Repligen Corp (RGEN) May 12, 2026 Conference Transcript

All right, we'll kick off our next session. Thanks everyone for joining us. My name is Mike Riskin. I'm on the Bank of America Life Science Tools and Diagnostics team, and we're excited to host Repligen for our next Fireside Chat, joined by Jason Garland, Chief Financial Officer, and Jacob Johnson, IR. And with that, we'll kick things off. We're going to do just a Fireside Chat. If you've got questions, throw up your hand, and we'll try to call on you when we can. Maybe just to kick things off, you know, you guys recently reported just a couple weeks ago. Maybe give us a high-level rundown of how the quarter played out relative to expectations, sort of what was a little bit better, what was a little bit surprising. Any key takeaways there?

Yeah, no, look, we started the year, in our view, executing exactly what we set out to do, right? So we had a strong first quarter, better than expectations, certainly on a top-line basis, as well as earnings. You know, it was right down in the middle of the fairway for our overall total year guide on organic growth. So it started strong in the top line and enough confidence in our margin profile that we actually raised EPS guidance for the year. And so financially, great start. Second, I'd say that it helped build that confidence in our total year guide as well. We look at, again, first quarter, 11%. We've shared that second quarter is going to be around the same. That's right in line with our total year guide, which means the second half doesn't require an acceleration in growth. So again, we kind of keep executing what we're doing so we can increase our confidence. The other thing is that we delivered that margin expansion, but we also shared, I think, some tangible actions that we're taking to make margin expansion, I'll say, number one, more sustainable, and two, accelerating a little bit beyond what we've shared before. So we launched and announced the transformation office, both focused on our fit for growth journey in terms of the capabilities we have to continue to grow and scale, as well as some very specific projects that will help deliver margin expansion. And we shared that by the end of next year, 2027, on a runway basis, we'll see, you know, about a point of margin expansion as a benefit. And so, again, we're building, I'll say, a structure, a framework, bringing in the right resources to execute that. We also announced a small sale of our Polymem segment, you know, small, like 7 million-ish of sales last year, but losing money. And so, again, cleaning that up as well as a part of our transformation. And the other thing that we were really excited to share was the signing of an OEM partnership in China. So we've talked a lot about finding ways to be, I'll say, more local within that region without necessarily needing to plant a replicant flag in a greenfield. And so this is a first step in an evolution of a partnership where they'll build some of our products. It'll still be Repligen sales and distribution, our design, using their local manufacturing, cost structure, local supply base. But that gives us, again, access to compete with local players in a different way. So we couldn't have been happier with the start of the year with the financials we put up and the print and all the great strategic priorities that we're executing.

Okay. All right, that's a good overview. Maybe we'll dive into it a little bit deeper in terms of the performance you saw in the quarter. If you could sort of talk through, you know, filtration, chromatography, protein, sort of like, you know, go sort of segment or subsegment, you know, one by one, walk through it.

Yeah, so proteins grew very strong. We saw both the strength in the ligand side, but then also some of the other pieces that we have within our custom and resins. you know we filtration again kind of mid single digits with with overall growth we talked about some dynamics there with with ATF and happy to share some more of that a bit a bit later chromatography again really great growth in the quarter as well as our analytic segment and we've seen a lot of continued traction on particularly our upgrade cycle and the solo VP plus within our analytics business. So in fact, they helped really lead the charge on our overall equipment performance as well in the quarter. So what was great is we saw great growth across all the franchises. Again, a good testament to the kind of the breadth that we have and the diverse nature of the portfolio.

Okay. I mean, since you touched on ATF, maybe we'll dive into that a little bit deeper. You had some customer-specific timing, some inventory dynamics. You know, you have a little bit more moderated outlook for that for 2026. Sort of what gives you confidence that you've got, you know, strong visibility there and sort of talk about the rebound beyond that?

