Great. Great! So thank you all for attending. I'm Tim Daley, Life Science Tools, Diagnostics, and Pharma Services analyst here at Wells Fargo. This is the final presentation for my track for the Wells Fargo 2023 Healthcare Conference. So, you know, we are very pleased to be having, you know, the Repligen team here. We've got Tony Hunt, CEO. And, you know, very interesting space, very dynamic, you know, the last few quarters, I guess, the last few years. So just really kind of just thinking about everybody's really focused on the inflection point, right? You know, much more so on the, on the order dollar front. I think you guys have done, been really helpful so far in helping us understand, you know, sequential order cadence on a dollar basis. But, you know, just to think about August, you know, this conference, we've been hearing slight improvement in tone around biotech. Nobody's willing to call, you know, it back or even say it's back, just, you know, green shoots around the edges. Just curious, you know, how is August going? Are you seeing any green shoots around the edges, you know, from a higher level, and then we can dive into the, you know, geos and stuff like that? Yeah, I would say that where we were when we did our earnings call in August is not too dissimilar to where we are today. In other words, you know, we went into what I would call the second half of the year, knowing that pharma had taken a drop back versus what we were probably anticipating back in the May timeframe. And, you know, we went into the second half of the year with, some, you know, at least degree of confidence that our, opportunity funnel, which is what we really monitor very closely, had, we had seen a 25% increase in Q2 in our 75% and above, opportunities. So for us, that's the kind of green shoots, right? Our goal is between August and the end of the year that we close out on a lot of those opportunities, and that leads to a improvement in kind of order run rate, which would give us some degree of confidence going into next year that we're going to see improvement in bioprocessing. And, you know, we've had a number of meetings over the last week, and I think the way we view 2024 right now is that the first half of 2024 would be stronger than the second half of 2023, and then the second half of 2024 is stronger than the first half, but obviously a lot stronger than the second half of 2023. For that to happen, I think it's, it's really around what you said at the very beginning, Tim, which is the orders have to kind of rebound a little bit, right? More than a little bit, but they have to be rebound versus what we saw, especially in Q2. And we think Q3 is probably the dip, the low, and then, we start, even from a revenue point of view, and start to pull out in Q4. Okay. All right. So, you know, I guess bottom or at least slight inflection point starting, you know, after 3 Q, maybe latter half of 3 Q, and then revenue into a quarter or so later. Yeah. Is that kind of the way to think about it? Okay. And is that? You know, if we think about the ramp, you know, some companies are. We like to discuss multi-year stack comps. Again, you get into intellectual argument where you're talking about three-year, four-year, five-year, geometric, arithmetic. But just thinking about a kind of, you know, the industry running on a kind of multi-year stack growth rate, should we be thinking about the first half of 2024? I know you expect it to be slower than the second half of 2024, but is the trend, like, dipping? Like, are we, you know, is the industry pulling back a bit, or are we just facing tough comps and, you know? Yeah, it's a great question, and I think, you know, one advantage I suppose I have is I've been in the industry for quite a while. And you know, I would say historically, the bioprocessing industry has grown at, on average, 8%-12%. And I can speak from my Life Tech days, that was pretty much a standard range where you would fall into for bioprocessing. And I would say that the industry is healthier now than it was in the, you know, the 2008-2014 timeframe. If you look at the... And we talked about this in our August earnings call. If you look at the last three years and five years base business average growth, not CAGR, our average growth, if you include our guidance as of August for this year, we're up on average 22%, for our base business on a three-year basis and on a five-year basis. And we're growing probably, you know, anywhere between 5% and 10%, and we've been closer to 10%+ above the market growth rate over those in that time period. So that would put, you know, market growth 12%-14% is probably the real market growth, if you include the market being down 10% this year on base business. So, I think that's a pretty reasonable. I think the 8%-12%, and maybe on the higher end of that range, 10%-12%, given you've got mRNA, you've got cell and gene therapy, you've got mAbs, and some nice blockbuster mAbs coming through. And, and the fact that vaccines are coming back, which, you know, no one really spoke about, and biosimilars are still strong, that there's no reason why the market can't grow, you know, 10%-12%, 10%-14% on average over the next four or five years. And why Repligen, with our portfolio that's highly differentiated versus the competition? Can't grow above