Section title or presenter/ title/contact...Strong End Markets for Bioprocessing 1. Antibodies to...
Transcript of Section title or presenter/ title/contact...Strong End Markets for Bioprocessing 1. Antibodies to...
August 2020
Investor Presentation
Safe Harbor
This presentation contains forward looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are subject to risks and uncertainties which may cause our plans to change or actual results to differ materially from those anticipated. In particular, unforeseen events outside of our control may adversely impact future results. Additional information concerning these factors is discussed in our reports filed with the Securities and Exchange Commission including recent Form 8-Ks, our most recent Annual Report on Form 10K and our most recent Quarterly Reports on Form 10Q. The forward looking statements in this presentation reflect management’s current views and may become obsolete as a result of new information, future events or otherwise. We may not update such forward looking statements to reflect a change of events or circumstances that occur after the date hereof, except as required by law. The industry and market data contained in this presentation are based on management’s own estimates, independent publications, government publications, reports by market research firms or other published independent sources, and, in each case, are believed by management to be reasonable estimates. Although we believe these sources are reliable, we have not independently verified the information.
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Repligen Overview
Advancing innovation as a trusted partner in the production
of biologic drugs
Repligen Snapshot
Bioprocessing innovator with
diversified portfolio
Enabling efficient, single-use,
high productivity manufacturing
Differentiated, disruptive products
with high brand recognition
Accelerating demand from
gene therapy and COVID-19 programs
Supported by a robust and
expanding global biologics market>760
EMPLOYEESfrom ~550 at YE 2018REVENUE SPLITS
FY 2019
44%
24%
24%Filtration
Chroma
Proteins
GeneTherapy
85%
15%
mAbsrProteinsvaccines
GeneTherapy
4
33%Organic Growth
FY 2019
$270.2MTOTAL REVENUE
57%GROSS MARGIN
FY 2019
39%RevenueGrowth
26%ADJ. EBITDA MARGIN
FY 2019
>1,000 EMPLOYEES
23%-26%Revenue Growth18%-21% Organic
Guide 2020*
$332-$340MTOTAL REVENUE
56.5%-57%GROSS MARGIN
FY 2020
27%ADJ. EBITDA MARGIN
FY 2020
*as of 7/30/20 earnings call; see appendix for GAAP to non-GAAP reconciliations
Market Drivers, Addressable Markets
Strong End Markets for Bioprocessing
1. Antibodies to Watch in 2019 MAbs. 2019 Feb/Mar 11(2)219-238 PubMed link, FDA.gov2. Alliance for Regenerative Medicine Q3 2019 report ARM report , FDA.gov; Includes gene therapy and gene-modified cell therapy3. SDI Bioprocessing Market Analysis and Perspectives Sept. 2018
Monoclonal Antibodies (mAbs)1
110FDAapprovedYE 2019 >550
clinical trials
Gene and Cell Therapy
8FDAapprovedYE 2019 >1,000
clinical trials
• Originator and biosimilar mAbs, emerging gene therapy driving growth
• >750 gene therapy clinical trials2;90% in Phase 1 and Phase 2 trials
• 2019-2023 estimates for gene therapy market growth; 20%-30% CAGR
Surging clinical activity driving major capacity expansion
2019 bioprocessing market
8%-10%CAGR thru 20223
~$10B
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Robust market for bioprocessing technology and expertise
Urgent Clinical Programs Targeting COVID-19
Source: WCG Knowledge Base: wcgclinica.com/covid-19/#dashboard
Sudden and critical need driving additional demand for Repligen products
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Focus is on Vaccines to halt spread of virus
Select vaccines and therapeutics in clinical trials(not necessarily involving Repligen products)
Viral vector;AZD1222
Inactivated; CoronaVac
Repligen Rapid Response
• Traction with existing customers
• COVID-related demand 2020 (est.):
• >$15M in COVID-related revenue
• ~5% of revenue
• 40%-50% of order growth
• Filtration, Chromatography, Proteins
Source: PhRMA phrma.org/coronavirus/activity-tracker as of 08/11/2020
