, many of them into the filtration portfolio, so I think that just give us a lot of additional fuel as we go through 2022.

Okay, and then maybe just--that probably leads into this question or this line of thinking here just on cell and gene therapy. The growth you’re seeing there is obviously coming from new customers and existing accounts. I suppose it’s a hard question to answer, but are you able to sort of put some thought to those two buckets, if you just think about the existing body of work and how that scales up from an earlier stage to a later stage, and then what you might see in terms of just acquiring new customers in 2022, because it does feel like your momentum there is pretty good.

Yes, let’s maybe start with the new customers. Our expectation is we’ll continue to add at a similar pace in 2022 as we did in 2021. Our portfolio of products has expanded, so there’s no reason why we can’t move at a similar pace. I think what the industry needs more than--so there’s two things happening in the industry that we see. One is there’s a lot more scale-up going on, which is really encouraging, but we also need to see more of the late stage opportunities getting through to final approval. I think that’s kind of the last litmus test, is to see more approvals, because I think with more approvals comes with more momentum in that clinical pipeline. But yes, we look at the first half of last year versus the second half, we saw a real uptick in our cell and gene therapy business in the second half of the year.

Just to finish the thought, Tony, is there any--we get a lot of questions about the big picture things that are taking place in the cell and gene markets, just in terms of companies working through safety and efficacy issues, etc. Has any of that showed up in your business when you look at your order book or in a way that we would be able to tell, or is it pretty smooth sailing at a high level because one company might be dealing with something, but overall the industry’s in good shape?

Yes, I think overall the industry is in good shape. I think the earlier comment about seeing more approvals is actually really important. We look at our order book - really robust coming into 2022, we have seen no slowdown on the cell and gene therapy side.

Okay, thanks a bunch.

Thank you, and the next question will come from Jacob Johnson with Stephens. Please go ahead.

Hey, good morning everybody. Tony, maybe just to follow up on something you mentioned during your prepared comments, in your new investor deck your TAMs went from $3.7 billion to $8 billion-plus now, so more than double. Can you just expand on your comments on what drove that increase and maybe flush out how much of that is COVID base business, maybe things like cell and gene therapy?

Yes, so on the TAM, clearly the impact of COVID has increased the TAM for our whole industry, probably 80%, I would say. It didn’t quite double our TAM but probably added probably $3 billion onto the TAM. Everything else came from the businesses we’ve jumped into, the acquisitions that we’ve done, the expanded markets that we have now. When you keep adding new products at the rate we’ve added them in, again I’ll just reiterate 11 products launched last year, that just opens up additional parts of filtration or chromatography, and just this week launching now Affinity resins into cell and gene therapy, that opens up again more of a market for us. I would say $3 billion is probably COVID, everything else is M&A expanded markets.

Got it, that’s super helpful. Then maybe as a follow-up, kind of sticking with a higher level question, I appreciate the $1 billion 2024 revenue target and how you guys think about the long term growth profile of the business, but something I’ve been asked recently is just on the margin side, how should investors think about the long term margin opportunity at Repligen? If you get to a billion of revenues, what should your margin profile look like at that level?

Jacob, this is Jon here. We look at our margins this year and it’s interesting - when you look across the industry, it’s a very similar story to what a lot of our peers are saying right now. As we finished the year, our investments started to catch up to the revenue levels that we’ve had, and again a very consistent story across the board. We’re really pleased with the way we’ve been able to expand our gross and operating margins; as a matter of fact, operating margins were up over--up 530 basis points this year, and I think about 1,180 basis points over the last three years, so that’s been a really great growth story. We guided down a little bit for 2022 as we continue to invest in the business to make sure that we’re well positioned long term here to take advantage of the market opportunities that are out there. I think if you look at the billion dollar level, we will continue to keep the targets out there that we have today, which will continue to be trying to get above 60% on the gross margin level - I think that’s a good aspirational level for us. Then on the operating margins, we’ll obviously want to continue to be above 30% on those as well, so I think we have a good opportunity to get there but right now, we’re really in an investment phase, capacity expansion phase as well as really continuing to build up our R&D team, our commercial teams, our administrative infrastructure, and everything else to support a billion-dollar business and above as we go forward.

