Good day, and welcome to the Rapid Micro Biosystems fourth quarter 2021 earnings conference call. At this time, all participants are in listen-only mode. After the speakers' presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star then one on your touchtone telephone. If anyone should require assistance during the conference, please press star then zero to reach an operator. As a reminder, this call may be recorded. I would now like to turn the call over to Mike Beaulieu, Investor Relations. You may begin. Good morning, and thank you for joining the Rapid Micro Biosystems fourth quarter and full year 2021 earnings call. Joining me on the call today are Rob Spignesi, President and Chief Executive Officer, and Sean Wirtjes, Chief Financial Officer. Earlier today, we issued a press release announcing our fourth quarter and full year 2021 financial results. A copy of the release is available on the company's website at rapidmicrobio.com under Investors in the News & Events section. Before we begin, I'd like to remind you that many statements made during this call may be considered forward-looking statements within the meaning of federal securities laws, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements, including but not limited to statements relating to Rapid Micro's financial condition, expectations for business development and growth, customer interest and adoption of the Growth Direct system, and the potential impact of COVID-19 on Rapid Micro's business. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. For a list and description of the risks and uncertainties associated with Rapid Micro's business, please refer to the Risk Factors section of Form S-1 filed with the Securities and Exchange Commission on July 12, 2021. We urge you to consider these factors, and you should be aware that these statements should be considered estimates only and are not a guarantee of future performance. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, March 4th, 2022. Rapid Micro disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. With that, I'll now turn the call over to Rob. Thank you, Mike. Good morning, everyone, and thank you for joining us to review our fourth quarter and full year 2021 results. Before getting into the details of our performance, I would like to remind everyone of our mission at Rapid Micro Biosystems. We're focused on revolutionizing microbial quality control or MQC, which is a critical regulated aspect of the global pharmaceutical manufacturing process. This process includes a constant testing of raw materials, production environments, personnel and processed materials, and final sterility of drug products from microbial contamination, such as bacteria, mold, and other harmful organisms. Our Growth Direct platform fully automates and replaces the traditional manual MQC process, setting the foundation for end-to-end quality control automation to enable the future of advanced pharmaceutical manufacturing. We remain very excited about our commercial opportunity. The MQC testing market is large at approximately $10 billion and growing. It is ripe for disruption and under pressure to modernize with little competitive intensity. We count over half the global top 20 pharmaceutical manufacturers as our customers, and our value proposition is resonating strongly. While we address all pharmaceutical manufacturer modalities, we are especially strong in the fast-growing biologics and cell and gene therapy segments. Turning to full year 2021 results, total revenue was $23.2 million, which increased 45% compared to the prior year. This includes commercial revenue of $21.6 million, which increased 54% compared to 2020. For the full year 2021, we placed 29 systems and completed the validation of 33 systems. On a cumulative basis, we have placed 116 systems as of the end of 2021, a 33% increase compared to the end of 2020. Additionally, we have validated 84 systems, a 65% increase compared to last year-end. Recurring revenue increased by 100% in 2021, driven by higher consumable utilization and annual service contracts. While still early in our commercial growth, recurring revenue represented 36% of commercial revenue in 2021 compared to 28% in the prior year. In 2021, approximately two-thirds of new systems were placed with existing customers and one-third with new customers. Moving forward, quarterly variability notwithstanding, we expect a good balance of systems to be placed between new and existing customers. This demonstrates that as we continue to expand our footprint with new customers, existing customers are recognizing the value proposition of our Growth Direct solution and are purchasing additional systems. Geographically, about 60% of the systems were placed with customers in North America, and about 40% were placed with customers in Europe and Asia Pacific. Finally, approximately 70% of the systems placed are being used to support manufacturing of biologics and cell and gene therapies. Together, these points demonstrate the progress of our land and expand strategy, where we seek to place an initial set of systems with a customer and then expand to other sites in regions within a customer's manufacturing network. We fully expect the investments we are making across the commercial organization to drive future growth and success. Entering 2022, we have a robust funnel of Growth Direct system