Sources: World Health Organization 07/31/20 publication who.int; RAPS https://www.raps.org/news-and-articles/news-articles/2020/3/covid-19-therapeutics-tracker
Remdesivirapproved for emergency use
mAb cocktail;REGN CoV2
mAb;LY-CoV555
mAb;lenzilumab
mAb;ravulizumab
mAb;canakinumab
MRNA;BNT162
Viral vector;Ad5-nCoV
Inactivated
MRNA;mRNA-1273
mAb;gimsilumab
Synth DNA;INO-4800
Filtration*10%+ share2019 organic growth >30% Leader in upstream clarification Taking share downstream (UF/DF)
Our Total Addressable Market
Proteins~10% market share 2019 organic growth >20%Ligands organic growth ~15%Leader in Protein A ligands
Chromatography20%+ share2019 organic growth >40%Leader in pre-packed columns (PPC)
Winning market share with differentiated technology
Process Analytics5%+ sharePro-forma 2019 growth ~10%Leader in protein concentration measurement
~$500M
~$500M
~$1.6B
~$550M
~$500M ~$325M
~$3.0BTAM
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*includes Engineered Molding Technology TAM $200M, acquired July 31, 2020
Our Performance
24%
44%
24%
6%2%
$60.4
$83.5
$104.4
$141.1
$193.9
$270.2
$336.0
$0.24
$0.44$0.49
$0.69
$0.73
$1.07
$1.27
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
$1.30
$0
$40
$80
$120
$160
$200
$240
$280
$320
$360
FY 14 FY 15 FY 16 FY 17 FY 18 FY 19* FY 20 G
midpt
Track Record of Execution and Performance
Disruptive technologies driving diversification … and increased revenue and profitability
*Change in accounting for the treatment of tax on certain intangible amortization in 2019; adj. EPS figures for prior periods do not reflect this change** Non-GAAP financial measure; see reconciliation tables in appendix** Guidance as of 7/30/2020 earnings call; see reconciliation tables in appendix
Proteins (OEM) Filtration (Direct) Chromatography (Direct)
~35%5-year
Revenue CAGR72%11%
16%1%
2014
2018
28%
47%
23%
2%
72%DIRECT
2019
10
Rev
enu
e (i
n $
Ms)
Ad
j. EPS fu
lly dilu
ted **
>4xincrease in
Adj. EPS
76%DIRECT
28%DIRECT
Process Analytics) Other
2014-2019
Our Blueprint for Growth
Accelerate growth through disciplined M&A and R&D
Transform bioprocessing through high-impact technology innovation
Enter new markets and expand applications
Scale to meet demand
Position portfolio for future growth in biologics markets; mAbs, recombinant proteins, gene therapy
Deliver results and create value for customers and shareholders
M&A2014-2019
5ACQUISITIONS
~40% CUMULATIVE REVENUE
represented by acquisitions2014-2019
6YEARS
R&D2014-2019
12NEXT-GENERATION
PRODUCTSthru R&D
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Accelerating Growth through M&A and R&D
Accelerating Growth through Acquisitions
* Excluding $4M in sales to Repligen** Revenue Growth, first full year of Repligen ownership (proforma)
JUNE 2014 APRIL 2016 DEC. 2016 AUG. 2017
Filtration leadership inperfusion; XCell™ ATF
Key Benefit Entry point for PPC in process development;
OPUS® PD
Downstream single-usefiltration; SIUS™ TFF
Hollow fiber filtration and system portfolio;
KrosFlo™ TFFSales force Asia
MAY 2019
Establishes analytics franchise; at-line and
real-time measurement
PF Revenue $10.6M $4.6M $5.8M $37M* ~$24M
48% 26% 37% 24% >30% est.Year 1 Growth**
1 2 3 4 5
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Engineered Molding Technology: Acquisition #6
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Tuck-in acquisition, closed July 13, 2020, meets our M&A criteria
Adds ~$3.5M to $4.0M of incremental revenue in 2020E (6 months); adds $200M to TAM
Gross margins and operating margins in line with Repligen corporate average with path to margin expansion following initial investment
Accretive to adjusted EPS for 2021E and thereafter
Addresses requirement for leakproof assemblies in biologics manufacturing
Underinvested in commercial with opportunity to build on OEM and Direct customer base and strengthen Repligen offering
Expands single-use presence and establishes core competency in silicone extrusion and over-molding technology
Engineered Molding Technology
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Headquarters: Clifton Park, NY
Founded: 2010
Co-founders: Mike Pandori & Todd Etesse
Employees: 50
Sales offices: U.S.