Perfect, thanks for that, Jon.

The next question will come from Julia Qin with JP Morgan. Please go ahead.

Hi, good morning. I’ll start with a high level backdrop question. Many investors are concerned about biotech’s [indiscernible] environment in light of recent market volatility, and some CRO companies have called out a meaningful slowdown in orders earlier this week. I was just wondering if you’re seeing any impact regarding your pipeline. Of course we understand that Repligen sits more downstream, so the impact is probably more on early stage research than on development stage, but if you could just talk about your customer quoting activities more recently and the order funnel, that’d be great.

Yes, I would agree with you, Julia, that the impact is more on the research side than it is on the bioprocessing side. If we looked at our orders in last year, if you take COVID aside and look at base business orders, they were sequentially up every quarter. We look at our orders as we’ve gone through the initial first half of this quarter again being very solid, so we’re not seeing as of today any impact from that, but obviously we’ll go through the year and see what happens. Our guidance is based on everything we see today, and I think there’s definitely some confidence around our $800 million to $830 million.

And the pipelines look exceptional, right, the clinical pipelines and new product development pipelines across gene therapy, across MABs [ph], most areas of our business.

That’s great, and then in terms of inventory levels in the channel, your peer called out about five percentage tailwind from customer inventory building in each of the past two years and they expect that to reverse this year. I’m just curious if this is in line with what you’ve seen, and is that what you’ve contemplated in your guidance as well?

Yes, I think everyone in bioprocessing is witnessing similar trends, so I think that feels like a pretty reasonable amount to assign to inventory build. We’ll see as we go through the year what customers do from an inventory point of view. For sure last year, there was a build up in inventory as people were worried about being able to get product. I don’t think the concern about product availability has disappeared, so I think that inventory--say, slowing down on inventory build is probably, for us, I don’t think it’s going to happen really until the second half of this year.

Got it, thank you.

Thank you, and the next question will come from Paul Knight with Keybanc. Please go ahead.

Tony, I think you mentioned the overall product line and new capacity expansions of 3 to 9x. What’s the overall capacity for the entire firm - is it in between that, like 4x, or could you comment on that? Then second question is on cell and gene therapy, is flat sheet your biggest driver and differentiator?

Yes, so on the capacity, we probably haven’t calculated exactly what the average capacity increase was last year because every product line was a little different, but I think your guesstimate is probably accurate, it’s probably around 4x. For us, though, there were some key product lines that we really needed to build up capacity given the COVID demand. I think clearly hollow fibers was the one that we highlighted with the nine-fold increase. What was interesting about last year was a lot of our capacity increases came from addition of people and being more efficient and some physical capacity space being added. This year, it’s more about adding in that physical capacity space, which I think will set us up for the next three to five years and really drive our lead times down significantly versus what you might have seen in the past. I think that’s really a positive sign for us, and it’s no different than what our peers are doing as well. Everybody is on the same journey. On the cell and gene therapy side, I don’t think I would call flat sheet out as the primary driver for us, or differentiator. I would say when you look at our portfolio of products, obviously filtration, there’s a large number of highly differentiated products in our filtration portfolio, so I would say that the major driver of growth in cell and gene therapy is our combined filtration portfolio, not any one individual product. What’s nice about the rest of the portfolio is we’ve got some really nice traction with our OPUS prepacked columns and we’ve got some really nice traction with our Flow and Solo VPE technologies in cell and gene therapy, so those franchises, because they just don’t have the same number of products as filtration will always naturally have a lower percent impact on gene therapy than what you might get with filtration.

Okay, thanks.

