Good morning. I'm Todd Spencer, Corporate Vice President of Investor Relations. On behalf of all of us, I would like to welcome you to Charles River Laboratories' first completely virtual meeting with management. We are pleased to have members of our senior management team here with you today in this virtual environment, led by our CEO, Jim Foster. There will be two question- and- answer sessions during the event, as noted in the agenda. Today's slide presentation is posted on the Investor Relations section of our website at ir.criver.com. An archive version of this webcast will also be available on the same website. I'd like to remind you of our safe harbor and the use of forward-looking statements, and also that we will be speaking primarily to non-GAAP financial measures covered under Regulation G. You can find additional information on these disclosures in the slide presentation and on the Investor Relations section of our website. Now I am very pleased to introduce Jim Foster, Chairman, President, and CEO. Thank you, Todd. I'm delighted to welcome you all to our virtual investor conference. We're delighted to be here with you today, and before I begin my individual comments, I'd like to introduce you to our other speakers today. Immediately following myself will be David Smith, who's our CFO, Executive Vice President and CFO. Following David Smith will be another British Smith, Daniel Smith, who's the Executive Director of the Global Cell and Gene Therapy Portfolio. Daniel recently joined us along with our Cognate acquisition. We're delighted to have him as a member of the Charles River family and delighted to have him speaking to you today on this important topic. Following Daniel will be Birgit Girschick, who's the EVP of Discovery Safety Assessment Biologics and ADME and Vaccine Services. Birgit has a broad portfolio, and she now has Cognate actually reporting directly to her. Kerstin Dolph will follow Birgit, and she's the Vice President of our Biologics Solution, a very high-growth important business for us, and she'll talk to you about that business in depth. Following Kerstin will be Mike Austin, who also recently joined us. Sorry, he's the Vice President of Cell and Gene Therapy CDMO, and he also recently joined us with the Cognate acquisition and is going to go deeper on the contract production aspects of that deal. We'll have Colin Dunn, who's the Senior Vice President of Global Research Models and Services, talk to us about our RMS business, including our HemaCare and Cellero acquisitions. Our final presenter will be Julie Frearson, who's our Vice President of Strategic Alliances, who'll be talking to you about a whole host of very important strategic relationships we have with regard to cutting-edge technologies. What our goal is today is sort of multifold. One is we're obviously going to give you a general update of the business and the constituent parts and pieces, how they're doing, where they're going, their scale and size. We're going to talk significantly about our cell and gene therapy capabilities, both across our historical portfolio and obviously with regard to our new businesses which have been acquisitions over the last year, specifically in the cell and gene therapy space. We're also going to go deep on our partnership strategy, which is a critical part of building out this portfolio, having access to meaningfully cutting-edge technologies throughout our portfolio, where those stand, and what the nature of those are. We're also going to give you new long-term financial targets, actually three-year targets for the business. The demand is fabulous for what we do right now. The portfolio has never been stronger. We believe that we're positioned to deliver low double-digit organic growth over the next three years and with earnings growing faster than our sales growth over that timeframe. When I think about the sort of headline statistics of this business, there are several of them. One is that we worked on more than 80% of the drugs approved by the FDA over the past three years. Secondly, we've doubled the revenue and non-GAAP EPS of this company since 2015. Third, we retain the number one market position in several of our businesses, principally research models, safety assessment, which of course is our largest business, and microbial solutions. We are now working in a $20 billion outsourced addressable market. As I said a moment ago, we expect low double-digit organic revenue growth from 2021 through 2024. We've actually worked on 85 novel molecules that we have targets that we discovered for our clients since 1999. These are targets that our clients couldn't discover on their own. We don't own any IP on those, but we've provided those for our clients. We have invested around $4 billion in 25 acquisitions over the past decade, and they've all met or exceeded our investment criteria in terms of our return on invested capital. An overview of the company is that we are a leading non-clinical CRO. Our LTM, last 12 months of revenue, we're a little over $3 billion. We can work with our clients from the time they've identified a target all the way through market approval, and all of the constituent parts and pieces within that. While we don't run the clinical trials, we now can manufacture drugs for clinical trials. We do the safety testing before drugs go into clinical trials, and we do a lot of our tox work contemporaneously with the clinical trial work. We have 19,000 employees, we're approaching that sort of magical 20,000 employee level. We have now over 100 facilities in more than 20 countries, we have very strong proximity to our clients, which is increasingly more important to that. Client base is interesting. Probably almost a decade ago, our biotech clients eclipsed our global. Global clients would be sort of big pharma companies. They eclipsed the pharma clients in terms of total revenue, certainly eclipsed them in terms of growth rate. I think that will continue. Our academic and government piece has actually shrunk as a percentage of the whole because we've done so many acquisitions, but it's about 10% of our sales and almost 20% of our sales are in this other category, which is agricultural and chemical companies, CROs, animal health companies, life science companies, et cetera. Geographic footprint has remained relatively constant. It's about 2/3s North America and 1/3 rest of world. I don't think that's going to materially change given that the preponderance of biotech companies are in North America, and the preponderance of our revenue comes from biotech companies. We are a very important partner to biotech companies. I think it'll probably remain two-thirds, one-third. I think what's distinguished the company from our competition increasingly is the power of our portfolio, both the breadth and depth of the portfolio, the uniqueness of the portfolio. It's our key competitive differentiator. We start with target identification, as I said before, going all the way through to market approval. Most of the activities in drug development along that continuum, except, as I said, for running clinical trials, which is something we did years ago and got out of it because we just didn't think we added a lot of value. We like to start, we like to engage with our clients at the very earliest part of the business. We want to engage with them when the drug is developed or discovered. If we can help them discover the targets, great. If they have the target, we can help them design the drug against the target. If they've already designed the drug, we can help them do all the testing, both in vivo and in vitro, both GLP and non-GLP, before the clinic and after the clinic. Really important role that we have. You see that our DSA business is 2/3s of our revenue. Our toxicology business, our safety assessment business, is our biggest individual business, and this segment is our biggest segment. Our research model business is about 20% of what we do, and our manufacturing business is about 20% of what we do as well. That's the segment profile. We have this integrated non-clinical business that spans pretty much the whole drug discovery and development paradigm. The company was started with research models, and then we moved into research services. You can see here that about 19% of the revenues are RMS and about 17% of the non-GAAP operating income. I do think we have an opportunity to continue to expand our operating margin in this business. We've added to our historical research tools, which are small laboratory animals. We've added to that cellular products to this toolbox. Obviously, a critical tool for cell therapy, and with our acquisition of HemaCare and Cellero, we have a critical role in all of this. Our GEMS, or our Genetically Engineered Models and Services business, has grown rapidly over the last decade. Grew even faster because of COVID, where clients who did some of that work themselves, the molecular biology or the breeding they did themselves, had to outsource to us over COVID, and we did such a good job, we kept a lot of the work. These complex animal models, which genes that either been knocked out or knocked in or added to express a particular disease state, human disease state, are the most important mammalian tools in discerning whether a drug is likely to work in people. That translational leap is obviously important. Those GEMS models are really important. Our IS, our insourcing solutions business, becomes increasingly more important for us as we manage other people's animal facilities around the world, both government, academia, biotech, and pharma. We have this wonderful new business, our CRADL initiative, where we have incubators, mostly for small companies, not entirely, to utilize our space. We have facilities in Cambridge, Massachusetts, and in South San Francisco, and we will have just gone into Shanghai, and we're likely to have facilities in other parts of the world. Small companies can utilize our space as they're growing their businesses. Their businesses become successful, they then can work with us in that space or take advantage of greater amounts of our services. Nice high growth business for us. Lower margin, at least the IS piece, but very low capital employed, so the return on invested capital is similar. CRADL business has nice high growth and nice high margins. We're getting nice mix and price benefit in our sort of mature markets, U.S., Europe, and Japan. China continues to be our largest growth part of the product business. It's about 10% of RMS revenue. We're the premier player. We have about 30, I think 35% share. We build new facilities, we take advantage of the enormous demand by pharma and biotech in China. Chinese government continues to invest a huge amount of money in pharmaceutical and biotech companies. They need high-quality research models to do legitimate research. We're very pleased with our business in China. Interestingly, as we've done so many acquisitions, particularly of our safety assessment companies, CRL has become our largest client. DSA is the largest client of RMS, we're vertically integrated there, and that's really powerful as a competitive differentiator. Increasingly, our digital relationship with our clients, as you'll hear more later, is going to be an increasingly important differentiator between Charles River and the competition, improving the efficiency of the client experience. Our DSA, Discovery and Safety Assessment business, is the largest part of the company, as I said, it's about 2/3s of our revenue, about 57% of our non-GAAP operating income. The largest opportunity to expand our operating margin is in DSA because it's the biggest part of the business. The demand for discovery and safety assessment over the last year or so is the strongest we have ever seen. It's unrelenting in a very positive way. Instead of building in-house capability, biotech depends on Charles River. They would not be getting drugs to market without Charles River. They don't have the desire, the time, the finances, or the need to bring these services, the services that we have inside. Big pharmaceutical companies who used to do many of the things that we do are increasingly either shutting those capabilities down, repurposing the space, shrinking those capabilities, or stopping them entirely. If you look at something like safety assessment, we do that so much better than our clients ever did, on a much larger scale with much deeper science, with much greater history and knowledge of how their new molecule might operate, might perform. Between biotech outsourcing and pharma outsourcing, the demand is really quite significant. All the while, we've been adding more capabilities, mostly through M&A, but increasingly through these strategic initiatives to have a stronger portfolio than the competition. Wonderfully, 50% of our discovery clients remain with Charles River for safety assessments. We're getting that pull-through that we aspired to have for such a long time. Pleased with that. Look, it's all about speed to market. If the drug is progressing and we do really good work for the clients and we understand the molecule as well or better than the clients, why would they want to go elsewhere for the safety assessment? I would argue they wouldn't. All of our sites at DSA, which is about three dozen, were acquired, and they're all over the U.S. and Europe. All things being equal, clients prefer proximity. They can get the work done. If they're a French company, they can get the work done in Europe or even in France, that's better. They use our facilities in the U.S. when we didn't have something in Europe or if one of the European sites is full, but they really like dealing in the same language, same currency, same time zone, and pre-COVID-19, when they could travel to the sites. If you look at our manufacturing solutions business, it's 18% of our revenue, growing very nicely, but 26% of our operating income, so a more profitable segment than the other two. We obviously have a nice footprint now in cell and gene therapy with Vigene and Cellero, with Cognate and with Vigene, which has been signed and hasn't closed yet. Those new businesses, which are straight-up cell and gene therapy, provide the background and the context for clients to use us in other parts of our business, like in DSA, like in biologics, and even in microbial and RMS. It really emboldens the rest of the portfolio. That's going to be very high growth and a new aspect of manufacturing. Biologics, which has really come into its own in the last few years, very high growth, improving margin business, driven by the plethora of large molecules, monoclonal antibodies, oligonucleotides, et cetera. Recently, really driven by COVID-19 vaccine production and testing and some therapeutics for COVID-19, and also all the cell and gene therapy. Really wonderful business for us with high growth and greater capacity. Our microbial solutions business has this enormous demand for our high technology, unique IP for this very rapid and efficient testing platform, both in sterile and non-sterile products, both for the pharmaceutical industry and consumer product companies. We've seen really wonderful growth and terrific margins there. We have a small clean egg business with those eggs we use mostly for veterinary vaccine production, particularly poultry vaccine production, obviously, but also for some human flu vaccine as well. High growth, high margin segment of the business. We're really pleased with our expansion into the CDMO sector, cell and gene therapy CDMO sector. We got out of our CDMO business because we were underscale, and we didn't think we could make a difference, and we were going to stay out of it. It's become increasingly clear to us that our clients really want us to be able to provide manufacturing capabilities for cell and gene therapy because there's very few providers who do it well. They like the fact that we have this broad portfolio. This would be an important part of it. They don't want to stop and go outside and have somebody else manufacture it. A Cognate deal, which we just closed in March of this year, gives us cell therapy, GMP manufacturing capabilities in the U.S. We have facilities in Memphis, Baltimore, the U.K., and Sweden. We also have the capability to produce plasmid DNA and viral vector, mostly European-based. It's about $140 million run rate business. That would be the estimated run rate for this year. That business is going to grow greater than 25% over the next five years. Vigene, which we signed and haven't closed, is sort of the conduit of this business. The primary focus here, this is U.S.-based, is viral vector manufacturing and also some plasmid DNA capability, which we have in Europe with Cognate, now we have that in the U.S. with Vigene. Smaller business, the $30 million-$35 million annual run rate, but also growing at 20%-25% or greater. You can see the dramatic accretion that we're going to get to our top line because of our cell and gene therapy businesses. HemaCare and Cellero will grow at these rates as well. Of course, having HemaCare and Cellero first is the foundation and basis for our cell therapy manufacturing business. It's a wonderful deal with Cognate, in particular, on top of that. Really excited about entering the CDMO sector in this very high value, high quality niche way. Look, cell and gene therapy is going to be a principle, if not the principle, high growth modality for drug discovery and development over the next, I don't know, several decades. Charles River is in the business of supporting almost everyone in the world of drug development business with a whole suite of products and services. We have to have an exceptionally strong capability in cell and gene therapy to support our clients. They need us. I'm really excited about our capabilities, complementary capabilities between Cognate and Vigene. If you take a look at the 2021 run rate, the cell and gene therapy capabilities will be greater than 10% of our annual revenue and growing disproportionately fast. It will have a very important impact on the growth and development of the company. Equally as important, our ability to service these very important high-growth cell and gene therapy companies that are being created all the time by the venture capital industry. We love our capability in U.S. and Europe. Maybe we'll expand that to other parts of the world. We love the capability to do manufacturing and have capability both on the cell and gene therapy side. The CDMO segment is going to grow. The addressable market is probably $2 billion-$2.5 billion, and it's going to grow disproportionately fast. We love being in this business. We have entered this business as a leading player, and I think we're on our way to be the leading player, certainly in the cell therapy side. Really interesting to look at where we are now, going from discovery to other parts of the drug development pipeline, but also other parts of Charles River in small molecule, large molecule, and cell and gene therapy. When we bought Argenta and BioFocus, which is, I don't know, seven or eight years ago, we bought a small molecule platform. We had the capability, as I said earlier, to discover small molecule targets and design the drugs for our clients. We discovered, as I said earlier, 85 novel compounds. This has really been a really important business for us on the small molecule side to do these discoveries and then hopefully hold onto the client through the whole non-clinical development phase. We just bought Distributed Bio a few months ago, after having a partnership with them for a couple of years and after looking at many, many large molecule discovery platforms, none of which we thought were as robust as DBio. This gives us the ability to use their antibody library to discover antibodies for our clients that they haven't been able to do themselves and get a larger number of hits than other technologies. If we do that for them, then have them use our safety assessment ability and our testing capabilities as well. From discovery to all of those areas in large molecule. If you look at cell and gene therapy, as I said a moment ago, you look at Cognate and Vigene, it takes us from very, very early discovery there, providing the cells, doing the basic research, and then all of the phases of process development, testing, contract, production, and helping get these cell and gene therapy drugs into the clinic. Really, really strong focus on these advanced therapies, with a nice mix between biologics and small molecules. We had a very, very interesting growth journey over the last decade. Like so many companies, we had a really strong 2007 and 2008, and then most of 2008, the end of 2008, like so many companies, the music stopped when the economy fell apart, and we had declining revenue in 2009, 2010, and 2011. I think we worked through that well. We had too much space and too much cost. We managed it well. Things began to flatten out and grow in 2012 and 2013. We had low single-digit growth. You can see 2014 through 2017, we had 5%-8% organic growth. 