Hi, this is Paul Knight, the Analyst at KeyBanc on the Life Science Industry covering Repligen. It's great to have with us today, Jon Snodgres, the CFO, and Tony Hunt, CEO of Repligen. I think that's it from Repligen, right, Tony? Yeah. Yeah. We've got Sandra and Steven here as well, Jon Snodgres and myself will probably be doing most of. Okay. Talking. I know, you may have been on the investor circuit a little while already this year, but if you wanna make a few opening comments about the market, please do, and then we'll have some questions develop. Yeah. Maybe start, Paul, with, you know, where Repligen is coming out of 2022 and what we think are maybe things that our investors. Everybody's, like, thinking about 2023, but I think we should spend a minute on 2022. I think in general, it was a great year for the Bioprocessing industry and definitely a really, really good year for Repligen. If I were to kinda highlight what I think are the five or six things that really stood out for me, one is we continued on our journey of innovation. You know, we launched 10 products in from R&D last year. You know, percent of revenue coming from new products that were made in 2021 and obviously some launched in 2022 is about 7% of our revenue, so that was very encouraging. That's obviously core to our strategy, which is all around innovation. Our base business, despite everybody's, you know, everybody asking about COVID, our base business was up, I think close to 40%, 39% organic for the year, which is just a tremendous growth number, coming off a really strong 2021. I think that speaks to, you know, how our products are doing in the marketplace, the traction that we're seeing, bodes well for the medium long-term future of Repligen and bioprocessing. I think in terms of, you know, M&A, we didn't do any M&As last year, but we actually did do two strategic deals. One was on Daylight, and hopefully we'll get a chance a little later to chat through PAT. I think adding another PAT tool into the toolbox was really important for us, and I think that's gonna be something that will integrate into our system strategy as we go through the next couple of years. Then obviously we extended and expanded our relationship with Purolite on the ligand side. As you know, and you and I have been chatting about this for many years now, but the progress, you know, the decisions we made in 2018 around pivoting to Repligen-owned ligands has really paid off, and I think the relationship with Purolite has gone from strength to strength. We've now expanded that relationship with new ligands that address not only monoclonal antibodies, but also mAb fragments. I think that was also important. Last year was also a year where we completed all the integrations of the Fluid Management businesses that we had acquired in 2020 and 2021. We've really set ourselves up for success over the next few years by putting a dedicated business team together, a dedicated commercial organization. We built out the assembly centers that allow us to leverage the components that we acquired and really start to put that into the flow pass that we're selling with our systems. Finally, the expansion. You know, everything a year ago would've been around have you got enough capacity, what are you gonna expand, when are you gonna expand? We completed three key expansions last year. There's a few more this year that we have to do, but for the most part, I think we're in good shape, you know, when we look out to 2027, 2028, that by the end of this year, we'll have all, pretty much all the capacity we need to get us out to that kinda $2 billion target that we've set ourselves for 5 years from now. We'll talk about cell and gene therapy as well, which was also a very good year for us. Then I think to answer your original question, 2023, I think the. You know, we all know there's some headwinds as we come into the year, right? It's all been. Most of the conversation's been around destocking. We've said that, you know, we've seen, you know, the destocking that we've observed has really been confined to the CDMOs and to the component side of fluid management. I've spent a fair amount of time out with customers in Q4 and here again in Q1, there's a lot of activity. I think the overall markets and markets are healthy and the activity is high, but there's a bunch of headwinds that has kinda slowed the industry down, you know, especially in the second half of last year and obviously We'll see how everybody finishes up in Q1 and talks about that when we get to the end of April. You know, medium long-term, I think we're very bullish on the industry. You know, it's great to see new modalities coming through. It's great to see the scale up. It's great to see the maturing happening in cell and gene therapy. All of those, I think, are going to be very positive kinda leading indicators for the health of bioprocessing and the success of Repligen. Just a quick intro there. Tony, when you talk to destocking, I, you know, I understand the CDMOs in that comment, and the other one you made was destocking around fluid management. What do you mean by that? When you think about fluid management, which is what we do, there's a lot of individual components that are sold to what we call integrators, but these are all the other bioprocessing players in the industry. They're the Cytivas of the world, the