opportunities that is balanced between new and existing customers and include the diverse mix of manufacturers, including top global pharma companies and CDMOs. While the funnel includes opportunities across several modalities, it is most heavily weighted towards the fast-growing biologics and cell and gene therapy segments. We believe the size and quality of our Growth Direct system funnel, coupled with our continued investments in our commercial teams and capabilities, will enable us to drive significant continued growth and achieve our goals in 2022. In summary, 2021 was a transformative year at Rapid Micro. Despite some headwinds, we executed against our land and expand strategy. We significantly expanded our commercial, operational, and product development teams, including key leadership positions. Importantly, we strengthened our financial position following the initial public offering that provided the capital to execute a multi-year strategic plan, including critical investments to drive commercial growth, product development, and operational expansion. Looking forward to 2022, we will continue to target investments in our commercial capabilities, including nearly doubling the size of our global direct sales and marketing team, as well as expanding sales operations and support, investing in training, and developing digital marketing and tools aimed at increasing sales force productivity and effectiveness. We are also excited about our expanded team and capability in the Asia Pacific region, where we have not had previously a meaningful presence. We are also investing in new innovative products that will further demonstrate our leadership position in automated microbial quality control. Our product and service strategy is focused on leveraging the Growth Direct platform to provide additional upstream and downstream in our customers' workflow. We are pleased with the progress of our product development teams have been making, and would like to provide a few updates to our product pipeline. We are on track to begin customer beta testing of our mold detection advanced software later this year. This product will enable customers to differentiate mold from other categories of microorganisms. This is an important capability that supports our goal of giving customers early information to make decisions and respond to contamination events more quickly. We have integrated this feature into our core vision system, further enhancing and expanding Growth Direct's capabilities within customer workflows. We are also excited to announce that in Q2, we plan to start beta testing with a global top 20 pharmaceutical customer for our Rapid Sterility application. This customer has adopted several of our other applications, and we're excited to get the beta underway. As we have discussed, integrating Rapid Sterility testing into our automated Growth Direct platform will accelerate final product release and enable customers to ship their products more quickly. This application is especially important for sterile and time-sensitive products such as vaccines, biologics, sterile injectables, and cell and gene therapies. Moreover, delivering a Rapid Sterility test to customers on the Growth Direct platform will extend our automation and data integrity benefits and offer compelling differentiation versus existing sterility products on the market. We are also investing in global manufacturing to expand capacity, augment our supply chain infrastructure, and drive operational efficiencies to deliver product cost reductions. Around mid-year, we are looking forward to the completion of our new consumables manufacturing site in Lexington, Massachusetts. The second manufacturing site will enable even more robust continuity of supply to serve our customers and is critical to our long-term growth. To summarize, we are very excited about the opportunity in front of us. We are building a strong recurring revenue business as we increase our cumulative system placements and drive higher consumable utilization. Additionally, we have a strong balance sheet and the financial flexibility to continue to make strategic investments to expand and enhance our commercial and operational capabilities, including new product development, to drive growth and create shareholder value in 2022 and beyond. With that, I will turn the call over to Sean to discuss our financial results. Sean? Thanks, Rob, and good morning, everyone. This morning, we reported total revenue for the fourth quarter of $5.2 million, which was essentially flat compared to Q4 last year. Commercial revenue was $4.9 million, down slightly from $5.1 million in the fourth quarter last year. Both total and commercial revenue were at the high end of the ranges we pre-announced in early January. Within commercial revenue, product revenue was $2.9 million compared to $4.1 million in the fourth quarter of 2020. This decline was due to lower placements of Growth Direct systems, but was partially offset by strong growth in consumables, which increased over 100% compared to Q4 2020. As we discussed in January, the decline in system placements was due to customer site access limitations caused by the rapid onset of Omicron and other specific customer timing issues that resulted in the placement of three Growth Direct systems in the fourth quarter compared to 10 placements in Q4 2020. Systems revenue declined