Distributors: NA, EU
Rev
enu
e (
$M
s)
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
2017 2018 2019 2020
>30%Revenue CAGR
2017-2020e
Molded connections
Tubeset with over-molded fittings
Experts in molding and over-molded components and sub-assemblies
Reputation for customization, reliability, industry-leading turnaround
Revenue Sources• ~90% OEM
Bioprocess customers, including Repligen
• ~10% Direct Biopharma and CDMO customers
Qualified by key industry players
Transforming Bioprocessing
High Performance
Affinity Ligands
Bringing Industry “Firsts” to Market
Single-use KrosFlo® Integrated TFF Skids
Establishing Key Partnerships to Expand Market Position
Next-generation Protein A ligands
Integrated perfusion
bioreactors
Focused on High Impact Technology Innovation
OPUS® R Pre-packed Columns
Single-use TangenX™ Flat Sheet TFF
Single-use XCell™ ATF Perfusion Systems
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Advancing Growth through R&DTransformative high-impact “industry firsts”
Filtration
ChromaProcess
AnalyticsProteins
Single-use ATF™ perfusion with multiplex controller
OPUS® pre-packed columnsCustomer choice of resin & bed height;Resin recovery feature
SoloVPE and FlowVPEAt-line and in-line protein concentration measurement
NGL-Impact® AHigh-performance Pr A ligand;Reduces cost and improves process economics
TangenX™ SIUS™ single-use TFF;Incl. gamma-irradiated SIUS™High performance with lower cost
TFDF™ disruptive technology Displaces centrifugation in fed-batch clarification
KrosFlo® systems“Plug and play” functionality in both upstream and downstream
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Expanding Capacity
Global Commercial
YE 2019
Advancing R&D
Tech Centers of Excellence
FiltrationChromatography
ProteinsUS and EU
Scaling to Meet Customer Demand
Building our Team
Industry-Leading Talent &
Expertise
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FiltrationUS
ChromatographyUS, Europe
key manufacturing sites
7
95 External
sales, field applications and service
40Internal
customer service,
marketing
84 North America21 Europe
30 Asia
6%-7% of revenue
Ongoing new product launches
135 (18%)
Our Future is BrightNew Products and Markets Fuel Future Growth
Industry and
Market Trends
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Increasing capacityflexible facilities
Adoption of single-use
Continuous manufacturingadvances
Greater automationmonitoring and process control
Emerging
Opportunities
New & Future
Products
Gene therapy workflows;Increased investment by industry
TFDF®in fed-batch clarification
Next-generation ligandsfor mAbs and other biologics
Multiplex ATF controllersin perfusion
Flow VPEnext-gen
Our Financial Performance & Guidance
Second Quarter 2020 Financial Highlights
Record Quarterly Revenue
o $87.5M; +19% organic
Strong Gross Margins and Operating Margins
o GM: 57.9% GAAP, 58.2% adjusted
o OM: 22.3% GAAP, 29.2% adjusted
Low Tax Rate
o 1.0% GAAP, 9.1% adjusted (benefits from stock option exercises)
EPS Expansion
o Fully diluted EPS: $0.30 GAAP, $0.42 adjusted (from $0.17 and $0.33 2Q19)
YTD $26.3 operating cash flow, $9.5M Cap Ex investment (capacity, SAP)
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Second Quarter Business Highlights
GeneTherapy
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12-point beat on revenue, 75% COVID-related
Strong order book with 40%-50% of order growth COVID-related
Strong margins (GM, OM) reflect sourcing gains, product mix, cost containment
o OPUS column to resin mix, Proteins
Gene Therapy activity continues to accelerate
o Expecting 30%-40% growth compared to 2019
C Technologies commercial team gained traction
o 29% pro forma growth in Q2