Thermos of the world, Sartorius, Avantor, you know, Millipore, et cetera, right? These components are things like tubing, like silicone tubing and clamps and pressure sensors and, you know, a lot of individual components. At the very beginning of COVID, everybody stocked up on them, right? Because no one wanted to be short on a, you know, a relatively inexpensive component. There was stocking that happened at the beginning of COVID and throughout COVID that has created this situation where there's an oversupply of these components in the marketplace right now. Yeah. your prediction on, you know, it subsides during the first half of the year or whatever, July first, 2023. No, I think most of the destocking that we've talked about at the CDMO level, we see that as our first half, second half. Like, as we get into the second half, that begins to really clear out. I think the component side, and I said it on our earnings call a few weeks ago, we think that that's probably later in the year because I just think there's a lot of components that are, you know, just stocked. This is not Repligen per se. This is just all those components. Like, we've done it, and I think everybody else in our industry has stocked up on components. That's probably closer to a Q4 timeframe. Got it. You had mentioned on the business team it being assembled for the fluid management strategy. You're referring to what? ARTeSYN and what else in that kind of a discussion? Yeah. We created this Fluid Management business internally here at Repligen. And it really consists of, you know, a majority of 4 acquisitions, right? ARTeSYN, there was 2 parts to the ARTeSYN deal. One was systems, and the other was components. These are, you know, valves and the associated liners with those valves that are single use. So whether it's pinch valves or diaphragm valves or steam-through valves, all of those valves are part of the component side of fluid management. That represented when we acquired ARTeSYN about half of their revenues. The others are really EMT, which was the Silicone Manufacturing company that we acquired that does overmolding. And that's EMT. NMS is the Plastic Fabrication company that does not only plastic fabrication, but bottle top assembly. All of that falls into fluid management. BioFlex, which is the Clamp company that we acquired. All of those components go into fluid management. They go into fluid management in two ways. One is the component side, where you sell to what we call the integrators, which are, you know, the Thermo of the world and Cytiva of the world. The other part is we take those components and we integrate them into our flow paths and our assemblies that we sell to the pharma biotech CDMO end users. The excess capacity is on the component side of the equation, not on the flow path side of the equation. Okay. Got it. Purolite. Could you talk to Purolite? When was the deal originally going to expire, and what is it now? Yeah. Originally, and Jon will correct me here, I believe it was around 2026. We've extended the agreement out to 2032. 2032. Yeah. The reason honestly was, you know, as we chatted to Ecolab, right, which is now, you know, the parent company. Yeah. For Purolite, there was really general alignment between the two groups that, you know, the progress we've made since 2018 has been really positive and that, you know, we kind of all wanted to commit to each other that we were gonna continue in the relationship beyond, you know, beyond 2026. Putting the 2032 date out there was essentially a 10-year from, you know, when we did the deal, when we signed the extension last year, so going from 2022 to 2032. On top of that, we felt that, you know, when we looked at our sales force, and of course, we're selling chromatography resins through, you know, the ligands and resins that have been manufactured coming out of Avitide. We use the Purolite-based feed in our resin manufacturing, which is just, it is a very positive relationship that we have there. But we felt that Purolite had the channel into the monoclonal antibody side of the market and we didn't really need to be in there competing. We've taken any of the ligands that we've manufactured and developed through Avitide, and now we've made that available to Purolite. It now addresses not just monoclonal antibodies, but mAb fragments, bispecifics, anything that is an antibody or an antibody fragment, that's going to be where we play the provider role of the ligands. Then other markets like, you know, AAV, anything in cell and gene therapy, new modalities, we would sell direct 'cause we feel that we have a good channel through our sales force, through all the work we've done in cell and gene therapy over the last few years. That's kinda how it, how it splits up, and I think it's a good deal for both companies. Is it similar to the GE relationship you used to have with some of the business? Yeah. I mean, I think there's always different ways to view that. I would say, you know, Repligen's has had a great relationship with, you know, GE for 30-plus years, and we continue to manufacture ligands for GE. I think the difference is that, you know, GE, you know, they're their own innovators, right? They've created and developed their own ligands. Think about Repligen, GE relationship more as we were the CDMO for the manufacturing of GE ligands. We didn't own it, but we were