Yeah, absolutely. So I think maybe first point is, you know, ATF grew in the first quarter for both consumables and capital equipment. As you mentioned, Mike, we called out a headwind on ATF that, you know, moderate our expectations for ATF for the balance of the year, kind of as part of our updated outlook for the filtration franchise as well. You know, in terms of what's going on there, it really relates to two customers who are managing inventories. You know, we don't think that's totally uncommon for kind of a novel technology like ATF when it's early in its its life cycle um you know as a result we think it's it's really kind of a transitory headwind that we're facing this year um and we expect those customers kind of order again next year and that's what gives us confidence you know in atf returning to to robust growth next year i think the other important point is you know both those customers you know use atf beyond you know the the commercial drugs uh or yeah commercial drugs we're referencing there and so So, you know, we think it's really kind of specific inventory management, you know, doesn't relate to anything else. You know, I think as you think about ATF, you know, this year and beyond, we continue to win new customers. You know, we continue to expand with existing customers, and we have a really strong pipeline of opportunities. And I think to the prior point Jason made is, you know, even with that headwind, we still have the same organic growth outlook for the year, which highlights, you know, what we've been emphasizing for some time, which is we have a broad, diversified portfolio of offerings and growth opportunities across all our franchises.

Yeah, one of those customers actually has platformed ATF across a lot of their lines. And so, again, this is a very specific inventory dynamic they're managing.

Is that like a three, six-month drawdown? Sort of just like how long until you pass this headline?

We see it as kind of a 26 item, right? And whether that changes towards the end of the year, we'll continue to connect with them. But our outlook and assumptions is that really that there's nothing that comes through 23.

And maybe the other important point I should note is, you know, outside of kind of the dynamics in ATF, we see healthy demand for consumables, you know, in the rest of the portfolio. So, again, I think this is very much kind of an ATF customer-specific headline that we've called out.

I'm sure you've done this work, you know, outside of those two customers. What are inventory levels like? Is there a concern that someone else, you know, three, six miles from now down the road will have the same process? Or is there something that, you know, these guys had more elevated inventory to begin with?

I think as of now, we see it really confined to these two customers. And I think it's a testament to how close we are with these customers that we kind of were able to identify this and call it out as it became apparent. But I don't think we're seeing any impact elsewhere within ATF on any other customers.

We still have a good mix of commercial versus clinical as well business. So this type of order of magnitude of inventory is going to be more on the commercial side as well. So, again, that's the breadth of what we're offering helps in that, too.

And then maybe more broadly in the portfolio, you know, the strength you're seeing in the first quarter, the strength you're projecting for the rest of the year. Anything you can point to in terms of, you know, product type or drug class that's driving that? Is it more, you know, MAPs, biosimilars, you know, cell and gene therapy? Just sort of dive into sort of where you're seeing the best opportunities.

Yeah, I'll start on the kind of modality side of things and then I'll let Jason kind of maybe chime in on products. But yeah, look, I think it's very much MAP driven. You know, in the first quarter, new modalities were dilutive as expected. You know, we've talked about or cited this gene therapy headwind. You know, as a result, you know, I think we'll continue to view new modalities as dilutive for the year as well. With that said, if you look under the hood, we saw strength in cell therapy, which we've now seen for several quarters now. I think that's really encouraging, and we're seeing a lot of opportunities there. And then if you look at gene therapy, you know, X that particular headwind, we actually saw growth in the quarter. So I think that's encouraging, along with the fact that there's been two gene therapy approvals this year. So I think you put all that together, we continue to view new modalities as strategic end market for us, and we are seeing opportunities in cell therapy. And ADCs aren't in that count, but I think we think about them similarly.

And from our products' perspective, again, they cut across both MAVs and the new modalities. So that's what's great is we serve both of those kind of equally across the portfolio. Again, talked already about the analytics growth. That's certainly going to be one of the things that we continue to lean on this year. And chromatography as well. A lot of good demand, a lot of good conversion of new customers. So again, this is that type of product where we're not very frequently competing with a similar. It's more about convincing customers that they can outsource what they most often do internally and the service and the value that we can bring for that, and we continue to see good conversion on that. So those are the two areas in particular that we're really excited about. And proteins as well, which will continue to have a strong year.

You talked about, you know, dilutive growth from new modalities and some of the effects there. Is that specifically 2026 dynamic? Is that a little bit longer? I mean, like, it's still early in the year, but, like, how much visibility do you have until next year and beyond, you know, when that could turn to be, you know, growth accretive again?

I mean, so, again, we're still hurt this year by this, by the gene therapy, you know, change. So that, and like Jacob said, outside of that in the gene therapy space we're actually growing so we see it as kind of let's get through you know the anniversary of of that headwind and overall you know still very bullish on on new modalities in total and particularly gene therapy and to be blunder there for people who aren't familiar that relates to a specific customer and we're assuming zero in revenue from them this year so i think hopeful that we won't have that headwind again next year You can't get worse than zero, right?

Yeah, it's an easy comp too, right?