o On track for $32M revenue in 2020 despite site visit challenges
Announced acquisition of Engineered Molding Technology
Robust regional growth in both Asia/Pac and Europe
Financial Snapshot
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* FY 2020 Guidance as of July 30, 2020 earnings call 1. Change in accounting for the treatment of tax on certain intangible amortization was made in 20192. Non-GAAP financial measure; see reconciliation tables in appendix
($s Millions except EPS) 2018 2019 2020 Guidance* Long-Term Goals
Revenue $194.0 $270.2 $332-$340 $500M-$600M by 2023
Revenue Growth37%,
17% organic39%,
33% organic23%-26%,
18%-21% organic10%-15% organic CAGR
Gross Margin (GAAP) 55.4% 55.9% 56.5%-57.0%
Gross Margin (Adj.) 55.8% 57.0% 56.5%-57.0% 60% adj. gross margin
Operating Income (GAAP) $26.0 $36.1 $59-$62
Operating Income (Adj.) $39.4 $63.5 $81-$84 25% adj. operating margin
Net Income (GAAP) $16.6 $21.4 $41-$44
Net Income (Adj.)1 $30.1 $52.5 $66-$69
EPS diluted (GAAP) $0.37 $0.44 $0.77-$0.82
EPS diluted (Adj.)1 $0.66 $1.07 $1.24-$1.29
Cash and Cash Equiv. YE $193.8 $528.4 $560-$570
Fully diluted shares YE (M) 45.5 49.2 53.4
EBITDA (Adj.)2 $45.0 $71.1 $91-$94
Additional 2020 Guidance*
R&D: 6.0%-6.5%
Adj. tax rate: 18%
Cap Ex: $30-$32M
Well Positioned for Sustainable Growth
Four main franchises focused on technology leadership
High impact products for flexible manufacturing; single-use and continuous solutions
Growing total addressable market: ~$3.0B
Expanding manufacturing capacity to stay ahead of increasing demand
R&D engine to launch next-generation products
Strong end market acceleration for biologics, including gene therapies $528.4M
Cash & Equivalents YE 2019
FILTRATION
XCell™ ATFKrosFlo®
TangenX™TFDF™
CHROMATOGRAPHYOPUS®Resins
ELISA Kits
PROTEINSNGL-Impact A®
Protein A Growth Factors
PROCESS ANALYTICSSoloVPE™FlowVPE™
$500M-$600MRevenue Goal
By 2023
24
2525
Thank you!
GAAP to Non-GAAP Reconciliation
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2019 & 2018 ReconciliationGAAP to Non-GAAP Income from Operations and Net Income
Reconciliation of GAAP Income from Operations to Non-GAAP (Adjusted) Income from Operations(Unaudited, amounts in thousands)
Twelve Months Ended December 31,
2019 2018
GAAP Income from Operations $ 36,083 $ 25,988
Adjustments to Income from Operations
Acquisition and integration costs $ 12,508 $ 2,928
Inventory step-up charges $ 1,483 $ -
Intangible amortization $ 13,441 $ 10,518
Adjusted Income from Operations $ 63,515 $ 39,434
Reconciliation of GAAP Net Income toNon-GAAP (Adjusted) Net Income (Unaudited, amounts in thousands)
Twelve Months Ended December 31,
2019 2018
GAAP Net Income $ 21,411 $ 16,617
Adjustments to Net Income
Acquisition and integration costs $ 13,008 $ 2,928
Inventory step-up charges $ 1,483 $ -
Intangible amortization $ 13,441 $ 10,518
Loss on extinguishment of debt $ 5,650 $ -
Non-cash interest expense $ 7,536 $ 4,248
Tax effect of intangible amortization and acquisition costs $ (10,003) $ (4,204)
Adjusted Net Income $ 52,526 $ 30,107
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2019 & 2018 ReconciliationGAAP to Non-GAAP Net Income Per Share
Reconciliation of GAAP Net Income per Share to Non-GAAP (Adjusted) Net Income per Share (Unaudited)
Twelve Months Ended December 31,
2019 2018
GAAP Net Income per Share – DILUTED $ 0.44 $ 0.37
Adjustments to Net Income per Share – DILUTED
Acquisition and integration costs $ 0.26 $ 0.06
Inventory step-up charges $ 0.03 $ -
Intangible amortization $ 0.27 $ 0.23
Loss on extinguishment of debt $ 0.11 $ -
Non-cash interest expense $ 0.15 $ 0.09
Tax effect of intangible amortization and acquisition costs $ (0.20) $ (0.09)