very happy to manufacture it, and I think we've delivered products always on time to the level we've scaled up. It's been a very positive kind of relationship over the years. I mean, we don't, you know, the fact that Cytiva/GE decided to bring ligand manufacturing in-house, that's absolutely their decision. It's their, you know, ligands, and how they wanna do it is completely up to them. I think what we've done over the last 5 years is just created an environment where we could, we could remain independent on ligands. In other words, we own the ligands that are getting manufactured, and therefore we don't put ourselves in a situation 5 years from now, 10 years from now, 20 years from now, where you've worked very, very hard to, you know, create a really strong partnership, but then it can unravel, unwind because one partner decides they wanna bring stuff in-house. In this case, with Purolite, the difference is we are the, you know, developers of the ligands. We have the IP on the ligands. We manufacture the ligands. It's very clean and clear what we do. It's very clean and clear what Purolite does. I think, that would be the big difference in the, in the relationships, is that it's really our IP, our technology, and then working with great IP and great technology from Purolite to provide the resin and do all the immobilization and the selling. It's just a different partnership, but it's based on really who developed and owned the ligand as opposed to being a CDMO. Okay. Cell and gene therapy, it closed at what% of revenue last year, Jon? What are the pieces of, like, what are the components going into that market? It was 14%-15% last year. You know, I think the biggest revenue streams come from our Filtration products in the cell and gene therapy. We also sell, you know, Chromatography products there as well. As Tony mentioned, you know, starting to sell resin, you know, resins for AAV. And also process analytics are, you know, kinda early stages going there, but have additional potential to grow in that area as well. When you talk, filtration, you're talking what? hollow fiber, flat sheet? Yeah. Yeah. All of the above. Systems, you name it. Yeah. I think to what Jon was saying, Paul, I think the big difference for us over the last few years in cell and gene therapy. We've always been kind of promoting and selling hollow fibers and flat sheets. If you went back 4 years ago, that's what we would be telling you. Yeah, like, it's a flat sheet opportunity, it's a hollow fiber opportunity. What's changed for us over the last few years has been the emergence of our system strategy, right? That's helped us a lot to get in at the bench level and start to seed. Then you can not only do you get the system, but then now you can go and upsell on flat sheet cassettes or hollow fibers. I think more recently, you know, when we did the CTech deal, like 95%, maybe even 100% of the revenue was coming from those bioprocess revenue, was really coming from the mAb world. They've, you know, at least. I wouldn't say pivoted because we still, I mean, our primary customer for the Analytics business is definitely monoclonal antibodies. The increase in activity at the cell and gene therapy accounts has been really impressive over the last couple of years. That's picked up some steam as well, so that's good. How fast is the cell and gene therapy market growing for you? Last year, I think it was about 50%. I think it was 50%-55% last year. In general, I think that's a market that's growing 20%-25%. I think this year it's gonna be a little. I think the growth rates are gonna be lower just simply because, one, you know, that whole conversation on CDMOs and stocking at CDMOs, it just doesn't impact, you know, monoclonal antibody demand. It also impacts anyone on the cell and gene therapy side. There's a lot of cell and gene therapy customers that go through the CDMOs. We expect that, you know, that's going to be just a lower growth rate business in 2023. I can't remember what the final number. We did put it out. What was our cell and gene therapy projection for this year? 15%, 20%. 20%? Fifteen. 15%-20% fall. I don't think the market has slowed. I think it's just simply that there's some excess inventory out there that's gonna get used, and therefore that's what's gonna make it look like a slower year this year. It was probably a little higher than reality last year, little lower than what reality. In general, I think that's a market that's gonna continue to grow. I mean, we were really happy to see that, you know, when we finished last year, we had well north of 20 customers now that are buying over $1 million a year. You know, as Jon Snodgres said, 14%-15% of our revenue coming from cell and gene therapy, a lot of customers scaling. You know, you've asked me this question many times, what's it gonna take for cell and gene therapy to take off even faster than what we've seen? I think that's just approvals, right? There's a number of drugs up for approval this year, I think the more approvals that happen, you know, I think the more momentum there's gonna be in the marketplace, and therefore just a positive market for anyone in bioprocessing to be involved with. Yeah. Got it. Okay. In terms of some of these different market segments, has monoclonal antibody growth slowed off, or is it kinda still going along at historical pace, particularly, I