Maravai LifeSciences Holdings, Inc. (MRVI) Earnings Call Transcript & Summary

Good afternoon. Welcome. I'm Dan Brennan. I cover tools and diagnostics in the pharma service stocks here for UBS. Pleased to be joining the virtual stage here with the senior management team of Maravai, who became public back in -- I believe, it was December, and we were involved on that IPO. End of day 2 of the conference, but certainly really looking forward to digging into the story with both Carl Hull, the CEO; and Kevin Herde, the Chief Financial Officer. Carl, you'll be able to hear on the phone. Kevin, you'll be able to see on video. Please feel free -- for those on the webcast, if you'd like to try to shoot me a question in the webcast question link, please do so, and I'll check it throughout the presentation. So first off, I would just say, Carl and Kevin, thanks for joining us here at the UBS conference.

Well, thanks for having us, Dan.

Terrific. So listen, since coming public, the results you put up have been certainly very strong, benefited by what's going on with the COVID vaccine market, which is where I thought I would start. Certainly, we'll get to a series of questions throughout the presentation that speaks to your whole product portfolio. But I thought a place to start was really on CleanCap, which clearly is a tremendous differentiator for the company and a really notable driver of growth right now. I guess the question I wanted to ask, and I know it's come up on the recent quarterly conference calls as well is when we look at -- listen, the results you put up have been very strong and you raised guidance materially, but I guess the first question I was going to ask you with really start off with this idea that when we look at what we could see publicly announced from Pfizer, BioNTech and what we see what you're guiding for, for us, it seems to be maybe a bit of a discrepancy. And I'd love to understand a little bit how the process works with those customers and how much visibility you have in terms of their future production needs and kind of what -- what gets baked into your guidance and at what point?

Sure. Well, I think, Dan, it is difficult to reconcile the comments may be made by the senior leadership with one of our customers in a certain setting with what the forecasts are that exists in the supply chain at the moment that they make that announcement. And everybody has to remember, I'm sure that these forecasts and projections of the number of vaccines have only gone up over the past year. And I think, in many cases, the organizations are trying to catch up to their own targets, so there's a bit of a built-in time lag that's always going to be there as those increased capacity request flow through some, I think, it's 80 suppliers in about 20 different countries. But Kevin, would you like to talk a little bit about how we go through the rather dynamic and very much real-time forecasting process?

Yes, happy to, Carl, and thanks for having us here again today. Our forecasting process is really embedded in what we're getting from our customers and those ongoing conversations. So as it relates to the vaccine side of the house that we're working with our large customers, we have MSAs in place. They provide us a forward-looking forecasts that go out about 12 months. That informs some of our capacity and some of our ability to guide against that, but we're really locking in also on the near-term POs that we're receiving for the CleanCap materials, which will go out 3 or 6 months and be locked in. So we are selling our CleanCap product to the large vaccine manufacturers at a kilogram basis. And we're working with the supply chains based on that dynamic and making sure that our guidance and how we're planning our business as we look forward to the course of 2021 is really tied directly to that direct input on a CleanCap in bulk. As Carl said, there'll be some timing differences over time here. We've seen nothing but increases in those forecasts, and that's really been the reason why our forecast and our guidance statements have increasingly come up over the last 6 months based on what they're telling us and how we're rolling that through our operational forecast.

Got it. Okay. Okay. That makes sense. Maybe as I look at like -- and again, there are timing differences, so my second question is on -- probably going to be another one that the transparency of what Pfizer is saying versus what you have in your model that we have in the mall. Is it going to be linear or tit-for-tat? And nonetheless, Pfizer has been discussing 4 billion doses -- or 4 billion-plus doses in 2022. Is it possible just to say -- to the extent they deliver that or they wanted to deliver that number, is there a reason to think that your COVID CleanCap numbers wouldn't grow year-over-year, if, in fact, they wanted to deliver 4 billion doses next year?

No. I think your logic sounds pretty good to me.

All right. Good stuff on that. That sounds good to me. Maybe in terms of -- when we think about the out-year forecast, and we're going to dial back to the near term as well because we're not going to jump too far out in the future. But when we think about the need for booster shots, maybe even a third shot in 2021 and where we are at the rest of world rollout in mRNA vaccines, any way to think about like the durability of this COVID CleanCap business? Obviously, you're not going to guide for '22 and '23 and '24 and '25 now. But what we're trying to figure out, like the right numbers to put into a model, based upon those factors, anyway from a high level to think about the kind of the durability of that line item for you?