There you go. Maybe one of the other ones that investors look at when thinking about the business and the market is equipment versus consumables. You've had really good strength in consumables. That's existed for a while. Equipment, a lot of focus on orders. Lead time is there as a leading indicator. You talked about some improving equipment order trends later in the quarter. just help frame the magnitude of that, you know, how strong of a single data point that is and A being like week to week on equipment orders and book to bill and things like that. But how much should we be reading into that or not reading into that?

Yeah, so I mean, so you take a step back that, you know, the guide assumes, you know, equal growth, right? Low digit for both of those segments through the year. So again, I think good equal contribution overall to our growth story. You know, consumables, again, Again, it's been great strength and will continue. The equipment, I think, is a bit of a tale of two cities. We've got, and again, I've already referenced this a couple times now, so equipment is absolutely being helped by the analytics side. So, again, that upgrade cycle is a big piece of that. We saw analytics up 50% in the quarter, and 40% was organic, right, because we still have some inorganic from the 908 portfolio that we purchased from them. But so, you know, that's really been a leader. And then the other piece on the equipment side that's been a growth driver for us is mixers. So, you know, this stems from an acquisition we did the end of 2023. We launched new products and really starting to see some good pickup on the mixing side as well. you know that's another place that's had some good luck in in china and too so that those have been really the growth when you look at the i'll say the more traditional um you know downstream filtration systems that's where you know we're seeing more of a flat dynamic this is where you know to your question about kind of customer dynamics where we continue to see a good pipeline of in our funnel right of opportunities but we're um we're picking our analogy, but waiting for the tap to open or the dam to break, pick and choose what you like, but that, you know, we're still waiting for customers to start, you know, taking some decisions. Because we don't see it as a, oh, we're bringing in opportunities and we're losing them. It's the decisions aren't being made. And there's, you know, whether that's MFN digestion or kind of just some of the overall uncertainty in the overall pharma space, you know, we see some of those decisions is being delayed. And we talked about that in February, and that dynamic continues. But again, back to Jacob's point, with a broad and balanced portfolio, we're able to offset some of those slower points with other fast-growing products.

Why has analytics been so strong? Is this a comms dynamics, something about portfolio refresh, new technologies?

What's driving the extra investment there from your customers yeah so it really is that portfolio refresh i mean um we we launched a new uh generation of our this is our atline um you know device so uh it's the solo vpe plus that we just launched you know with with upgraded features um and and technologies um and you know frankly this is one of those areas where you know when olivier came in it was well, what do you mean we haven't upgraded or launched a new gen of this after, what was it, 10 years or 6 to 10 years old? So it's been a while. So we took that on, became a priority, and we're seeing some great traction. So, again, we all love new technology, right, our new next gen of phone, et cetera. But, again, it brings enough good capabilities, functionality that it's been a real good success. There's a fair number of units out in the install base that we've been going out to capture. We kind of see this as a tailwind for us probably over the next, you know, 18, 24 months. And then also expect with that to be able to capture some new growth as well. So not just, you know, the upgrade and replacement cycle, but actually, you know, get new customers. And it's a broad customer base that we've built at, too, right? It's, you know, it tends to kind of, the at-line tends to be a little bit more on the PD side, but it's not, you know, it's big pharma, it's CDMOs, it's biotech, et cetera. So we've got a lot of good momentum there.

And, you know, you mentioned some of the larger, more traditional filtration systems still being a little bit touch and go. I mean, what are we waiting there?

Is this a capacity issue where there's, you know, there was a lot of investment there in prior years and you just don't need the extra capacity? is this a reshoring dynamic sort of like what's the what's the next step there yeah i mean look i i i i we would we've characterized it as this mfn digestion just kind of the pharma um you know ensuring and understanding well what what are what are the priorities you know some of the things that changes that we've seen with the administration and priorities as well um and how to respond to those. I think our view is that, you know, the capacity will be needed, right? The end therapies and drugs that are ultimately being produced will continue to grow, and they'll need, you know, more capacity. And then it's just kind of deciding when and where, right? And I do think there's, you know, that everyone has talked about the opportunity with on-shoring, and that it makes sense to either expand or build out within the U.S. Again, the timing on that still seems to be, you know somewhat of a question um but uh but that in the end of the day you know even if a small percentage of the overall you know the on-shoring opportunities counted as very big numbers and so even if you got a small amount of that you know we still think there's an opportunity for for all players in the space so uh but i think it's just the timing and that we're waiting for to see kind of flush through our funnel of opportunities continues to grow and and so now again it's kind of you know when does the tap turn on okay heading on a couple other points you briefly touched on earlier from sort of

like a customer segment perspective emerging biotech you know grew nicely in the quarter but still sort of you know below historical levels I've gotten a really mixed data points on how biotech is playing out across the industry so what are you seeing there and what's it gonna take for that to truly come back Yeah.