that rate at some five-10 points above it. So that kind of gets you back to what we've been saying kind of consistently, that we think we can be a 20% grower as a company in this market, but clearly not 2023. And I think 2024 is looking, you know, more like a, you know, a recovery year. And it reminds me kind of 2018. If you, if you remember, 2017 was a bad year for bioprocessing, and we grew 8% in the first half- Mm-hmm. of 2018, and then it was 25% in the second half. And my sense is, you know, there's no sharp, like, rebound, but it's going to be more of a gradual move up and eventually back into more traditional higher growth levels. Okay. Yeah, that's actually exactly where I was gonna go next, so read my mind. But, you know, 2017 is kind of at least how we're thinking about, you know, the best proxy for today. You had a pipeline that swelled, and then all of a sudden pulled back pretty drastically. Granted, different reasons than it was some failures, this time, obviously, a lot of other stuff. But at the same time that you had bioprocess vendors increasing their capacity, very quickly, and then you had that kind of supply-demand- Yep - gap out, if you will. So if we think of that framework that you laid out, you know, this is a recovery year, 2024 is a recovery year, 2018 was a recovery year, first half 8%; second half 25%. Just, is that a good framework for us to think about 2024 in terms of, like, the order of magnitude of growth? Yeah, I do. I think that's exactly the right way to look at it. And, you know, people forget that, you know, when we went to 2019, right, the momentum really carried over from the second half of 2018. I think we were at 25%, I said, in the second half of 2018. We were 29% growth in 2019. And our industry, when it comes back, tends to come back with- in a good way- Mm-hmm Right, with a vengeance. So I do expect that we'll see above average growth, you know, as we go through, say, second half of next year and definitely into 2025. There's just too many positives in the... Mm-hmm. Which is a great thing, right, in the industry, right? There's so much scale up that's been scheduled. You know, you're seeing some goodness happening. Even in the cell and gene therapy space, you're seeing a few more drugs getting approved this year. I think that's going to continue to happen. You know, mRNA and we'll see how the, you know, the vaccine side of mRNA plays out over the next couple of years. Mm-hmm. But there'll be more, that's going to get approved in that space. And, you know, mAbs are mAbs, and there's lots and lots of mAbs that are- Mm-hmm out there that are going through development. So, you know, we feel really bullish about the medium, longer term, and we don't think there's anything that has changed in terms of the competitiveness of our portfolio. And almost everything we're dealing with right now, this year, is a macro problem. Mm-hmm. Okay, no, that's helpful. And just, you know, still on that 2018, 2017 time frame, at that point, we saw, again, that capacity come on, demand slack out. We saw some price competition, if you will. Obviously, more commoditized products. You guys, and just again, at that time it was filtration, and you guys had a differentiated filtration portfolio. But are you seeing kind of price headwinds, given all the checks that were cut by BARDA to stand up new consumables, you know, facilities or new capacities? Yeah. You know, the pricing situation, I think in 2023 is definitely, definitely evolving. We set a target for the year of about 5% realized price. Mm-hmm. I think that's where we're gonna come in. I don't think we'll be short of that. I think we're gonna come in right around that number. I would say that the price pressure in the second half of the year is stronger than it was in the first half of the year. But it's pockets, right? Mm-hmm. Our customers, you know, had to deal, just like we had to deal with inflation, over the last two or three years. I think the expectation is that, you know, pricing is going to be relatively flat, and then there'll be probably certain accounts that you're gonna have to deal with some price concessions, for, opportunities. So that's almost situational, but I don't expect next year to have... I think it's gonna be, like, somewhere between 0% and 1% realized price, across the board. Okay. That's helpful. So even with effectively flat price, we could be looking at, you know, if we again look at 2018, your, you know, mid- to high-teens volume- Yep. Really. Okay. No, that's, that's very compelling. Okay, and then, you know, again, we're hearing some interesting stuff. First, obviously, China has been dominating a lot of the conversations this week. You know, if we were to think about China, you know, how is that market evolving, more recently? You know, again, I'm not, I don't think the anti-corruption stuff is kind of spreading into any production-oriented things. It's much more on academic gov instruments. But just curious, are you guys hearing about that or anything off China? You know, the anti-corruption stuff, I mean, it's kind of always been, you know, in, I'd say, in the back of everybody's mind for the last 10, 15 years, and you kind of put things in place, right, to make sure that that's not an issue for you as a company. I haven't personally been—I