Thank you, and the next question will come from Matt Hewitt with Craig Hallum Capital Group. Please go ahead.

Good morning and thank you for taking the questions. I realize it’s very early days, but the recently launched new resin products for AAV manufacturing, what has been the initial response that you’ve heard from customers, and how quickly do you think you could start to see some of those hitting the order book?

Yes, there’s no magic bullet, unfortunately, when it comes to chromatography resins. It’s a process that anyone in the industry that’s launched products into this space knows quite well, it takes--you know, this year, 2022 is all about seeding. The good news, Matt, and to your question, the response has been very positive. We’ve had lots and lots of customers that want to evaluate the resins. They are differentiated versus the incumbents that are in the marketplace today, and we’ve focused really on improved caustic stability which allows customers to run the resins a lot more cycles and you hold onto that capacity for on the chromatography column a lot longer with the products that we’ve launched. I’d expect this year, it’s a lot of seeding and then next year, you start to see opportunities where we get into Phase 1, Phase 2, maybe even later stage, later phase programs as well. We just want to get off to the right start. I think what’s incredibly encouraging for me as the leader of Repligen is that five months after we did the Avitide acquisition, that we have these three products launched. We said we would do it, we’ve executed on it. I think my comments about R&D, I just want to make sure people really see it, we are really executing at a very high level within our R&D teams right now. We’re getting products launched, we’re hitting our timelines, and that’s just going to help us on our journey towards a billion in the next few years.

That’s great, and then maybe separately or in a different line, cell and gene therapy, you’ve mentioned it a number of times, it’s obviously going to be a key growth driver for you going forward. Where would you characterize those products today, the ones where you are actively involved? Are those still early clinical stage opportunities or are you starting to see those shift into the commercial realm, and what will that mean from an increase in revenues for you as those do become more commercial based? Thank you.

Yes, I would say that the majority of our opportunities today are in the clinical. Clearly the customers we’ve been working with for the last four years have--some have scaled and moved it into the later stage clinical trials. As I said when we were chatting with Dan earlier, we need to see more commercial wins - that’s not just for us, I think for the industry the more we see approvals, the more momentum you have in that clinical pipeline, so that’s really what we all should be looking for, is the increased number of approvals and that will drive volume, it will drive a lot of the clinical programs that are currently ongoing. Hard to put a number on it, but obviously if you’re in a commercial process, it’s very consistent revenue versus if you’re in clinical, you may see revenue--if you’re in one clinical application, you see revenue this year, but it could be 18 months before you see additional revenue.

Got it. All right, thank you.

The next question will be from Brandon Couillard from Jefferies. Please go ahead.

Hey, thanks. Good morning. Tony, if my math is right, it looks like your Asia Pac business more than doubled last year, and I would assume that most of the COVID vaccine contribution was mostly concentrated in the U.S. and Europe. Is that the right assumption, first of all, and could you just elaborate on the drivers of that and maybe the size of your commercial team in Asia?

Yes, so maybe I’ll start with the commercial team. We’ve really increased our commercial organization over the last few years. I think we finished last year with almost 200 people between sales, field applications, field service. I think right now by the time we finish up Q1, we’re probably in that 225, 230. I don’t have the exact number of sales people in Asia. I do know that in China, it’s around--we have probably 40 people on the team there, so I think the momentum in Asia has been just fantastic over the last few years. To your first question, the drivers of growth in Asia, I would say predominantly driven by our filtration portfolio. We have some bigger accounts that use our prepacked columns, but a lot of times in countries where labor is not as expensive as in, say, the U.S., people tend to want to pack their own columns, but the big companies that we all know have definitely moved towards prepacked columns. But I would say filtration is the main driver, and there is a--you know, last year there was a significant contribution, Brandon, from COVID, so we have a number of accounts in China, in Korea and in India that have implemented or used our technology in COVID vaccine manufacturing. Remember, the way the COVID vaccine manufacturing played out last year, you had some core companies but there was a lot of CDMOs that ended up signing on and doing the manufacturing, so think about our impact is--some of it is through customers in Asia that are making their own vaccine and others are through CDMOs.

