Maravai Lifesciences Holdings, Inc. Q4 FY2020 Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to Maravai LifeSciences Q4, 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host Senior Director, Investor Relations, Debra Hart. Madam, you may begin.

Thank you, Latif. Good afternoon, everyone. Thanks for joining us on our first quarterly earnings call as a public company. On today's call, we will cover our financial results and business highlights for Maravai's fourth quarter and full year 2020 and will provide financial guidance for 2021. Our CEO, Carl Hull, will first provide a business update, and our CFO, Kevin Herde, will review our financial results and guidance. Our president, Eric Tardif, is joining us along with Carl and Kevin to answer questions following the prepared remarks.

Thank you, Deb, and good afternoon, everyone. I'd like to take a moment to welcome our newest group of investors to Maravai. As Deb said, this is our first earnings announcement as a public company, and we are very pleased to have you with us. In addition, I would like to take this opportunity to extend my personal thanks to each and every member of the Maravai team who together have positioned us to make meaningful contributions to the battle against the COVID-19 pandemic. Without them and their sustained efforts, we would not be speaking with you here today. As an introduction for those of you new to Maravai, we provide reagents and services focused on high growth markets and cell and gene therapies, vaccines, and biologic drug manufacturing. As a supplier of solutions to other LifeSciences companies, we are well positioned to benefit from multiple tailwinds that are affecting the sector from early discovery through clinical trials all the way to the commercialization of health care products. Our customers include the top 20 global biopharmaceutical companies, as well as emerging biopharma, LifeScience research companies, leading academic research institutions, and molecular diagnostic companies. All of this resulted in our exceptional performance in 2020 with full year revenues of $284.1 million, representing growth of 98.5% over 2019. Kevin will take you through the details of our financial performance in just a moment.