haven't heard a whole lot about that, at least in our space. I think most of our conversations have been around the fact that, you know, where you had a business that was 10% of revenue last year, which would have been $80 million, of which a quarter of that was really COVID-related. So our base business was, you know, $60 million. How do you turn the corner in a market that's being challenged on multiple fronts? So I suppose the anti-corruption piece has been- hasn't been a factor, at least in, at least in the conversations I've had or anything that I've heard about in China for, for us. And it's been mainly around, you know, the CDMOs being challenged in terms of, business, early biotech funding drying up, and therefore, those companies were the ones that were supplying or were doing contracts with the tier two CDMOs. Some layoffs on local Chinese pharma manufacturing, as some of the biosimilars haven't been as successful as people wanted. And all of those sort of came together. I suppose the last factor that we've been dealing with is manufacturing in China was start-stop last year, and the ordering rate didn't change, right? So, a lot of stuff was ordered, and inadvertently, you've ended up now in an excess inventory for a different reason versus probably what was going on in North America and Europe. And so all of those kind of come together to leave what's a pretty challenging environment, and we started to see the orders drop off in Q1. And so when we did our May earnings call, while our revenue was outstanding, orders were weak, and revenues in Q2 were actually pretty reasonable because we were still, you know, burning off the orders that had come in late, late last year. And now you're more in a situation where orders equal sales, and so expect the second half of the year to be fairly weak on the revenue side, fairly weak on orders. The trick's going to be next year, can you, you know, get back to even parity on, on total revenue for China in 2024 versus 2023? Okay. So even, you know, back to that thing, we were saying price, volume, so ex China. So that means Western markets are even going to be stronger if you kind of do that math, if China is going to be, you know, flattish, I guess, in 2024. Yeah, flat to... You know, we just have to get back to kind of that, that par level for 2024, given, given how strong revenues were in, in the, in the first four or five months. Okay. I think other players have started to talk about China and the fact that orders dropped off for the other companies in Q2. Mm-hmm. We've been seeing it since early Q1. Okay, got it. And then, you know, in China, a theme that's been emerging or, you know, has obviously been present, for a while, since, you know, a lot of the Biden initiatives and the supply chain challenges, but it seemed to solidify more or be more apparent and more forceful in the company's messaging is the, you know, the onshoring dynamic in U.S. and Europe away from China. Yeah. So, you know, if we were to think about that, is that, you know, growth accretive in the sense of obviously you have more exposure in the U.S. and Europe, but like, is there redundancy built into the system at that point? You know, what's the conversations you're having with customers in terms of... Like, you talked about the China CDMO demand and, you know, slipping a bit, but just more broadly, as an industry, offshoring China into the U.S. and Europe, are you seeing that beyond just kind of talk, like, real active, kind of discussions going on with customers about that? Yeah. If you think about the conversations with customers in China, they do want flexibility, right? They, they want to be able to order locally. I think there is a concern that trade wars, especially with the U.S., could put them in a position where they can't get product. So I think they want that. You know, it's almost the dual sourcing- Mm-hmm ... concept. So I think the local manufacturers in China will probably have a smaller percent of the pie until such time as there is some macro event that will push the volumes more toward in their favor. So I do think there's a desire at the Chinese company level, if you take a look at the big CDMOs and the big pharma companies there, that they want to be buying from, you know, the Repligens and Sartoriuses and Cytivas and Thermos of the world. But they want flexibility as well. So I think the whole concept of local Chinese competition being annoying but not impactful, it's definitely a little bit more than that, but I don't think it's going to get to a point where it's, you know, the majority of purchasing is going to come from, you know, the local providers. So I think there's an opportunity for all the bioprocessing industry, and everybody has their own strategy about how you supply into the region. Okay. No, that's really helpful. So kind of for China and China, but maybe not even for China and China, as long as you're... You don't have to have the local brand, you don't have to have—you could still have, you know, the Western nameplate on the front door- Absolutely ... as long as the facility is in- Yeah - China. So I think... And that's one thing, we do not have manufacturing in China. Mm-hmm. We have distribution, we have applications, we have a commercial organization. So that's part of what, you know, we, we will