That’s helpful. Then just one for Jon, any color or direction you’d give us in terms of the phasing of margins and EPS in ’22, and should we expect the vaccine revenues to be ratable at kind of $50 million to $55 million a quarter?

Yes, I’ll start with the first one in terms of the margin view and how that’s going to phase, and I’ll hand off to Tony for the other question. Margins as we come out of this year, we’re on an H2 run rate of about 57.3% on the gross margin level, and again this is because obviously our investments are now catching up to the revenue levels. That’s a really good starting point coming into the year. Interestingly, though, that’s really right within the range of our full year, so I’d say we expect to be fairly consistent throughout the year in that 57% to 58% level. Then on operating margins, similar story - we finished the year at 30%. We’ve guided down a little bit because I’d say we got a faster jump in terms of capacity adds as opposed to maybe infrastructure and commercial adds with the catch-up on volumes and such. I would say 30% end of the year, we’re expecting to come in at 28.5% to 29.5% on operating margin, so I would say you’re going to start in at a fairly consistent level and then you’ll finish, so it should be reasonably consistent throughout the year.

Yes, and then Brandon, on the COVID vaccine revenues, we expect that--you know, I think Q4 was north of $60 million. We’d expect the first half of the year to be north of $60 million on a quarterly basis, and the second half might be a little lighter, so I’d say that 55/45 type split is probably a pretty reasonable assumption, first half-second half.

Super, thank you.

Once again, if you have a question, please press star then one. The next question will come from Ram Selvaraju with HC Wainwright. Please go ahead.

Thanks very much for taking my questions. Firstly, I wanted to ask if your $1 billion-plus revenue guidance for 2024, achieving that threshold by 2024 does take into account the possibility of reduced vaccine demand, reduced vaccine production as the COVID-19 pandemic might shift to endemic status by that point. If you could just maybe comment the extent to which that number is essentially battle-proof, so to speak.

Yes, great question Ram. When we look at our billion-dollar target, obviously--and we talked about this back in November with a number of analysts, so our model is about a 25% reduction in 2023 and 2024, and we still are confident that we can hit a billion dollars in 2024 even with that type of reduction. We think there’s a long tailwind on COVID and so we’ve modeled just from our perspective that type of drop, but we’re still very confident we can get to a billion-plus.

It’s 25% in ’23 and another 25% in 2024, just to be clear.

Great, and then on the gene therapy side, I was wondering if in a more capital constrained environment - this is kind of building on questions that were asked earlier, do you think that, for example with the reusable resins, you would actually be able to take market share from your competitors from a bioprocessing perspective within gene therapy, and do you expect the bulk of the gene therapy demand to be driven by AAV products, particularly in the context of how your new resin products can be used?

Yes, when we launched--and obviously we just did it the other day, we launched three resins for AAV against the more dominant AAV types that are out there, so obviously we no market share so we would hope to take some market share over the next couple of years. We think--you know, it was important for us when we launched the product that the products would be differentiated. They’re clearly differentiated versus the competition, but it’s going to take time, Ram. It’s not going to happen overnight, so yes, our expectation is we’ll take market share, it will take a couple of years to really build up our portfolio. Right now, AAV is the dominant gene therapy vector. There are other vectors, and obviously we’ll continue to look at that and decide what other Affinity resins we’ll bring to market over the next one to two years, but expect to see more Affinity resins coming from Repligen in the next one to two years.

Thank you.

Thank you, and ladies and gentlemen, this concludes our question and answer session. I would like to turn the conference back over to Tony Hunt for any closing remarks.

I’d just like to thank everybody for joining us this morning and look forward to catching up with everybody again in May, which is not too far away, so thanks again and we’ll chat later.

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