So, I mean, I think first off, because we get asked a lot about this, right? Like clearly funding was really good in the fourth quarter last year. I think really good in the first quarter. And it seems like April was really good. So I think, you know, that's certainly an encouraging kind of KPI. And I get why people ask about it. You know, the reality is, you know, that they get the money we then needed to get out the door. Right. And so I think, you know, for us, we've had four straight quarters of growth from that customer base, which means one, the comps start to get tougher. But I think that suggests we're seeing stabilization. With that said, if you look at whether it's dollars or our mix from that customer base, it's probably 8% or 9% of our revenues right now. Not that long ago, it was 10% of our business, if not a bit higher. And so that's where our view is. It's certainly encouraging trends there. I certainly think there's an opportunity in front of us given the funding trends.

But I think we'd like to see more tangible evidence of that money being spent before we kind of declare that it's back but certainly we're under indexed there versus where we were you know not that long ago okay i think for us that you know the question always becomes well you know as funding's picked up what's the timing right that that translates to the orders and sales um i don't know people always kind of talk six to nine months maybe in today's environment that ends up on the longer end of that range so so that's what we're waiting for it as well but overall we still feel like that that segment will be a tailwind for us you know but um the timing and how that flushes through is i guess still to be seen okay and then

um you also touched on china um in your opening comments including the the oem uh partnership just to get a little bit more of a local presence um china seems to be rebounding strongly you know overall where are you seeing better performance there if you could break it into like what are the pockets of growth um and then we'd just love to hear more about you know oh the the oem agreement and maybe next steps beyond that yeah i mean so number one we firmly believe that biopharma in china is going to be you know a key leader right globally and will be a huge source of growth um And so, you know, really, I'd say we've been employing two elements of our strategy.

Number one is we brought in new leadership, new team in many cases in our existing China country structure. And we're already starting to see, I think, some of the benefits for that. We had our best quarter in the last two years in China on a very low base, mind you, and coming off of, you know, some share loss. But I think, again, we've got now a much stronger team that's able to capitalize on the opportunities that we have. And that cuts across a lot of pieces of portfolio. So that's to kind of go execute and run what we got, right, and with the team we have. And we're starting to see some good momentum there. The second piece is now back more to our longer-term strategy, which is the OEM partnership. So, again, our view is that to really be able to support and take advantage of the overall biopharma growth in country is to be more localized, right? And because I said, you know, our view wasn't, oh, let's go plant a flag, build a greenfield. It's how do we find the right partner to grow with? And so we've started, they'll start manufacturing, you know, our products will sell that. But it could evolve into, you know, a broader relationship, building more products, and certainly we'll be able to maybe leverage some of the local relationships that they have otherwise and be able to grow, you know, in different ways. So the question always becomes, okay, you bring in a partner, you know, is there a risk of technology, IP loss? And, you know, in our view is that, you know, we certainly took the time and vetted to find the right partner. You know, we haven't announced the company, but we know the leaders, you know, our leadership and team have worked with them in the past. You know, they're trusted, known leaders in the industry. And our view is that there will always be a risk of IP loss, but you either sit out and watch, you know, and not take advantage of any growths in China, or you participate and you manage those risks, and that's really been our approach. And so we're really excited about what this translates to and allows us to play in a more localized way and take advantage of what we see as, again, it's going to be a big biopharma growth in the region.

Is this one move, you know, you talk about a local presence, and having sort of that flag, is this one move enough or do you need to do more? Does this get you everywhere you need to be?

Well, I think for us, it's a step. You know, our view, again, depending on how it goes, would be to continue to expand with this partner in different ways. And so, you know, we see it as a first step of multi-phases, which could be more products, it could be different relationships, It could be, you know, at some point, you know, is there – within Asia, there's other countries and regions that, you know, are amenable to, you know, China-built products. So there's a lot of different ways we could get there. So we kind of see this as a step one with that path to be defined.