definitely look at over the next couple of years. Okay, great. Okay, so that's, that's really helpful. And, and then, you know, thinking about... You mentioned dual sourcing, obviously the supply chain, dynamics and, and capacity gap outs, if you will, because of COVID, Defense Production Act, what have you. Really kind of, you know, emphasize the risk mitigation practices or, you know, had companies maybe double down on, on dual sourcing, be it from, you know, multiple vendors or multiple vendors, or same vendor, multiple facilities, what have you. You guys had capacity- Yep. Earlier than most, you were able to effectively benefit from that dual sourcing dynamic. And just, can you help us understand, like, the stickiness of that, of those share gains or, you know, that those new footprints that you got? Yeah, no, there definitely is a perception out there that Repligen took a lot of share during COVID. And I think, I think maybe the, the truth is that we definitely had product lines where we had more capacity than others. Because there was such a push for COVID-related demand, most of the share gain was COVID-related. Mm-hmm. Right? And it wasn't like we were. It was like the other players just couldn't make, and so therefore, we picked up a fair amount of COVID business that others couldn't supply. Did we pick up some additional kind of share gain? Yeah. Have we held on to it? In some cases, yes, in some cases, it's. It's kind of hard to tell because, you know, with the dynamics in our market over the last 12-18 months- Mm-hmm. It's kind of hard to look at it and say, "Well, is that a share gain loss, or are we looking at just increased inventory levels, and you don't really know? Mm-hmm. And I think that's honestly where we are. I don't think we picked up a whole lot of business from the other players. That was what I would call base business. Yeah. I think it was mainly COVID. Now, that said, like every pharma company that I've spoken to, and I've been, I've done a lot of pharma meetings and CDMO meetings, they definitely want flexibility in their supply chain. Mm-hmm. I think that desire to not get caught where we only get product from Company X- Mm-hmm and then a COVID event happens, and they did get caught. Yep ... is something that they're acutely aware of. So there are opportunities for sure to on second supplier. Where we're different, I think, is a lot of our products are so differentiated. Mm-hmm. It's not like you look at our portfolio, and you say: "Oh, who makes ATF?" Right? There isn't really the same product as, hey. You know, who makes, you know, our analytics products? Who makes systems? So I think it's more around... Our conversations are definitely more around the multiple manufacturing now. So we have dual manufacturing for a lot of our portfolio. Because we have improvements in our technology that can give yield, a lot of our conversations around, "Look, we can offer you not just dual sourcing, but we can give you something with improved yield or improved efficiency." So that's definitely been part of the strategy, and I think the other part of the strategy is that COVID was an interesting time. Everybody was selling, 'cause we're always selling, right? Mm-hmm. Everybody was selling from their home. Mm-hmm. Right? So not many salespeople in bioprocessing were traveling. The applications work was all being done remotely. Even service was being done remotely. So for the last year, plus, I think a lot more people are out doing face-to-face with customers. We've pivoted a little bit to what I would call top-down selling as well, because we, we have a really great commercial organization, goes in at a certain level, but we haven't really pushed a higher level kind of view of Repligen, and we've been doing that now for over a year, and it's made a big difference. I think the general perception is that Repligen is a company that is ATF and OPUS and products that you would have heard about pre-pandemic, but they're probably not as aware of what we've done in fluid management, definitely not as aware of what we've done in advanced analytics, and probably not as aware of what we've done in advancing our systems portfolio. So almost everything we've done since, like, mid-2019, people don't really. Some people know about it, but I think the vast majority of customers aren't aware of the depth of the portfolio. So I see it as a huge opportunity for us because you can then start to influence that decision-maker level in these companies and really start to drive down messaging into the organization. So that's part of the strategy. Okay. No, that's, that's really interesting. Okay, so, you know, we went over kind of the near term. We went over a bit more of 2024, maybe past 2024 into 2025. Just, just if you were to think about, you know, the, the growth dynamics that we just talked about, if we split it by, you know, CDMO customers versus pharma versus, versus biotech, you know, any particular group near term, kind of below trend or below average or, you know, midterm and long term is just- If we're to just, again, we gotta- They're all below average. They're all below. Yeah. Well, I mean, below the fleet average guidance, if you will- Yeah. The expectations. No, I think, I think the interesting piece will be to see which of those three groups come