Thank you, Carl, and good afternoon, everyone. First, I'd like to echo Carl's remarks and thank all of our employees and business partners for their tireless commitment and efforts over the last year. It's through these efforts that we have become the strong company we are today. Now I will review our financial results for the fourth quarter and full year of 2020 and provide our financial guidance for the full year of 2021. As you have seen in our press release this afternoon, we delivered strong financial performance for both the fourth quarter and full year of 2020. Our Q4 revenues of $98.4 million represent 173.5% reported growth from Q4, 2019. For the full year of 2020, we reported record revenue of $284.1 million; this year-over-year increase of $141 million represents 98.5% annual revenue growth. Operationally, we continue to prioritize key areas of investment in the company. We made important capital investments in our San Diego nucleic acid production manufacturing site, with a significant portion of our spend dedicated to increasing overall production capacity, quality systems, and automation. We have also continued to invest meaningfully in our infrastructure to support long-term growth via investments in further enhancing our IT systems and security, our quality systems and processes, our environmental health and safety programs, and our global supply chain efforts. To provide more insights into our overall financial performance, our nucleic acid production business fueled the most significant portion of the revenue growth for the fourth quarter and the year. Our nucleic acid production segment represented 79% of the company's total revenue in the fourth quarter and 73% for the full year compared to 51% for the full year of 2019. Cleancap revenue to support only our COVID-19 vaccine customers was $51.4 million in the fourth quarter of 2020 and was $99.3 million for the full year of 2020, showing the accelerated demand we saw in the second half of the year. Our biologic safety testing business contributed 14% of the company's revenue in Q4 and 19% for the full year. This business grew by 21.8% in the quarter and 23.6% in the year, driven by the ongoing market growth of biologic drug development programs and the high quality and breadth of our host cell protein Elisa kits. Our protein detection business accounted for 7% of revenue for the fourth quarter and 8% for the full year of 2020. Now moving on to our statement of operations. Our GAAP-based net income before the amount attributable to non-controlling interests was $14.5 million for the fourth quarter of 2020 and was $78.8 million for the full year of 2020. Adjusted EBITDA, a non-GAAP measure, was $64.4 million for Q4 and $169.2 million for the full year of 2020 compared to $13.9 million for Q4 2019 and $62 million for the prior year; this is a 363% increase for the quarter and a 173% increase year-over-year. This overall full year increase in adjusted EBITDA of $107 million was primarily driven by overall sales volume leverage and margin improvements from our nucleic acid production business. Our cash and cash equivalents, which are both GAAP metrics, totaled $236 million at December 31, 2020. With a year-end cash balance of $236 million, $550 million in long-term debt, and our trailing 12-month adjusted EBITDA of $169 million, we exit the year with a 3.3 times gross debt to adjusted EBITDA ratio and 1.9 times net debt to adjusted EBITDA ratio. We continue to have a strong balance sheet and cash flows, and these factors, along with the $180 million available on our undrawn credit revolver combined with the growth that we see for 2021 that I will talk to next, continues to provide us with the strategic flexibility to make investments to fuel organic growth while also actively evaluating M&A opportunities. Now moving to our 2021 guidance. Because of the restructuring of the company associated with the November IPO and the UPC structure that was put in place, we will not be referring back to or attempting to reconcile historical GAAP EPS or share count information, as it is not consistent with our current structure moving forward. Today, we are setting our 2021 full-year revenue guidance at $580 million to $630 million, reflecting growth in the range of 104% to 122%. Included in that range is our estimate for 2021 CleanCap revenues directly attributable to COVID-19 vaccine customers that we are estimating at $370 million to $400 million. Because of the continually evolving demand for CleanCap as well as the inherent variability in supporting our gene and cell therapy customers through their multiple manufacturing cycles, we will not be providing individual quarterly breakouts of revenues at this stage. However, we expect Q1, 2021 total revenues to be up sequentially in the range of 30% to 35% over our reported Q4, 2020 total revenues. For background on how we establish revenue guidance, our largest customers are generally under master supply agreements in which they provide us with rolling forecasts out for several quarters that are further supported by binding POs that may go out for several months. On top of that, we have a forecasted funnel for our GMP suites which are used to mainly support builds for our customers’ nucleic acid therapeutic programs. Based on these factors, our 2021 revenue guidance is based on a good degree of forward visibility. Based on those revenue expectations, we expect our adjusted EBITDA and non-GAAP measure to be in the range of $350 million to $390 million, which at the midpoint of that range represents growth of 119% and an implied adjusted EBITDA margin percentage of 61% when applied to the midpoint of our 2021 revenue range. Adjusted fully diluted EPS and non-GAAP measure is expected to be in the range of $0.80 to $0.90 per fully diluted and fully converted share. Adjusted fully diluted EPS is based on the assumption that all class B shares are converted to class A shares, which results in a forecasted fully diluted share count of approximately 260 million shares for the full year of 2021. The net income included in the adjusted fully diluted EPS has been adjusted to eliminate any net income or loss attributable to non-controlling interests as a result of the assumed full conversion of class B shares to class A shares. Additionally, our adjusted fully diluted EPS including certain adjustments that do not reflect our core operations are based on an adjusted effective tax rate range of 24% to 26%. Now as it relates to certain adjustments to get to our non-GAAP adjusted EBITDA range, we see the following items in 2021: interest expense between $30 million and $35 million, depreciation and amortization also between $30 million and $35 million, and an adjusted tax rate of 24% to 26%. Lastly, we expect equity-based compensation, which we show as a reconciling item from GAAP to non-GAAP adjusted EBITDA to be $10 million to $12 million in 2021. I would like to note that our Q4, 2020 results had approximately $21.5 million in equity-based compensation tied primarily to the vesting of certain performance-based units within the pre-IPO LLC structure that was above the normal run rate for this non-cash expense line item. For 2021, we expect to invest an estimated $20 million to $25 million for capital expenditures, including approximately $5 million to complete the last planned phase of our San Diego facility expansion. As you can see, we've successfully scaled the organization in the midst of tremendous growth. We delivered a record year of performance in 2020, including making substantial investments in the company to further support our continued success. Our 2021 guidance is a reflection of these investments, our view of continued strong growth, and the overall strength of our business model. I'll now turn it back to Carl for some final remarks.

