Repligen Corporation ($RGEN)

This is Paul Knight, life science analyst at Repligen. And with us, we have Jacob Johnson, Head of Investor Relations; Jason, Chief Financial Officer; Olivier, CEO. We all very familiar with Repligen management. In fact, when I first met them at $3 a share, it was in the building I'm sitting in right now at 1301 Sixth Avenue.

So they've come a long way. And Olivier, you've been there -- you've not been there forever. What are your impressions now as the CEO a bit of how Repligen is positioned and how this market feels to you?

Yes. No, that's a great question, Paul. I mean I've been here for about 2.5 years now, CEO of the company for 1.5 years. I mean, I'm obviously more excited than ever. I mean we have a very unique and very broad offering at the same time. And with our very intense commercial strategy, I mean, we've been very successful over the last couple of years to really get more and more closer to those big companies and getting them understanding we have a very broad portfolio of products. You know very well, like innovation has always been really at the core of our DNA, and we're still doubling down on innovation as well because we really want to make sure we are helping our customers to improve their yield, increase their -- sorry, improve their cost of manufacturing and so on. So we are really extremely well positioned and excited about what's coming for the next several years here.

We just mentioned innovation, which I think is like a cornerstone of what Repligen is. I think 80% of your portfolio is differentiated. Could you just touch on what makes your product so differentiated? You said yield improvement. So that's definitely important. But on the other 20%, is there ways you're trying to add, whether it's analytics or other technologies to differentiate those offerings?

Yes. No, good question. And so on the 80% where we are really differentiated, the reason is simple. I mean we've always make sure that our R&D team was focused on what doesn't exist and what customers are looking for. I'll pick up two examples here, which are two of the historical product line, ATF on one side, pre-packed column on the other side. ATF, people have been telling us for a decade now, we need a process intensification technology. I mean we want to be able to get more out of the same footprint. So that's what we've developed. That's what we've launched. We're already at the second or third generation of that technology, working on the next one. That's a perfect example. Pre-packed column is another one. I mean back 15, 20 years ago or so, I mean, most companies were hiring people who would pack column for their entire life. Now they just don't find those people anymore because a young generation wants to pack column for 3 years and then do something else. So really working with a company that has got decade of experience doing that and packing thousands of columns is absolutely a big, big advantage for those companies. So on the 80%, and you could mention PAT, you could mention the vast majority of our portfolio. Where we have more direct competition and the usual portfolio segment is obviously fluid management, we are still trying to differentiate ourselves. And here, you would think about differentiating yourself via better service. I mean, being more customer-centric, whether because you're offering better lead time or maybe also because you're really offering better customer service. And it's fair to say even though fluid management, single-use technologies have been implemented now for more than a decade, there are still several challenges with that technology like extractable and leachable, leakages and so on. We are really trying to make sure our customer service team are closer to our customers so that we really differentiate ourselves on that side. So it's really, really whether we've got very differentiating products or for the 20 person making sure we are more customer-centric, making sure we offer better service than others.

Yes, that makes sense. I never thought about the 20% with the service side, just like being able to serve your customers maybe more closely than a bigger competitor. But it just seems like your portfolio, whether it's ATF pre-packed columns are really resonating with customers on the pharma side, on the CDMO side. Could you just walk us through some of those customer wins and what's really motivating these customers? Is it a product? Is it your sales forces they really know their products or cost-saving metric? I think that would be helpful to hear.

