Rapid Micro Biosystems, Inc.

Good day, and thank you for standing by. Welcome to the Rapid Microbiosystems first quarter 2022 earnings conference call. At this time, all participants are in listen-only mode. After the presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star, then 1 on your telephone keypad. Please be advised, today's conference may be recorded. If you require operator assistance during the call, please press star, then 0. I'd now like to hand the conference over to your host today, Mike Bollier with Investor Relations.

Good morning, and thank you for joining the Rapid Microbio Systems first quarter 2022 earnings call. Joining me on the call are Rob Spignessi, Chief Executive Officer, and Sean Wurchis, Chief Financial Officer. Earlier today, we issued a press release announcing our first quarter 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 statements 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 our Form 10-K filed with the Securities and Exchange Commission on March 24th, 2022. 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. Also, the company's contract with the U.S. Biomedical Advanced Research and Development Authority, or BARDA, was completed in the fourth quarter of 2021. Throughout our quarterly performance discussions, we'll be excluding the noncommercial revenue impact from BARDA by comparing total 2022 revenue to commercial revenue in 2021. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, May 10th, 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 will turn the call over to Rob.

Thank you, Mike. Good morning, everyone, and thank you for joining us to review our first quarter 2022 business performance and financial results. While we were very pleased with most elements of our business performance in Q1, system placements were weaker. Access to customer sites continued to be limited, which resulted in the placement of two growth direct systems, which was consistent with the guidance we provided in March but nonetheless still disappointing. Both systems were placed in March as trends with customer access and in-person meetings began to improve marginally later in the quarter. While interest in our growth direct system remains high, we are not satisfied with these results and are focused on improving system placements enterprise-wide at Rapid Micro. Excluding system placements, our performance in the first quarter met or exceeded our expectations. Recurring revenue grew more than 65%, led by consumables growth of nearly 100 percent, and we completed nine system validations in the quarter. Additionally, systems and consumables gross margins both improved significantly compared to Q1 last year, reflecting the progress our operations team is making in advancing our manufacturing efficiency initiatives. Finally, I'm also pleased with the performance of our product development team, which is achieving key milestones as we progress our pipeline of innovative new product offerings. Over the last few months, we began to see a gradual improvement in customer site access. As we have discussed in the past, site access and in-person selling is important to our system sales process because it allows us to work more closely with our customers to understand their manufacturing and quality control challenges and opportunities. We are also able to better showcase the differentiated capabilities of the Growth Direct, which allows our team to demonstrate how it can improve existing workflows and deliver the value customers expect. I recently had the opportunity to visit some customers and would like to provide you with some real-world examples of the importance of being onsite with customers. In April, I traveled to Europe and, along with Andy Keys, our chief commercial officer, spent about two weeks meeting with existing and prospective customers. Most of the existing customers we met were top 20 pharma customers who have multiple systems at multiple sites. This trip underscored the importance of customer site access and reinforce customer interest in deploying our technology across their operations. Specifically, there were three important points I came away with from these visits. First, customer site access is starting to improve. For many of our customers, we were the first on-site visitors they had welcomed into their facilities in over two years. These meetings included senior leaders, which substantiates strong customer interest in the Growth Direct system and RMB. While this was encouraging, we were also reminded that there are still some customers who are not ready for in-person meetings due to ongoing COVID precautions. We will continue to pursue virtual meetings where appropriate as we look forward to increasing onsite meetings with new and existing customers over the coming months. Second, and consistent with our commercial land and expand strategy, we spoke with multiple customers who shared their vision to make follow-on purchases to expand their global rollout of the GrowthDirect platform. These discussions reinforce a strong value proposition in our ability to positively impact our customers' complex operations. And third, there was a broad level of excitement about our future new product launches. We took this opportunity to discuss our upcoming rapid sterility and mold detection products and received strong, positive feedback on the benefits of these innovative products we'll have on our customers' manufacturing and quality operations. In summary, it was a highly productive two-week trip that we expect will be the beginning of improved site access and in-person collaboration with our customers. The benefits of our growth direct technology are resonating with our existing customers, and many are looking to adopt our technology more broadly across their organizations. To drive growth with this opportunity, we are making the right investments in building a world-class commercial and service and support organization, as well as new product innovation. I'm personally excited to be back out working with our teams and meeting current and prospective customers as we remain intensely focused on placing growth direct systems. And while our system placements may be variable in the near term, our total addressable market is large, our value proposition is resonating, and our systems are providing value for our customers once they are in routine use. I'll wrap up my prepared remarks with a brief update on some of our key initiatives for 2022. It's important to note that first and foremost, we are intensely focused on new system placements as an organization. To this end, we have strengthened our commercial team by hiring multiple leadership and field-based roles in sales and marketing across North America and Europe, as well as Asia, where our new team is ramping and we see meaningful future opportunities. We are very excited about the pace at which we are developing our global commercial capability and view it as the most critical component of our growth strategy. Also, we remain on track with the development and commercialization plans of our mold detection and rapid sterility products, which, as discussed, are resonating strongly with customers. As a reminder, our mold detection products will enable customers to differentiate mold from other categories of microorganisms, such as bacteria. This is an important capability that supports our goal of giving customers information sooner so they can make decisions and respond to contamination events more quickly. Over the coming months, we plan to begin enrolling customers in beta testing. Our rapid serility beta system has been placed and installed with one of our existing top 20 global pharmaceutical customers with beta testing expected to commence later in the second quarter. Our rapid serility product offers compelling differentiation versus existing serility products and will be especially important for time-sensor products such as vaccines, biologics, sterile injectables, and cell and gene therapies. We are excited to be working closely with one of our top customers on this important new application and look forward to providing you updates as we move forward. We remain laser-focused on executing against our growth plan. With over half the global top 20 pharmaceutical manufacturers as our customers and our value proposition resonating strongly, a ramping high-quality commercial team focused on new system placements, an exciting new product pipeline, and significantly improving gross margins, I remain as excited as ever about the future of Rapid Micro. With that, I will turn the call over to Sean to discuss our financial results. Sean?