Thanks very much, Kevin. Before we wrap up and turn to questions, I'd like to provide some very high level perspective on 2022 and beyond. While we aren't ready to provide guidance for 2022 yet, we are seeing customers already booking production capacity for the first half of that year. As Kevin just mentioned, we have a direct line of sight into the book of CleanCap demand for 2021, which continues to grow, and our 2022 outlook is starting to build nicely with additional mRNA vaccines coming to market and the expansion of our strong existing partnerships with industry leaders in mRNA therapeutics. It is our belief that COVID-19 vaccinations will continue to be needed for years to come in order to address new strains of the virus that emerge as selective evolutionary pressure is created by partially completed immunization programs. This suggests that we should expect COVID-19 to become either an endemic disease or similar to seasonal influenza, requiring multi-pronged and ongoing public health interventions. We expect that mRNA vaccines will continue to be very relevant, if not essential, to those interventions. Unfortunately, the science is now telling us that our initial high hopes of this being a one and done vaccination effort are unlikely to be realized anytime soon. We have all learned a lot about viruses, infectious diseases, critical care, PPE diagnostics, and vaccines in the past 14 months. It's time now to apply that knowledge to comprehensive public health programs that aim to successfully eliminate new COVID-19 infections in all communities across the globe. I'd now like to turn the call back over to Latif to open the line for your questions. Thanks.

Thank you, sir. Our first question comes from the line of Tejas Savant of Morgan Stanley. Your question please.

Hi guys, good evening and congrats on the solid performance out of the gate here. So one quick question for you, Carl, your updated 2021 guidance seems to suggest an incremental sort of 650 million doses or so versus the 750 million that at least we had in our model. That comes to about 1.4 billion doses for 2021. First of all, is that in the right range and if so, how should we juxtapose that versus the comments you made on BionTech's goal of 2 billion doses for 2021 as well as potentially some upside from CureVac towards your end?

Yes. Well, thanks for the question, Tejas. I think what we're dealing with here is a question of apples and oranges. I know that the models are out there that look at consumption by unit of vaccine and what that dose equilibrates to in terms of revenue for us. We view it from the opposite direction. We are actually looking at the orders that we have on the books today from our customers and the projections that they have given us for their future demands. So to the degree that there is a difference between the output of the model and that order book, it's really a function both of timing and calculations and other aspects. So I can't reconcile those adequately for you, but I can just tell you that we're guiding to what our customers tell us they're going to buy.

Got it. Very helpful, Carl. And then in terms of just the ongoing steady-state consumption of the vaccine it’s still early days and there’s your comments around the likelihood of a booster shot and the virus becoming endemic and so on, how should we think about sort of a normalized run rate in sort of 2022 and beyond? I mean the question that we've been getting obviously is around you've had this nice pull forward in 2021, but what does it mean for an ongoing run rate for CleanCap in 2022, 2023, and 2024?

Yes. Very good question. It's going to depend on evolution. As the virus evolves, to the degree that it evolves in a way that escapes the existing vaccine protections that are provided, then you're going to have to modify it. That could be something that happens once in a year. It could be something that happens once every three years. You just don't know, but that's going to be the catalyst for changes in the vaccine and thus the frequency of the re-inoculation programs. I think the other issue is this whole question of waning immunity, and we really don't know yet how durable the immune response is from a completed two-dose vaccine or even a single-dose vaccine. It's thought to be good, but we don't have a lot of experience under our belts. So to the degree that that happens and the absence of the antibodies is indicative of perhaps ineffective immune response, that will also drive the frequency of repeat inoculations. So my honest answer to you is I don't know, but we think, and our customers seem to be signaling, that you're going to see some re-inoculation every 12 to 18 months.

Got it. Very helpful. And then one quick one on CleanCap's production capacity—I mean how future-proofed are you? I know you opened up the three suites here, but beyond that, is there anything incremental you need to do to deal with sort of this unprecedented demand situation?

Kevin, would you like to take a shot at that?