Well, first of all, I do think it's difficult to predict the long-term steady state here just because it's going to depend on how the virus actually evolves over time. And I think if you see a circumstance where the virus evolves to the point that it escapes the existing vaccine protections that are going into people's arms today, then you're going to have to modify the vaccine itself, right? And that could be something that happens once a year. It could be -- have something that happens once every 3 years. We really don't know. But the one thing that science is teaching us right now is this is a hyperevolutionary virus, and it is quite likely, at some point, it'll change enough that you're going to have to alter the vaccines, and that's what the trials are that are underway from Pfizer and BioNTech and Moderna right now to look at modifications and how they deal with some of the variants that are out there. And so that will be the catalyst for redesign, and thus, the frequency of reinoculation that you have to do for that reason. But the other issue, which is really more related to the need for what we've thought of historically as booster shots is the question of waning natural immunity. So if there were no changes in the virus itself, how long would the protection that you get from a vaccine actually last? And we simply don't know the answer to that yet today because not enough time has passed since the first vaccines were administered to follow people. We are seeing the early signs of decreasing immunity among the early vaccinees. But as I stand, overall, the protection that has been conferred has been adequate so far. But we're thinking, and our customers are clearly signaling, and I think the smart immunologist and epidemiologists that are out there have commented that their expectation is you're going to see some reinoculation needed due to waning immunity every 12 months or so. So right now, this feels to us like we think that it's going to look like a seasonal flu vaccine in the long-term steady state. Now how the vaccine market share plays out among the different vaccines, I think it's still also a little bit up in the air. But clearly, our partners at Pfizer and BioNTech have a first-mover advantage, and they've -- now that they've appeared to resolve any cold chain storage concerns or distribution concerns as the international regulatory bodies are reacting favorably to some of the changes in the refrigerator frozen storage conditions that are being required, that's a real positive sign. And I think it means that the mRNA vaccines as a class will play a bigger role than was originally expected in the global response. And so you may well see these vaccines going to a number of countries that were not anticipated to be set up to handle from a cold chain point of view, mRNA in the first place. So my guess is you're looking at the largest class of vaccines with mRNA for the foreseeable future.

Yes. Yes. Anyone's guessing what the relative share is, but certainly unquestionably it's higher today than we were, higher today than it was a year ago or 6 months ago. Maybe stepping back beyond -- so Moderna doesn't use CleanCap today. Pfizer obviously buy and take the big ones that do. And at the time of your IPO, you listed I think a series of other programs, I think, storage, intrinsic value, others. But maybe could you just update us on where we stand outside of Pfizer and BioNTech? What's been disclosed about CleanCap's usage and uptake from these other mRNA players? And are there any notable ones they are not being used in?

Well, the decision of whether to use CleanCap or an alternative capping method, which is typically enzymatic capping, was really made when these companies began their first research into mRNA even for therapeutic purposes years ago. So as they adapted to the COVID pandemic, they took with them the technology platforms that they had already worked the bugs out of. And in the case of BioNTech and Pfizer, that turned out to be CleanCap, and with Moderna, turned out the enzymatic capping. For us, the other programs that we've talked about publicly or have been able to disclose include CureVac, who's obviously in Phase II, Phase III trials at this point and expect for registration and receive authorization later this year. Beyond that, the ones that are probably further along with capabilities include the BioNTech program with Fosun, which is targeted at the Greater China market as well as Daiichi Sankyo targeted the Japanese market that's earlier. And then there were a few other players that we mentioned, but they're even earlier than that. So they're probably not relevant to the near-term forecast. So it's been a pretty dynamic situation, but we're pleased to see the number of people who are having success with CleanCap in their programs.

Got it. And then I think most of the investors who are listening probably have a pretty good familiarity with Maravai. But nonetheless, I think it'd be helpful just to maybe step back a little bit on CleanCap and just kind of for you to highlight -- or for both of you to highlight, if you will, just the key performance features. And obviously, we did a lot of diligence with you and some of your customers during the prep process, but I'd love to just understand, maybe get an update on kind of why customers are choosing CleanCap over enzymatic and/or ARCA. And then importantly, how sustainable are those performance benefits? And as you get to scale production, which obviously you're at with the COVID vaccines, do those benefits get bigger? Do they get smaller? Maybe a scale, maybe enzymatic is something that could be more on par. So anyway, just kind of a high-level question on CleanCap and the competitive profile.