at a rate slightly less than system placements. In contrast, the significant increase in consumables revenue was driven by newly validated systems coming online and increased utilization by some existing customers. Commercial revenue also includes service revenue, which was $2.0 million in the fourth quarter, an increase of 91% compared to Q4 2020. The increase was largely due to higher revenue from validation services and, to a lesser extent, recurring service contract revenue. During the quarter, we completed the validation process on 16 systems, including several that shifted from Q3 into early Q4. On a combined basis, the 21 validations we completed in the second half of 2021 met our expectation and sets us up well for continued consumables growth in 2022. Nonrecurring revenue was $2.6 million in the fourth quarter, with the impact of lower system placements partially offset by good growth in validation revenue. Fourth quarter recurring revenue, which includes consumables and service contracts, increased 91% to $2.3 million. Growth in our recurring revenue is primarily driven by increases in our cumulative validated systems and higher customer utilization of our consumables. During 2021, the cumulative number of validated systems in the field grew from 51 to 84, an increase of 65%, and consumable revenue per average validated system was around $80,000. It's important to keep in mind that this metric includes a number of recently validated systems that have not yet fully transitioned into full commercial routine use. Looking only at those systems we consider to be in routine use, consumable revenue per average system was well over $100,000 in 2021, with several individual customer systems at run rates well over $200,000 for the year. These metrics are important factors in our forecasting and give us confidence in the contribution we expect recurring revenues to make to our long-term growth. While we expect these metrics to continue to trend up over time, they can and do vary from quarter to quarter due to several factors, including the pace and timing of validation and the transition to routine use for new systems. To finish up on revenue, non-commercial revenue related to our contract with BARDA was $0.4 million in Q4. As a reminder, we completed our existing contract with BARDA in Q4 and do not anticipate recognizing any non-commercial revenue in 2022. Turning to gross margins, product margins were -$2.7 million, or -92% in Q4, compared to -$3.0 million or -74% in the same period last year. The decrease in product margins was due mainly to the lower system volume in the quarter. To help illustrate this, had system placements been flat with Q4 last year, product margins would have improved substantially compared to that period, reflecting both the progress we've made in reducing product costs over the past year and the impact that variability in system placements can have on our margins. We continue to execute against a number of product cost reduction and efficiency initiatives across both systems and consumables, and expect these efforts as well as increasing sales volumes to drive sequential improvement in product margins as we work our way through 2022. Service margins were 3% in the fourth quarter compared to 12% in Q4 last year. The slight decrease was mainly due to investments we made in incremental field service and validation personnel during 2021. We expect these investments to drive significant service margin improvement over the course of 2022, as both our activity volume and employee productivity continue to increase. On a combined basis, commercial gross margins improved slightly from -57% to -54% in Q4, with the impact of lower system placements more than offset by a higher mix of service revenue and improved consumable margins. We continue to actively manage inflationary pressures in some materials, freight, and labor costs, and did not experience any material business impact from them in the fourth quarter. Moving down the P&L, total operating expenses were $12.0 million in the fourth quarter, consisting of $3.4 million in sales and marketing, $2.9 million in R&D, and $5.8 million in G&A. This compares to total operating expenses of $6.6 million in the fourth quarter of 2020. The increase was largely due to higher employee-related costs due to increased investment in commercial and product development, as well as higher G&A expenses incurred to operate as a publicly traded company. Net loss in the fourth quarter of 2021 was $14.6 million. This compares to a net loss of $11.3 million in the fourth quarter of 2020. The increase in net loss was primarily due to the higher operating expenses that I just discussed. Net loss per share attributable to common shareholders was $0.35 in Q4 2021, as compared to $36,000.66 in the prior year quarter. As a reminder, the number of weighted average common shares outstanding in Q4 this year was materially higher than Q4 last year because of the conversion of our outstanding preferred stock to common stock in connection with our IPO in July 2021. This accounts for a substantial portion of the decrease in net loss per share between periods. With respect to non-cash expenses and CapEx, depreciation and amortization expense was $0.5 million. Stock comp expense was $0.7 million, and capital expenditures were $2.0 million in the fourth quarter of 2021. We ended 2021 with $203.5 million in cash equivalents, and investments. We believe the strength of our balance sheet gives us the flexibility to invest in our growth initiatives as we scale and continue on the path toward profitability. Now turning to guidance on our 2022 outlook. We are reaffirming the guidance we provided on January 9 for full year commercial revenue of between $27 million and $32 million, representing growth of approximately 25%-50%. System placements are the largest source of potential variability between the high end and low end of this guidance range. As we expected back in January, Omicron headwinds have continued to impact our ability to access customer sites and interact with customers in person thus far in Q1. While we have recently seen early signs of these limitations starting to lessen in some geographies, we continue to expect Q1 system placements and commercial revenue to look similar to Q4 and represent the lowest quarter of the year. From there, our guidance assumes that commercial revenues increase sequentially as the year progresses, peaking in Q4, driven by two primary factors. One, increasing system placements due to ramping benefits from our ongoing commercial investments and expected lower impact from COVID-related headwinds, as well as normal seasonal trends. Two, increasing recurring revenues from consumables and service contracts as we continue to grow our base of validated systems and move them into routine commercial use. Looking at the year in halves, our 2022 outlook assumes that roughly 40% of our revenue will be delivered in the first half of the year, with the remainder in the second half. We expect the number of new systems validated in 2022 to be in line with or slightly higher than 2021. Although we currently expect the quarterly cadence of system placements and validations to increase gradually as the year progresses, it is important to note that we have historically seen some variability between quarters. That concludes my comments on our 2022 outlook. At this point, we'll open the call up for questions. Operator? As a reminder, to ask a question, please press star then one. If your question has been answered and you'd like to remove yourself from the queue, press the pound key. Our first question comes from Max Masucci with Cowen. Your line is open. Hi. Thanks for taking the questions. First one is just around, you know, the timing of Growth Direct implementation. Like, for biopharma companies, you know, that are conducting their drug development manufacturing in-house, and I'm sure it varies, you know, for small molecule versus biologic and cell and gene therapy customers, but, are you seeing that these customers implement Growth Direct systems, you know, automated MQC testing capabilities, you know, before or after IND filing? Just curious when it would be ideal time is to introduce a Growth Direct system. Yeah, Max, it's Rob. Good question. Most of our placements and installations are after commercialization of the product, within, again, our broadest segment is biologic and cell and gene therapy. Although we do have examples of where we've been purchased and installed in phase III trials, especially in cell and gene therapy. That's the composite, I would say, of our current portfolio. That being said, we see opportunity to work upstream in the process, in the phase, certainly phase III, possibly even phase II, to become part of the manufacturing quality process earlier. It is one of the key elements of our commercial strategy. Great. Maybe just thinking about demand by customer type, can you just give us a sense for, you know, the demand trends you're seeing for, you know, biopharma customers, you know, versus CDMOs? Maybe even if we could split it, you know, between biologics companies, you know, cell and gene therapy companies and small molecule. Just be curious to hear, you know, how demand trended for each of those customer types during 2021 and expectations in 2022. Right. I would say with the way we look at it and what we've seen is, you know, demand was strong. I think you've heard in the prepared remarks with regard to biologics and cell and gene therapies both from a principal manufacturer standpoint as well as CDMOs. The majority of our CDMOs is a strong segment for us, and majority of those sales are into the biologics and cell and gene therapy categories. Those companies that are performing principal manufacturing of biologics and cell and gene therapy, as I discussed in the prepared remarks, our value prop is resonating quite strongly. Our value prop resonates strongly in small molecule and sterile injectables. It's just less of a current feature of our current portfolio, you know, based on the, you know, the composite I walked you through in the prepared remarks and previously. That's as much to do with our current focus as any end market demand. As we expand our commercial team, expansion of our capture of those other segments is certainly in scope. But the demand and value proposition around biologics generally in cell and gene therapies remains strong across the, I would call it the, manufacturer type, principal manufacturer or CDMO. Great. Maybe just a final quick one. Just on, you know, as the, you know, the variant impact has, you know, cooled off a bit, you know, you're serving a global customer base, but if there's anything you can offer around, you know, a