2017 to last year, we had 6%-9% organic growth. Really pleased with that growth rate. As you can see from the slide, so much of our growth was benefited by meaningful, strategic, high growth, high margin acquisitions, which gave us a portfolio that was unassailable from a competitive point of view and really critical from a client point of view. We're really pleased and proud with our growth trajectory over the last decade and the way we've added to the portfolio through M&A. We're in about a $20 billion-ish market. You can see the parts and pieces here, discovery and safety, a similar size, about $5 billion. CDMO space and cell and gene therapy is relatively new at about half of that, $2.5 billion. Biologics, a little less than $2 billion. Microbial around $3 billion, and RMS also a little less than $2 billion. As I said earlier, we have the number one market share in research models, safety assessment, and microbial. If you think about how we continue to build out our business and what the growth dynamics will be over the next 5 years-10 years, if we have a $20 billion marketplace, I don't know, probably growing at 6% or 7%, and we have a three-ish billion dollar base, we have a big, long runway ahead of us just staying focused, investing aggressively in areas in which we're currently in, doing some acquisitions as appropriate and available, and doing a bunch of strategic deals to continue to round out that portfolio. We just have to look straight ahead, have the best possible people, and have extraordinary execution, and that's really what we're focused on. The change, I get a lot of questions from shareholders about when's the next cycle coming and what's different about now versus years ago, and it's so different. This industry and our business hasn't been cyclical for a long time. You have less pharma companies and more outsourcing by the few remaining pharma companies, and you have thousands of new biotech companies. The amount of investment by the public markets in particular, in biotech industry is amazing. It's gone from $25 billion, an average between 2005 and 2009 to $30 billion last year. The numbers of drugs being approved a year while still could and should and hopefully will be better is more than double, and the number of preclinical pipelines and compounds in the pipeline is more than double. That's really quite powerful. The whole biotech industry has changed in delivering new therapies, being the discovery engine for big pharma. Big pharma licenses and acquires or licenses in 50%-70% of their drugs. Focus on biotech is so important, and a lot of funding for biotech comes directly from big pharma as well. We think that there's at least three or four years of cash if the music stopped today for the biotech industry. It's not going to stop. As long as these new modalities continue to occur, continue to save lives, continue to build real companies with escalating revenue and profitability, the investment community is going to continue to look favorably on the biotech industry. Let's talk about the two-year targets that we gave at Investor Day 2019. We said RMS revenue would be low to mid-single digit and operating margins would be above 25%. We didn't meet those goals because of COVID, so we had declining revenue in 2020, and our operating margins dropped to 22%. Entirely COVID related. Our DSA business, we said high single digits. We achieved that 9.4%. DSA, we said mid-20s for operating margin. We achieved it at 23.4%, or almost achieved it, on our way to achieving it. Manufacturing, we said low double digits. We did 10.4%, achieved that. We said mid-30s for manufacturing operating margin. We crushed that at 37.4%. On a consolidated basis, we said high single digit. We delivered 7%. We said that we would hit 20% operating margin. We did last year. Really pleased and proud of those results. Consolidated with acquisitions, we said at least low double. We did 11.5%. We said 20%. We did the 20%. We're really pleased to have achieved most of those goals in two years. I am delighted to give you the goals through 2024. They are as follows. In RMS, we're going to go from low to mid, which was our last target, to now mid to high single digits. We said last time that we would have operating margins above 25%, now we're saying high 20s. We're looking for improvement in both top line and bottom line in RMS. In DSA, we previously said high single digits, now we're saying around 10%. We said operating margin for DSA mid-20s, now we're saying at least mid-20s. Higher growth expectations over the next three years for the DSA segment as well. For manufacturing, we said low double digit, now we're saying approaching 20%, much greater growth in manufacturing. We said mid-30s for operating margin, now we're saying that those operating margins will essentially stay the same around the mid-30s, principally because of the headwind from Cognate. While Cognate will help invigorate the top-line growth, it'll be a bit of a headwind to the bottom line. On a consolidated basis, last time we said high single-digit revenue growth, now we're saying low double, and we said 20% operating margin, and now we're saying 22.5% operating margin. We're really, really delighted given the unprecedented client demand, given the strength of our portfolio, given the great growth metrics that we enjoyed over the last couple of years to now give you these 2024 goals, which we're proud of and we're quite confident we will achieve over the next three years. What are the important imperatives for us? As I said, it's all about the portfolio. We distinguish this company by the strength and depth and scientific rigor of our portfolio, getting our arms around emerging technologies and access to new modalities and moving into areas like cell and gene therapy. While our organic growth, as you just saw, will be quite significant, we think we can continue to grow it even faster through M&A and additional strategic partnerships. We're very, very focused on always improving, enhancing, growing the portfolio, both size and scale. Let's look at that. I love this slide. How have we done it so far, and how will we continue to do it? We spent $4 billion in more than 25 acquisitions since 2012. We have acquired all of our discovery businesses. We've acquired all of our safety assessment businesses. We've acquired all of our cell and gene therapy businesses. We wouldn't have any presence in any of those areas without M&A. We've done it very surgically, very strategically, I think very responsibly from a financial return metric point of view. We have a very strong integration team now that does the basic due diligence, valuation models, basic due diligence, does a 90 or 100-day acquisition plan and stays with every target for 6 months- 12 months. We have a high degree of confidence that we can continue to do successful M&A. Equally as important as our strategic partnerships, we have a dozen of these small deals that we've signed, about $40 million committed. A relatively modest financial amount, where we will either provide a small amount of equity or debt financing, we will be a sales or marketing partner with these companies for a year or two. In most cases, we have a right of first refusal to buy them, and in many cases, we have a predetermined formula to buy them, a takeout formula. We get to see whether these cutting-edge technologies are real, whether the clients like them, whether they're responsive to the clients, whether we think of the scientists are ethical, whether they have business sense, whether they're responsive to the clients, whether they work well together and work well with us. Distributed Bio is one of those deals. It's a large molecule discovery platform. We worked with them for two years and bought them. We have deals in translational biology, bioinformatics, in next-generation sequencing, and 3D tumor modeling. We have another several deals that we haven't signed yet, but are at the letter of intent phase. Very important part of examining cutting-edge technologies, evaluating them without jumping in with both feet, but jumping in when we believe that these are good companies. This will always be an important part of our strategy. Many years ago, we became LPs with our first venture capital company, and now we have, I don't know, six or seven or eight of those deals. We have kind of three classes of venture capitals. Six or seven of them where we're limited partners. We've actually invested money, and we get access to the seed partners of these firms to work on strategy and new modalities and even a little help with their M&A. We get access to their portfolio companies. We have another six or seven venture firms that work with us strategically but don't want or need our money. We have another probably six or seven that don't want or need our money and don't want to work with us strategically, but utilize us a lot. These are magic. If you can keep the portfolio companies as cutting-edge, rapidly evolving, fast-moving portfolio companies that there's a couple of 100 new ones a year. If you can satisfy them or light them up scientifically and work with them and become a member of their management team, sit on the same side of the table and be their true partners, it's magic for them. If we can satisfy their needs, we can satisfy any client's needs. This strategy has worked so well. We have more than 10% of our annual revenue coming from the venture capital portfolio companies. While we didn't do these investments to get our we're not an asset management company. We're not a venture firm, we invested money in the venture firms where we're LPs, and we've gotten a greater than 30% average return. We love those returns as well. These three areas, strategic M&A, strategic partnerships, and our venture deals are really fueling our long-term growth. Cell and gene therapy space is really quite extraordinary, so let's just unpack the stats. With all the conversation, all the noise, only nine drugs have been approved by the FDA. It's still kind of small, but $20 billion went into cell and gene therapy last year. We expect by 2025, which is only five years from now, that 10 drugs-20 drugs a year will be approved. There's almost 3,000 cell and gene therapy programs being worked on. 2/3s of those are in pre-clinical or phase I. We have an opportunity to be working on a couple of thousand of those, and the pre-clinical stuff is growing at 30% a year. 900 of them are in the clinic. About 200 INDs will be filed every year. This is a juggernaut, this new modality. This is eclipsing everything else in terms of investment, in terms of growth, in terms of potential, in terms of making a difference, in terms of treating diseases for unmet medical needs, and definitely in terms of Charles River. We're going to support so many of these companies with our broad portfolio of capabilities in cell and gene therapy. Really important part of our growth. If you look across our whole portfolio, and as I said earlier, more than 10% of our revenue is coming from this, if you include Cognate. That percentage should grow because the growth rate of cell and gene therapy work is higher than everything else we do. Not just in the new businesses like Cognate, HemaCare, Cellero, and Vigene, which obviously we love all of those direct capabilities in cell and gene therapy in the cGMP space and plasmid DNA and viral vectors and providing the cells, but also in the rest of our portfolio. In RMS, we're providing immunodeficient models. In discovery and safety, we're providing combo pharmacology and safety studies. Also in safety, we're providing bioanalytical testing. In our Biologics business, we're providing analytical testing and cell banking. In Microbial, we're providing advanced rapid cell screening techniques. All parts of our business touching cell and gene therapy will increasingly be the case. We're really a premier partner, and as I said earlier, if we're not, we're certainly one of the leaders in this space, if not the leader in providing these services. Another strategic imperative is driving efficiency. Driving efficiency across our whole portfolio is sort of part of our genome. We're always looking to optimize what we do. We took $50 million, $60 million, $70 million of cost out of our business every year, and we'll continue to do that. We have to optimize our cost structure. We had a dozen safety sites. We have to optimize how those all work, what's the best methodology, and apply that across all of them. We're committed to 50 basis points of operating margin improvement a year beyond this year, and obviously, a lot of that's going to come by driving efficiency. Whether you're a PhD or a trained business person, you're focusing on driving efficiency and improving biotech growth and operating margins. Look, for our clients, everything is about speed to market. You can have three biotech companies working on the same target for the same indication and all developing some large molecule. The one that gets to market first will have an 80% share. The one that gets to market second will have a 20% share. The one that gets to market third will go bankrupt. They're maniacal about speed. If we delay them a month, a week, a day, sometimes a few hours, they can't stand it. We have to be incredibly responsive. We reorganized our company about three years ago to decentralize it. I consider every general manager of our business, one of our businesses, and all 100 of those sites, an owner. You run a site, you run a business, you run a collection of businesses, I consider you an owner of that business. We expect all of our GMs to make decisions on how many people they hire, what they pay them, how they structure them, as if they owned a piece of the business. I want them always thinking about what does the client need, putting themselves in the shoes of the clients, and obviously, ultimately, the shoes of the patient. If you're a person dying of cancer and we're working on a breakthrough cancer drug, and we get it to market a year, a month, a week earlier, and that could save your life, we have to be thinking about that every single day, and we do. Everything's about speed to market. We've committed to our clients and to ourselves, and to you all, that we will take a year out of drug development process, and we've already made great strides in doing that. Drugs simply don't get to market without us. When I talk to the CEOs of so many of these drug companies, including Moderna, which is one of the few companies we're allowed to talk about, and when I say to Stéphane, "You must feel fabulous about having one of the first vaccines to treat COVID," he says, "I feel great, but I want you to know I would have never gotten that vaccine to market without Charles River," and he means it. We're pleased and proud of the important role that we play in drug development in getting more than 80% of the drugs to market and in getting all four of the current vaccines for COVID to market. We're going to continue to focus on transforming the way we work with greater technology. We're digitizing our enterprise. If you're a safety assessment client, we want you to be able to get online and say, "Okay, I have a reproductive toxicology study. Do you do it?" The computer will say, "Yes, we do it," say, "What would it cost?" Give the clients an early quote and say, "When can you book me in?" Give them a slot, book the study, give the client real-time data. The way we manage the enormous amount of clients we have, the enormous scalability of our business model, is through this digital connectivity, through an end-to-end client experience, through greater e-commerce, yes, we have lots of great scientists and study directors and technical people for our clients to talk to. They should only talk to people if they have something that requires that sort of iterative conversation. They just need data. They just want to know how the study is doing, when their animals will arrive, when their eggs will arrive, when their endotoxin test kits will arrive. Shouldn't have to call and ask somebody. That's an anachronistic way of doing it. We're deep into our digitization initiative at Charles. We're really excited about it, beginning to roll things out shortly. We're also very focused and interested in using AI. A couple of those technology deals that we have, I think we have two, and soon to be three AI deals. Hopefully, that will help us learn from the work we've done, design better trials with better outcomes, and use machine learning and artificial intelligence to help our clients have better outcomes and to get more drugs to market. We're very focused and excited about utilizing technology to make us a better partner with our clients. I say this all the time to our almost 20,000 employees. We are only and all about our people. The best technology and facilities and IT in the world doesn't get it done. It's all about having the best people in the world, understanding the mission, lit up by the mission, feeling well-respected, having us listen to their input, working well as teams, embracing the knowledge and the notion that we're there to service our patients and get life-saving drugs to market. We're really focused on attracting, retaining, motivating, challenging the best people in the world about having an inclusive environment where you can be yourself and we can embrace yourself. The power of inclusion is really, really important. We're working on connecting our people throughout the world and really harnessing the power of having 20,000 people working together and not being somehow disenfranchised from one another. Really, I think we have an amazing culture. I think it's very family-oriented. It's very team-oriented. It's very results-oriented. It's very patient-oriented. No matter how many acquisitions we make, we're still able to not only maintain that culture, but to enhance it. We're really focused on our corporate citizenship initiative. If you haven't seen our corporate citizenship report, we're really proud of that. Talked a lot about the things that we have done. Talked a lot about how we strengthened our board and made it more diverse. We now have almost 40% of our board is females and minority representatives. Talked a lot about diversity and inclusion amongst our employee base. I was a signatory to the CEO Action for Diversity and Inclusion. Many of our employees are signatories personally. We have teams of people working on this from the recruitment level, succession level, and just working with each other and promoting, furthering a culture that people can be themselves, I think is the best way to put it. We're really committed to improving this planet that we have all destroyed. I think every person individually has responsibility, and Charles River at all 100+ of our sites has a responsibility to do everything humanly possible to reduce our footprint, to help bring this planet back. We have a sustainability capital fund that we'll infuse money into every year. We have commitments to reduce our greenhouse gas emissions by 50% by 2030. We made great strides towards that. We also feel a very great sense of responsibility to the communities in which we live and work. We can't just make money there. Yeah, it's great that we pay taxes, but we need to support the people, the organizations, the educational organizations, youth organizations, STEM organizations, food banks in these communities. We give money to our sites to give money to needy local organizations that they believe are in the greatest need. That was really magnified because of COVID-19. We gave money to some organizations that would not have made it. They would have gone out of business or out of existence without our contribution. We feel really good about that. Focused on each other, focused on the planet, focused on the communities in which we live and work. One of the guiding principles, we're