Sure. I mean, let's start off with the basics. CleanCap is essentially a chemical molecule that is attached to the end of a messenger RNA molecule when you're going through the transcription process. Transcription is where you go from plasma DNA to actually making the messenger RNA sequence. You've got to tag it in on the end of it, if you want to think about it that way. And it requires a cap on the end in order to stabilize the molecule and also to protect the molecule from being immediately recognized by the body as foreign. When it comes to how you can cap one of these mRNA molecules, there's really 2 choices. One is what's called cotranscriptional capping and the other is called enzymatic capping. And then within cotranscription as a class, you have CleanCap and you have a technology called ARCA. ARCA doesn't really scale well at these levels and probably is not a realistic alternative for most of the players here, so it really comes down to a choice between CleanCap and enzymatic capping. And in that comparison in our hands, in our customers' hands, CleanCap performs equivalently or better on several different dimensions. We don't need to go into them here, but material is chemically produced. So it's not made from the enzyme. Enzymes tend to be difficult to source in massive quantities, especially at GMP grade. And so there is an intense effort to try and create additional capacity in the industry to do that. The chemical method is easier to produce. And then when we say cotranscriptional, since it's being done at the same step that you're making the mRNA itself, you don't have to have an added step to put the cap onto it. So you're reducing the risk of losing material or having degradation of the ultimate molecule itself by avoiding an additional step. The fact that it's chemical versus enzymatic adds some simplicity to the ways in which we can manufacture it. And when you're doing it enzymatically you're going to have to add yet another purification step, which can cause a loss of yield. So all of that adds complexity in manufacturing, supply and some of the quality requirements and in -- on all those dimensions, CleanCap performs better. With respect to capacity, which was, I think, the second part of your question there, Dan. We built the capacity to cover this demand and what the customers have forecasted. We looked very carefully at our capabilities. We looked at the options for scaling up for adding physical capacity, but also for improving the scale of which we do these reactions so that you have less waste in the setup and the processing steps, and we've made all of those investments in our new facility in San Diego. And we've intentionally thought about ways to use that capacity, the new capacity for multiple purposes. So it's quite flexible. And we thought the facility would support about $800 million in revenue at the time that we built it and got up and running with the large-scale CleanCap programs. But because of those improvements that I just mentioned and the fact that we're making a lot more CleanCap and a lot larger scale, we now think that the actual capacity through San Diego that we can do, is it going to be higher, substantially higher and probably supports well over $1 billion in nucleic acid production alone each year.

Interesting. That's helpful. So an obvious question which comes up is, the success with COVID, obviously, as spotlight on mRNA as a modality that could really become that much more exciting in the future. So there's obviously a lot of work that was going on already in mRNA, but maybe now it's been accelerated, although that just kind of makes sense but we can't really prove that. Maybe just could you give us some flavor on the vaccine side? Just kind of where -- what's the pipeline of opportunities look like on the coming non-COVID mRNA vaccine programs? Like what would you highlight in terms of the opportunity there as we look out over the next, I don't know, 2, 3, 4, 5 years?

Sure. Well, I think if your investors are interested in looking at a wide range of possibilities, there is a great article, I think, in February. An MIT technology review that showed a number of different applications for mRNA and some of the programs that are underway and really quite excessively written for a change. But the pipeline is clearly growing. And in the other vaccine category, let's split it into 2 parts. Other vaccines is the question you asked. And then the second is the therapeutics themselves. We see that a number of programs that were put on pause as everybody concentrated and COVID-19 are now resuming in both areas. In particular, you've seen announcements from a number of the major players in the mRNA field of what's next for them and their research efforts. I believe, for example, that Pfizer called out in their last earnings call that they were going to spend an additional $600 million a year on R&D related to mRNA. Majority of that sounded like it was vaccines. There was some therapeutics in that, and that's just in this current year. And some of the things that they've been talking about are moving into mRNA seasonal flu vaccines, which I think, for Pfizer, will go into the clinic in the third quarter of this year, if I recall correctly. And similarly, Moderna is making the same announcements. We've seen Pfizer announced within the last week the start of clinical trials for their mixing and matching their COVID vaccine with different other respiratory vaccines that they manufacture that included the pneumococcal vaccines. And that will be an interesting study to see how that comes out. Can they co-administer them at the same time and protect especially elderly patients? Even better. So what -- assume that flu is going to be a big part of the story in the future. Some of the other diseases that have been discussed and are being actively pursued with mRNA include really difficult vaccine targets. Historically, one with a lot of discussion and a lot of challenges is in HIV. And there are 2 different schools of thought on how you can use mRNA technology with the -- with HIV, one would be a true vaccine. The other would be a T cell-mediated approach, where you try and stimulate the immune system to kill somebody who's -- to kill the HIV virus in someone who's already been infected. Rabies, chikungunya, Zika, these are all infectious diseases that were under study as mRNA targets before COVID hit and those programs are resumed.