rebound, the rebound you've seen in the U.S. versus, you know, maybe, the E.U. and rest of the world, you know, Omicron has cooled off, that would be helpful? The first part of the quarter looked a lot like Q4, you know, per Sean's comments. Although we are seeing green shoots and things getting better in the U.S. in particular. Just for example, we had one of our major customers on site last week. It's the first time that's happened in a very long time. Asia I would say is probably the most, based on our experience at least, the most still in a you know I wouldn't call it a lockdown mode, but in more of a COVID protocol mode. Europe is somewhere in between North America and Asia. That being said, we are planning a significant, you know, customer, visit trip in early part of Q2, which we expect to go through with. We are kind of cautiously optimistic about you know, the restrictions alleviating. It's still company to company and case by case, but we're incrementally optimistic. Great. Thanks for taking the questions. Thank you. Our next question comes from Tycho Peterson with JP Morgan. Your line is open. Hi, guys. This is Casey on for Tycho. Thanks for taking my questions. Hey, Casey. Wanted to get a sense of, hey, so what's the implied pull through per system in the 2022 guide, both in terms of, you know, total instruments in the validated base and then for the routine use instruments. Can you give us a sense of, you know, how many of the validated base right now is routine, and where do you think that would go by the end of 2022? Yeah. Hi, Casey, it's Sean. On the first question, you know, focusing on the validated system base, I think what we've got modeled in is a, you know, relatively modest increase in that number, that $80,000 number that I mentioned in my remarks. You know, we will expect to see that accelerate over time as we continue to grow that base and more and more of that overall base is already into routine use. You know, think about routine use. We've talked in the past about kind of the lag and the process to get from validation to routine use. It's different for different customers. It typically goes faster for existing customers than new customers. You know, we've got our target is three months. You know, we don't have every customer there yet. Some take longer than that, and we're continuing to work with them to accelerate that process. You know, we do see significant opportunity and are going at that in a number of different ways. You know, we've talked about some things we're doing to project manage more directly and shrink those timelines down. Both that and, you know, there are opportunities with customers we're going after to increase utilization of their systems, whether it be adding applications, you know, they naturally do it sometimes as they ramp up production. You know, both of those factors are things that we see as drivers of that metric increasing and accelerating over time. Got it. That's helpful. On the margin profile of the consumables, you know, usually in our space, the consumables have a higher gross margin than the instrument. Just wanna get a better understanding of what goes into the consumables manufacturing process here and if there's any way to optimize costs there. You know, ultimately, where do you see the long-term consumable margins shaking out once you guys are at scale? Yeah, sure. You know, there are lots of opportunities to optimize cost, and we're going after many of them right now. When you think about us, I mean, we've talked about this before as well, and you know, one of the bigger challenges with consumable margins for us today is just scale. You know, the volume is relatively low. We've made significant and multimillion-dollar investments in an automated line and infrastructure to support you know, the growth of us, ourselves and our customers, you know, adding facilities. We just talked about the Lexington facility that we're adding and we expect to bring online mid-year. You know, what's gonna drive the consumable margins for us moving from negative to positive and trending up into the 70%-ish range, which is where we ultimately expect them to get long term, is going to be, you know, us taking cost out of the product. You know, at low volumes, you don't have a lot of leverage with suppliers. You know, there are different things we can do as we grow that'll help get cost out of product that we've talked about in the past. But volume is a very big provider of leverage in the margins for consumables going forward as well. This cost base we built, we do not expect to grow at anything close to our consumables growth rate, and therefore, the amount of overhead that gets allocated to an individual consumable over time is going to shrink relatively rapidly, and that will drive a lot of improvement and expansion in consumable margins going forward. We look out, you know, a couple of years from now, we would expect to be in a space where we're moving positive, and we'd expect that trajectory to be pretty steep in terms of getting ourselves up to where we ultimately think we can get on a consumable margin overall. Got it. Thank you for all the color there. Maybe just curious. Sure. you know, how you guys are thinking about client staffing shortages, if there are any, both in terms of near-term impacts to placing and validating instruments, but also on the customer