all about science. We have 2,400 PhD, MD, DVM level people with advanced degrees, providing advice and counsel to thousands of biotech and pharma companies working on thousands of drugs to cure so many illnesses. Our input is critical to how those studies are designed and what the outcomes are. This is a place increasingly where great scientists can come from other organizations, often big pharma, biotech, academic, or government organizations that want to be part of an enterprise that's touching almost 100% of the drugs that are approved. We're focused on the strategic hiring of the best people in the world and treating them with dignity and respect. We're focused on the greatest connectivity with our clients, increasingly digitally, to have the greatest responsiveness to them and to take a year out of the drug development process. We're focused on expanding and enhancing our incredible portfolio through additional M&A and strategic deals. We're focused on continuing to build shareholder value. We believe we will once again double the size of this company and increase our earnings per share over the next five years. The demand continues to be as extraordinary as we've ever seen it. Given our powerful expanding portfolio, we think that demand will continue, certainly for the kind of three-year guidance that we're giving you here, and I think well beyond that. We will continue to expand this portfolio in a way that distinguishes us when the competition lights us up internally. Thanks for listening. As you can tell, I'm very enthused about this company, about what we've accomplished and what our capabilities are going forward. I'd now like to turn the floor over to David Smith, our CFO, to talk to you about some of the financial aspects of our business going forward. David? Thank you, Jim. I'll start with first quarter results for two reasons. First, it sets us up nicely to discuss the latest guidance and our long-term targets. Second, the results provide a solid baseline for today's discussions. We're seeing double-digit growth in all three segments, even when we back out the impact of COVID-19. Collectively, this gives us an organic growth rate of 13%. Our margins expanded partly on the fall through of the strong sales, giving us 170 basis points of growth, which we're clearly delighted with. Non-GAAP earnings per share grew at over 37%, which helped drive record free cash flow for our first quarter of $140 million, beating last year's record by $100 million. This strong performance, coupled with the mounting order books, enables us to improve our full-year guidance and provide an increase that is well beyond just a Q1 beat. Reported revenue guidance is now 19%-21%, up from 16%-18%. Organic is now 12%-14%, up from 9%-11%, putting us squarely into double-digit territory. We now expect margins approaching 21%, whereas previously we stated modest improvement. Non-GAAP earnings per share is now $9.75-$10, which implies a year-over-year growth of over 20%. Free cash flow is now at the top end of our prior range of $435 million, and this despite CapEx increasing by $40 million to accommodate the capital needs of our recent acquisitions. In addition, I'm pleased to confirm that our second quarter has got off to a stronger start than we expected. For the full year, we now expect revenue and earnings per share growth to be at least at the high end of the guidance that I've just outlined. Our last five years have grown well too. Reported revenue with compound average growth rate over 17% and earnings per share over 18%, essentially a doubling of the top and bottom lines. Q1 full year recent history, this is all a great backdrop in which to discuss our future or strategic targets. To the future, we're looking at a time horizon of three and a half years to the end of 2024. We're striving for low double-digit organic revenue growth up from the high singles and non-GAAP earnings per share that grows faster than revenue. In respect to margin, we expect further expansion. We're now targeting approximately 22.5% for the full year 2024, that represents a 250 basis point increase over the full year 2020, which was our last reported full year set of results. Looking at it after this year where we expect to approach 21%, then we have about 50 basis points on average increase each year thereafter. It is, however, worth calling out that we don't expect it to be necessarily linear, but directionally we feel this gives you some shape to work with. Again, as in the past, the drivers of margin expansion are DSA and corporate unallocated costs. DSA from the higher volumes pricing and efficiencies, unallocated corporate costs from the leveraging of our scalable infrastructure with a target to get under 5% of revenue by 2024. Clearly, the actual operating income itself, the absolute dollars if you like, will increase in all segments and that will help drive our earnings per share expansion. Tax is going to be interesting with Biden reform still uncertain, both in timing, when will it be enacted, and the scale, the dollar impact. We're clearly monitoring this space, while for obvious reasons no one can be precise, directionally we feel on balance we'll probably end with a tax rate in the mid-twenties. That's up from the low twenties we currently have. If passed, we expect a lower EPS growth rate in the year of enactment. It's hard to say at this time exactly how high the EPS growth would be in that year. Obviously, we'll keep you appraised as and when we learn more. Free cash flow has grown at mid-teens over the last five years, which we expect to remain strong based on what we've already described about the sales and margin and the earnings per share growth targets. Clearly in respect to CapEx, we need to feed the growth engines of the company. We will continue to allocate capital where appropriate as we have in the past, both for legacy businesses and the newly acquired businesses. As such, at this time, we expect CapEx to increase to about 7% of revenue. Now, I won't spend too long on the specifics of our capital structure, the approach remains unchanged. Use our bank revolver to give the owners of acquisitions the confidence that we have the funds, periodically, depending on the market conditions, issue bonds to replenish that revolver or to get competitive coupon rates as we did earlier this year. We still prefer leverage below 3x, for those of you that have followed us in the past, you've seen that we've demonstrated an ability to bring our leverage down after acquisitions. Historically, over the last five years, we've always got leverage under 3x by the year-end. Now, no promise of that going forward, as it depends on the month in which we acquire a target. At this time, we still prefer to pay down debt rather than, for instance, offset equity dilution. Strategic M&A remains our top priority, no change there. Still prefer acquisitions that are neutral or accretive out the gates, and a return on invested capital that meets or exceeds our weighted average cost of capital in years three or four. Over the last five years, we've seen returns averaging 200 basis points in excess of our weighted average cost of capital. That remains encouraging. In case you missed it, the growth from the last five acquisitions has the potential to provide half a billion of revenues in 2024. In summary, I'll leave you with this simple table that compares and contrasts our past performance with the long-term targets that we've laid out for you today. I will add that we've doubled our top line and bottom line over the last five years. Obviously it depends on how our future acquisitions pan out, but I see no structural reasons why we can't repeat that performance in the coming years. It's certainly a target that we have our sights on, and we'll do what we can to make that a reality. I believe we're going over for Q&A. Great. Thank you, David. We will now begin the Q&A. If you'd like to ask a question, please raise your hand in the Zoom function. Thank you. Hi, up first is Elizabeth Anderson with Evercore ISI. Hi, Elizabeth. Hey, guys. Thanks so much for the question. No, thank you for all this updated information. It's super helpful. I guess maybe I have two main questions. The first would be, how are you thinking about the acceleration of the new longer-term growth rates over the forecast period that you have? That would be my first question. My second question, if you look at the individual segments and take a look at what that longer-term guidance is, and even backing out the 5% corporate expenses, it does seem like there's a little bit potentially of wiggle room or conservatism in that number. If you could just please comment on that and what other things you would factor in there. Thanks. Okay. Go on, David. Yeah. The first question was really around how might the progression of our growth rates pan out over these other 3.5 years. Clearly from the underlying businesses that we have, we feel comfortable that they are stepping up. We're moving away from, if you like, say, DSA, from these high singles towards the 10% basis. Where we're going to really see these kicking in is in manufacturing and in RMS, where the recent acquisitions that we've acquired, HemaCare, Cellero, Cognate, even the new one that we hope to close, all these have immense growth rates, 25%, 30% growth rates. Obviously they become more meaningful as you get the compounding impact of that going out towards the year 2024. Broadly, there's two halves. The legacy businesses are stepping up, the real bounce is going to come when these recent acquisitions start to become more material to those growth rates. In terms of the question is our margin guidance somewhat conservative or earnings per share guidance somewhat conservative? We still feel good about what we posted. Just to recap, the reason we're getting a stepping up in the margin is partly because you see the revenue improvement. You've seen RMS moving from low to mid, moving to mid to high. We've seen DSA moving from high singles to approximately 10%, and we've seen manufacturing from low double digit to approaching 20%. They are meaningful changes in the revenue growth rates, and of course, we'll get the full flow of the volume because we've got a certain amount of our costs are fixed. Of course, we're going to continue with efficiency. Even if we weren't getting revenue improvement, we would still be getting some benefit from the efficiencies that we're doing. We're seeing Safety, for instance, moving away from integrating the recent acquisitions, WIL Research, MPI, Citoxlab, much more on optimization, on quality, on customer experience. We're seeing that connectivity with clients, which means helping with the improvement in the revenue as well. You could argue there is room for further improvement, right? I would counsel against that because we still need to invest in the business. In the past, the last five years up to 2020, we had four years at 19%, the final year came in at 20%. We were investing in the future. We had companies which had a drag on the margin. We were moving them up towards the legacy businesses. We were investing in people, we were investing in protocols, we were investing in back office, we've been investing in IT. We are reaping the benefits from some of those investments that we made historically. I would make the same argument. Over the next two or three years, we will continue to invest in our business because this isn't about what the margin looks like in 2024. This is about what the margin might look like beyond 2024 as well. As you've heard, we're looking at a 50 basis points increase on average over the next three years. That does give us room for meaningful investments in the business, which we believe will help give us benefits in the longer term as well. Great. Thank you very much Hey, John, the next question will be from John Kreger at William Blair. Hey, guys. Thanks. Appreciate this. I've got two that I'll just throw out. Jim, you painted a really encouraging kind of macro picture. I don't think you talked about the regulatory environment, though. Could you just elaborate on whether that's changing at all under the new leadership in Washington in particular? We're getting a lot of questions about that. The second question, you mentioned machine learning. Can you just elaborate a little bit on where you think that can be deployed most effectively across your portfolio? Thanks. Sure. Hi, John. We're not seeing any changes in the regulatory environment that we anticipate would adversely impact our business or fundamentally change it in a particular way. I think that our regulatory oversight is really quite sophisticated over a whole bunch of modalities at different agencies that we deal with, moving into our latest business, which is GMP manufacturing cell therapies. I think the regulatory environment will be somewhere between neutral or positive to us. Machine learning is sort of the big question, right? The question is, how will artificial intelligence change the way folks design preclinical trials and clinical trials, number one. Number two, will there be sort of connectivity between the two so that there are better outcomes? Will we learn substantially from what we have done, we the general drug development community, and we specifically at Charles River, will we benefit from historical data that we have over a whole host of thousands and thousands of compounds? If you have a new drug, doesn't that inform you? Doesn't the history inform you about how the new one may perform? The answer is likely yes. I think over time, we're going to see some beneficial structural changes that will give very early indications of how a drug is likely to perform either positively or negatively. I think the validation of those different technologies, even early on in the process, will take a while, both from our clients' point of view and from the regulatory agencies. I do think it'll be part of speeding up the process and hopefully for all of us getting more drugs into the market. We're, as I think you know, I alluded to it sort of quickly in my remarks, we're going to be placing bets within the context of our technology deals to find the most robust technology that we can both invest in, utilize, and distinguish Charles River from others, and also help with this journey that we're on to help our clients take a year out of the drug development process. We want to be careful, though, about what we invest in and how much and how deep, because I do think that technology is going to change rapidly. I think several shots on goal, which we already have a couple and we will have more for sure, should allow us to really evaluate them real-time and see whether they're significant enhancements or not. Then, assuming we have the opportunity, we're likely to acquire some of these technologies, which then hopefully would be unique and give us a leg up. We're all over it in terms of educating ourselves, but not all over it in terms of making a massive investment right now, which probably would be too early and tough to pick the right horse to bet on. Great. Thank you. Sure. Hi, Tycho. The next question will be from Tycho Peterson at JP Morgan. Hey, good morning. Question on cell and gene therapy, Jim. I'm wondering if you could talk what's baked in the long-term guidance in terms of% of revenues for that 2024 guidance from cell and gene therapy, and then how you think that's going to be split between manufacturing, discovery and safety assessment and other businesses. Also if you could just talk to the level of investment you think you need to make around cell and gene therapy. Yeah. Without giving you those specific numbers, Tycho, those businesses will grow disproportionately fast to the rest of the franchise. You have some historical and future growth rates for everything that we do, and we just updated them, of course, as cell and gene therapy are already baked in there to some extent. They're going to grow disproportionately fast and be a disproportionately larger percentage of our total revenue. We just told you that it's somewhere greater than 10% right now. You'd have to do your own math to come up with what the number will ultimately be, but it'll be a significantly more meaningful part of the portfolio, and it has to be because so many of the new drugs that our clients are working on are in the cell and gene therapy space, and so we either need to be a full-gauge provider to them or not. We've done this in a very significant way. I think both sides of the business, both the kind of product pieces and the service piece will be significant, and both are already in and will continue to be in high demand. We will invest as aggressively as possible to provide sufficient capacity to accommodate clients' growth rates. We just gave you a number. If you were trying to pick CapEx a little bit, there'll be 7% of our revenue out in the outer years. We feel quite confident in our ability to manage the business and keep up with the growth rate at that level. We have to have space slightly before we need it, slightly before the clients can use it. When they give us work, we can't run out and add a rent space or build a facility. We have to be able to call it right. I would argue that as you've seen from the guidance raises this year already, our demand is exceeding even our operating plan. We continue to believe in the growth rate of the business and that we understand the clients well, and the clients need to utilizing us well. We're going to continue to have to stay ahead of the capacity, which will be the CapEx issue. The headcount is equally, if not more important. High growth driver of the company, we think both top and bottom line, and one that makes us a better provider and solution for the many needs of our client base. We need to give David acquisitions added to about half a billion in 2024. That might be helpful. Okay. David, one follow-up on RMS margins, the path to get to high 20s there, is that all mix? Is that GEMS and higher margin products, or are there other drivers for RMS? One of the drivers is the HemaCare and Cellero. Obviously, with time, as that revenue builds up, then the fixed cost won't be growing as fast as that revenue growth, and therefore you do get a fall through on that. Otherwise, it really is a question of the extra volume that we're getting in, which is true for all businesses. We're talking about a stepping up in the volume of all of our segments, and there is a fall through that helps on the margin in that respect as well. The two to look at is that extra volume on the legacy business, but the real kicker will be on the new acquisitions because obviously with the 30% growth rates that we're talking about for those units, it doesn't take long before they're eclipsing the fixed cost that are needed to support it. Okay. Thank you. Hi, Dave. Up next is Dave Windley with Jefferies. You're on mute. Dave, you're on mute. Yep. Sorry. Good morning. Thanks for taking my question. Good to see you. My first question is around the comment that you made, Jim, not surprisingly, I guess, around DSA, that the demand is as good as you've ever seen it. I was wondering if you would be willing to put some exemplary numbers against that, like studies booking out further, number of quarters or months, price taking, any number or any type of metrics that you could add to that that would put some tangibility around that demand as high as you've ever seen it. Hey, Dave. Sure, I'll try. We're booking out further than we have in years, and it depends on what kind of study and where it is. In some cases, we're quarters out. I think in a few cases, people are already talking to us about next year. If you think about where the clients are right now, crowded funding environment, a whole host of new modalities, really deep pipelines. For the big companies who used to do a lot of this work themselves are now reducing their internal infrastructure, so they actually can't depend on themselves. They really need to depend on us, and they really need that close relationship with us, and they really need to plan better than they used to. You've heard us say for years that they're not the best planners in the world, some of our clients, particularly some of the large ones, because they didn't have to. They had internal capacity. We always had enough space. I do think that space is filling up, and so I think it's more orderly. We have better predictability. We have better visibility