So I had trouble -- we don't cover cellular kind of therapeutic vaccine company, so that would give us a leg up. But like when you think about the potential size of those opportunities for you? Any way to frame? Obviously, it will depend upon the success, the usage of the doses and then how much material, both on COVID CleanCap -- oh, excuse me, on CleanCap and some of your nucleic acid. But I don't know, have you laid out or discussed the broader market opportunity for you with M&A? I know in your line, you had some information back then in terms of, I think, maybe pipeline products. But just trying to think through what the magnitude of the opportunity could be for you.

Yes. It's super hard to tell right now because it is so early with each of those, and you're right, clinical success is the first determinant of the size of the opportunity, and then you can get into details after that. So I think it's a little too early to tell. The important thing to keep in mind, though, is that making and administering an ongoing therapeutic require massively different amounts of drug substance in order to be effective and that's something that kind of gets lost in translation. Each of us when we received the vaccine dose of mRNA got somewhere between 30 and 100 micrograms of mRNA being administered. When you look at some of the chronic disease states that are amenable to treatment by mRNA, first of all, they're chronic, so they require continued administration of the mRNA therapeutic. It's not one and done. These are rare diseases or orphan diseases. That could include CleanCap. They include things like OTC deficiency, a bunch of the metabolic disorders that babies can be born with, leukemias, et cetera. And in some of those cases, if you look at the size of the patient because weight is an important factor in the dosage and you look at the frequency of administration and how much mRNA is needed, you could be administering to 1 patient upwards to 1 gram of mRNA year. So even those are very tiny numbers of patients globally the amount of drug substance they need is quite high. So we'll update you as we see those programs developing. And then there's a whole range of other things that are now emerging as people have been thinking about how can we combine the latest technologies together, and there's some pretty exciting applications of mRNA, coupled with gene editing approaches like CRISPR, where you could target some major global threats that are out there that cause significant morbidity in the developing world. And those would be, for example, sickle cell disease which is a major target for several different programs right now.

Interesting. Okay. That's helpful. What -- maybe switching gears for a minute, Carl and Kevin. So you discussed already that the ability to produce some revenues down north of $1 billion from the San Diego facility. How do we think about like that facility itself? So the facility is being used to produce material that's going into kind of color. But at the same time, we understood it to be also a facility that you could be doing work on behalf of clients for. So just maybe walk us through a little bit of like your business as a CMO versus your own nucleic acid and kind of COVID CleanCap business. Is the CMO part of it an opportunity at that facility? Or am I just displacing it? It's all going to be used to produce your own materials that go into third-party products.

No, no, not at all. I think that's a very good characterization. But what we would say is we are a highly specialized, early-stage contract manufacturing organization. We're not somebody who does sterile fill finish of individual syringes, which has obviously been one of the major shortages facing the vaccine programs globally. We focus on making bulk substances that are suitable for use in research, all the way through to early preclinical and clinical toxicology testing, which can also go to Phase I trials. The reason for that is our specialty is working with customers to design mRNA molecules. Many times, you don't know that you can actually make the thing you have designed, so we work with them to prove the manufacturability. We will make multiple different candidates in very small quantities early on so that the customer can make their target selection. And then as they get more precise about that, we'll make that material in greater quantities for them. And we will also make it for them under differing and more stringent quality conditions. So in that sense, we are a CMO, but it's very different than what you would think of typically.

And would those products and would those be reported just under your Nucleic Acid business? Like the revenue you're generating from that segment, even if it's not like maybe some of your own material that you're -- so maybe some of your own now nucleotides or triphosphates from -- I'm just throwing some of these out from memory, but down would under nucleic acid, if you both for your own products? Any third-party CMO stuff? Or does the CMO stuff come in somewhere else?

No. It's all under Nucleic Acid Production generally.