demand side, as this dynamic, you know, would likely drive some incremental demand towards, you know, an automated, high throughput kinda solution. Yeah, any color there? Thank you. Yeah, Casey. It's certainly part of our value proposition. You know, customers view our system as a way to manage the risk of human labor. So it's definitely a core part of our value prop and resonating, as you may imagine, strongly in the current market. As I touched on, you know, in previous conversations, it's also not a great idea historically to have, certainly through COVID, to have a number of people in a lab side by side, you know, looking at Petri dishes. So that automation and remote data and data enablement capability we bring as part of the strong value prop, it resonates well with our customers, you know, per my comments in the intro remarks. Our next question comes from Dan Arias with Stifel. Your line is open. Good morning, guys. Thanks for the questions. Sean, when you look at the bucket of routine use systems that drive those consumables pull-through levels that are pretty high, $100,000, and then I think you said there were some that were over $200,000, what is the average timeline that it took to get to those levels? And then I guess, what are the characteristics that those customers have in common and that we can kinda use to conceptualize who should be getting to what level and when? I mean, I'm sure overall customer size plays into it, but I'd be curious just to hear, you know, when you try to understand who gets to where and when and what the expectation should be there, you know, how we could go about thinking about that. Yep. I'll start, and I think Rob may have some comments here too. Yeah, in the timeline to get customers from validation to routine use, it varies quite a bit historically. We're, as I said earlier, trying to narrow that down, both shrink it and make it more consistent. We're making some progress on that, but we've got some work to do. We think there's a lot of opportunity there, which is gonna benefit us and get consumables going sooner. You know, the three months I said was a target. You know, we have some that are three months. You know, we have some that are, to be frank, more than a year. Most are in between that. I don't have an average number for you, but I would think about, you know, in the, you know, somewhere in the middle of that range of being where a typical customer would be or the time it would be taking a typical customer today to get from validation and routine use. You know, in terms of, you know, who's at the $200,000+, who's at the, you know, something less than that, it really has to do with use cases for a specific customer. I think we've said before that, you know, cell and gene therapy, the level of testing intensity for EM within that sector is very high. We would typically expect those kinds of customers and generally biologics as well, maybe slightly lesser extent to in EM particularly to be pulling through high volumes of consumables and generating high volumes of revenue. It does ultimately come down to use case. You know, Rob, I'll let you comment a little bit on that as well. Yeah, sure. I think just to jump off of Sean's comments, I think that's he was spot on. You know, think of it as right now, mostly application driven, Dan. Environmental monitoring. In a given manufacturing facility, it's 70%+ of the volume, and our footprint tracks pretty closely to that. Our higher volume and higher yielding systems tend to be the environmental monitoring systems in both cell and gene and biologics. We have some very high examples in both end segments. Our water and bioburden tests tend to be a bit lower volume, but I can also tell you that we've got a focused energy against continuing to maximize system capacity. There is latent capacity in some of our systems around the world, and we've got a dedicated team out there that is growing, focused on improving application utilization, bringing on, for example, if a site has a water system that's being used not at full capacity, partnering with the customer on different parts of the site or campus to bring more water testing on to maximize the utilization and ultimately consumable revenue. At the highest level, think of it as, you know, we're focused in biologics and cell and gene therapy. It tends to be a very, very high test volume environment for EM and other. The majority of our sales and forward-looking funnel, it's important to note, is environmental monitoring. Yeah. The only other thing I'd add to that, Dan, is just remember that, you know, between water, bioburden and EM, the pricing is quite a bit different, roughly 3x or more. Right for water and bioburden. Volume is not the only driver. Price is important, as you think about how that's working out in the market. Right. Some of that latent capacity and some of the systems around the world, that becomes an interesting lever over time as well. Yep. Okay. Okay, helpful. Just to go back to some of the dynamics in the quarter and some of the things that you mentioned, can you just talk to the placement factors that you saw that aren't related to COVID and the extent to which some of them are sort of idiosyncratic or one-time situations? You know, looking into the first half of the year, are you getting the sense that there might be any of those that would crop up and that we