guess, if you consider biosimilar? Yeah, I would say it's growing. I think the market is growing at a historical growth rates. I think what's totally clouds this year a little bit is just simply the fact that everybody is kind of working off, you know, inventory levels at CDMOs, so that makes it appear to be lower growth, but it really isn't. You know, as I said, I've been out visiting lots of customers over the last 6 months, and, you know, the activity level is really high. The scale-up is happening. While 2023 might be, you know, a more challenging year, I think when we all look back a few years from now, it's gonna be like what we were talking about in 2017 or when we were in 2012 talking about 2009. It's just gonna be one of those years where it's not going to be as great as everybody wants it to be, but it's kind of just a bump in the road because overall bioprocessing is incredibly healthy. Yeah. Yeah. Any thoughts on the world of mRNA? Yeah. We're, we're big fans, right? Just like cell and gene therapy, you know, I think the success of COVID vaccines, right, and mRNA COVID vaccines and our involvement in that puts us in a good position because a lot of our products were adopted for the vaccine manufacturing, especially our hollow fiber and flat sheet set portfolios. You know, there's been a fair amount of investment happening in mRNA in two areas. One being, you know, continued vaccine development, which could be, you know, flu-based vaccines, hybrid flu COVID vaccines, other vaccines that could benefit from an mRNA strategy. That's kind of one bucket. You've got the therapeutic side and a lot of work going in now to, you know, cancer therapeutics and using mRNA. It's not like there's, you know, 500 customers out there doing mRNA. There's probably, you know, a couple of 100, but there's probably 10 or so big guys that are putting a lot of money into it and really trying to focus on bringing products through phase I, phase II, and phase III. It's gonna take a little while for anyone to sort of see the big benefit outside COVID, but some of the vaccines get approved as we go through this year and, you know, some of the therapeutics get moved through, you know, from phase II into phase III. They're all gonna be very positive, and I see mRNA as being a, an important market for bioprocessing for the foreseeable future. Is mRNA more of a filter market like flat sheet, hollow fiber, or is it, you know, is it all of the typical biologic process technologies? Yeah. It's definitely a little different than the other biologics in the sense that you're synthesizing on the upfront side versus using, you know, a bioreactor or using, you know, a fermenter to make your drug out of cells. It's obviously mRNA synthesis is different. Once you get downstream into the processing part, it's not that different, right? You've got affinity chromatography, just like you have monoclonal antibodies. Scale is different for sure. It's smaller scale. You got affinity chromatography. You've got, you know, the ability to use hollow fibers and flat sheet. I think hollow fibers are probably more prevalent than flat sheet. Both are there, right? There's no doubt that customers are using both. The system side is also important, right? Customers really want the systems to match the scale that they're operating at. We believe that, you know, when you get into clinical manufacturing, you know, the large skid-based systems are gonna be too big, and therefore you need something smaller. You know, you've seen us talk about RS20 and even smaller systems than RS20 that are GMP with the right software. We think that that's definitely the right tack, and we expect that that's going to be an important part of our overall solution to mRNA customers. I'm going to rehash a question a little bit from, one of the investors, and that is Tony, you know, in the past you've had, TFF, CTech, you know, truly, you know, step up technologies in the market. Is there still room for that in the years ahead, or will it have to be, "I've got a better system, I've got a new sales force"? I guess the question really is how much is the pace of new products going to change the future? For Repligen or just bioprocess? For you. For Repligen. Yeah. I think there's no doubt that, you know, the acquisitions we've done over the last nine years has changed how we do R&D. You know, if you went back to 2018, 2019 and you asked how many products did you launch in 2018 or 2019, my guess is it was a few. Maybe it was two, maybe it was three. Now here we are, 2022, 2023, and we're launching on average 10-12 products a year. There's more products coming out. I think it's really encouraging that, you know, last year products launched in 2021 and, you know, the little bit of revenue we got from 2022 launches was about 7% of our revenue. We expect that'll double this year, be close to 14%. 