Yes. No, as I mentioned to Paul earlier, I joined about 2.5 years ago. And I can tell you the visibility we have with big pharma accounts and big CDMO as well today compared to what it was 2.5 years ago. It's almost day and night. I mean it's fair to say like 2.5 years ago or so, those big companies, they knew us for maybe a couple of our product line. Now they realize we probably have one of the broadest, I want to say, probably one of the top three broadest bioprocessing portfolio in the industry today. And really, during the last 2.5 years or so, my focus with the commercial team and the product management team is to make sure those customers understand the breadth of the portfolio we have. And I think we mentioned a couple of months ago or so that in the last 5 years, the amount of product line we've been selling to those big accounts has multiplied by a factor of 2.5. So that's a great sign like people really, really understand that we have a much broader portfolio. And we're at a point, in fact, where we are starting to even package all of our technologies together and then working on a full solution offering so that for some of the specific customer needs, but potentially some of these specific modalities now beyond pitching all of the different parts of the portfolio, now we come and say, we almost have a full workflow for you. And if for whatever reason, we might miss one or the other part of that workflow, potentially articulating how we can still support customers with that full workflow. So this has been a huge evolvement of our selling in the last 2.5 years or so. But the good news, we are still at the beginning of that process. And I think we've got incredible tailwind for the next several years because people are just starting to understand the breadth of the portfolio we have today. Another good example here, a nice, we have now such a broader offering on the equipment side that where we were not getting a seat at the table up to probably 6 months ago. So now we're getting involved in probably 80%, 90% of any big RFPs that are coming out because think about it, 2 years ago, so we mostly had the ATF hardware offering. Then we added all of our downstream system, both TFF chrome system, and then we added now the mixers more recently. So we have almost 80% of whatever equipment are being needed when a company decides to build a new bioprocessing plant, and that's a fantastic opportunity for us as well here.

When you say equipment, Olivier, do you mean -- would that include ARTeSYN?

Absolutely. So ARTeSYN is what I call downstream equipment, which is both TFF and chromatography system. And we have had, as you know, really good traction on that side over the last couple of years here.

I was reading an old industry report that said it in the bioprocess industry, 40% of market was equipment, 40% is single use polymer bags and then the remaining would be media and other. Would you still be a good number?

I'm not sure, honestly, Paul. And I mean, obviously, there are so many different studies coming out and so on. So if you talk about a brand-new site where people need to build and buy all equipment and so on, yes, it's fair to assume like overall, at least for the first 1 year, procurement is going to have a big part of it coming from equipment and so on, absolutely. But once the plant is up and running and so on, the part -- the percentage of the equipment is much lower than 40%. I mean -- and if you look at the four big guys, but even to a certain extent, ourselves, I mean, most of us have the vast majority of our sales on the consumable side, up to probably 75%, 80% of sales going on the consumable side. So where your number would potentially make sense for a site that is being built, and that's probably where the onshoring topics would be a good one to reflect on the number you just said. When you're more talking about a well-established operation and so on, consumable component is much bigger than hardware for sure.

Then Sartorius, as we were talking earlier, talk Tuesday about, I think, 9% to 12% growth this year themselves or market growth. You're similar. What's your overlap with Sartorius?

Yes. No. I mean we -- I'll start first where we collaborate together. And I mean, as you've seen and we've talked about several times, I mean, we're collaborating with Sartorius on the ATF side. We've been working -- our two teams have been working together now for several years, and we're, I think, very happy on both sides about the collaboration where we are learning from each other and what needs to be done to improve further this process intensification capabilities and so on. Beyond that, obviously, yes, we are -- it's one of our, I call it, good competitor. I mean it's a very good, very high technological company and so on. We don't have that many overlaps, honestly, Paul. We have a little bit on the fluid management side, but they are much bigger than we are. I mean we're a very small actor in the field versus where Sartorius is. And then we have some overlap, but limited as well on some of the downstream system and so on. But overall, we've got very little overlap with Sartorius.

I wanted to talk about how some of the tailwinds that we're seeing that you've mentioned are translating to your top line and just momentum in general. I think in '25, correct me if I'm wrong, but I think you raised guidance twice and also beat the high end of that range. So sitting where we are today, what do you think played out differently versus what you originally expected? And then we can go into more of 2026, but would love your thoughts there.

