Repligen Corporation

Good day, ladies and gentlemen, and welcome to the Repligen Corporation's third quarter of 2022 earnings conference call. My name is Chris, and I will be your coordinator. Today, all participants will be in a listen-only mode. Should you need assistance during today's call, please signal for a conference specialist by pressing the star key followed by zero. Please note that there will be a question and answer session following the company's formal remarks. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, you may press star then two. In order to accommodate all individuals who wish to ask a question, there will be a limit of two questions at a time. Please note that today's event is being recorded. I would now like to turn the call over to our host for today, Sandra Newman, Head of Investor Relations for Repligen. Please go ahead.

Thank you, Chris, and welcome, everyone, to our third quarter report. On this call, we'll cover business highlights and financial performance for the three- and nine-month periods ended September 30th, 2022. We'll also provide updates to our financial guidance for the full year. Refugee President and CEO Tony Hunt and our CFO, John Snodgrass, will deliver our report, and then we'll open up the call for Q&A. As a reminder, the forward-looking statements that we make during this call, including those regarding our business goals and expectations for the financial performance of the company, are subject to risks and uncertainties that may cause actual events or results to differ. Additional information concerning risks related to our business is included in our annual report on Form 10-K, our quarterly reports on Form 10-Q, the current report of Form 8-K, which we're filing today, and other filings that we make with the Securities and Exchange Commission. Today's comments reflect management's current views, which could change as a result of new information, future events, or otherwise. The company does not obligate or commit itself to update forward-looking statements except as required by law. During this call, we're providing non-GAAP results and guidance. Reconciliations of GAAP to non-GAAP financial measures are included in the press release that we issued this morning, which is posted to Repligen's website. and on SEC.gov. Non-GAAP figures in today's report include the following, revenue growth at constant currency, gross profit and gross margin, operating expenses, including R&D and SG&A, operating income and operating margin, income tax expense, net income, and earnings per share, as well as EBITDA and adjusted EBITDA. These adjusted financial measures should not be viewed as an alternative to GAAP measures, but are intended to better enable investors to benchmark Reflogen's current results against historical performance and the performance of peers while evaluating investment opportunities. Go ahead, Tony.

Okay. Thank you, Sandra. Good morning, everyone, and welcome to our Q3 earnings call. As you saw in our press release this morning, we delivered a very productive first nine months for the company. In addition, we entered into two strategic collaborations that advance analytics, and approaching franchises, which I'll speak to later. Quarterly revenue came in at $201 million, despite an 11x, $11 million of FX headwinds, and slowing COVID-related revenue. Revenue the first nine months came in at $615 million, up 28% organically, which takes into account a 9% decline in COVID revenue during this period and five points of FX headwinds. Our base business continues to perform well, finishing up 29% for the quarter and 35% through the first nine months of the year. Our filtration and co-entropy businesses were again the major drivers of growth in the quarter. The growth in these two franchises more than offset the decline in COVID revenues, which were down by 19 million, or 40% year-on-year. We continue to see strength in gene therapy accounts, where revenue growth exceeded 50% through the first nine months of the year. More importantly, we now have over 20 accounts with revenues in excess of $1 million per year, up more than 70% from a year ago. We remain on track to finish the year above our 40% growth target, or over $105 million in gene therapy revenue. As mentioned earlier, we again saw a predictive drop-off in COVID revenues in the quarter, and we now expect COVID revenues to come in at $135 to $140 million for the year. an adjustment of 7.5 million from the midpoint of our previous guidance and down 28% versus our 2021 finish. Looking ahead, we expect COVID revenues for 2023 to be in the range of 30 to 40 million. On the order front, we had a lighter quarter in Q3 reflecting the minimal contribution from COVID accounts, approximately 7% of the order book, and a return to more normal ordering patterns by our customers based on shorter lead times for our products. Our base business orders were up slightly year on year. Book-to-bill on total orders through the first nine months was 0.9, while base business had a book-to-bill of 1.0. Looking to our full year 2022 finish, we're tightening our reported revenue to a range of $795 to $805 million, representing total revenue growth of 19% to 20% and 24% to 25% of constant currency. We're also increasing guidance for our base business growth to 33% to 34%, up 1.5 points at midpoint from our previous guidance, and we anticipate organic revenue growth in the range of 21% to 22%. Returning now to our strategic collaborations, during the quarter we executed on two agreements that strengthen and expand our process analytics and proteins franchises. In September, we signed a 15-year strategic licensing and collaboration agreement with DRS Daylight Solutions, who are experts in mid-infrared technology. As part of the agreement, Repligen will focus on the commercialization of Daylight's Copayo technology, while Daylight and Repligen's R&D team will jointly focus on next-generation product development. Copayo is an advanced in-line technology that complements our FlowVPX offering from C Technologies. What's really important about this deal is that we now have two highly differentiated process analytics technologies in the marketplace that will be integrated into our systems portfolios. In October, we signed an expanded agreement with Purolite, an Ecolab company, to extend our exclusive NGL Protein A agreement out until 2032. In addition, we broadened the agreement to now include ligands developed by Abbottide for MAP fragment purification. The first of these ligands, CH1, was launched at the recent BPI Boston show in September. Since signing the original NGL agreement with Purolite in 2018, The combination of our NGL ligands with PureLite's Argos Jetted B technology has resulted in rapid adoption by our process end-users. We are very confident about the long-term success of this strategic partnership and the growing revenue contribution to our proteins business. So moving now to our quarterly performance. The story of the quarter was continued strength in our filtration and chromatography businesses. In filtration, our business was up 15% organically, driven by the ATF and HoloFiber portfolios. Organic growth from these two businesses was north of 20% year-over-year. Base business growth for the same businesses, which exclude COVID-related revenue, and inorganic M&A was up almost 40%. We now expect our filtration business to grow at approximately 25% here in 2022. As highlighted at our investor day in September, we are very excited about our filtration systems business, which we just strengthened with the launch of a dedicated system for gene therapy and mRNA, and an expanded set of artisan systems focused on TFF applications. Systems revenue through the first nine months of 2022 are up greater than 40%, reflecting the differentiated nature of this portfolio. With the build-out of our fluid management business, we expect customers purchasing systems to order more fluid management consumables, potentially generating additional revenue for the company. So moving to chromatography, our Opus prepack column business had an excellent quarter, up greater than 35%. As noted in other quarters, we continued to transition customers to customer-supplied resins in North America and Europe. We saw a welcome improvement in resin supply in Q3, which contributed to the overall performance for our chromatography business, which was up in the quarter. For the year, we now anticipate that the chromatography franchise will grow in the range of 35% to 40%. an increase from the 25% to 30% at our Q2 call. Our proteins business came in flat for the quarter with revenues from growth factors and PureLite offsetting its client and revenues from Cytiva. We continue to make good progress with AEB resin customer evaluations and expect some of these evaluations and opportunities to materialize in 2023 as customers implement and scale with these resins. We continue to expect proteins to be down approximately 10% in 2022. Finally, our process analytics business had a solid quarter with continued adoption of solo and flow VPX, with Europe being a standout. We now anticipate growth of approximately 20% for the year for this business. So overall, we had another strong quarter in Q3 with continued strength in our base business. We're excited about the potential of our new strategic partnerships with DRS Daylight Solutions and PureLight to strengthen our analytics and proteins franchises. We believe we've developed one of the strongest and most innovative bioprocessing portfolios in our industry. We're confident about our finish year in 2022 and continued success in the coming years. With that, I will turn the call over to John for the financial update.