Yes. Sure. I'm happy to. Certainly, the expansion we made here in San Diego included a lot of automation, large-scale waste management, and numerous manufacturing efficiencies; we continue to see improvements in yield, better utilization, more efficiencies, and certainly, CleanCap orders at large scale. So as we look at this today through our current lens of pricing and mix, we actually see a little higher capacity than we had previously projected now, comfortable that we can support over a billion dollars in revenue annually from nucleic acid production out of the San Diego facility.

Perfect. Got it. And then Carl, any early color you can share on the plasma DNA launch? I mean obviously, since you guys have invested in that capacity, you still have some of the competitors, some scale up there, Catalent acquired Delphi, etc. So it sounds like the demand-supply disequilibrium continues here. Any early feedback on sort of customer traction?

Yes. This disequilibrium is definitely still there and perhaps even growing based on the number of programs that are out there. Our customer reaction has been extremely positive to the capability to produce the plasmids for an integrated program. We have a couple of different and very exciting programs that are in sort of the mid stages of negotiation to actually provide the soup-to-nuts capabilities that we had anticipated in the first place. So I'd say it's all tracking as expected or better.

Got it. Very helpful. Thanks so much for the time here this evening and congrats on the quarter, guys.

Thank you.

Thank you. Our next question comes from Matthew Sykes of Goldman Sachs. Your line is open.

Great. Thank you. Congrats on the quarter and thanks for taking my question. My first question was just regarding the non-COVID related mRNA therapy and vaccine work. You guys talked a little bit about during the IPO about other programs you're involved with. I'm just curious, in terms of the number of those programs or the growth that you've seen there, how can we think about that non-COVID related mRNA therapy and vaccine work that you guys are doing?

Sure. Look, I think the pipeline there is growing and we're seeing a resumption of the programs that had been delayed due to the pandemic at various points last year. So we're working with our customers to support the need for additional infectious disease, but non-COVID vaccines. We expect to see those programs accelerate here, benefiting from the mRNA COVID work that's being done today. I believe Pfizer mentioned recently in their conference call that they will use an mRNA platform for their seasonal flu vaccine program. Other examples include non-COVID therapeutic products. Many of these are for rare conditions or orphan diseases that can incorporate CleanCap. Examples of the disease states include OTC deficiency, glycogen storage disorders, acute lymphatic leukemia, etc. So there are multiple applications. I can't really comment much further on those partnerships unless the sponsors have disclosed publicly their own detailed production methods. That generally doesn't happen in this hyper-competitive field, but we have multiple of those programs continuing and we see a number of them in the clinic already, with the vast majority of those being phase one.

Great. Thanks for that. It's very helpful. And just on when you look at the 2021 guidance, you had mentioned that you're baking in the assumptions from a number of customers on the COVID vaccine side. I'm just wondering, in terms of CureVac, how we should expect that to ramp up? Should it be sort of back half loaded or is there some manufacturing taking place now that requires some purchase orders increase in growth and purchase orders?

Let me think about how best to answer that. That's a little bit tough because it's probably getting into close details about the relationship. I would just say we have an excellent relationship with our partners at CureVac. We've been working with them for a number of years prior to the onset of COVID-19, and we have pretty good visibility to their program. They're obviously, from their public announcements, accelerating those efforts. So I think it is totally fair for you to expect to see impact from CureVac's efforts in the first half of this year, and if it scales anything like the relationship with Pfizer and BionTech, then you will see that continue to accelerate in the back half of the year and beyond.

Thanks for that, and just my last question on biologic safety. You guys have a pretty good competitive advantage in terms of the breadth of your generic test kit and far above what some of your competitors have. I'm just wondering have the competitive dynamics changed at all in that over the past few quarters, or do you still find yourself in a pretty good position with that generic test kit?

No, they haven't changed one iota. We're continuing to see strong growth in that business and as you can imagine, a lot of the new therapeutic programs that are targeting COVID-19 themselves are now spooling up and utilizing our product based on legacy relationships. So it seems to be in a good spot.

Great. Thanks very much. Appreciate it.

Thank you, Matt.

Thank you. Our next question comes from Brandon Couillard of Jefferies. Your line is open.

Hi, thanks. Good afternoon.

Hi, Brandon.