Got it. Got it. And what's that split today, like in nucleic -- sorry, I don't want to jump around. Let me get back to it. So maybe I'll ask that question now. So when we think about -- because I mean that was one of the things that we learned as we were doing checks around the IPO, like we spoke to some experts who said there's really no men. There's no CMO we could do this today. They were seeing on behalf of Moderna's process, they come in to Lonza and they put their process in. So it's very highly specialized, and they need a lot of technical expertise to do it so that, that could be an opportunity maybe that was overlooked for Maravai to have this core competency, technical know-how and now having this GMP-grade facility, if, in fact, clinical kind of GMP needs grow. So a long way of saying, as we look out over the next 3 to 4, 5 years and we look inside your Nucleic Acid business, how much do you think that opportunity will be the CMO versus your own products?

Yes. I don't think we've guided to a split there, but we certainly see the contract manufacturing opportunities as significant ones for us. Again, it goes back to the customer's success clinically with the program ultimately determining the value of that program, but we participated in a number of different programs with a number of different sponsors. And we think that the opportunities are great. And If you look back at the last 15, 16 months since COVID hit, the progress that has been made in the industry, let's call it, mRNA, if you can imagine that has just been incredible in the literal sense of that word. And I think Stéphane Bancel at Moderna was -- or maybe it was Pfizer was saying that they thought there had been 10 years of progress in the last year in the field because of all the intense interest and all the scientific brain power as well as the investment that has gone into mRNA that would not have happened otherwise, and certainly would not have happened as fast. We do agree with that. It felt like as -- last year, it felt though we were going at 3x the speed previously. Now I would say it feels more like we've probably advanced 5x as fast as we would otherwise. So with that, then those opportunities have progressed further faster, and we're seeing much more demand from a variety of different players that were not previously customers of ours.

So we think about that non-COVID clean -- about the non-COVID Nucleic Acid business. Maybe could you just speak outside of CleanCap, just speak to a little bit about like what the level of differentiation is for your products? I mean custom all of the nucleotides plasmids you started to produce -- just we heard feedback around the diligence process. Some of those products, some customers love it because they say, you just buy from Maravai, you buy from TriLink, and you know it to work all together. Some diligence suggested a lot of those products could be more commodity and there's a lot of low-cost competition in China. So within that nucleic acid business, ex CleanCap, how do we think about those products and the level of differentiation and their competitive?

Well, like the simplest way to think about that without getting too much in the weeds is to think about highly modified or complex oligonucleotides as being TriLink and Maravai's sweet spot. That's what we've done extremely well for the past 25 years. Some of those highly modified oligos can have a number of different chemical twists to them that a customer is looking for specific experimental reasons. Sometimes they can be exceptionally long oligonucleotides, which are themselves complex to synthesize correctly? And then other times, you're getting into functionality, so you're getting into something like a messenger RNA molecule. And that's really where TriLink distinguishes itself. And our team at TriLink in the past 3 or 4 years, took a critical look at their business and the areas that they were operating in and realized that there were some margin improvement opportunities because we might have been devoting resources that we could have been applying to these complex oligos to more plain vanilla, simple, lower-margin products. And so through a series of very deliberate actions and analyses decided to exit certain types of business not continue going after certain things that we had in the past and to really concentrate ourselves in 2 areas and that being the complex oligonucleotides, including mRNA. And then the other is small molecule chemistry manufacturing, which includes CleanCap.

Interesting. Okay. So I think in a few slides at the time of the PL or maybe subsequent to that, but we've got, in our model, call it, I don't know, on average, around a 20% growth rate for that business, this is ex COVID, maybe a little higher in the early years and then coming below 20%, maybe low 20s over the next 3 to 4 years, probably gets back to that first -- the question we explored earlier, which is how big is the opportunity for mRNA therapeutics in vaccine. So what have you said about -- given your position in that space, what's the right way to think about the durability and outlook for that business in terms of growth?

Well, I think Kevin's been communicating with most of the investors on that. Kevin, do you want to tell them how you positioned it?