on our revenue, and we're able to really get on the same side of the table with the clients who will tell us they've got X number of studies, and this is the most important priority and et cetera. Without giving specific numbers, definitely studies are booking out longer, which is great. We're very happy with the pricing that we're getting. As we said several years ago, we're not going to give the exact price, but definitely getting some pricing and a nice mix between specialty work and general work. While our clients will always be interested in price, I'll never tell you that they're not. I do think that they're very interested in getting a slot. They're very interested in the quality of our science and very much interested in our speed, particularly our smaller biotech clients who maybe have a single shot on goal. While pricing is always an issue, it feels like it's less the first thing we talk about and often the second, third, or fourth thing. I think that's good because studies are very complicated. They're expensive to run. We're trying to hire the best people in the world. We're filling up capacity, and so we need to be paid well for it. It feels like the respect quotient has gone on and the greater appreciation for the role that we play and also a real acknowledgment that there's a significant dependence on us to help them get their drugs to market. Thank you for that. I wanted to follow up in cell and gene therapy with a couple, if I could. Just a couple shorter ones. One, as you move into contract manufacturing, is your point of contact at the customer the same? Maybe it is because these companies are largely small and innovative, small biotechs. Is that a similar or same sales point, or do you need a manufacturing sales team now to be promoting those capabilities? On Vigene, you mentioned in your comments about that it was a conduit to Cognate. How do you think about your end target markets in the manufacturing business? Is it cell therapy and modified or gene-modified cell therapy, or do you really think about it as complete cell and complete gene therapy coverage or service addressing that market? The acquisitions that we've done in the cell and gene therapy space are benefiting substantially from both our sales organization and our access to clients. While they may be selling it at a certain level, it could be they have manufacturing inside the firm, or if it's a small biotech company, it's only a handful of people to deal with anyway. Access to certain clients, particularly large clients, we're playing a very heavy role in that. Our biologic sales team is playing the principal role in that, who's all around the space. We're connecting the sales organizations of these smaller businesses that we bought. Obviously, their relationships are important as well. We just want to enhance them. So what we've seen in almost every deal that we've done for years, David, even in new areas like cell and gene therapy, that the confidence that clients have in us, the history that we have, the large amount of work that we do for many of them right now, kind of validates these new businesses that we buy. It makes it easy. Of course, it's all about speed for them. Obviously with Cognate and Vigene, which we don't even own yet, we'll be working through the subtleties of the sales interface, but I think it's going to work quite well. We think of the Vigene/Cognate businesses principally on the sort of product pieces that Vigene is a U.S. enterprise, which has large viral vector capability and plasmid DNA capability. We have the same capability in Europe with Cognate. When I said conduit, I meant mostly geographically because a lot of clients, it's all about proximity. I think about these businesses that we are already and will continue to be a major player in cell therapy, particularly in gene-modified cell therapies from a pure manufacturing point of view. I'd say probably our gene therapy, straight up gene therapy manufacturing is more about the elements of it and less about actually doing broad-gauge manufacturing for our clients there, although we may move in that direction. I have no doubt that we will be A, if not the principal player in cell therapy and a meaningful player in aspects of gene therapy, maybe is a simpler way to think about it. We have a pretty good run rate with these assets, David, both geographically, client base, history, deep science, and a broad footprint. We hope to continue to add to them through more M&A to the extent that they're both available and they fit. Obviously, we'll continue to have aggressive investments to keep up with the market demand. Thank you. Sure. Our next question will come from [Osfod] Morgan Stanley. Over to you. Hi, good morning. Hi. Thank you for all the updates. A couple of follow-up questions. First of all, clearly M&A has been a key component of the strategy over the last decade. When we think about the long-term guides for 2024, we just consolidated guides, how should we frame the potential contribution from future M&A to sort of those long-term goals? Those numbers I've given without adding any assumptions for M&A because it's impossible to do that. We know what the next five deals are that we'd like to do. Doesn't mean any of them will get done, doesn't mean that they'll allow to be available, that will prevail, or that we'll like the asset when we get into it. Kind of strategically, we sort of mapped out the drug development process and what facets of it we want to participate in. With a couple of exceptions, I think we're doing well in filling in whatever gaps we may have had and expanding them. If we did nothing further from an M&A point of view, which will not be the case, if we did nothing further, we think the growth rates that we've just given you. The smaller strategic deals that we're doing, we certainly hope that some meaningful proportion of those, I'll make it up, at least a third of those, I would say, will become acquisitions because the technologies, at least at the outset, seem really beneficial and important for us to have in the portfolio. Those will be relatively small checks, like Distributed Bio, but with very high growth rates, usually IP, and certainly technology that no one else in the world has. We certainly hope that they will be. We hope to do more, as I said a moment ago, from an M&A point of view in cell and gene therapy, specifically in multiple aspects of discovery, for sure. Certain aspects, laboratory aspects of our safety assessment business. We have a couple of things in RMS. Maybe some things geographically and some smaller sort of niche moves in microbial and biologics. We continue to be active all the time, including now, as I think you all know, most of the deals that we have made in the last decade have been private equity-owned, so they're always for sale. It's just a matter of timing and price. We know that we at least have a shot at these companies, the ones that fit. I guess the last thing I would say, just because you're asking about size and growth rate, is that we would never do anything artificially. I hope you all know that. Even though we threw out a number in our last investor conference that we'd add $1 billion of revenue, threw out a name, we've already added a half billion, and I do think the $1 billion is imminently doable. We would never just force that just to make those targets because we said so. We're not interested in being bigger just for the sake of being bigger. We're interested in building out the portfolio, and I continue to believe every single day that the portfolio is a very powerful one and is the principal distinguishing feature between Charles River and every other competitor that we have, and is what gets the attention of the client base. Continuing to add to it, strengthening it, both geographically and just from a depth point of view and a scientific rigor point of view is really critical. Of course, as you know, the technology changes so rapidly. If I think about the 12 technology deals that we've done, I don't know, most of those companies didn't even exist two years ago. Two years from now, there'll be another, I don't know, 2025 or so that we will look at and maybe do. Figuring out what to buy from a technology point of view is not trivial. We do think we have a good methodology to do that, though. Just to give you some math, we called out today that our earnings per share growth would be higher than the revenue growth, and the revenue growth we called out at low double-digit. Historically, we've done earnings per share growth in the 18%-19% category. There is a step change if we were able to repeat M&A in the next few years in a similar fashion to the way we've done it historically, that there would be a pop on the earnings per share. That's very helpful in terms of framing it. Thank you. Thinking about second quarter guide, clearly you've been bullish since the beginning of the year, and yet here we are, what, about a month and a half after you gave guidance, and you're upping guidance again. What specific areas are doing better than where you expected them to come in? Go for it. It's across the organization. You look at the guidance we've given, either historically a little over a week ago, or the long-term guidance we're giving. That guidance is across all the segments. It's not as if we have one segment that is driving our long-term guidance. Broadly, we're sitting in a beautiful position where all of our segments are performing well. We're delighted to be able to report that. You're right, we reported only a few weeks ago, a sort of guidance for Q2, and here we are. We've not even closed the May books. It's the 27th of May, so we haven't seen the de facto May numbers. We do know from talking with the senior team and to the organization that there's a confidence there that coupled with our April results, we wanted to signal to you today that we felt that we would be surpassing the Q2 guidance and try to help factor that into some color as to what the full year would do. Really, today isn't about the Q2, today is about the long-term guidance. To answer your question, we're sitting in a comfortable position in all of the segments. One last question. Jim, in your discussion early on, you talked a lot about talent development in the organization. We're hearing a lot about how tight the labor market is, clearly there's a lot of demand in the industry. How do you think about that ability to find the right people, to attract them, to hire them, and retain? When we think about limiting factors to growth, is that where you see the challenge to future growth opportunities? We're hiring a lot of people, which is a commentary on the demand that we have right now. We're pleased to be doing that. We're doing that as aggressively and thoughtfully as possible. We have a lot of people that are unskilled labor and choose to come here versus Walmart. I think we have a leg up because people do care about the mission of the company. We obviously have a better mission. No offense to Walmart. We're actively making sure that our pay levels are appropriate and that we explain our jobs well and that we have panels to interview people to make sure that we have a more diverse workplace, and also that people have pretty clear career growth goals that they have some control over. I think we're doing an increasingly better job at that. We want to stay slightly ahead of the demand because a lot of those unskilled labor jobs still require a fair amount of training. While you hire somebody, they may not be contributing for several months. It's an always, and that's a good place to be. I think we're doing fine, and every geographic locale has a different story. I would say in the senior scientific ranks, and we just talked about 2,400 PhD level people, that is, I won't use the word easy, but we're doing an increasingly better job at recruiting those people because it's a place where great scientists now want to be. If you want to participate in touching 80% of the drugs that get to market and working on those and having an input and having diverse client conversations and working over diverse modalities and multiple therapeutic areas, I think it's a much heavier proposition than some of the big pharma companies or biotech companies. We're recruiting a lot of people directly out of big pharma and biotech who, for whatever reason, don't want to be there anymore. We have to have those people so that when our clients look at us, look at our staff, they see deep scientific capability and that gives them confidence. I think we're doing fine. It's the principal rate limiting factor. It's a much greater rate limiting factor than capacity. Capacity is just money and planning. Okay? You have to build the buildings 12 months or 18 months, sometimes 24 months in advance. Headcount's more immediate, although we do have to stay ahead of it. Thank you. Sure. Hi. Up next is Derik De Bruin with Bank of America. Good to see you, Derik. Hi, good morning. Hey, Jim, for a number of years, basically since we began covering your company in early 2000s, the technological threat to RMS has always been out there, in terms of having new technologies replace some of the animal studies that are out there that are going on. As we have done a lot of IPOs lately, there's a lot of technology out there. Where are we in technological enhancements to that whole process of using animals? And it's a broader preclinical question in thinking about how technology is impacting that, and this is obviously going to lead into an M&A question, are there opportunities out there for you to enhance that? Yeah, nice to see you, Derik. Yeah, there's a fair amount of technology out there, and we both seek those conversations out and people do seek us out, because obviously we have the greatest market potential penetration for the technology. There's a lot of 3D modeling stuff and obviously computerization and organ-on-a-dish and all of those technologies. I would say that anecdotally, they're interesting. Anecdotally, they seem scientifically beneficial. At the moment with relatively limited application. We'll place some bets going back to the technology deals I've talked about. We'll place some bets in this area, as for sure we already have placed some. The extent to which these technologies actually are beneficial, either augmenting what we do or replacements for certain aspects of what we do, particularly earlier in the process, before we get to GLP trials. If the clients are embracing them and validating them and the regulatory agencies are accepting them, or if it's earlier on before the stuff is regulated, but it's answering some question that will either save time or preempt them continuing to develop the drug, or it's before you go into animals, I do think that this stuff will have a role. I can't tell you how many years we've been engaging with those companies and how many interesting technologies we've seen that look really powerful, and it's really sexy cutting-edge science, but just practical application, some of that's limited. We're going to stay close to it. We're going to place some bets. We certainly will do some M&A in areas where we think it's augmentative or even some replacement for some of the early work. The extent to which those technologies actually speed up the process of getting our clients answers on how the drug is likely to do in preclinical trials, those will obviously be very important technologies. If you go back to the earlier question, certainly AI and machine learning will have a role in all of this as well, in addition to the 3D technology. Watching it carefully, placing some bets, certainly open to it. The extent to which these technologies work, we do want to participate. I got to follow into that one. The last few years, all these companies, these technology-enabled drug development companies have been coming out and basically saying, "We're going to have better molecules, generate less tox issues." Have you actually seen that in the number of molecules you're looking at? Has the quality of the pipeline gotten better over the last few years as some of these newer technologies have been implemented there? It's a question like how successful are these companies at really pushing development? Yeah. I don't think we're seeing a fundamental difference yet in the quality of them. I still think the sheer number of drugs that get to market or perhaps putting it the other way, not getting to market, is still quite haphazard. I don't think we have fundamental understanding yet that's going to accelerate the numbers of drugs that get to market or improve the hit rate in preclinical. What we do have is a larger number of molecules to work on and a whole bunch of new modalities. I guess if you look at the fact that there were more drugs approved last year than the prior year, that is beneficial. I think it was 53 drugs or 57 drugs, and that should be 157 drugs or 257 drugs. It still seems like we all can do a better job, both understanding these drugs earlier on and either killing them more, investing more aggressively in them. I don't think there's a discernible difference yet. Great. Thank you very much. Sure. Hi, the next question is from Erin Wright at Credit Suisse. Great. Thanks for taking my questions. First, you mentioned that it was the 50% pull-through from discovery. Will that accelerate going forward, in your view? Do you anticipate a meaningful paradigm shift on the back of COVID-related dynamics on that front? Well, we hope it continues. There's no reason it won't. We certainly hope it accelerates. A little of that, it's impossible to quantify. Definitely some of that was COVID-19 related, work that would have been done internally, let's say, for bigger pharma or biotech companies or with one of our competitors that was unable, for whatever reason, to perform. It did instigate more outsourcing, and we're pleased with that, and I do think that with those clients, that will continue, and that's probably a permanent shift. It's illogical, and I understand that I'm looking through the Charles River lens, but I'll say it anyway. It's illogical to us that a company with whom we did first-rate discovery work, late-stage discovery work with a molecule that looked promising, that was progressing to the point where we knew potentially more than the client about the molecule, but certainly as much, that they would then go somewhere else. It's illogical. There will always be reasons. We're full. They think we're too expensive, that they could be a big pharma company who wants to do it themselves. I would say on the margin, because everybody's interested in speed to market, that there's a logical rationale for them to continue to work with us. It's a clean handoff. Our discovery folks can educate the safety folks, and I think it's a better outcome. I think that's the reason why you've seen so much consolidation in the pre-clinical space, a lot of which we have done, and we will have competitors that will do the same thing. I think that that number should continue to increase. I think that the pull-through should continue to be powerful. Clients that used to use us only for safety are now using us for discovery and never even thought about using an external resource for discovery. Certainly smaller companies that have no internal capability for which we do successful discovery work, increasingly, they'll stay with us. Just one quick follow-up on the DSA segment as well. That does seem to be a big component of the margin expansion story over the next few years as well. How much of that is latent synergy opportunity associated with some of the larger transactions over the past several years versus some underlying operational efficiency initiatives across that segment? It may be too hard to parse out at this point post some of the larger transactions. You can't break it out. I do think that overall scale, the margins have improved materially in the discovery space, for instance, and that's because we finally have reached significant scale and scientific excellence and geographic dispersion that we're really getting a lot of uptake from clients now, and the methodology from efficiency point of view has improved. We've also bought some things where the price points and the margins are higher, so that's been terrific. Safety just continues to be a, for years now, a quarterly march towards driving efficiency. The digitization of the safety business will drive more efficiency, better margins. We