Maybe along a similar line, let's talk about cash use, M&A, portfolio evolution. You've got almost $800 million of cash in the books now. You've got a focus on capacity expansion, analytics, some innovation. How are you thinking about M&A opportunities going forward? Any gaps you'd like to fill? Any opportunities shaping up there from an evaluation perspective?

Yeah, so M&A remains a high priority for us. We still think that's the best use of our capital and the cash that we have available. We, again, are focused on finding technologies that are differentiated. You know, we don't want to go down a me-too path. You know, there's gaps to be filled in our portfolio. We've shared those a lot, both on the MAP side, but then also opportunities to support new modality workflows. And so a lot of opportunity, you know, very active in the space. We've also gone down the path of, you know, minority interests as well, investments. So, you know, we announced NovaSign earlier last year. So this allows us access and partnership to new technologies, you know, frankly, without sort of needing to deal with some of the short-term dilution that might come with earlier stage companies. So we're really excited about what NovaSign can bring, and we're open to that type of investment as well. So a lot of activity, a lot of opportunity. You got to, you know, it's all got to line up. You know, they got to want to sell when we want to buy and all the pieces that come with it, but very active right now.

We got about five minutes left. If there's any questions from the audience, we'll give you a chance. All right. We'll keep going. Let's talk a little bit about margin progression and margin story from here. You know, you introduced the transformation office targeting some incremental margin. What are the biggest levers you have? And can you talk us through sort of what that ramp could look like over the next couple of years, which trajectory will be?

Yeah, so again, I kind of made the point earlier that the transformation office is a way to formalize and I'll say assign and dedicate the right resources to a lot of different priorities that we've been either working through or planning. And it puts a structured framework around and a way to bring in, again, not only dedicate some of our internal resources, but also bring in some external experts to help us. We see it as a path for acceleration. So, you know, we've shared, you know, probably over the last year or more, this target to get to about a 30% EBITDA, you know, within five years. But I also had shared often that we felt like, you know, 26, 27 were still more of investment years and we would see, you know, say an acceleration of that margin expansion in the latter part of that period. I think the transformation office and some of the benefits it can deliver for us is a way of accelerating that and pulling some, you know, I won't say it's linear, but, you know, making it less of a, you know, sort of a ramp up at the end and puts a framework. It's going to be focused on, you know, products, but our portfolio, for example, you know, we've talked about, you know, fluid management is one of the elements of the portfolio that is below average, right, for our product margins. And so that's one of the focal points, you know, which could be a, you know, design changes, you know, material. It could be manufacturing, adding more automation, et cetera. And so outlining all those different opportunities that can drive it. And there's other things in terms of supplier, working with them. And then we also talked about beyond the margin expansion, the transformation office would help us on our fit for growth journey. the big one in there is our is our it modernization right making sure that we um you know take more advantage of the systems we have today you know and and then also rationalize some i mean for our size company we have way too many apps way too many vendors right so how do we rationalize those how do we you know start to align on common platforms and then all of that as well as is a push on our data management and infrastructure will be the foundation for us to build more AI from an internal benefit as well as in how do we incorporate that into our products as well. So that's why that's a really important one because it's the fit for growth, it's modernization, but frankly, I might get some savings as well when it comes to some of the rationalization on vendors. So I'm really excited about this. I think, again, we said that we see about a point of margin expansion on a run rate basis by the end of 27. So we'll see some of those benefits. And then on a go forward basis, we'll kind of see that full point in 28 and beyond. Okay.

Maybe one last big picture question for me. Just thinking about the markets and where we sit today um and you know how we feel about you know bioprocess and market going forward um it's been you know really volatile the last couple years we talked about some of the moving pieces some of the individual customer contracts and these similities but you know you did 11 in the first quarter you're guiding to you know 9 to 13 for the year um you know taking a step back everything that's gone on the merchant biotech pharma mfm restoring china you know has it changed your views on you know bioprocess long-term algorithm long-term growth absolutely demand drivers?

Absolutely not. I mean, this has an incredible tailwind behind it. Again, we see this year still kind of this digestion happening. And like I said, the pipeline and opportunities continue to build up. We think we're well positioned to capture those opportunities in a different way than we ever have before with our broader and deeper portfolio, as well as the relationships that we build. We've talked a lot about starting to actually have some swings at bat for RFPs. We actually won recently. And so that's going to be the start of it. So we're thrilled. We're excited about the year and even more excited about the future beyond to 2026 and the opportunities that we have.

Okay. All right. Well, with that, we'll have to leave it there. Thanks, everybody. Thanks, Mike. Jason.