Yes. Certainly, when we look at the non-COVID CleanCap component of our Nucleic Acid business, that is a good number to peg, that 25% to 30% market that we think is growing. We think we're well suited to grow certainly with that market and have potential to grow in excess of that. As Carl mentioned, there's several unique applications for this technology that will potentially grow that -- our growth rate in excess of that market growth rate. And I think we're seeing that starting to come to fruition. When you look at the additional applications in the vaccines and then you look at, as Carl mentioned, just the amount of product you may need for some of the therapeutic purposes, you see these applications, that class of customers moving over their development cycle and utilizing that material from us. So certainly, the -- some of the parts of that overall market, some of the subsectors of that market, we think are -- we are well positioned to supply and certainly comfortable with that base business growing at least 25% to 30% the Nucleic Acid production business with some nice opportunities for upside to that trajectory.

And back to the question on versus your own products? Is it fair to say that the CMO is less than, I don't know CMO maybe 25% of that opportunity, 20%? Is it something in that ZIP code versus your proprietary products? Or could the CMO contribution be bigger?

Yes. Well, look, I think it depends on where this class goes and what time they go. I think for now, as Carl said, we're really focused on where we add value, and that's really been our strategy here outside of CleanCap supporting base of customers through their development cycle. And then we -- there are certain decisions to make as far as where you go with them after that. Do you ever -- do you expand organically or through acquisitions or by partnering to deliver commercialization of those products or higher volumes they might have, as you alluded to, lower margins and higher dollar values? Or do you continue to stick to the products that you really specialized in, and we're going to -- we're evaluating that as we speak. The nice thing about our business model is the cash flow and the margins we have and the net leverage we're at today give us a lot of optionality with regards to looking at organic investments to realize that or inorganic investments as well, and those are all on the table.

Interesting. Okay. Maybe just back to CleanCap for a moment. So I know at the time of the NPL, I believe, in omni like even the next-gen CleanCap. I'm obviously expecting all these vaccines today, just -- what's -- you're obviously probably just trying to make sure you could supply a CleanCap in a perfect way for all these COVID vaccines so that there's no problems at scale. What are the priorities for you with your COVID CleanCap business as you look out over the next, I don't know, 3 to 4 years? Obviously, scaling in a really efficient way. I guess, from a capacity standpoint, Carl, you said earlier, that site get support north of $1 billion in revenue right now. So that should obviously give you some nice healthy headroom light, I would presume. Just maybe walk through what are the focal points vehicle with the CleanCap business right now.

Yes. Well, certainly, scale is a very important consideration for us. And so we're looking at some, I would call them highly advanced manufacturing technologies that would allow us to do CleanCap manufacturing in a way that has not been possible up until now. And if we can do that successfully, we have the chance to dramatically increase our capacity even beyond the levels that I mentioned earlier, so that is priority number one. Priority number two is making sure we meet the customers' needs for different kinds of CleanCap. So we have simplistically a few different flavors of CleanCap that depend on the sequence that the customer's molecule has as it start. Then we have to accordingly modify CleanCap to match those sequences and we offer those analogs today. And then we are looking intently at ways of modifying CleanCap further and not just in the cap structure itself, but elsewhere at the start of an mRNA molecule where we can improve the ability of that particular molecule to actually generate a protein that you're intending in the body, so it's a translational efficiency question. And if we can improve that, we can improve the efficacy of the products our customers are making and putting into their patients.

Interesting. So the growth you put up has been absolutely tremendous. Stock has certainly done well since I guess it gets back down to this thought like we've got this tremendous revenue contribution in COVID CleanCap and no one knows what the future looks like, so no one is on really discount the durability of that. And most people think it's obviously going to come down on the factors we discussed. But I don't know how -- do you think -- what would you say towards the questions of the understanding or appreciation of that business. Do you think people have it right? Do you think people are not? You're kind of underestimating the durability of longevity? Or just a profit? Just maybe with your cola cleanup business, do you feel like is there something that people don't really recognize?

Yes. I think I would step back a level and just say that as a class -- a therapeutic class and that therapy can be true therapeutics or can be vaccines. I think the potential of mRNA is only scratching the surface today. And to realize that you have the largest selling pharmaceutical product in history in less than 15 months of development and to think that that's only scratching the surface of its potential is a pretty remarkable thing, but that's where I think we are. So our objective is to continue to be a valued supply partner to the innovators and the sponsors who are exploring that potential and to be part of their programs as we go in the future, but I think the upside is really quite phenomenal. And we'll have examples for people who may not have been familiar with the technology start working with it and realize that it is much more efficient and much more therapeutically successful than the historical approaches that have been used. And so that will bring even more converts to the mRNA fold. So we're really quite bullish about it. And we do think the market may be underestimating that potential because even if you look at the normal course of life sciences, even if one product comes off of its peak at some point in time, if there are 5 different equally attractive new applications coming up, those are supplanted. And I think people just didn't realize that there might be 5 or 10 more things behind the COVID-19 vaccines in the pipeline.