are getting better pricing and better mix component as well. And of course, to your question, we have a lot of large relationships with a lot of clients, and I think sometimes the sheer scale of that is beneficial from a margin point of view. DSA, as David pointed out earlier, is definitely going to be the principal area to drive a lot of that 250 basis points improvement that we talked about over the next three years. Yeah. It's worth adding that historically, discovery was a drag on the margin to DSA, but it's really matured. It's no longer the drag. We're heating up on all bases across discovery and safety segment. Okay, great. Thank you. Great. We have time for one or two more questions in this portion of the Q&A. Hi. Up next is Dan Brennan with UBS. Go ahead, Dan. Great. Thanks. Thanks, guys. Thanks for hosting the day. I want to get the first question on cell and gene therapy. Obviously, we're going to hear a lot more about it in the coming presentation. I'm just wondering, Jim, just how would you characterize the positioning today of Cognate and Vigene within their respective markets, share gainers? Just does anything help us on that front? Again, we're going to learn more than B related to cell and gene therapy. What are the biggest areas that we should be thinking about as we move forward over the next three years within your business planning where we could see you make incremental investments, either organically or inorganically? I would say that Cognate is already a meaningful player in the cell therapy manufacturing space. It's pretty early days for cell therapy manufacturing, and I think there is enormous demand, significant opportunity, and while some clients are obviously bringing it in-house, I don't think that's something they want to do. I don't think they want to undertake the expense or the loss of time in doing that. I think we're going to see fabulous demand both on the pure manufacturing side and also providing the tools, the plasmid DNA and viral vectors. We will and will continue to invest aggressively in capacity. We have to stay ahead of that. Cognate's work is principally in the clinical trial domain right now. Obviously, some of those clients will get to commercialization, even though there's only nine drugs that have been approved so far. We're going to see more every year. On the M&A side, we would be pleased and are interested in more of the same at a minimum. More capacity for manufacturing, more product capability, more geographic expansion as well. I do think being close to the clients, we've seen this in safety and discovery. We see it in all of our businesses. All things being equal, it is always a preference. You have to think about our cell and gene therapy assets, specifically ones we've bought over the last 18 months, in context with the rest of the Charles River portfolio. While there are a couple of companies that are probably the same size or larger on the cell therapy manufacturing space, and definitely some that are larger in plasmid manufacturing. If you take the whole portfolio, the RMS capability, the safety and discovery capabilities and biologics, if you roll that up to what we told you is more than 10% of our sales, we have a very large footprint already. All of those parts and pieces will be growing disproportionately fast. If we did nothing further from an M&A point of view, we'll have a very large business in five years that's cell and gene therapy driven. We intend to do some more M&A there because I do think the opportunity to grab more share of this business with clients early on, particularly ones that are thinking about what, if anything, they want to do internally is critically important. I've never quite seen a modality that's sort of come on the scene this quickly with this much investment, with this many molecules, with this much opportunity. As expansive as this portfolio can be, it's going to be necessarily beneficial to support the client base. Great. Maybe as a follow-up, just staying in cell and gene therapy. The manufacturing margin guidance remaining consistent. I know you commented it's due to maybe the lower margins of the deals. Can you just give us a sense of just, I should have looked this up, where are those margins today, and what's assumed in this three-year planning process, and where do you think they can eventually get to given the growth that you're expecting? Why don't you try that? Yeah. Some of that we've declared. We said that the Cognate's margin is a drag on manufacturing. That's why you're seeing it posting mid-30s, when actually without Cognate, we're doing better than mid-30s. It is a drag. The margins are not that dissimilar to total Charles River because you're not seeing a bit of an impact to the bottom line, partly because it's relatively small today. Of course, with the growth rates that we expect to see from Cognate, that will become a more meaningful part, not only of manufacturing, but for Charles River as a whole. Other than that, we haven't broken out the margins other than that segment I've just given you, nor have we declared what sort of margins we expected to get to. Partly because we've only owned the company for a few months anyway, and we don't normally call out where we think some of the margins will go to on companies like that. Overall, yeah, it's a drag on the manufacturing margins. Mid-30s still is a healthy margin for that segment, and we would expect the margins in Cognate et cetera to improve as we get that revenue and of course the fixed cost side optimized as I said earlier in the call. Great. Just a really quick one. On Q2, you basically said that the results would be ahead of what your guidance was. You didn't give me frame of reference in terms of the magnitude of that upside right now in terms of whether the organic growth and/or the earnings? No, we've just tried to hint that if you take the guidance that we have given, there will be a modest increase against that for Q2. We haven't given more color than that. What we're trying to do is signal that the full year will be at the top end or maybe even better of the guidance ranges that we've given. Obviously, we'll provide more color when we have another two months' worth of data when we come to speak to you next at the earnings call about the full year. At this point, we wanted to signal that we're likely to be at least at the top end of the full-year guidance. We didn't want to surprise you with that in literally August. Great. Thank you. The final question for this session will come from Patrick Donnelly at Citi Research. Go ahead, Patrick. Great. Thanks for fitting me in, guys. Jim, maybe just on RMS, that bump to mid to high single-digit growth, can you just talk about how much of that is share gains you saw during the pandemic that are going to prove durable, areas like China being obviously higher growth? Just what you're seeing in that market. Obviously, it was a lower growth market for you guys for a little while. Nice to see this uptick. We just want to better understand that piece. We're really thrilled with the renaissance of our RMS business. We have escalating growth rates both in the top and bottom line. We have some significant parts of that business where we are for sure taking share, and there is a fair amount of de novo business that we're seeing in our genetically engineered models business for sure. We're seeing it in our insourcing solutions business for sure. We've got our small CRADL business, a high-growth, high-margin business in South San Francisco and Cambridge, Mass., which not only is a nice business in and of itself, but is a feeder to other parts of RMS and other parts of the company. China is a big growth area for us. As I said earlier, we have about 35% share and should have a significantly higher share going forward, just given the competitive dynamics, the strength of our franchise there, and our continued investments. We continue to get price and a really interesting mix in our sort of legacy lower growth geographies, and that will continue. Nobody produces their own animals, and be getting increasingly more sophisticated animal models with higher ASPs. Definitely taking share in China, GEMS, our IS business for sure. We also have obviously our cell product companies, which are extremely high growth, limited competitive dynamics, and without those companies, there is no cell therapy work, period. Great growth dynamics as well. You roll that up, we're quite confident that we'll meet these new growth levels to this business, which we haven't seen in, I don't even know how long, certainly in over a decade. We should have, as we said, operating margins which are in the very high 20s. Okay. Just a quick follow-up. You touched on the synergies between discovery and safety assessment a couple of questions ago. Can you just expand a bit more on the traction you're seeing between there? Any metrics you look at internally in terms of clients that previously would not look at you, they're now kind of using you due to the expanded capabilities you have? It's all about these several things. If you look at discovery, it's been about what clients think discovery is. The early knee-jerk reaction used to be, "Yeah, we do discovery. Why would we ever talk to you about it?" You get to explain what it is. You have years of building out the CNS franchise and the cancer franchise and all the other attributes that we have, large molecule and small molecule discovery. It has very similar dynamics to the growth trajectory of the safety assessment business, which is that it's about not wanting or having the ability or desire to spend the money to do it themselves, depending on companies like us, and comfortably depending on companies like us, even big clients who used to do it themselves. As we said for years, we just need to reach critical mass. We need to get the strategy out there in the marketplace. I think we've done that successfully. We will disproportionately add to our discovery franchise through M&A. That will continue to grow both in terms of scale, but also in terms of scientific distinction. We're going to be able to continue to gain and we'll work from there, particularly as the word continues to get out that the quality of our science is really first rate. Very excited about discovery. Great. Thank you. Sure. Great. Thank you. Now we will move on to Daniel Smith, who will provide an overview of cell and gene therapies. Thanks. Good morning. My name is Daniel Smith, and I'm an Executive Director for Charles River Laboratories for the Global Cell & Gene Therapy Portfolio. Cell and gene therapies are evolving as the next generation therapeutic modalities for different diseases. Today, I will provide an overview of the underpinning science and technology pertaining to cell and gene therapy. It has been over 30 years since scientists came up with the concept of cell and gene therapy, suggesting that for certain indications, these types of innovative therapies could provide long-lasting therapeutic effect and even potential cures to the affected patients. Cell and gene therapies are now starting to deliver on their potential in broad disease areas, including immunodeficiencies, monogenetic diseases, and immuno-oncology. As previously highlighted by Jim Foster, the cell and gene therapy market is growing at an exceptional rate, offering tremendous growth opportunities. We are, in fact, living in the golden age of biotechnology, standing at an inflection point in the development and commercialization of advanced innovative therapies, enabling us to address the most fundamental of human concerns, how to live longer, healthier lives free of disease. Underpinned by groundbreaking scientific innovations, cell and gene therapies are highly advanced biological products that are being developed for the treatment of chronic, rare, and genetic diseases. Cell and gene therapy products are classified as Advanced Therapy Medicinal Products, ATMPs. ATMPs include autologous and allogeneic cell-based therapies, gene therapies and in combination, genetically modified cell therapies such as the chimeric antigen receptor, CAR T-cell therapies, and CAR NK therapies. As with all medicines, ATMPs are subjected to stringent preclinical testing, then a range of clinical trials involving small groups of patients. Cell therapy is the delivery of live intact cells to a patient to eradicate or relieve the burden of disease. Starting cells are taken from either the patients themselves, autologous cell therapy, or healthy donors, allogeneic cell therapy to treat disease. At present, many cell therapies are based on the autologous approach. The landscape is moving towards the development of allogeneic cell therapy. On the left side of this slide is an example of an allogeneic cell therapy for type 1 diabetes. Here, stem cells are removed and isolated from a donor. The cells are matured into insulin-producing specialized cells outside of the body, then transplanted into a patient's pancreas to correct for the disease. Certain cell therapies may also involve genetically altering the cell. On the right of the slide is an example of an autologous genetically modified cell therapy for an oncology indication. Here, the patient's own T-cells are isolated from the blood. The T-cells are genetically engineered to detect and destroy tumor cells. Following expansion, the modified T-cells are infused back into the patient. This is the basis for immuno-oncology using CAR T-cell therapy. The basic premise for gene therapy is to modify, inactivate, or introduce new components to the genetic makeup of cells in order to alleviate a disease. By altering the DNA that is present in a cell, the protein or groups of proteins that are encoded by that DNA are also altered. Gene therapy may involve adding a wild-type copy of a gene augmentation. It may reduce the levels of a dysfunctional protein that may be causing a disease in gene suppression or altering a mutated gene to a wild-type gene editing. Gene therapy treatment may take place outside of the body, ex vivo, or inside the body, in vivo. To get the gene into the center of the cells, different types of delivery vectors can be used. This slide shows the different types of ATMPs that are commonly used for cell and gene therapy. All ATMPs are highly complex biological molecules or living cells produced through various multi-step manufacturing processes. For gene therapy, there are two main classes: those that use recombinant viruses, termed viral vectors, and those that use naked DNA or DNA complexes, non-viral methods. For cell therapy, many different types of cells can be utilized, isolated from patients, autologous or healthy donors, allogeneic. Certain cell therapies may involve genetically altering the cell. Let's take a closer look at the types of ATMP products and the overview of their production. First, there are the non-viral gene therapy products. These are typically circular pieces of DNA called plasmids that carry the gene of interest for the therapy. They are produced in bacterial hosts and purified to remove unwanted impurities. They can be delivered in naked form or in an encapsulated or complexed form. Second are the viral vector gene therapy products. Here, viruses have been modified to carry the gene of interest and not to cause disease when used in people. They can be made by transferring the instructions for their production into industrial cell lines using plasmids. These cells then act as factories making the viral vector. The viral vectors are purified to a level sufficient for use in patients. Currently, there are three FDA-approved viral vector gene therapies on the market. The clinical development pipeline is strong in all phases and contains both non-viral and viral vector-based gene therapy ATMPs. Now let's turn our attention to cell therapy, specifically autologous cell therapy, and the example here is a gene-modified cell therapy such as a CAR T-cell therapy. These products have complex healthcare, logistical, and manufacturing supply chains that all require coordination and control. Blood is collected from a patient at a clinical site and then transported to a manufacturing site. Here, the T cells are isolated and expanded. These T cells are then modified using a viral vector to introduce the chimeric antigen receptor gene into the T cell. The resulting CAR T cells are then purified and expanded. The product is then shipped back to the clinical site for infusion into the same patient. Currently, there are five approved FDA autologous gene-modified cell therapies, all of which are based around the CAR T-cell therapy approach. There is also one autologous cell therapy product. The clinical pipeline is very strong for these types of indications and modalities, with 70% of the products in development classified as gene-modified cell therapies. As we have seen, the first cell therapy ATMPs were developed as autologous products. However, from a manufacturing and marketing perspective, allogeneic products are preferable. They enable the manufacture of off-the-shelf products and reduce the bespoke manufacturing cost burden, as well as simplifying the supply chain. For allogeneic products, cells are collected from healthy donors. They are still transported to the manufacturing site where they are isolated and expanded. Here, once again, they can be genetically modified or matured into various cell types. These universal cells can then be purified, banked, and importantly stored until required for use. The allogeneic product can then be shipped to different clinical sites for use with different patients. As of today, there are no FDA-approved allogeneic cell therapies. However, there are 18 active phase III trials ongoing that use allogeneic cells. The allogeneic clinical development pipeline again is very strong for both pure play and gene-modified allogeneic cell therapies. Cell and gene therapy holds the promise to do what has never been done before: help people live longer, healthier lives free of disease. The journey from discovery through pre-clinical and clinical development for cell and gene therapies is fundamentally different and more complex than traditional medicines. There are multiple types of cell and gene therapies. Some ATMPs are individualized to a single patient, while others apply to a group. Some leverage human material and others do not. Some will be engineered ex vivo and others in vivo. Here at Charles River, with our innovative science and unique range of services from discovery, research, safety assessment, biologics testing, and now ATMP production, we can be an integral part of the cell and gene therapy revolution by being the partner of choice for our clients, helping turn their discoveries into therapeutic realities. Thank you for listening. Birgit Girschick will provide an overview of our vision in the cell and gene therapy space and also discuss our DSA segment. Thanks, Daniel. Good morning. My name is Birgit Girschick. I'm the Executive Vice President of Discovery, Safety and Biologic Solutions. Following Daniel's great summary of cell and gene therapy, please allow me to provide you with an overview of Charles River's portfolio supporting cell and gene therapy, including a deeper dive into the cell and gene therapy offering in our discovery and safety assessment business. Lastly, I will update you on our continuing efforts to accelerate our digital technologies. It is our vision to be the preferred partner for cell and gene therapy innovators worldwide. We are achieving this by providing convenient, fast, and high-quality support to our clients, utilizing our comprehensive portfolio and best-in-class science and technology. Just like for other modalities, we are on the forefront of collaborating with clients and partners to enable the next generation of cell and gene therapy. The advancements we're seeing in cell and gene therapy are fulfilling the promise of personalized medicine and is driving the accelerated growth of this modality compared to others. Cell and gene therapy is now approximately 11% of the pharmaceutical pipeline and growing rapidly with a CAGR of over 25%. About half of drug programs are being developed in the U.S., which provides us a strong and growing market for our services here. The challenges the industry is facing are the need for speed, safety, reliability, and cost management, driven by small patient numbers, inherently variable manufacturing processes, and technology challenges scaling