out of this kind of destocking. If you take the destocking piece first, and I suspect it'll be the CDMOs because they started to drop orders back in July of last year, whereas pharma really only started to bring orders down in late Q1 into early Q2. So it was really a Q2 trend. I think the level of stocking at CDMOs was probably higher. Our expectation is by the end of the year, CDMOs are pretty much through whatever inventory levels that they've stocked up on, and we should start to see a real uptick in CDMO activity. Pharma, I think, is probably around the same time. It might, it might move into Q1, but in general, we're thinking that as we get to the end of the year, that those, those all those groups begin to kind of emerge out of what we would call the overstocking component. I think the piece we've been trying to deal with right now is this whole conserving cash. Mm-hmm. Those tend to be like a year type events, right? I really think that pharma comes back into next year, biotech comes back into next year, and those are just a different, spend pattern. Mm-hmm. We see it. We don't see it on consumables as much as we see it on CapEx. Okay. Yeah, if we were to think about the CapEx piece, you know, I guess, like, think of skids and some of the more chunky things, maybe systems as well. You know, what's the, I guess, the historical obviously maybe a bit higher growth, given some of the new additions to the portfolio. But, you know, just thinking about the mix of the kind of capital sensitive versus just pure, consumables in the sense of where we are today, and, you know- For Repligen or the industry? For you guys. For us. Yeah, I would say we've been traditionally a consumable company. Mm-hmm. We really didn't pick up capital equipment until we acquired Spectrum in 2017, and then that capital equipment was very much associated with hollow fibers. I think if you look at the, kind of the medium-term, longer-term strategy for Repligen as a company, we really are beginning to rally around and focus on systems as a central part of the strategy, and we're adding to those systems with advanced analytics, and we're adding to those systems with consumables. The consumables can be hollow- fiber filters, flat-sheet cassettes, can be OPUS columns. But probably the piece people miss is that it's also the fluid management. So you get those flow paths that go with systems, and then when you're connecting unit operations, you also have what we call assemblies or line sets that connect, you know, unit operations together. So it... The ideal situation for us would be, you know, a really strong systems portfolio that drives consumables and the fluid management components, and then we're starting to link unit operations. So you'll hear us talk a lot more as we go through, not only this year, but into next year and the year after, about, you know, owning the upstream part of the workflow as opposed to we're in one unit operations. Because we want to be the premier player in upstream intensification. We definitely want to be the premier player in advanced analytics and systems. So if we execute on those, I think we can continue to grow above market, whatever that market growth rate tends to be. I like what we have, and, you know, we've always made M&A part of our strategy, and it'll continue to be a part of our strategy as we move forward. Okay. Yeah, so just true kind of razor, razor blade rather than- Absolutely ... product to product. We've never really had the razor part, right? Mm-hmm. We've had a lot of razor blades, but we've never really focused on... I think the ARTeSYN deals really help put us over the top in terms of getting the, kind of the Porsche of systems, and now, now you got to figure out how you make that cheaper. Okay. Yeah, exactly. You know, a few minutes here, just want to open it up to the audience if anybody's got any questions. We got plenty more, so don't worry or don't be shy. Nope? All right, so I guess thinking here about... You know, we went through China, we went through the near term, we went through the consumables. But, but I guess if you would think about the, the growth of the individual, you know, segments, obviously fluid management, newer. Yeah. We talked about that being a leading edge. Is there, you know, within the next two, three years, that kind of growth rate that you were discussing earlier, is there anything—how should we think about the individual, you know, product or segment lines? Yeah, I think there's a few. I think the key for us is the filtration portfolio coming back because it's such a big part of what we do. I think the fluid management component is of our portfolio will. We're in kind of an inflection point for that portfolio in 2023 because the component side, which is, you know, the clamps and the silicone tubing, that's a pretty depressed market this year because customers, what we call integrators, definitely overstock there. But our assembly part, which is how you take all those components, create flow paths out of it, line sets, assemblies, that's doing quite well. So it's almost like a crossover where we would've been more component-focused or driven for revenue in the past, is now flipping over to the assembly-driven. And so that's going to be where the growth trajectory, and then the component piece comes