Carl or Kevin, as we think about the 2021 outlook, can you help us with the phasing in terms of the first half versus the second half? And in terms of dollars, should we assume a fairly linear progression through the year and what would be the most important upside or downside variables that we should consider that might steer you toward the low or high end of the revenue outlook?

Yes. I think from a—as we said in our prepared remarks, I think we're looking at the first quarter up 30% to 35% sequentially from Q4 on total revenues. I think the business can get a little choppy as we start to move forward. So I think we're going to keep our quarterly expectations at that level for now. Certainly, as it relates to CleanCap, we had a solid fourth quarter, but it will be moving up meaningfully in the first quarter, but we don't see the first quarter of 2021 being the largest quarter for CleanCap at this stage either. So you have to take that into account when looking at the range that we're giving for the CleanCap for COVID vaccine customers that we put in our prepared remarks, and that's kind of where we're going to stop as far as the quarterly expectations at this stage.

Got that. And then on the plasmid DNA from understanding, it's still very early into the launch, but I'm curious how will you measure success here in the near term? And given the huge supply-demand imbalance, are you already thinking about adding additional capacity here? And could you speak to the kind of revenue potential with the three suites that you just recently brought online? Thanks.

Yes, look, we're pretty conservative as we project. So we have not baked in a lot of plasmid DNA-only revenues into our 2021 numbers. So I think it's fair to think of that as an area of potential upside as time develops. But I'm going to measure success by capacity utilization; how many jobs do I have, and how occupied are the suites? That's how we'll look at it, and I think realistically, given the initial indications of interest, we're spooling up jobs and performing jobs as we speak, and that's the measure of success. So it just tells us that all the things that everyone has heard about shortages of plasmid continue to be true, and when you see investments like Catalan and Delphi, it just confirms that further.

Super. Thank you.

Thank you.

Thank you. And our next question comes from Matt Larew of William Blair. Please go ahead.

Hi, good afternoon, guys. Carl, I wanted to follow up on your commentary around M&A. As you think about how rapidly this market is progressing and just how much file processing demand is accelerating, how do you balance the idea of building a capability organically like plasmid that maybe leverages your existing infrastructure but might take some time to scale to maturity versus adding something a little more established really in the way you built this business with trial thickness vector labs, etc.?

Yes, that's a great question. Eric, do you want to take a shot at that?

Yes. Sure, I'd be happy to. So I think as we've told you and as we've discussed on the road in the past, I think our activities in M&A have a lot to do with shoring up our strategic capabilities and really solidifying our position, primarily in mRNA rather than biologics and then protein detection. We look very much at our capabilities and what we need to fill that pipeline and ultimately be able to provide a complete service offering and product offering to our customers. We obviously do the build versus buy analysis, and we absolutely factor in time to market. But in addition to that analysis, it really is about finding those differentiated capabilities on the market that frankly we couldn't build ourselves. When it comes to just pure capacity, we certainly look at acquiring capacity and we look at building capacity; that's much more of a build versus buy, but the majority of our M&A activity is centered on strategic moves that shore up our capabilities.

Yes, that makes sense. And then obviously we spent a lot of time talking about the ramp-up in infrastructure and manufacturing capacity, but just curious as you're thinking of 2021, how are you thinking about ramping up the spend in terms of customer support, customer engagement, and building up a team to support obviously all this increased demand that you're seeing? And then maybe Kevin, to the extent you can help put any numbers around that, that might be helpful too?

Yes, I'll just offer a first comment and then turn it over to Kevin. We certainly see the need to stay in close contact with our customers throughout this period of hyper-expansion. Their needs are changing day-to-day. Their forecasts are changing day-to-day and we have to be on top of that so that we can be that trusted partner that they need right now. We don't want to be the squeaky wheel in anybody's supply chain. So we are expanding the resources that we have in all those areas—marketing, customer support, etc. We will spend more time on voice of customer about what customers’ desires are. We think there are some obvious areas that we can and have been expanding based on customers’ needs already expressed to us, but we want to get better and tighter with them in the very near future. So that will happen during 2021. Kevin?