up to larger batch sizes. Our business model provides critical elements in resolving our clients' challenges and helping them to succeed. Our integrated comprehensive portfolio is taking complexity out of our clients' drug development efforts and supply chain. Our reputation for deep science and regulatory compliance, as well as our broad geographic coverage, gives our clients the confidence that we are a reliable partner for their programs. We are working closely with our clients and partner relationships to further innovate and ultimately address inherent development challenges. Charles River supports clients in all areas of cell and gene therapy drug development, from product characterization and development all the way to manufacturing and release. Our DSA organization supports the non-clinical developments for IND approval. Our biologics cell supply and CDMO businesses are supporting process development, clinical to commercial manufacturing, and testing. Together, our businesses are providing our clients with an integrated solution, which is a powerful business model. Our cell and gene therapy strategy was built with the client and patient in mind. We have a team of highly experienced cell and gene therapy scientists, engineers, and regulatory professionals to guide and advise our clients. Our client journey continues to become easier to use. We are achieving this by utilizing digital technologies, scientific expertise, program management, and data analytics. Our portfolio speaks for itself and is unmatched in the industry, providing a one-stop shop for our clients. This certainly includes our market-leading cell therapy supply, which is cells, media, and reagents, as tools for process development and scale-up. We will continue to enhance our capabilities and global footprint organically through acquisition and partnerships to drive even greater efficiencies for our clients and differentiate us from our competition. Cell and gene therapy is an increasingly important modality in our DSA business. To remind you, Discovery and Safety Assessment is a leading non-clinical contract research organization holding the number one market position for early-stage CROs. We employ roughly 2,000 PhDs or equivalently educated scientists that support our clients in their efforts and provide them deep scientific expertise and a wide range of experiences. We believe that our safety assessment business maintains approximately 33% market share. We are proud that our scientists have supported and generated over 400 patents for our clients for new technologies and drugs and have generated 85 clinical candidates, all novel molecules since 1999. DSA is maintaining approximately 10% revenue growth, which is also our three-year target and outlook. The early-stage market has considerable market size, good market growth, and growing opportunities for increased outsourcing. We estimate the discovery market to be between $5 billion and $6 billion, with low double-digit growth and a still limited 25% outsourcing penetration, which we believe will accelerate over the next years, providing additional opportunities. Our discovery organization is a unique CRO, offering clients a single source for services across the discovery spectrum and integrates chemistry, in vitro, and in vivo capabilities. We are continuing to expand our capabilities through M&A, strategic partnerships, and internal investment. Just recently, we acquired Distributed Bio and Retrogenix. Distributed Bio is a next-generation antibody discovery company. This acquisition provides Charles River's premier large molecule discovery platform with an end-to-end solution for therapeutic antibody discovery and development. Distributed Bio's antibody libraries and integrated antibody optimization technologies expedite the antibody discovery process by several months. The library was designed with 76 billion fully human antibodies, and because of its diversity, can generate hundreds to thousands of unique hits against every one of the antigens in our pipeline. Retrogenix is an early-stage CRO providing specialized bioanalytical services utilizing its proprietary cell microarray technology. This technology is used for target receptor identification, off-target profiling, and target deconvolution on a wide range of novel therapeutics, including biologics, cell therapies, and small molecules. It's also a premier platform for off-target screening for preclinical safety assurance in CAR T-cell therapies, providing our clients with another solution for their complex development efforts. We estimate the outsource market for safety assessment to be between $4.5 billion-$5 billion, with mid-to-high single-digit growth and a more mature outsourcing penetration of 60%. Charles River is the global leader in both regulated and non-regulated safety assessment services with services such as efficacy studies, general tox, specialty tox, and bioanalytical services. The acquisitions in recent years of Citoxlab, MPI, and WIL have truly solidified our scientific capabilities and global scale and are providing us with an unmatched capability and capacity. I mentioned earlier that cell and gene therapy is an increasingly important modality for our DSA business. In 2020 alone, we have conducted over 900 cell and gene therapy studies, deepening our expertise in this field. We see meaningful growth potential with approximately two-thirds of cell and gene therapy R&D programs currently in the preclinical phase. Preclinical testing requirements vary by molecule. Gene therapies require complex specialty programs. Gene-modified cell therapies, for example, T-cell therapies, typically require non-clinical programs involving combo efficacy and safety studies. Regenerative medicine cell therapy programs vary by therapeutic area and can be quite complex. On this slide, we see the translational focused approach of our portfolio, as well as the pull-through of drug programs from early stage into our cell supply, biologics, and CDMO organization, which you will be introduced to by my colleagues later. We have and we will continue to provide even more value for our clients and at the same time driving revenue and OI improvement by strengthening the four pillars of our strategy. The first pillar is scientific expertise. We are investing organically through M&A and partnerships to obtain access to new technologies and expertise to further accelerate pathways to go or no-go decisions. The second pillar is our digital strategy that will allow us to provide enhanced data analytics and self-service options for our clients. I will talk about our digital efforts a little bit later. The third pillar is operational excellence. This has been a strong focus within Charles River for years and will continue to going forward. We're doubling down in this area to drive speed for our clients, as well as continued margin improvement. Last but not least remains our focus on our people, which are the cornerstone of our business and our success. We're hiring and developing the best talent in the industry. Before I hand over to my colleagues, I would like to touch on our digital technology efforts. We continue to build a best-in-class outsourcing experience through digitalization of data analytics, and enhancing self-service options for our clients, including real-time access to data. We are a data company, and the faster and better we can provide data, the more successful our clients will be, plus it drives competitiveness and efficiencies for us. Specific areas of emphasis are implementing and upgrading best-in-class technologies with highest priority on cybersecurity to provide us and our clients a secure and scalable infrastructure to work on. Our digital progress is accelerating rapidly as we continue to hire the best digital talent anywhere out there using agile methodologies and actively creating a culture of learning and problem-solving. We are creating scientific and operational efficiencies by leveraging our data for insights. We are also accelerating drug development by continuing to provide our clients with more effective and innovative means to engage and to reduce white space. It is our goal to reduce the drug development timeline by one year. Up next, Kerstin will discuss our Biologics Testing Solutions business. Thank you, Birgit. Hello. Good morning, everyone. My name is Kerstin Dolph, and I'm overseeing our Biologics Testing Solutions business. Really excited to be here today. We are a premier CRO testing provider, and there are a few things that I'm particularly proud of that I wanted to highlight for you today. The first one is that we have been seeing robust revenue growth exceeding 20% for the past several years, and this is mainly due to the exploding cell and gene therapy market. Over this past year, COVID vaccine testing has been another contributing factor. The addressable market matching our current testing portfolio is between $1.8 and $2 billion, and we are one of the leading CROs in the space. You have already heard a little bit of our recent acquisition of Cognate BioServices, and this is something that I'm personally really excited about. There are significant synergies with the biologics testing solutions business, and I will be highlighting these in more detail during my presentation. A very high-level summary of our testing services is that we're providing quality control and safety testing for biologics and biosimilars throughout the development process all the way through commercialization. I would categorize our businesses into four different areas. The first one is that we provide product and genetic characterization services to generate identity, purity, and potency data, and this work requires quite advanced analytical techniques depending on the nature of the protein that we're working with. A large piece of the biosafety and clearance testing is represented by viral clearance studies, and these studies are basically done to audit the manufacturing process itself and to make sure certain viruses or agents have been sufficiently inactivated or removed. Here we're testing the actual manufacturing process and not the product, and these virucide studies play an important role in establishing the safety of biological products. Bioactivity and potency testing is used to test for potency and efficacy of products, and this is often a requirement for regulatory submission. Lastly, we also provide direct manufacturing support with GMP-compliant master cell banking, cell line characterization, and cell bank testing. To give you some additional information here, a fully characterized master cell bank is the ultimate source material for the production of any recombinants, vaccines, and cell and gene therapy products. A big revenue driver for us is lot release testing, which is really spanning across multiple areas because the release testing is the final safety and consistency evaluation of a product. It requires very comprehensive testing across our entire service portfolio, and it really brings all of our service offerings nicely together. We are one of the few providers that can really accommodate all different aspects of release testing. In general, the market is very fragmented with a lot of small competitors in the field, and most of them are lacking the full testing capabilities. The top five biologics testing providers, so that includes Charles River, are representing approximately 40% of the total market. When we're looking at our market sector opportunity, we like to segregate the market sector into three different manufacturing phases. The first one is the early-stage development area, and we have a lot of coverage there, and we provide a lot of testing and service offerings. Then we have the clinical stage for the production of large clinical lots all the way through commercialization. The Cognate acquisition filled here a significant gap in our portfolio around the manufacturing and process development activity for cell and gene therapy products. The final phase is then the commercial manufacturing and the associated support services. Here we provide the lot release testing that we mentioned, validation services, and then Cognate, again, contributes here largely with large scale manufacturing capabilities. The current market size for biologics testing that aligns with our testing portfolio is between $1.8 billion-$2 billion. The number of biologics and biosimilars in the marketplace is growing, and this growth is expected to continue at a rapid pace. The main driver for the 20% + growth that we are seeing is the cell and gene therapy market. We don't anticipate this trend to slow down anytime soon. Cell and gene therapy drugs are generally referred to as new biologics. Viral vaccines, like these COVID vaccines, are also falling in this category. Cell and gene therapy drugs, in general, require more frequent drug release testing and a much quicker turnaround time. Those are really several new requirements that are currently shaping the testing market. For biosimilars and other innovative molecules, the more traditional biologics, we're seeing a slowing, but still continued solid growth. Right now, we're focused in Charles River, in every business unit, on the cell and gene therapy growth and how we best serve this market. Our current portfolio coverage within biologics testing is solid, and what I presented to you at the beginning during the introduction also applies to the cell and gene therapy market. We continue to bolster our development capabilities to onboard cell and gene therapy development platform assays. We continue to develop custom assays on a customer by customer basis, and we continue to fully support clients' clinical GMP development and product release. The unique cell and gene therapy requirements are mainly related to faster timelines and customized offerings that apply to the individual client products. We're always reviewing our instruments and our technology platforms to ensure we're serving our clients in the best possible way. Our current focus is primarily on rapid technologies and automation because that will continue to drive down our turnaround times even further. The cell and gene therapy market, in general, is very fast moving, so this will be an ongoing assessment, and there will always be tweaks that need to apply to our portfolio. As I previously mentioned to you, I'm very excited about welcoming the Cognate team to Charles River. Clients really appreciate our strong portfolio coverage within biologics testing, our global footprint, and the capacity for growth that we're offering. They're also looking at us as a very reliable partner with very competitive turnaround times. However, clients are looking to really reduce further the number of vendors they're doing business with to streamline the administrative efforts, like vendor audits. With Cognate, we've added a high quality manufacturing partner with a strong market reputation, and Cognate's capabilities to serve clients through clinical and commercial phases further progressed our journey to become really this end-to-end service provider for cell and gene therapy clients. Cognate's CDMO process development and manufacturing expertise will feed directly into the biologics GMP testing pipeline. Additionally, a harmonized testing and manufacturing approach represents a very attractive offering for our clients. They're just seeing more and more of the value in quality improvements in addition to scaling, because both really goes hand in hand. From a global footprint perspective, we have eight sites across four different countries. Four locations are in Europe and four in North America. We have ongoing capacity and capability expansions at all of these facilities in response to the strong market growth. The Pennsylvania expansion that took place a few years ago has been really instrumental in accommodating the increased demand that we're seeing. We're currently active in 45 countries across six continents, and we provide our services to about 1,000 clients worldwide. What is interesting is that a significant portion of the APAC release testing that we're providing is actually performed in Europe and North America due to the regulatory requirements around lot release testing. For release testing for cell and gene therapy products, they have to be performed at the final destination. There are no mutual recognition agreements in place at this point. That plays a big role when we are looking at our overall footprint strategy and next steps. To summarize our overall strategy and everything we talked about today, we need to serve our clients fast and further expand client connectivity, which is why we're continuing to invest in IT, which is very important. The more data we can make easily accessible for our clients, the faster and better the client journey is going to be. We will continue to provide best-in-class service and focus on customized solutions to effectively serve the cell and gene therapy market. Our scientific strength allows us to maintain a comprehensive cell and gene therapy portfolio, close any current or future gaps, and accommodate other new future novel therapies that are entering the market. Our focus remains on capacity. We will continue to drive expansions aggressively across the globe in response to the fast-growing cell and gene therapy market. We will also continue to concentrate on efficiencies and automation, resulting in increased speed, flexibility, and adaptability. Thank you all for your attention. Now we will share a short video of Cognate's capabilities, and then my colleague, Mike Austin, will provide an overview of our cell and gene therapy CDMO business. [Presentation] [Presentation] [Presentation] Hello, everyone. Mike Austin here. I'm the Vice President in Cell and Gene Therapy CDMO for Cognate, Charles River. I joined the Charles River team recently with the acquisition of the Cognate BioServices organization. It's my pleasure. I'd like to provide an overview to our cell and gene therapy service provision at Cognate, Charles River Laboratories. This overview will be helped by some virtual orientations through the accompanying video and also some spatial examples of our capabilities and infrastructure throughout this slide presentation. I would like to emphasize that given the planned acquisition of Vigene by Charles River Laboratories, any reference in this presentation to Vigene will only be relevant when the transaction closes. Firstly, some positioning. Charles River's acquisition of Cognate BioServices significantly accelerates the company's global reach in cell and gene therapy. The Charles River Laboratories and Cognate integration makes us a leading premier scientific partner for cell and gene therapy development, testing, and manufacturing. It certainly puts us in a leading position in this space, with annual revenue anticipated around $140 million for this year, with planned aggressive growth beyond, clearly represented by the strong CAGR. We are very proud of the capability we've built in Cognate BioServices, and together with Charles River's existing strengths is our ambition to maximize our potential in the cell and gene therapy area. Primarily, we're focused on enabling more therapies and touching the lives of more and more patients. This is a strong growing space in which we see our integrating offerings addressing access to approaching 3,000 programs in the CDMO market. To deliver this, Cognate BioServices and Charles River Laboratories have significant existing global reach within multiple facilities across the U.S., U.K., and European Union. Calling out the enterprise fit here provides for a strongly integrated platform, serving the client throughout their development and commercialization journey. Our focus in supporting this growth is through effective utilization of existing assets and driving planned expansions at each of our sites. Cognate BioServices, what does our business look like? Firstly, we are a key CDMO partner for clients that need comprehensive and integrated cell and gene therapy development and manufacturing solutions. Our primary expertise is in GMP cell therapy manufacturing, as you can see, contributing about 50% by revenue. In addition, we have expertise in the production of plasmid DNA and viral vectors, both contributing equally by revenue currently at around 20%. The remainder of our business is in other value-adding components which serve and complement the cell therapy space. Our strength