Adjusted Net Income per Share – DILUTED $ 1.07 $ 0.66
Totals may not add due to rounding
2019 & 2018 ReconciliationEBITDA to Adjusted EBITDA
Reconciliation of GAAP Net Income to Adjusted EBITDA (Unaudited, amounts in thousands)
Twelve Months Ended December 31,
2019 2018
GAAP Net Income $ 21,411 $ 16,617
Adjustments
Investment Income $ (5,324) $ (1,895)
Interest expense $ 9,292 $ 6,709
Tax Provision $ 4,740 $ 4,819
Depreciation $ 7,317 $ 5,213
Amortization $ 13,551 $ 10,565
EBITDA $ 50,987 $ 42,028
Other Adjustments
Acquisition and integration costs $ 13,008 $ 2,928
Loss on extinguishment of debt $ 5,650 $ -
Inventory step-up charges $ 1,483 $ -
Adjusted EBITDA $ 71,128 $ 44,956
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2020 Guidance Reconciliation GAAP to Non-GAAP Net Income, Net Income Per Share
Reconciliation ofGAAP Net Income per Share Guidance to Adjusted (Non-GAAP) Net Income per Share Guidance (in thousands)
Twelve Months Ending December 31, 2020
Low End High End
Guidance on Net Income per Share – DILUTED $ 0.77 $ 0.82
Adjustments to Guidance on Net Income per Share – DILUTED
Acquisition and integration costs $ 0.11 $ 0.11
Anticipated pre-tax amortization of acquisition-related intangible assets $ 0.29 $ 0.29
Inventory step-up costs $ 0.00 $ 0.00
Non-cash interest expense $ 0.21 $ 0.21
Tax effect of non-GAAP charges $ (0.15) $ (0.15)
Guidance rounding adjustment $ - $ -
Guidance on Adjusted Net Income per Share – DILUTED
$ 1.24 $ 1.29
Reconciliation ofGAAP Net Income Guidance to Adjusted (Non-GAAP) Net Income Guidance(in thousands)
Twelve Months Ending December 31, 2020
Low End High End
Guidance on Net Income $ 41,000 $ 44,000
Adjustments to Guidance on Net Income
Acquisition and integration costs $ 5,706 $ 5,706
Anticipated pre-tax amortization of acquisition-related intangible assets $ 15,733 $ 15,733
Inventory step-up costs $ 233 $ 233
Non-cash interest expense $ 10,963 $ 10,963
Tax effect of non-GAAP charges $ (7,790) $ (7,790)
Guidance rounding adjustment $ 155 $ 155
Guidance on Adjusted Net Income $ 66,000 $ 69,000
Totals may not add due to rounding
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Where our Products Fit
in Protein (mAb) and Gene Therapy Workflows
Therapeutic Protein Bioprocessing Workflow
NGL™ Impact A®
XCell™ ATF
KrosFlo® TFF
XCell™ ATF
KrosFlo® TFDF
OPUS® PPC OPUS® PPC
VPE Devices
KrosFlo® TFF
TangenX® TFF
VPE Devices VPE Devices
KrosFlo® TFDF
VPE Devices
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Gene Therapy Bioprocessing Workflow
OPUS® PPC
OPUS® PP
KrosFlo® TFDF
ProConnex
HF Filters
KrosFlo® TFF
TangenX® TFF
XCell™ ATF
ProConnex
VPE Devices
TangenX® TFF
VPE Devices
HF Filters HF Filters
XCell™ ATFXCell™ ATF
KrosFlo® TFF
OPUS® PPC
VPE Devices
OPUS® PPC
HF Filters
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Revenue Views
Revenue Splits by Biologic, Customer and Product Type
81%
19%
86%
14%
20192018
35
Biopharma developers
CDMOs
$0
$50
$100
$150
$200
$250
$300
2017 2019
mAbs, rProteins, Vaccines
Gene therapies
~15%
~85%
~96%
~4%
Rev
enu
e ($
Mill
ion
s)
77%
23%
Single-use accounts for 40%+ of total revenue
Consumables and SU
Equipment
2019
*The above charts represent revenue estimates
Revenue Splits by Geography, Commercial/Clinical
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57%
27%
16%51%
37%
12%
Direct Only(excludes Proteins)
Overall(includes Proteins,
partial year C-Technologies)
North America
Europe
APAC
North America
Europe
APAC
Commercial35%
Clinical65%
Commercial30%
Clinical70%
Overall(includes Proteins)
Direct Only(excludes Proteins)
2019 2019
C Technologies – May 2019 Acquisition
$13.8$14.9
$19.4
$23.7$25.5
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
2015 2016 2017 2018 2019