Yes, I think we continue to see SG&A expenses increasing on an absolute basis for some of those investments, but certainly less than revenue growth. I think we'll see them in the mid to high teens for 2021 with some specific increases within marketing as Carl just talked about to really inform some potential R&D decisions as well and certainly with regards to support the public company costs that we'll have for a full year in 2021. We're still relatively light on R&D expenses as a percentage of revenue and I think the further input from our marketing organization, the voice of the customer and working with some of our scientists will help to define some programs there that we hope to invest in organically as well going forward.

That makes sense. Thanks, guys.

Thank you.

Thank you. And our next question comes from Catherine Schulte of Baird. Your line is open.

Hi guys, thanks for the questions. I guess first you had a press release out last month about a new issued patent for CleanCap. Can you just talk through how you feel from an IP perspective and if you're seeing any new competitors coming to market with an increased excitement around mRNA-based vaccines and therapeutics?

Yes, that's an important point, Catherine. The newest patent that issued is our third patent here in the U.S. It covers multiple advancements on the proprietary CleanCap technology and we think it further demonstrates our kind of scientific leadership position in figuring out novel ways to enable this co-transcriptional capping of mRNAs. So it's turned out that's important all of a sudden, and it's turned out we've got a very good solution that meets the customers’ needs there as they scale up some of these incredibly large manufacturing operations for mRNA. So we're feeling pretty good about it and we believe that the IP would encourage people to come to us first, and that in fact is what's happening.

Alright. Got it. And then on the M&A side, when you have the type of adjusted EBITDA margins that you do, it would be hard for an acquisition to not be margin diluted. So can you just walk us through kind of what those financial requirements are when you're looking at an asset and the type of leverage that you would be comfortable with?

Sure. Eric, do you want to do that one?

Yes, for sure. Look, you are right. We have margins that are hard to beat, and it's hard to find M&A targets that would be accretive to our margins. Certainly, I think we don't really look at margin as a calculation when we're doing the math. We're looking at return on invested capital, for example, and the impact on our earnings over time. So it's not really a margin percentage calculation that we do. We are very mindful of keeping our margins where we are. But I think really our target right now is on acquiring strategic assets rather than trying to do financial modeling or financial engineering by acquiring assets. So we have great organic growth. We've got great margins. Really, the focus in M&A is on strategic capabilities, and in terms of the leverage, Kevin, you might want to address that one.

Sure. I mean with our net debt just over $300 million in our projected adjusted EBITDA for 2021, that puts us at about one times net leverage looking forward to 2021. Obviously, that's something we're very comfortable with. We certainly feel we can take on more debt if needed for the right asset and also with cash on hand in our immediate liquidity with our undrawn revolver. We like to be in a position to assess and act quickly, whether for some more organic investments in our product lines or through M&A. So we like the flexibility that our balance sheet affords us.

Great. Thank you.

Thank you.

Thank you. Our next question comes from Erin Wright of Credit Suisse. Your line is open.

Great. Thanks. So on CleanCap again, you mentioned the high visibility on the CleanCap revenue, but I'm just trying to frame maybe the level of conservativeness in the guidance or other factors that you may be considering relative to what's been publicly disclosed out there from Pfizer and others. And has there been any sort of changes in underlying relationships or timing of payments or revenue recognition or other factors that would help us reconcile with those numbers? And just to clarify, does your guidance assume meaningful contributions from relationships outside of Pfizer-COVID vaccine or CleanCap?

Let me see if I can hit those maybe in reverse order. Yes, there are other relationships outside of Pfizer CleanCap, so a considerable number of them in fact, and they do contribute materially to our estimates for the full year. And you are right that we do tend to be conservative when we put together our forecast, but we don't sandbag them intentionally. We are just realistic and grounded about what we know, what is our degree of probability of confidence in that particular projection and what could go wrong, and we sort of go through a fairly systematic way of digesting all of those data points and coming up with a combined forecast. You won't see us putting out something that's pie-in-the-sky that we have no chance of meeting, but at the same time we think we're being realistic based on what we know today. Now the one qualifier I would offer to you is that the situation does change sometimes, it seems like on a daily basis. So our customers are figuring out what they need as they go, and I think as you can imagine with the complex supply chains that are being utilized, a customer is looking at a particular problem and being constrained and gives all their vendors projections based on that constraint being in place. Once they fix that constraint, they rethink it and look at it and move on to what the next issue is, and our objective is not to be that issue.