in this space is supported by subject expertise, experience, and a strong and developing track record. This experience extends to the production of a variety of cell types and technologies, and also platforms commonly used in cellular immunotherapy, immuno-oncology, regenerative medicines, and advanced cell therapies. The patient centricity of our approach extends beyond the highly advanced technologies, beyond the state-of-the-art facilities and future-proofed equipment. As importantly, we execute our purpose through an organization of talented staff across our four current locations. This business is a knowledge-based proposition, and we take care to invest and develop the tacit knowledge of all in our organization. Moving on. From this slide here, you can see obviously, we are a global proposition, and our capabilities are represented on the geography in this slide. We have our cell therapy manufacturing in Memphis, Tennessee, and a supporting process development analytical capability in Hanover, Maryland in the U.S. Our U.K. site in Keele and our Matfors site in Sweden both provide plasmid DNA manufacturing capability. In addition, the Keele site provides viral vector manufacturing capability also. We are extremely pleased with the model we have developed. It is an effective and integrated network, and essential to this is an infrastructure of logistics, quality, regulatory, and licensure and supporting services. Together, it is a great team of people. At this stage, it is also important to call out Vigene's viral vector and plasmid DNA manufacturing operations in Rockville, Maryland, United States. This is a very important slide. It really captures the whole Cognate/Charles River proposition in terms of process, in terms of infrastructure, geography, and ultimately, integration of our technology and services. To help position this slide, let me walk you through how our individual offerings contribute to an integrated global gene modified cell therapy solution. Ultimately, the picture you're looking at represents a very structured and integrated cycle. It begins with our most important client, the patient, and as importantly, it ends with the patient. A compelling currency in this slide as you look at it is time and process integration. Focusing on our Cognate Memphis cell therapy facility, it's strategically sited to benefit from its proximity to the FedEx air freight hub at the adjacent airport. As you orientate on this site, moving from bottom left on this diagram and progressing up and to the right. Cells are collected from the patient and fast-tracked to the Memphis facility. Our existing capabilities and expertise in our HemaCare and Cellero companies will ultimately provide a further opportunity to complement and enhance this process in the future. Cells are received at site, and those of interest are selected and enriched before being modified. At this stage, we will then utilize the contribution from our Keele and Matfors sites. Following the middle bottom arrow from the United Kingdom and European sites up, you can see how plasmid DNA and viral vectors will serve and support the Memphis process in the cell modification stage. The modified cells are then expanded and proliferated, harvested, formulated, frozen, and again, are fast-tracked back to the patient where the cell therapy is thawed and administered. Complementing to supporting the process at Memphis, we can call on Charles River expertise and strength in analytics testing, thus keeping it in-house, assuring reliability of results, and adding to our ability to provide cell therapy solutions in an agile and dependable way. Important to recognize that the process along the top is determined by our clients. We execute against the client process and do so in dedicated manufacturing suites on site. As stated before, Vigene will complement this channel with U.S.-based supplied plasmid DNA and viral vectors. I provide some further detail on each of our cell and gene therapy locations and capabilities. As previously described, our cell therapy facilities are in Memphis, Tennessee. We also have small facility in Hanover, Maryland, which provides process development, support, and analytical services. Memphis has an established and proven track record achieved over a decade. There are currently 22 suites, which are discrete. They support GMP operations, all with adherence to U.S. and EU standards. As mentioned earlier, we're commencing a significant investment and expansion of the Memphis site with an additional build of a further nine suites. Turning our attention to our gene therapy offerings, we have two sites, one in Keele, United Kingdom, and another in Matfors, Sweden. Keele and Matfors each have 20 years experience in manufacturing and have seen significant expansion and capability investment in recent years. Both sites produce HQ plasmid DNA at the 15-liter scale and also GMP DNA at the 50-liter commercial scale. In addition, Keele has competency to deliver viral vector manufacturing with a supporting process development capability also. In our Matfors site, we are currently planning to expand our offering to establish an increased commercial scale at 300 liters for GMP. Matfors also has other offerings in addition to DNA. It has capability in the microbiota space and also in technical protein manufacturing. As I mentioned earlier, Vigene provides U.S.-based gene therapy capabilities from their facility in Rockville, Maryland. The site has over 100,000 sq ft of purpose-built facility encompassing 15 GMP cleanroom suites. Important to note, Vigene has established expertise in gene therapy for over a decade, and their primary capabilities are in viral vectors for gene delivery, AAV, adenovirus, lentivirus, and retrovirus. They have also process development and GMP production competency. Vigene also produces high quality and cGMP plasmid DNA. Turning our focus on cell therapy capabilities in more detail, Cognate has extensive expertise in the development and manufacturing of complex cell therapy solutions. This expertise and experience has been developed over 10 years. There's an established record in supporting clients from clinical phase through to commercial-ready GMP production across multiple cell types. Cell therapies are the ultimate expression of personalized medicine, and the process is typically customized to the client's requirements. The Memphis facility is designed to reflect this and represents a state-of-the-art solution to provide for flexible and highly controlled production suites. These suites will accommodate all client requirements for a variety of equipment and process solutions. Small batches and small scales are relevant to the process, spanning less than one liter volume in shake flasks going up to larger 200-liter bioreactor systems, and you will see some of the examples of these in photos later. The Memphis facility is about to start significant further investment and expansion to provide flexibility to accommodate a variety of large programs, both for allogeneic programs involving multiple patients and autologous programs, which are programs bespoke to the individual patient. Focusing on our Cognate gene therapy capabilities in more detail, as you saw on the previous slide, at Keele and Matfors, we have established gene therapy capability, supporting clients with solutions from preclinical to commercial-ready scale. Our core competency is plasmid DNA manufacturing and integrated capability across the two sites facilitates the value chain from small scale preclinical at five liters through to commercial capability at 50-liter scale. As previously stated, we are currently looking to increase our commercial scale to 300 liters in this space. In addition to plasmid DNA at Keele, we have experience in producing viral vectors. In Matfors, as I said earlier, we have microbiota and technical protein capability. Similar to the cell therapy operations, the gene therapy sites have extensive analytics, quality assurance, and quality control capability to underwrite our confidence in execution. Some visuals. On the left, you'll see a typical controlled suite at our Memphis location, and you'll see it in dynamic operations. The nature of attention to detail and process and environmental control is evident in this photograph as our highly trained staff process cell material in the process scheme described earlier. Turning our attention to the right, you'll see a control suite at our Keele facility in the U.K., and once again, highly trained and competent staff executing a process run in viral vector production at the 200-liter bioreactor scale. I think for both it provides a good insight into the smaller scales relevant to the personalized medicine proposition. Our capital expenditure program is influenced accordingly. Typically, for those of you who may have seen large sort of multi-thousand bioreactor setups in something like the monoclonal space, this is different from that and represents the nature of our business at the bespoke patient level. In summary, I hope this presentation articulates and reinforces the strategic fit of Charles River Laboratories and Cognate BioServices. Cognate is highly complementary to Charles River's existing non-clinical capabilities and established expertise. Our intention is to continue to further our capabilities and capacity to support strong client demand. This strategic fit enables clients to be able to seamlessly conduct analytical testing, process development, and manufacturing for advanced modalities with Cognate/Charles River as a single site of scientific partner. With time as an important currency in this space, it allows clients to achieve their goals of driving greater efficiency and accelerating speed to market and speed to patients. As emphasized in a previous slide, cellular products from HemaCare and Cellero, both of which are Charles River companies, can be future starting points for our clients' cell therapy programs. Thank you all for your attention, and I look forward to questions in the panel session later in the agenda. With that, I will conclude and hand over to Colin. Thank you, Mike. I'm Colin Dunn, and I'm Senior Corporate Vice President for Research Models and Services. We participate in a market sector that is worth $1.7 billion. We've been working with research models and supplying them for over seven decades. One out of two small models sold in the Western markets is a Charles River model. These models are used from very early stage research through to more sophisticated studies in safety assessment and even manufacturing. In 2020, we acquired HemaCare and Cellero and now participate in cell supply, and our cell supply has been involved in all of the FDA-approved cell therapies currently on the market. Our position as a global leader in production and breeding of research models is thanks to our significant scope of strains and species, and even substrains that we supply on a global basis. We have expertise in production and biosecurity, which ensures we supply animals of the highest health standard, and our geographic locations close to bio hubs and academic centers ensure we've got excellent availability. Our global footprint includes facilities in China. This remains as a very high-growth market. During the pandemic, our services business continued to flourish and expand. The Genetically Engineered Models and Services business allows research to access their specialized or highly customized research-ready cohorts on a regular basis and even to be supplied to their collaborators. The diagnostic services ensures that our internal quality control is of the highest stringencies. Likewise, this can be applied for our clients as well. In the insourcing solutions business, we provide our management expertise to clients in their facilities. More recently, we have developed turnkey vivarium in key biological hubs. In 2020, as I mentioned, we acquired the HemaCare and Cellero businesses, and like the research model business, these cell products are supplied at a very early stage of research all the way through to development and manufacturing phases. Cell and gene therapy is a theme that spans the research models portfolio. The humanized immunodeficient research models have been used for many years in immuno-oncology, and more recently, they have been applied for CAR T therapies and other complex modalities. Our turnkey facilities in CRADL, Charles River Accelerator and Development Lab, present in Cambridge, Massachusetts, and San Francisco are key to offering our biotech clients, both large and small, as well as new startups, access to vivarium space that they can rely on. It's interesting that our key clients in smaller biotech for cell supply business also are occupants of our CRADL facilities. We also see in our CRADL facilities clients who make very good use of our GEMS business. This illustrates the connection between cell supply, biotech, and the highly specialized and customized models. Our investment in CRADL continues to expand in the key biotech hubs, and we see it also expanding into new geographies in the very near future. As I mentioned, in 2020, we acquired HemaCare and Cellero. This has allowed us to support advancing discoveries across the cell therapy continuing by providing the highest quality human-derived biological materials. We have been able to expand to supply biological materials from both healthy donors and from patients, and to be able to provide these in a form that is both for research use only and also for GMP. This market is expanding very rapidly. There is expected to be a 30% CAGR over the next few years, and over the course of 10 years, this will expand to a value of about $2 billion. Our capabilities with both HemaCare and Cellero are very broad. First of all, we are able to ensure the supply of cells for both autologous and allogeneic therapies. We focus on the ability to be able to provide a highly customized product, and that this product is able to be available both in bulk cells and very highly refined cell isolates. This represents overall a very comprehensive solution so that there is one scientific partner able to provide across the spectrum of requirements. In the cell supply business, we're providing cells into cell therapy, where there's about 2,000 cell therapy programs currently underway. About 2/3s of these are preclinical. All of these programs will require cells, and depending whether it's autologous or allogeneic, the average spend can be between $1 million and $3.5 million per program. We believe that we're able to address about 3/4s of all the total programs that are running. With the acquisition of Cellero, it allowed us to have donor rooms in each of the corners of the U.S. We were able to supply clients from coast to coast and assure a strong network of supply and assure the logistics. With Cellero, it enabled us to supply product from human donors and further refinements to the type of cell isolates that we were able to provide. Donor recruitment and management is critical to ensuring we have a healthy supply of donors, and the fact that they're recallable over a period of months or even years is very important to our clients who need the consistency in the supply over a long period of time. We screen our donors on each occasion they donate, and our experience in apheresis is unparalleled in the industry. We now have experience of over 300,000 collections, so this means that our apheresis process is highly optimized and very well validated. Our process for in-house processing is fully vertically integrated, meaning that we can collect cells, isolate, and cryopreserve all in the one day. This is very important for quality, so the cryopreserved product reflects fresh cells in terms of the cell function and viability, and you then have the convenience of a cryopreserved product, and it takes away a certain risk associated with shipping fresh cells. The cell supply process also benefits from our internal supply chain, so that our product release and testing relies on colleagues in biologics and microbial solutions, so that this means that all of the steps are seamless to the client. We're expanding this further so that we have an option for GMP long storage offering. The combined cell supply, along with our manufacturing solutions, allows an end-to-end solution going all the way from cells through to Cognate as a CDMO. We believe cell therapy developers are able to rely and trust in us as one scientific partner able to deal with this end-to-end process. This is very important so that they can see that we are de-risking this complex process and ensuring that we are bringing a very compelling value proposition. In summary, with the Research Models and Services growth drivers, we continue to expand in China. We are expanding our footprint in the Biohub with CRADL. We're developing numerous strategic relationships for our GEMS business. We're still very focused on supporting our clients in academia and biotech with the Research Models and Services that they need, we're now very focused on the client experience and journey and picking up on our benefits and experiences with the digital enterprise. As I've detailed, we now also have the cell supply business, we're able to reach clients with product in both research use only and GMP quality, supplied from healthy donors and also patients. Thank you for listening. I can now hand over to Julie Frearson, who will discuss our technology partnerships. Hello, everyone. Thank you very much, Colin. I'm going to spend the next 10 minutes giving you an update on our technology partnership strategy. Jim has mentioned this in the earlier session. It's an endeavor to allow Charles River to future-proof its portfolio by reaching out into the external ecosystem and doing a series of build-to-buy partnerships around cutting-edge technology. This partnership strategy has been running now for three years. It's resulted in a portfolio of 12 partnerships to date, nine of which have a privileged position for acquisition by Charles River in the future. We've also managed to achieve our first acquisition from this portfolio in Distributed Bio. We've invested about $40 million to date, the current visible pipeline provides us with an opportunity to invest at least a further $40 million in the very near future. As this has developed, we anticipate a steady state portfolio of about 15 - 20 active partnerships, and you can see from the pie charts that they are already supporting all of the business units inside Charles River with a particular enrichment in discovery, which reflects the high science need of that business. Additionally, you can see that key strategic imperatives of Charles River in terms of digital and cell and gene therapy advancements are also very well catered for in the ongoing portfolio. Here is a slide which just sort of gives you, in one place, a list of all the partnerships that are signed to date. You can see they cover all business units. They cover all technology types from life science assays, through to software plays, through to devices, and they're geographically spread. They cover Europe, North America, and China. These partnerships have been organized into three sub-portfolios. All of those portfolios are a result of direct client and market drivers that we experience in our day-to-day business. The advanced modalities cell and gene therapy sub-portfolio has two signed partnerships and many more in planning phase. This strategy is driven primarily by the fact that our clients are increasingly drugging disease using a variety of modalities, with particular emphasis on the recent growth in cell and gene therapy. Our next-gen biology sub-portfolio has a mix of existing partnerships and planned partnerships. This is all driven by our clients' need to understand how drugs will behave in human systems as early as possible in their development, and is also a reflection of the types of challenging biology that we're being faced with as a high-quality CRO. We often have to be able to use technologies that unlock these difficult to drug targets. The third sub-portfolio is already very well established with a number of live partnerships as digital AI and informatics. This is driven primarily by the fact that our clients are increasingly themselves using data and AI and machine learning to drive forth their science, their decisions, and they have an absolute expectation that these tools and technologies will transform the clock speed