C Technologies – May 2019 Acquisition
Revolutionizing Protein Concentration Measurement
Strong Revenue Growth, Attractive Margins
Gross margin: Low-to-mid 60%’s
17%
Revenue CAGR 2015-2019
Process Analytics Revenue
Offline and at-lineExpanding the customer base
Quality ControlProcess DevelopmentFormulationManufacturing
~20%service,
consumables
~80%instruments,
software
Novel Slope Spectroscopy® Technology
First and only in-line
We are investing inC Technologies
Direct SalesR&D
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Solo
VP
E™
Flo
w V
PE™
Rev
en
ue
($M
s)
Adds Process AnalyticsBusiness
• Rapid, accurate protein concentration measurement that eliminates manual sample dilutions
• Flexible, easy to use
Met Repligen’s strictacquisition criteria
Moves up and down in sample
Process Analytics: Solo VPE and Flow VPESlope Spectroscopy®
L
VPE Slope Spectroscopy®plots vary “L” (pathlength) rather
than “c”
Key Process Benefits for Biopharma CustomersVPE Slope Spectroscopy® vs. Traditional UV
Removes or automates multiple steps
• At-line measurement, adaptable to in-line analytics
• Eliminates manual dilution, lowers dilution error
• No sample transfer from PD/manufacturing to labs
Rapid time to results, robustness
• Faster reporting and validation
• Built-in data quality
• Encapsulation improves workflow and validation
Ease of use
• Simple training
VPE
TraditionalUV-Vis
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Process Analytics: Solo VPE and Flow VPE
Overcoming Issues with Standard UV Spectroscopy
40
4141
Engineered Molding Technology –July 2020 Acquisition
Competitive Landscape
EMT portfolio enables
Repligen to compete more effectively in market for
integrated SU Flow Paths
42
Industry Migration Supports Our Systems Strategy
Industry is migrating to integrated
single-use flow paths and skids for
running critical bioprocessing
unit operations
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Go-to-Market Strategy
Accelerate
Customer Adoption
Integrate into Repligen Products
& Expand Product Line
Expand OEM:• Strengthen existing relationships with
leading SU vendors for OEM business
• Opportunity to expand beyond core customer base
Go Direct:• Invest in small direct sales force – BSS
• Sell direct to CDMOs and biopharma as part of Repligen single-use offering
Use in Current Products:• Fully integrated flow paths for XCell
ATF®, KrosFlo TFDF®, OPUS®, TangenX
SIUS®, ProConnex®
New Product Offerings: • Leakproof flow paths; high value for
gene therapy, vaccines
• Flow path assemblies for low hold-up volume TFF skids for flat sheet cassettes and hollow fibers
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How Our Products Work
Filtration: XCell™ ATF
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Links• How It Works Library• How It Works: Alternating Tangential Flow filtration (ATF)• https://www.repligen.com/applications/perfusion
Filtration: TFDF Benchtop System, SIUS™ Flat Sheet TFF
Links• How It Works Library• How It Works: TFDF™ System for fed-batch clarification• https://www.repligen.com/applications/perfusion
Links• How It Works Library• How It Works: Flat Sheet TFF• https://www.repligen.com/applications/perfusion
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Filtration: KrosFlo® KR2i TFF System
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Links• How It Works Library• Technologies: KrosFlo® KR2i TFF System• https://www.repligen.com/applications/perfusion
Chromatography: Inside OPUS 80R
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Links• How It Works Library• How It Works: Downstream Chromatography• https://www.repligen.com/applications/chromatography• OPUS® 5–80R Pre-packed Columns Technology