Yes. No, absolutely. And I was about to go to '26 first because interestingly enough, our guidance for '26 is very similar to the guidance we had at the beginning of 2025. But we will come back to that for sure later on. I mean, one thing I've learned over the last 30 years being in that industry, Anna, is you need to have a very broad portfolio of products. And beyond having a very broad portfolio of products, you need to have a very broad portfolio of opportunities with customers because, I mean, I would tell you, like in 30 years of working experience, I don't think I ever delivered the budget the way I thought I would on January 1 because you always have good and bad surprises. But in the vast majority of the case, you deliver your budget because you have all of these opportunities. And if for whatever reason, you get some headwind, you're going to be able to compensate or even more than compensate for it. And the way 2025 played out was a perfect showcase example where when we enter into the year, we had no clue like we would get that new modality headwind that we had finally in the course of 2025. And we didn't know either that somehow our biggest modality, our biggest franchise, filtration would be the one suffering the most from that specific headwind, but that the other three franchises would be doing much, much better than we thought for multiple reasons. So again, this is the beauty of having a really broad portfolio of products and having what I call the best-in-class sales organization because that's enabling you really to rebound and you've got so many opportunities that you're going to grab them. And you've heard me saying several times, the funnel management is critical as well, which is we're operating typically with 4 months of backlog. So it's good, but it's not huge. The only way you're sure you're going to deliver your years is because you've got a very strong funnel and then you need to just be able to succeed on translating that funnel into orders. So last year, if I just have to pick up two, I mean, because three really performed very well, but I just pick up maybe two, which is protein on one side, incredible success story for us last year. I mean, you know like '24 was a horrible year for us because we almost lost -- well, we lost really two of our two historical OEM companies, customer and so on. And we had to reinvent our business completely. I would never have thought we would have so much traction so fast and be able to go back to the level we were before we lost those two OEM partners. The good news today is we have our destiny in our hands and the best is still to come because now we are on a much broader range of customers on that side and which are end customers, meaning we don't have this type of intermediate situation that we had before. And then the second one is analytics, where when we launched a new SoloVPE PLUS, I'll tell you very honestly, I mean, I didn't realize how much traction we would really have. And I mean, it went beyond our expectation. Again, good news here. We are just at the beginning of the cycle because we replaced less than 10% of the installed base. That's going to be another tailwind for the entire year. So again, being broad, brought from a customer point of view, from a product line point of view is what has enabled us to over deliver last year and what will enable us, among other stuff, to overdeliver versus market for the next several years as well.

Yes, that's great to hear. And the SoloVPE was definitely a good upgrade cycle and good to hear it should continue in the next coming years. But I just wanted to -- I have some more portfolio specific questions, but I thought maybe for Jason, if we could just hit on some of the margin targets taking a step back, not looking just at '26, but over the long term, where do you expect margins to trend? And just what are some of the levers to get there?

Yes. So we've been pretty clear and sharing often that our target is to get to, call it, a 30% EBITDA, and that's probably 25 plus or so at the EBIT level by 2030. And -- but we've also been sharing that when you look at that trajectory, it's probably a smaller step up over the next couple of years and then accelerate as we grow scale and able to just find or benefit from more, I'll say, leverage, right, on the structure we've got. I think when you look at the path that we -- to get us there, we're certainly going to continue kind of think about the elements of the P&L. We're going to continue to be able to capture price, right, value-based selling in our markets. We'll certainly get volume leverage. That price will be able to effectively offset the inflation we have, right, and maybe a little bit more. And then we'll continue to deliver manufacturing productivity. And then the other piece that effectively would be a part of volume leverage, but it's worth calling out, it's really then the leverage we get from growing our operating expenses at a rate lower than our top line, right? And really being focused over the next couple of years, in particular, on investing in our Fit for Growth journey, ensuring we've got the right people and processes and infrastructure to get there. And then as that builds out, again, we feel like the investment on that will require lower amounts as we get into, call it, '28, '29, et cetera, and '30. And so that's really the model that we're driving. We delivered I think really strong margin expansion in 2025. If you take out the impact of M&A, and we expanded EBIT margin by 240 basis points. And so we've guided 150 for 2026. And I think we're going to be able to kind of demonstrate that continuous expansion here over the next few years.

That's great. It seems like in the short term, more investments, but it will drive top line growth as we look out to 2030, and that's good to hear. I thought maybe we could look at some of the product lines Olivier was talking about earlier. Maybe on chromatography, I know historically, CDMOs have been quicker to adopt the prepacked columns, but now we're starting to see some pharma customers. I think you had 2 pharma wins recently. So could you talk to us about the funnel on the prepacked column side? Are those mostly pharma companies? And how long does that usually take to convert those customers?