That's fair. And then you mentioned 2022 in your remarks as potentially shaping up nicely here. What are you referring to on that front? Is it largely COVID-related work or outside of COVID, or across the board? I'm curious how you're seeing things shake up on that front.

Yes. It is two elements. One is the COVID-related work, and that just reflects the growing sentiment that there will be repeat vaccinations needed and that they will be enduring. So I think that gives us a greater degree of confidence in what the 2022 opportunity may well be versus what was known even as recently as four months ago at the time of the IPO. The second contributor there is just our better understanding of the therapeutic pipeline. These resumed programs and the timeline that these resumed programs would be on have become significantly clearer, as obviously these development timelines are not COVID accelerated. Those look like they come into play significantly in 2022 as well.

Okay. Great. Thank you.

Thank you.

Thank you. Our next question comes from Dan Brennan of UBS. Your line is open.

Great. Thank you. Thanks for taking the question. My first question was, I know it was asked earlier, what is your capacity for doses on COVID CleanCap? Did you disclose that earlier in the call?

We did not. Kevin indicated that we feel comfortable with our ability to produce and support over a billion dollars in annual revenue on CleanCap.

Got it. Okay, and then kind of back to 2022 if you don't mind. I believe when we were looking at the time of the IPO, the company was thinking about an annual dosing regimen in the out years, which I guess is where we're getting centered on now today with all the variants out there. So maybe just another follow-up on the 2022 outlook. So when you talk, you're pleased with how things are progressing. Could you give us any sense about some of the committed orders you have in hand or just pleased? It's hard to frame what pleased would mean given the range of outcomes that we could see in 2022. So without giving a specific number, I’m trying to get directionally how we think about that 2022 outlook?

Yes. Look, that's a tough one. Realistically, we're not projecting a specific variant becoming the dominant one globally, and now we know that there is going to have to be a new vaccine by a specific date. But we are realizing how fast the rollout of the existing vaccines is going, or not going, depending on where you are, recognizing then the delta at the end of people who haven't yet been vaccinated or fully vaccinated. And then, thinking about the number of potential doses that could come from a change being required, those changes are breaking down into one of two areas. I kind of alluded to it. One is a true modification of the underlying vaccine sequence, and there it looks like if you see a variant that you have to change for, the regulators globally are going to have you on an expedited path to get that product authorized and into people's arms. So that's one element of it. And then the other approach is as Pfizer and BionTech just announced their study of the impact of yet a third dose. So initial dosage with two boosters—what does that do to your immune response to variants? Those are the things that are driving potential demand in 2022 and beyond.

Great. And then maybe you talked about the tremendous interest, I think you called it a transformation, just over the mRNA class just given the success so far of the mRNA vaccines. Could you give us a sense of A, just your base nucleic acid non-COVID business in 2021—like what kind of is baked in there; and B, if we think about what this opportunity is beyond 2021, how would you characterize a steady state normalized growth rate for the non-COVID-related opportunities, mRNA? Thank you.

Kevin, do you want to take a shot at that, or do you want me to?

Yes, Carl. I think when you look at our business and you look at the midpoints of our guidance, particularly given the midpoint of the COVID-19 vaccine CleanCap related revenues, you see the remaining business growing roughly 20% and that's across the three segments excluding the impact from the COVID vaccine virus and CleanCap. I think that's very consistent with some of the underlying market trends that we've been seeing, particularly where we perform in biologics, and then in nucleic acid production, certainly the protein detection business being a low single digit grower from a market perspective.

And that 20%—because I know historically the nucleic acid business grew 30%, 17%, 26%, 30%. So, I mean, the growth rate certainly has been above that level, and I am just wondering as we look out given the excitement and efficacy and success so far of mRNA just how we might think about, without giving a specific number, just how do we think about this transformational opportunity and what it means for Maravai?

