Rapid Micro Biosystems, Inc.

Good day, and welcome to the Rapid Microbiosystems Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star then 1 on your touchtone telephone. If anyone should require assistance during the conference, please press star then 0 to reach an operator. As a reminder, this call may be recorded. I would like to turn the call over to Mike Boyer, Investor Relations. You may begin.

Good morning, and thank you for joining the Rapid Microbio Systems fourth quarter and full year 2021 earnings call. Joining me on the call today are Rob Spignessi, President and Chief Executive Officer, and Sean Wurchis, 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 and 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 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 4, 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. And 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, in-process materials, and final sterility of drug products from microbial contamination, such as bacteria, mold, and other harmful organisms. Our GrowthDirect 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 of the global top 20 pharmaceutical manufacturers as our customers, and our value proposition is resonating strongly. And 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. And 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. And 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 Salesforce 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 GrowthDirect 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 a 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?