Interesting. Maybe just -- we could go to item one, Kevin, it's better. But on the profitability, it's obviously Maravai's got extremely attractive margins. Walk us through a little bit about the durability of those margins, like what drives the margins really across our whole business. But we haven't got to the biologic testing business or we got some protein business. And I do want to touch upon -- we have 5 minutes left, on those businesses. But when we think about profitability and was sustainable near that. Just give us some color about how we should think about that.

Yes, I'm happy to. I think overarching all of our businesses and products is just the quality, the acceptance in the marketplace, the uniqueness, the niches in which we've operated, and the fact that these products are very well accepted, have been for a very long time, have great stickiness with the customer base and are really considered kind of gold standard products in their given segments. And because of that, we have great repeat business, and we've been able to manufacture these with efficiencies. And as we get to scale, and automation like we did here in the San Diego facility, we really leverage up our fixed cost structure to create really strong margins. And that started, as Carl mentioned, even several years ago before getting into this facility as we looked at the pricing and how we operated with rolling out things to our customers and what product lines we participated in, making sure we continue to focus on differentiated products that generated high margins and not chasing commodity-like products that might be under pressure from other suppliers. So -- and that's really true in the biologic safety testing business. I mean great breadth of product offerings there, the number of or host cell protein detection kits we have. And what that covers is in excess of the next 3 or 4 competitors in our space, and that really allows us have a dominant market share there that also just gets great repeat customers, and we complement that with even new products that have been introduced in taking scale like detecting for protein A or endonuclease are providing further services to our customers to help them investigate contaminants and help with their overall quality control and biologics and biosimilars in both markets that are also growing at really nice growth rates. So all those things are really good. And those margins we feel we're seeing today are going to be sustainable because we haven't fully maximized our existing infrastructure as well. We have consistent pricing and long-term contracts in place, and we're getting great work done on our own supply chain as well as we scale up, which is helping us to further to increase those margins marginally as we go forward.

And you're saying the margins are sustainable. You pointed to the biologic safety testing protein. It's actually you're seeing more broadly across nucleic acids as well.

Yes. Certainly, with the scale we have and the demand we're seeing and the capacity and how we manage our cost structure, we certainly are. We are looking to try and invest some of those dollars organically into ourselves as well because we like our business model. So focused R&D spend, focused commercial spend, looking at our international infrastructure and our overall capacity or other reinvestment ideas that we're looking at organically. And I think that's the right place to put some of our dollars going forward as well as looking at some M&A opportunities.

Interesting. So maybe just in the final 2 minutes here. How about in M&A? Just what should we consider the company was built on a series of very sound strategic deals. What can we expect over the next, I don't know, 1, 2, 3 years? Should we expect there to be a lot more deals coming? Or just any opportunities or areas we should pay attention to?

Yes. Well, look, I think our activities in M&A have always had a lot to do with shoring up our strategic capabilities and really solidifying our position primarily in messenger RNA and then followed by biologics. So we very much look at the capabilities that we have today. We look at what our customers need and what we don't provide for them. And we try to fill that pipeline, if you will, and be able to offer a complete service sort of soup to nuts for our customers. That's why we entered the plasma DNA space because we need to be able to deliver to those customers, plasmids in order for us to be able to make messenger RNA. So that's really about gaining share of wallet and keeping your customers happy. Within the broader context, I'd say, near adjacencies are always going to be of considerable interest for us. And we'll try to fill any of those gaps that we may have in our portfolio. We've got a lot of targets at any 1 time, but we're very selective in going after any of those targets. And when we look at the fit with our existing businesses. We're also very focused on good cultural fits. We want to bring the same kind of successful scientifically driven businesses into our portfolio.

Great. Well, guys, I think we're at just about 2:45 here. So 5:45 -- excuse me, 2:45 West Coast. Hopefully, the day was good. I'm sure you guys have a lot of meetings throughout the day and hopefully, everyone on the webcast found useful day. We're back at it tomorrow. But Kevin and Carl, I really appreciate you guys being with us here today and allowing us to host you we look forward to hopefully doing something in person in the not-too-distant future.

Thanks again.

Thanks so much for your hospitality. Bye-bye.