should kind of factor in when we're thinking about 1Q or 2Q placements, aside from what you mentioned? Yes, Rob, I'll start, and Sean may have a couple of comments as well. You know, the non-COVID and maybe customer-related timing issues, like one good example is we had a decent sized multi-system order pushed to the right due to construction delays. Now, the details of that could be related to COVID underlying the impact in construction. It's hard to flesh that out at times, but you know, fundamentally, if the site's not prepared, the customer's not ready, it's extremely difficult to place a system. That is an example of an idiosyncratic case that was a meaningfully sized multi-unit order in the quarter. You know, looking into the first half, do risks of that nature exist? You know, at some level, yes. The quality and scale of our funnel that we're managing around to hedge any risk associated with that. That type of risk will exist. As we build our sales team out and build our funnel around it, that's really one of the major countermeasures we have against these types of challenges. Having better site access can also help us get ahead of some of these risks as well. Yeah, just one bit of color on that deal that Rob talked about, too. The reason that the construction pushed out or we needed construction at all, I guess, or they needed it was because they decided to increase the size of their order. They needed to put it in a different facility. Right ...which ultimately needed construction to fit the systems. It's a good answer for us. It just impacted timing. Yeah. Yeah. It should fall into 2022. If I was thinking initially two in Q4, I could be thinking three in 2020 or 2022 at some point. I mean, the point is like, you will capture that order and the size is larger. Yes. That's a good assumption. Okay. Yep. Yes. Okay. Just lastly on that funnel that you mentioned, just to kinda like calibrate where we are now versus where we were. I think when we were going through the IPO process, the way that it looked, the funnel looked by customer type was kind of just over 2/3 biopharma, and then the rest was CDMO and other. Is that generally the way that it looks now, or are you growing the biopharma piece? Because to your point, cell and gene and things like that are picking up and contributing more to the, you know, to the overall demand profile. I'd say the biopharma principal manufacturer is still probably in that two-thirds and a big chunk of the rest is CDMO. We tend to look at it as a bit more on end product manufacturing modality. The combination of biopharma and CDMO is better than 85%+. The funnel of those in our funnel, they're manufacturing specifically biologics and cell and gene therapies. Think of it as the vast majority of our funnel is in the biologics and cell and gene therapy category. The biggest single segment is biopharma, followed by CDMO. Got it. Okay. Very good. Thank you, guys. Sure. Our next question comes from Tejas Savant with Morgan Stanley. Your line is open. Hey, guys. Good morning. One on the 3Q versus 4Q dynamic here, Rob and Sean. Can you just walk us through why you think, you know, the site access issues impacted validated systems in 3Q, but the impact shifted sort of predominantly to system placements in 4Q? Tejas, if you recall, we picked up the validations pretty quickly in Q4. That is related to how customers view critical access and essential activities. Once a system is purchased and it's going through the installation process and validation process, you know, that can tend to get viewed more as an essential type of function and allows our folks to get on site. There's always some noise in that which cause a little bit of delay in between Q3 and Q4 in the validations. As you know, we picked them back up. You know, new sales opportunity is a little bit different with regard to our ability to get on site and get site access, you know, especially with some of our, you know, newer opportunities out there. That's just a practical issue associated with how customers ran their business and allowed us site access based on the kind of activity that we were performing. Yeah. Tejas, just to add to that, I think, you know, just more broadly, you know, it's important to remember that, you know, we at any given point in time, we have a number of validations in process. You know, we measure the metric at the end of a quarter, and in that case, because of the factors that we were seeing, you know, a handful of them slipped a few weeks. You know, and if you look back at our historical quarterly validation numbers, they have tended to bounce around because those kinds of things have happened historically. They have been exacerbated with COVID and some of the access issues that they've created. Although, as Rob said, you know, that it's a bigger issue with the system, new system placements than it is with validation. You know, I wanna set an expectation that these things can bounce around between quarters and, you know, we look at it on an annual basis and say, you know, "Did we meet our goal? Yeah, in 2021, we met our goal." You know, and we'll continue to do that. You know, the critical question is, you know, is what's happening with timing gonna impact future consumable sales? I think when we look at the Q3, Q4 example, not in any meaningful way, we don't think so. You know, to the extent that things split