20 21, 2022 and whatever revenue we get from 23 product launches. Definitely that's going to be a key part of our future, but I don't think that M&A is going to become a ultra rare, right? I really feel that there's still things that we need to buy. It's a big market. We don't play in the whole market. I think as long as we stay disciplined on trying to find, you know, technologies that fill a gap or companies that fill a gap in our portfolio or allow us to do something we've never been able to do before, then they're good deals for us to do. I think we'll continue to do M&A and probably no different than what we've done over the last 9, 10 years. I think go out 10 years from now, I think it'll average a deal a year. Some years like 2020 and 2021 where we did 3 deals in each year, that's probably not the norm, but I think, you know, a deal a year is probably kind of should be average for us. Some years it'll be more, and some years, like last year, it was none, but it'll average out at about a deal a year. It's all about finding the right technology, Paul. It's not about us trying to find every, you know, Private Bioprocess company that could be a fit with Repligen. You know, we really try to stick to our knitting on what's important when we do an acquisition. My guess is you know who they are. We have a few. Yep. We have a few names that we like. Yeah, it's a competitive market out there, so everybody. My list is no different than probably some of the other players in our industry's list as well. You just have to form some relationships and, when there's an opportunity, you kinda have to move pretty quickly. That's a good setup for Jon. How's your balance sheet looking? More specifically, Jon, should we start to assume a little more investment income based on the fourth quarter result? Yeah, Paul, as you've seen, the balance sheet is healthy, over $600 million of cash. Interest income is a positive contributor. You know, started really taking off in Q4 a little bit in Q3 last year, and should be a good contributor to income on the kinda other income line below the operating income level. Yeah, we should. Hopefully that'll will continue to, you know, interest rates will continue to stay solid and allow us to continue to obviously pick up income there. Tony, kind of to wrap up the conversation, what do you think the industry learned, as it went through Covid? That's a great question. I think there was some real positives that came out of Covid, which was ability for the vast majority of the bioprocess companies and the pharma companies and CDMOs that worked on Covid vaccines to be able to pivot. You know, traditionally it takes a long time for people to spec in a product or to move forward from, you know, phase I to phase II to phase III, but the amount of effort that went in at the industry level to move these vaccines through the clinical trial process was super impressive. I think every Bioprocess company jumped in and pivoted in terms of capacity. I think it's hard to say that everybody learned that you shouldn't overstock, when you're in the situation and products are scarce, it's very hard to not do that. I think people know what the lesson is, but I also think that every situation is gonna be different, and I think it's just, it's just gonna depend on what's going on. I do think that the other thing that came out of, out of this, which is more the Biotech industry looking at Bioprocessing, is I think they saw that there were more than four main players or five main players in the industry, right? I think we got our fair share and more than our fair share, I think, of COVID vaccine revenue, and I think there was a general sense. There are other companies that can deliver high quality products on time at scale than just the, you know, the standard players who've been around for a long time. I think that was another positive. Now, Jon Snodgres, if there's anything you wanted to. I think just the evolution of mRNA, I think it just really expedited that. Yeah. You know, that's gonna pivot from vaccines now into cancer therapeutics and other areas. I feel like that brought that transition, you know, forward probably by a couple of years, if not more. Do you think that it also created the clear awareness that you don't really want to be a bioprocess in-house producer? Was that already kind of acknowledged by the industry? A bioprocess in-house producer. Paul would-. Would a developer really wanna also make their own biologics, or was that ever even a question? I think for the smaller players like us in the industry, that's not something we would consider. You know, it's interesting that, you know, when you look at companies like Thermo, right? They have, you know, two pretty large CDMOs in their network. I'm sure at the Patheon level, they were. I don't have all the details, but I'm sure they were involved in manufacturing of either various components or the capacity that they had. I'm not sure. I just don't know what people on the bioprocessing or the life science tool space were thinking about whether they would jump in and do that. I don't think they were, that's maybe a question for kinda others to answer. You had to be a really big, big company with a, with a pretty massive manufacturing network that you could absorb and move really quickly and have all the logistics of knowing how to develop and move drugs through clinical trials as opposed to being a CDMO who manufactures at a, you know, to, you know, to certain trials. So I think, I think our industry definitely likes being the CDMO part. Not sure that the Bioprocessing industry wants to jump in and be the biological drug manufacturer from scratch. Okay. Super. We really appreciate the time, Tony. We look forward to. Always good. Always good catching up. Thanks for- Yeah. Thanks for having us. Take care, guys. Thank you. Thanks, guys.