Yes. No, I mean, you phrased it right. And I mean, historically, the value prop was particularly attractive for CDMOs. I mean think about it, when you're a CDMO, you have to be agile, fast to react because you're not 100% sure what you're going to have to manufacture when you're entering into a new year. So having prepacked column on the shelf is a great advantage because you are capable to react really fast if needs be. So -- and it's fair to say, really, we're still having a lot of traction on that side where some of the CDMOs who were maybe mostly using small-scale prepacked column in the past are moving towards using larger scale, which is one of the reasons why we've seen so much growth last year because they realize they really like the concept a lot. But beyond CDMOs where we've had traction for several years, now it's really about making sure we convince pharma companies to switch. And for pharma, it's slightly different because if you run a pharma manufacturing plant, normally, you have a pretty good idea what your manufacturing plan is going to be during the year. So more than really having the agility, flexibility to move to another product faster, which is what we talked about for CDMOs, it's really more about having the expertise in-house. And I alluded to the fact it's difficult now for those companies to find people who have got a decade of experience packing column. So when you think about the risk of contamination, the risk of losing a huge volume of resin, which is very expensive and so on. I mean, slowly but surely, a lot of these pharma companies start to realize it's probably very good to consider using pre-packed column to reduce all of those risks. So we had really good traction last year. It keeps on going this year, in fact. And last year, we said we won two new customers. It keeps on going this year. I mean it's -- we have a product line where we know we've got still a lot of potential growth for the next several years, and we see new customers popping up quite regularly on that side still. So yes, they're very exciting. I think we've got a great runway. I mean, column packing is a real art. And I mean -- and bioprocessing is an art, but column packing in particular, is a real art and you can't like suddenly be as good as a company like ours with packing more than 3,000 columns every year. So we've got incredible knowledge on that side for sure.

That's really interesting. The fact that talent plays such a big part of why your share in the pre-packed column market is probably irreplaceable.

Can I jump in here on that topic of talent. I'm sure that when Repligen in the early days was acquiring companies, it was also the game direct salespeople. Now it seems -- I'm guessing you have the size that you can compete with any firm in the industry on recruiting talent. Is that a fair assumption?

No, it is, Paul. I mean -- and I have to say, I mean, we've had the chance to really hire more or less anybody we really wanted to hire over at least the last 2.5 years I've been here. I mean -- and then a lot of people who have got the decades of experience. I mean, when we talk about getting fit for growth and investing in talent and so on, I mean that's definitely one big part of it. I mean, and really across all of our functions, I mean, obviously, I started mostly on the product management side and commercial side when I joined initially in October of 2023. But in the meantime, we started to do the same in many parts of our organization from finance quality, including services, including IT more recently and so on. So we are really bringing talent that have been working in that industry for a long period of time because as you know very well, Paul, it's a bit of a unique industry where know-how is very important. I mean whatever function you work for, I would even mention HR on that side, you're looking for very specific talent that ideally know exactly what is important for customers and so on. So -- and we've had the luxury to be a pretty attractive company for people who see the bandwidth we have and who sees like, yes, we are definitely smaller than some of the big guys, but this come alongside also potentially more opportunity for growth and then more opportunity to really focus on what people think is really important.

And just on proteins, I think that's another interesting area where strategy has kind of shifted in recent years. I think you're launching a bunch of resins, custom resins for customers. Could you talk about how the business is set up for 2026. Are there new resins launching? Are these new resins higher in margin? I know there was some difference in margins, but that would be helpful.