back in. So we feel good about that. The filtration portfolio, you know, we have a lot of opportunities that are coming through that are moving into late stage into commercial. They have to be accelerators for us as we go through the next few years. Like, a lot of our competitors are at, you know, 75%-80% of their revenue comes from phase III commercial. Mm-hmm. You know, 35% is Repligen, and so 65% is in that clinical funnel. And as some of those products, you know, get commercialized, right, that's going to be a, a nice accelerator for us as well. So I think it's filtration. I think the other ones to talk about maybe for a minute, proteins. You know, next year, like this is our last year of Cytiva revenue, so next year will be, you know, Cytiva will have pretty much moved away and brought everything in-house. So we'll have about a $10 million type headwind in 2024. We'll have no COVID revenue next year, so there's- Mm-hmm. So you kind of start next year with $40 million of revenue that we would finish this year, well, won't be around next year. And then, you know, I think our proteins business looks actually quite promising because we have a lot of differentiated ligands that have come out of Avitide, that we're working with Purolite. So we expect proteins, you know, start to move in a very positive direction from 2024 onwards. And we continue to be very bullish about our analytics business. I think it's done really well in a pretty, pretty challenging market environment. And if we can start to integrate that into what we do in filtration and in systems, I think it's an accelerator. So there's a lot of, you know, sort of positive, I would say aspects to why, you know, 2024, 2025, 2026 should be good for not only Repligen, but for the industry. Okay. And in, you know, focusing on fluid, I know you did mention the components, the tubing. That, at least from my work, does seem to be the area where you've seen some of the multi-industrials add a lot of capacity. You know, talk a lot more. If you look at the slide deck- Yeah of all these companies, you see this big, now it's this big on the page. Just curious, is, you know, in your ambitions to kind of sell the full system, and with fluid as the kind of chain linking it all together, is there risk of, you know, these new players that are kind of probably less margin-sensitive, given it's part of a bigger entity, but they are looking for growth to juice that number? Just thinking about that competitive environment and the full system ambitions around fluid. I do think they're different, and they're different for this reason. One, that you're absolutely right, the component side of fluid management is highly competitive. Mm-hmm. It's going to be margin... You know, lower margins and price sensitive. When you start to integrate those components, now we're one of the few companies that actually owns the components that go into what we call assemblies and into flow paths. So we should have a cost structure that's better because we're not buying the components. Mm-hmm. We actually own all the components that are required, or the majority of the components that are required. So I think the growth trajectory for us should be around, the systems piece. Mm-hmm. Most of those companies that you think about that are competing with us on the component side, they don't have a systems portfolio. Mm-hmm. The companies that do have a systems portfolio buy the components. Interesting. Okay. The only one that's fully got it all linked in. Yeah. Okay, and then, you know, last minute here, just wanna touch on margins. Again, probably should have gotten to this earlier, but, you know, how should we be thinking- I'm happy to answer it in 60 seconds. Incremental in 2024. There you go. Yeah, I think, you know, I look at our margin profile and, and, and we were just saying it in some of the meetings earlier this morning. Just like every other bioprocess company, we're going through a kind of a right-sizing of the company. So we've had to lay off some, some individuals. We're definitely tightening our belt on expenses. And, and if you think about it, right, in during COVID, we hired so many people to drive that $200 million of business that came from COVID. That doesn't exist anymore, or more or less at the end of the year, it doesn't. So we've had to right-size down. And then the capacity expansions that we made, all the facilities that we built out, that's probably 400 basis points on the gross margin side. So if you start at like that 58%, that probably brings you down to 54%. Everything we need to do in the next few years is all volume driven. We get the volume and the mix right, the margins will come, come back up. Okay, so the 400 basis points, just to clarify, is the excess capacity headwind, effectively, as- Yeah, I'd say it's the depreciation facility costs- Got it all associated with what we built out during the COVID. Okay, perfect. But that can come back up, and that gives us capacity until, you know, for another four or five years. Okay, excellent. Perfect. Well, we're right on time. This has been fantastic. Thanks, everybody, for attending. Thank you- Thanks, Tim ... for being here and hopefully, you guys have a safe trip home or good meetings the rest of the day, whatever comes first. All right, thank you. Thanks, guys.