Well, look, I would say this: that I think the 20% and the rest of the business is a blend of the three different units that Kevin was talking about, and when you look at the historical numbers, you do have to remember that there was CleanCap in those numbers, albeit not for COVID-related purposes. So it's also a little bit like apples and oranges. I would say this; we've thought about our total addressable market pretty carefully and spelled that out at the time of the IPO and how large that market is, and I do think in the broader nucleic acid business that we would expect growth rate outside of some of this stuff to be in the mid-20s, and I think we'd come up with a 28% total addressable market increase. That may have included CleanCap, but it will be a little bit higher than the other areas.

Great. Thank you.

Thank you. Appreciate it.

Thank you. Our next question comes from Michael Ryskin of Bank of America. Your question please.

Hi, thanks for taking the question. Thanks for squeezing me in. I want to ask just a big picture one at the end; a lot of the topics have been covered, but I want to go back to sort of CleanCap broader adoption and some of the longer-term growth opportunities in this space. I mean if we obviously CleanCap, you're already working with a number of leading pharma and biotech customers, Pfizer, BionTech, CureVac, and a number of others you've disclosed. But there are other prominent leaders in mRNA therapeutics that aren't utilizing the technology? So I'm just wondering over the last three to six months as Pfizer and BionTech's success in the vaccine program has become more and more prominent and garnered a lot more attention, have you even taken steps in terms of penetration into some of these other customers? I guess it's, in other words, I'm just wondering on whether CleanCap will be the dominant capping method for future programs even beyond your existing customers? I realize it's a very long adoption cycle with new technology, but I'm just curious about your ability to penetrate into that base.

Yes. That is a very important point. Look, we have seen a number of new customers come to us early in their own therapeutic development programs now because of our involvement in some of the vaccine-related work that's ongoing and have caught them early. So I think there's a greater market awareness of the benefits of utilizing CleanCap as part of your early phase work, and we are aggressively marketing our capabilities to companies early enough so that it's not a disruptive change to their own plans and methods. Now, in fairness, the other side of that is anybody who's making COVID-19 vaccines using mRNA and if they're using enzymatic capping, which is the alternative method here, they're not going to change to CleanCap overnight. It would be a re-registration and a very, very big change at a time when nobody wants anything to change just so they can keep up with demand. So we're not expecting to see vaccine programs change methodologies either towards us or away from us.

Alright. Thank you.

Thank you. Appreciate it. Yes, we have time for one more question, I think.

Okay. Our next question comes from the line of Daniel Arias of Stifel. Your line is open.

Hi guys, thanks for getting me in here. I wanted to ask about the capacity expansion in January. If I remember correctly that was for CleanCap and small molecule, I'm just curious whether you found the need to sort of borrow from the small molecule side in order to get you where you needed to be for vaccines, or were you able to build out on both there?

Yes. The lines that we use for CleanCap and other small molecule work are relatively fungible. So we can move them as demand requires. We haven't robbed Peter to pay Paul on this one. The other thing that came online in the first quarter is the plasmid suite, which are entirely distinct from this.

If I could sneak one more in.

Sure.

Last year, when we were going through the process, you had talked about being sort of locked in with six mRNA vaccine providers and that there were three additional ones that I think were just sort of sitting out there as potentials. It sounds like there could be others there. So, wondering if you would just be sort of willing to update us on where that tally of firmly committed customers lies at the moment?

We think that tally is still representative of what's going on, and if we have material developments where there's a significant program that makes progress, we'd probably disclose that at a future point. But I would say no major changes right now.

Okay. Very good, thank you.

Alright, thank you very much. We appreciate it.

Thank you. At this time, I'd like to turn the call back over to Debra Hart for closing remarks. Madam?

Great. Thank you. Thanks, everyone, for joining us today. I did want to let you know we'll be participating at the Cowen Healthcare Conference tomorrow, March 3, and we'll also be at the KeyBanc Capital Markets/Life Science and Med Tech investor forum on March 23. Both presentations can be accessed via live or replay from the Maravai Investor Relations website. So feel free to contact me with any questions and we look forward to updating you during the course of 2021. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.