Rapid Micro Biosystems, Inc.

Good morning and welcome to Rapid Microbiosystems' fourth quarter and full year 2022 earnings conference call. All participants are in a listen-only mode. After the speaker's presentation, we will conduct a question and answer session. To ask a question, you'll need to press star followed by the number one on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to Mike Beaulieu, Vice President of Investor Relations and Corporate Communications. Thank you. Please go ahead, sir.

Good morning, and thank you for joining the Rapid Microbio Systems' fourth quarter and full year 2022 earnings call. Joining me on the call are Rob Spignesi, 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 2022 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, anticipated year-end cash balance, cash runway, and future revenue and system placements, expectations for business development and growth, customer interest and adoption of the growth direct system, expectations for our new RMB nucleus mold alarm, and the potential impact of macroeconomic uncertainty and the coronavirus pandemic 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 annual report on Form 10-K filed with the Securities and Exchange Commission on March 24, 2022, as such risk factors are updated in our subsequent filings with the SEC. 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 3rd, 2023. 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 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 2022 results. On today's call, I will begin with a summary of our Q4 performance and then discuss our growth strategy and why we believe that the actions we have recently taken position RapidMicro for a return to solid growth in 2023. I will then turn the call over to Sean for a more detailed discussion of our financial results and our guidance. Total revenue was $4.4 million in the fourth quarter and $17.1 million for the full year. We placed two new systems in the fourth quarter, including one to a new top 20 pharma customer. These results are in line or better than our January pre-announcement, as well as the guidance we provided in August and reaffirmed on our third quarter call in November. On a cumulative basis, we have placed 125 systems, including 103 fully validated systems, and has sold over 3 million consumables, driving strong recurring revenue, which grew by 40% to $11 million in 2022. Customers are clearly using the Growth Direct, which speaks to the strength of our value proposition and the robustness of our business model. 2022 proved to be a challenging year, with our performance impacted by customer site access limitations and our own execution not meeting our expectations. In response to these challenges, we launched a comprehensive action plan to improve execution, drive efficiencies in the business, and enhance performance. As we look forward to 2023, our confidence stems from the improvements we have made in four key areas of our growth strategy. The first is accelerating growth direct system placements. The second is developing and commercializing new products. The third is expanding our gross margins by leveraging both internal cost initiatives and scaling the business. And fourth is a prudent management of our cash balance, which we recognize as one of our most important assets. Accelerating growth direct system placements remains our highest priority, and we have enhanced not only our sales processes, but also our customer experience and service organizations. We have added focused resources and launched enhanced training programs and new sales methodologies. We are expanding our lead generation and marketing capabilities, and we have equipped our teams with new sales tools. Also, we continue to expand our focus on key accounts. This is important as we partner with our larger customers to support reference selling and in the development of scientific white papers and technical training webinars. Last month, we held our annual global sales meeting, and the team is excited about the scale and scope of these efforts. In 2023, we expect to attend over 20 events and conferences around the globe. Building on the success of the Growth Direct Day, which held for both current and prospective customers in the fourth quarter, we are planning additional events globally in 2023. We are also planning to meaningfully increase the number of in-person customer events for Growth Direct demonstrations and system training at our Lowell and Lexington, Massachusetts locations. These sessions are focused events that seek to deepen our customers' knowledge of the Growth Direct system's capabilities and help them more robustly understand its value proposition and use cases. We continue to have a robust funnel of system placement opportunities, which includes a strong mix of new and existing customers. Our expanded focus on key accounts is important, as these customers make up our largest opportunity for multi-system orders within our funnel. By product category, biologics, including cell and gene therapies, make up the majority of our funnel, as well as global opportunities within the CDMO segment. Geographically, opportunities in the U.S. and Europe continue to make up the majority of our funnel, but we are excited about the traction we are gaining in the Asia Pacific region, including a new customer win in the fourth quarter. We look forward to sharing highlights of our performance in this region with you over the course of 2023. Another major part of our growth strategy is the development of new products. We view innovation as a way to leverage a growth direct platform increasing our value proposition to our customers, creating barriers to entry, and importantly, accelerating revenue growth. We were pleased to exit 2022 momentum in our new product development efforts following the full market release of RMB Nucleus Mold Alarm. Mold Alarm is a software product that allows for the early detection of mold in the manufacturing environment and gives the growth direct system the ability to differentiate between mold and bacteria. Customers are especially interested in differentiating between the two, as mold can grow quickly and require a significant and costly remediation plan. MoldAlarm is capable of alerting customers to the presence of mold in as little as one day. Following the full release in December, we are executing against our commercialization plan, which includes fully training our sales and service teams and partnering with several of our larger customers for deployment across their networks. Turning to our rapid sterility program, We continue to make steady progress with product development, including ongoing beta testing with one of our existing top 20 global customers. The sterility products will consist of a new consumable for the Growth Direct system, so again, leveraging our platform technology for growth. Sterility testing is typically the final step in the drug manufacturing process before the product is shipped to the market for patient use. The legacy method can take 14 days or longer, and we are targeting five to seven days for final results and even faster to first detection, which will allow customers to release product significantly faster. Lastly, we are nearing the completion of our manufacturing expansion in our Lexington facility. This site will include a backup consumable manufacturing line and a growth direct demonstration lab for current and prospective customers. We are looking forward to hosting customers at this new facility this year. So, as we begin 2023, we are encouraged with the progress and execution of our growth strategy to accelerate system placements and further new product development. Customer engagement and site access has largely returned to pre-pandemic levels, which allows our team to work more closely with customers, understand their micro QC workflows and challenges, and better demonstrate the manufacturing and regulatory benefits of the growth direct system. Now, I would like to turn the call over to Sean to discuss our fourth quarter performance and our 2023 outlook. Sean?