materially in the future, you know, we'll need to talk about that. But that, you know, we do see variability, and I just wanna make sure that we're clear that that's part of the normal business cycle for us. Got it. That's helpful. Just a couple of quick ones on the margins here. You know, I think you pointed to sort of some of the dynamics in the fourth quarter here on the gross margin line. Are you still targeting gross margin breakeven in 2022 on a consolidated basis? Yeah, we are. At the midpoint of our guidance range, we will be positive on gross margins in the fourth quarter. Got it. Great. Sean, on OpEx, I mean, should we be thinking of, you know, sort of mid- to high 40s% is fair with another sort of, you know, $8 million or so allocated for the Lexington facility build-out? OpEx or CapEx, Tejas, are you asking? Well, both actually. Yeah. Okay. Yeah. On OpEx, I would think about that as being a little bit below what our commercial revenue growth rate will be. We won't- Mm-hmm. We won't have it at quite the same level. It'll be a little bit lower. That's really driven by a couple of things. Investments we made in 2021 annualizing. The other big thing in there is that, you know, we're a public company now. This will be the first year that we have those costs that we carry with us for an entire year. Mm-hmm. The annualization of those drives a little bit higher growth rate in those costs. As we look forward, you know, we expect there to be a bigger gap between revenue growth and OpEx growth, after this year as we drive toward profitability over time. On CapEx, yeah, the Lexington site is a consideration. There's a couple other relatively significant things in CapEx this year. The number that you threw out there is probably a relatively fair number, to think about CapEx for us this year. Got it. Helpful. You know, it's come up a couple of times before, but I just wanted to talk about like some of the more recent proactive measures you've taken to ensure your customers regarding business continuity. You know, it's a big point of focus, especially given not just the supply chain pressures, but now also all the geopolitical tensions, you know, brewing over here. In that context, Rob, can you possibly think about sort of, you know, plans to accelerate that European facility build-out? Well, you know, to that point, Tejas, I mentioned a visit to see customers early in Q2. The second part of that visit is to look at various sites in Europe as well. It is top of mind for us. Just more generally, well, we continue to hold both upstream and downstream finished goods inventory in both North America and Europe for our customers. We haven't seen any major supply chain disruptions, you know, through COVID up until including, you know, kind of current times. We have our principal manufacturing in Lowell and a manual backup there. Of course, as you know, we're investing here in Lexington for backup manufacturing as well. As we discussed ultimately, Europe as well. Anyway, the good timing on the question because we are focused now on, as Lexington is coming to conclusion, looking into the European site selection and go forward. Still TBD on the actual project plan around that, but it's very much on the plate for 2022. That'll probably be our number one CapEx investment over the next couple of years. Yeah. after this year. Yeah. Got it. That's helpful. One final one for me on sterility. Just Rob, any color on you know, feedback from customers following the announcement? I think you mentioned the first customer beta starting here in the second quarter. Any color on whether a customer could adopt Growth Direct solely for sterility, or is it more of an optionality for existing customers to add a new application to the platform? Oh, yeah. Well, the general feedback that we're getting from customers, especially those of which we're working with on betas, is quite excited. So I think there's a need for a rapid sterility application in the market that is married with a system like the Growth Direct, where you have the full walkaway automation and all the data integrity benefits. To the second question, we absolutely see a value prop of selling sterility to not only our existing customer base but new customers as well. It's the value prop resonates strongly in our core market of biologics and cell and gene therapies. We also touched a bit about at the top of the call here, the Q&A about other segments, like sterile injectables and other types of small molecule markets. It also has very high value proposition fit there as well. We view it as certainly related with regard to the full assay profile that we currently have, but also it can be adopted, you know, as a standalone assay and system basis. Our goal obviously is to acquire the entirety of the workflow in any given customer. We do envision, you know, sterility maybe being the lead dog, if you will, or the lead, you know, kind of instrument and assay in new customers. Very helpful. Thank you, Rob. Sure. There are no further questions. I'd like to turn the call back over to Rob for any closing remarks. Okay. Well, thank you for joining us today. We appreciate your interest in our company. Next week, we're attending the Cowen Healthcare Investor Conference and look forward to speaking with many of you there. This concludes the program. You may now disconnect. Everyone, have a great day.