of discovery and development. In doing so, they expect our clock speed to be transformed so we can support them effectively. Through these partnerships and other initiatives in Charles River, we hope to digitally transform our core portfolio, drive efficiencies, increase our competitive differentiation, and most importantly for our clients, reach patients sooner with the candidate drugs that they're developing. I'm now going to take you through some exemplar partnerships in each of these sub-portfolios. The first one is advanced modalities cell and gene therapy. Already in discovery, we're using antibody fragments discovered from the Distributed Bio library to help our clients direct their cell therapies, including CAR T-cells and CAR NKs. In fact, nearly one-third of DBio's discovery programs that are currently running are actually for cell and gene therapy applications. In our cell supply business, we're anticipating a partnership with a microfluidics platform that will help us dramatically standardize the processing of donor cell materials, enabling greater long-term viability for those cells for their applications in process development and allogeneic cell therapy. In our biologics testing business, we have done a partnership with a company in China called JADE Biomedical. We are putting together our GMP and GLP biologic testing expertise with their localized knowledge, such that we can together become a global partner for advanced modalities in the testing arena. In the next-generation biology sub-portfolio, we have a number of mature partnerships. bit.bio is a stem cell platform company which allows us to produce authentic human cells at scale. We're using that primarily for disease modeling at the moment. They are also applying this technology to the future of allogeneic cell therapy. Cypre is a bioprinted 3D platform, which allows us to replicate the tumor microenvironment in the laboratory with a high degree of accuracy, and therefore allows our clients to have access to a system that will test their compounds in early immuno-oncology models. Kibur Medical is a microdevice platform company. This is allowing us to dramatically change how we do in vivo studies. With this device, you can test up to 15 compounds in a single animal. You can do combination studies, which is very important in oncology. Additionally, not only can you monitor the size of a tumor in an in vivo model, but with this device, we can track complex biomarker changes in the tumor tissue around the device. Last but not least, we're embarking on a partnership with a cryo-EM platform company. This is a technology which is rapidly emerging and opening up the opportunity to do structure-based design for small molecule drugs against targets that previously we were unable to achieve. That's because this particular platform allows us to look into the intimate structure of a protein, even if it's large protein complexes and complex membrane proteins. This is about to revolutionize the breadth of difficult targets that we can address through small molecule means. Digital AI and informatics, we have a number of live partnerships in this space and a number anticipated as well. We've been working with Fios Genomics for just over a year. They have been doing large-scale data, multi-dimensional analysis on both discovery and safety data for our clients and are growing very nicely since the partnership started. The Deciphex partnership with Charles River is considered to be truly transformational. It's changing how we do preclinical pathology, introducing speed and unheard-of efficiencies in how our pathologists review their data. The microscope is being taken out of the process, and all data is captured in digital images. There are seamless digital workflows, and with Deciphex, we are developing AI-powered tools that will really help the pathologists drill into those images that have annotation or diagnostic-worthy information in them. I'm also really pleased to say that we are party to, along with a large pharma client, the industry's first end-to-end, fully digital pathology assessment of a GLP compliance study. This will be published in the next few days, and there are several other large pharma clients quickly following suit in use and adoption of this platform. Another area where AI and machine learning is transforming how we do drug discovery is in small molecule drug discovery. We have two partnerships which are allowing us to interrogate much larger areas of chemical space than we've ever done before, as we find hits against new targets. Another partnership which allows us to use predictive models to optimize multiple small molecule parameters at once, thereby dramatically changing the cycle time as we develop small molecules towards their end target product profiles. It's becoming commonplace now in the industry news to see examples of how the use of AI in small molecule drug discovery is taking multiple years out of the process to the clinic. I hope I've given you a reasonable insight into how our partnership strategy has evolved, the types of technologies we're engaging in. We really do believe that this partnership strategy will provide a differentiated, high-growth, and market-tested set of acquisition targets over the next five years for Charles River. It's helping our clients in real-time by providing access to cutting-edge technologies with the assurance that they have been vetted by Charles River. This strategy will continue to support all business units with special emphasis on the key strategic themes of digital and cell and gene therapy discovery, development, and manufacturing. Thanks very much for your time and attention. We'll now move into the Q&A session. Thank you. Great. Thank you, Julie. We'll now begin the Q&A. Hi, John Kreger from William Blair. Good to see you again, John. Hey, thanks. I just have one question. I think it's probably best for David. The big moves that you guys have made into cell and gene therapy, very helpful deep dive into that, by the way. It seems like a lot of that's going to be more capital intensive than your sort of legacy businesses. Is that correct? How do you think about that? I think some of the other CMOs have CapEx burdens as much as 15% or 20% of revenue compared to your 7%, give or take. Should we think about your CapEx needs needing to sort of shift upward as this becomes a bigger part of your portfolio? Actually, in my pre-prepared remarks, we did say that the capital would move up to about 7% of revenue, which is a little higher than where we are currently or have been in the last couple of years. That said, even on the video that we've called out today, we were trying to give you a flavor that Cognate is not the same type of CDMO business as other CDMO businesses in terms of capital needs. It is less intense. It is more personalized. It is talking about using 1 liter, 10-liter type bags, plastic containers, and so on. It's not the heavy stainless steel type CDMO business that we're all familiar with. There's quite a marked difference between what we have acquired in the cell and gene therapy space in terms of CDMO and your standard CDMO businesses. That said, yes, we are expecting to see a step-up in capital, but it's more to do with some fantastic growth rates That the recently acquired companies have. Obviously, if they're growing at 25%-30%, we need to fuel that growth. It's less about the CDMO angle that you would traditionally expect. Great. Thank you. Hey, maybe a follow-up to John's question. I'm curious how you think about a distributed model for cell and gene therapy. There are a number of companies, Lonza, Berkeley Lights, developing onsite cell and gene therapy systems to go in hospitals. How do you think about that market over time evolving into a more distributed model? Birgit, you're on mute. Typical. Sorry for that. Tycho, thanks for the question. The model that we're looking at right now is to have our cell therapy facility in the most appropriate and most efficient location for shipments. What we do, we are in Memphis, Tennessee, where we have FedEx. That was a strategically located facility. The model would be that we make our product there, in many cases, the client or maybe at some point ourselves, could have another facility somewhere where the patients are. That's a typical model, that there's a satellite location on the East Coast and the West Coast. Generally, the clients will have that themselves. We certainly would be working with the client on making sure that their short expiration times of the product is taken care of. Okay. Was that answer? It does, yeah. Then a follow-up on the Distributed Bio business. I'm just curious if you can talk about the economics for that segment. We've seen some companies like Twist try to get at the milestone and backend royalties for antibody discovery and development. Is that something that you have any discussions with clients around, or is it really just fee for service? You can take that, Julie. Yeah. The model that Distributed Bio has been using to date definitely is a mix of fee for service and downstream milestone opportunities. We still consider that pretty market for antibody discovery plays. Most organizations and competitors in that space are receiving those downstreams subject to the quality of offering, obviously. There are some more commoditized offerings, I would say, that do just go for fee for service. I think if you're contributing value, you can add that into the concept of your business model. Okay. Just so I'm clear, you said milestones. Can you get royalties too, or is it really just milestones? Generally speaking, primarily milestones. We find there's pushback on royalties in the market. That thing is true right across discovery. We have found some clients, I say the word skin in the game, right? Of course, our skin in the game is we want repeat business. If you've got a new client that's never worked with us, often they'll sit around the table and say, "Well, other competitors of yours are offering milestone sort of arrangements. Will we offer that too?" The answer is yes, because we want to have our seat at the table when we have that discussion. Often the case is when you get into the economics of it, and they've started to work with us and talk to us, actually, some of those milestone agreements fall by the wayside anyway, and they revert to the fee for service because a fee for service is cheaper if you believe that your molecule is going to be successful, right? Obviously we want some upside on the milestone, but we tend not to do the royalties. We are not in the business of competing against our customers. We are a fee for service type business. We do have a number of milestone agreements in discovery. They are relatively small compared to the totality of Charles River's revenues, you can imagine. Occasionally, we call it out because it makes a pop to a particular quarter. Q3 last year is a good example where we had a 50 basis point increase in DSA because of a milestone that we've received. Often, they don't make a meaningful difference to the total revenues for the year. We have few, if any, requests for us to entertain a royalty deal. I think most clients think that's overreaching. Of course, from a practical point of view, we have an operating business there. We want to be paid well for what we do, for our services. Most drugs don't get to market, being paid by royalties would be, I think, a flawed financial structure for us. I think we're going to be primarily fee for service with some small amount of milestones, and I think we have as good ability to predict the outcomes. Obviously, you can't perfectly predict it, but we have a pretty good assessment whether the molecule is promising or not, and hopefully those milestone payments will be beneficial over time. I think royalties will be unusual. Okay. That's very helpful. Thank you. Great. The next question will come from Dave Windley at Jefferies. Hi. Thanks. Good morning. Thanks for taking a follow-up question. I wanted to ask a first one on cell and gene therapy manufacturing, and particularly Vigene. I appreciated the deep dive in the space, expected it, but appreciate it. Wondered in relation to Vigene, what the or if there is a specific, unique characteristic of that business or a uniquely good fit into what you wanted or needed? That drove your willingness to pay what is, I think, for you, a pretty high valuation for that business, albeit it is small, I understand. You covered a lot and kind of mentioned Vigene, but in terms of Vigene's specific capabilities, is there something unique about that business that makes it worth chasing that valuation that high? I'll take that question if you like. Thanks for the question. It's actually a really good question. For us, the Vigene acquisition is extremely synergistic with the Cognate organization. If you look at the European side of Cognate, so the former Cobra organization, and their capabilities of doing the plasmids and viral vector. Vigene does that too, but on the viral vector side, they have a different skill set. The European side is focused primarily on lentivirus, which is a material that is used for the cell therapy. The Vigene organization primarily expertise in AAV. We're actually adding expertise that is well-known in the industry. The other area is that they have very optimized plasmids, so that gives us a technology leg up in the industry, and they also have off-the-shelf products that we are adding there. In addition, the geographic location of Vigene, because we have our plasmids and viral vectors in Europe, is a huge benefit for us. Together, those two organizations together, in addition to us, the cell therapy CDMO really cover the whole spectrum that we want and what we need in the plasmid viral vector and cell therapy and gene-modified cell therapy space. It's very synergistic. Very good. Thank you for that. Broadening out on the cell and gene therapy and the numbers, wanted to clarify maybe a number that might have been offered in an answer to an earlier question. If I take the 10% quantification of current business, which does not include Vigene, if I add Vigene onto that, if I grow that at the kind of 25%-30% numbers that you're talking about, I get a number that's probably in the $650 million range for 2024. Maybe it's a question for David, is that a reasonable target for where we can think about cell and gene therapy being at the end of your guidance horizon? Well, we certainly called out the last five acquisitions would give us revenues of $500 million by 2024. I think you're in the zip code. Dave, you have to think about the underlying cell and gene therapy business across the rest of our portfolio, and you have to grow at a similar growth rate. The all-in cell and gene therapy business will be significantly higher than that. Dave, to your previous questions around the price tag of Vigene. I know there are not many of those companies that are for sale, so I've only got an N of one, but Thermo did buy Henogen for a similar multiple. Very good. Thank you. Great. Our next question will come from Dan Brennan at UBS. Maybe first question is just on utilization manufacturing across the cell and gene therapy facilities. I know you're in the midst of several expansions, which you outlined. What is utilization today and what's assumed after you get through these capacity expansions? Dan, on the utilization of the current facilities, we don't provide the exact numbers of that. We acquired some facilities that have half capacity and have capacity space, expansion space. We will be utilizing that as we go and as our demand grows. On the biologics testing solutions business, Kerstin outlines that we have several expansions going on there. It's the same thing there. We have multiple facilities, and every year we do some expansions. It's actually the same case in our safety organization, our discovery organization. We will always do some expansions. We'll do them just shortly ahead where we think where the demand is so that we can leverage them and utilize them to a pretty high percentage. Got it. Then maybe just on the competitive dynamics in cell and gene therapy. You provide a lot of information on your existing businesses and your relative share, but just given in cell and gene therapy, there's only a couple of companies that are public and many private players. Can you just give us a sense, clearly you've got a lot of different capabilities. I don't know how you want to define it, but across Cognate and Vigene, just where those businesses are from a competitive standpoint. Are they one, two, three, four? Any relative share? Then related to that, any color you can provide us out there, success in terms of competitive win rates. I think you want to assume that Cognate is one of the top three contract manufacturing players in cell therapy sort of on its own. If you add in the capabilities that we have in plasmid and DNA, and then you add our overall capabilities To support cell and gene therapy products for the whole drug development spectrum. We're not going to declare anything except to say that we are certainly organized to be the leading player in that space, all in. Having a strong biologic business is going to help pull through more contract manufacturing business and vice versa. I think without adding to it, we can be a principal player in the space. Very focused on Cell Therapy and secondarily on Gene Therapy, and that's without any M&A. Got it. Maybe last one is just in terms of commercial products that you work on today, you gave the slide that says the number of commercial approvals that are expected over the next five years. Any way to think through commercial products today and what's implied in the three-year guidance, the number of commercial products that you would assume in your guidance on the cell gene therapy side? Dan, that was my follow-up question. On the cell and gene therapy space and the cell therapy, our current portfolio is all clinical. We may have clients that get approval. Obviously, we don't know that is going to happen or not over the next years. In our guidance, we assume that we will stay with a clinical portfolio. On the gene therapies, we obviously provide products on viral vectors, plasmids that are used for commercial products, and clinical products. At this point, from the majority, primarily, it's a clinical operation, and that's assumed to continue. Got it. Okay. Thank you. Great. Well, there are no further questions in the queue, so I will hand it over to Jim Foster for some closing remarks. Thank you. First and foremost, I want to thank my colleagues for a deep dive in a multiplicity of areas there. Hope you found it comprehensive. Hope you have a better sense of the power of our portfolio, the uniqueness and the power of the portfolio, which we think continues to distinguish us from everyone, from the competition. Hope you have a sense of the power of the science. There's 2,400 PhDs that are working daily with thousands of molecules to thousands of clients daily. Think you understand our primary focus is on the strength of our people and hiring the best people in the world and lighting them up and retaining them and having them build long-term careers here. Hope you have a better sense of the importance of responsiveness that we feel to our clients, the fact that they demand it, and the fact that we're doing everything we can to be more responsive than they could do it internally and more responsive than our competition can do it, and that we're committed to a digital overlay of our entire business and having greater connectivity with the clients and hopefully taking a year out of the drug development process. Hope you understand that our M&A and our strategic deals will be all about enabling and building out a broader portfolio, heavily in discovery and cell and gene therapy and a host of other areas, biologics as well. Hope you're pleased with our 2024 targets. We are a low double-digit growth rate of 22.5% operating margin. We're confident in our ability to deliver those. We are committed to building value for all of you, for our shareholders. Our goal is to once again double the size of the company and our EPS over the next five years, even though we're specifically talking about three years here. I'm sure you felt our enthusiasm for our industry and the place that we play in it and how much we enjoy working as a team. Thank you all for your time and attention today. Take care.