es. No, absolutely. And I mentioned earlier, I'm so proud about how fast and how successful we've been to pivot that business because, I mean, I don't think there are many, many examples where you're losing suddenly to such huge customer of your business and you're capable to rebound like that. And what we've done, we really work from different side here. And so first of all, it all started with the acquisition of Avitide, which was about 4, 5 years ago or so, which just gives us the opportunity, the ability to develop custom ligand in 3 months. And I tell you, nobody else is capable to do that. I mean -- and in fact, what a lot of these big pharma and CDMOs have understood over the last couple of years is there is finally now a company that is capable, which is probably 5 to 10x faster than anybody else is capable to do it. But then obviously, if you really want to play a role on the full offering, which is resin, you need to have the bids as well, which is why we acquired Tantti in our year-end 3 months ago or so -- and not only the technology is beautiful, but for new modalities, I mean, it's giving us what I think is probably the best combination of the best ligands plus probably what is the base metrics for new modalities. So that's why we have a combination of catalog product launches that have got great traction, but what people don't see is we work on multiple -- I say multiple, it's really a big number of custom projects for those big pharma and CDMOs where we also have incredible traction. And then the last piece I would mention and not to underestimate, I mean, we've been collaborating with Purolite, as you know, on the monoclonal antibody side. The collaboration is closer than ever, and we are absolutely delighted about the progress we are achieving together. We will strengthen that collaboration over the years and that is also functioning extremely well. So very excited about protein. I mean, as you know, I'm always excited about my portfolio -- that's really one where I think we've got also incredible runway for the next several years here.

Yes, that's great to hear. And it's certainly been a cool transition to watch from the outside. And I want to talk about the process analytics portfolio. I think you recently merged the C Tech sales team and 908 devices. So now it's like a more unified portfolio of process analytics, both upstream, downstream. What would the time line look like for you to start pitching as to large pharma accounts, just a unified system level, upstream, downstream process analytics portfolio.

Yes. So we have merged the sales organization already. We did that in July of 2025. So we're about 7, 8 months into a merged sales organization. This has definitely benefited the funnel of 900 grandly because now, I mean, the sales team size is something like 5, 6x bigger than it was when it was independent. So obviously, this is helping us to generate massive improvement in terms of funnel for the 908 offering. So this is already happening. Where I think your question is particularly accurate and now is we are just at the beginning of that digitization journey that we are talking about because now between the FlowVPX, we already had in our hands, plus the four technologies we added from 908 plus one or two extra one. One of them, as you know, is the one we acquired from Delight several years ago. So that has taken us a little bit of time to develop. But now thanks to the know-how of the 908 R&D team, we've progressed very fast over the last 12 months to develop that MIRA technology that will be launched probably towards the end of this year. We have really 6 and probably very soon seven PAT technology. So now the question is how do we aggregate all of these together? And how do we make sure like beyond selling each of them one separately to the other and so on is how do we make sure that people -- our customers understand the real most advanced PAT provider in the industry is Repligen and how do we make sure we give them a chance now to aggregate all of the data they are collecting from our technologies and making sure and you see it coming, they can also use AI and type of software, software that will enable them to really develop their processes much faster on the one side, run their operation more efficiently on the other side. So that is our path forward. We -- as you know, we took minority investment in an Austrian company called Novasign last year, which is somewhere between pure PAT and AI. It's really more what is called digital twin, which is somewhere in between. We're working on a couple of other opportunity here, but the idea is to be really leading the pack for our bioprocessing customers in terms of AI enablement so that they run their operation much better in the future. And so we're at the beginning of that journey right now.

Okay. Perfect. That was very helpful. I think maybe we could spend a moment just touching on 2026 guidance, visibility around that and also some of the assumptions. I think CapEx is something that's been muted for a lot of players. What are your assumptions around CapEx in '26? And are you seeing an improvement on that side?

Yes. So and I mentioned it earlier, it's interesting because when we work on our guidance for 2026, we look at all of the guidance we had in 2025, it's really towards the end where we realize, well, in fact, it's extremely close to the guidance we had a year ago with the result you know. But at the same time, we said it's probably the appropriate guidance for the time being. And remember, our framework has always been, say, plus 5%, at least plus 5% versus market. Last year, we did much more than plus 5%. I'm not sure exactly what the market landed, but it's fair to say we need much more than plus 5%. This year, we said it's going to be plus 5%, minus 2% because of the headwind we have on that specific gene therapy program. So -- and then at least from what we heard so far, I mean, it looks like peer commentary at the beginning of February also was like we would be more towards the lower end of the market growth we've been talking about for 2026, which is probably more into the 7%, 8% growth for the market this year. So if you make the math, I mean, in fact, our midpoint of the guidance is still a little bit above 5% above what some of the peers might have mentioned about market growth this year. So we think it's an appropriate guidance, and you pick up one of the good topic, which is the CapEx spending. I mean -- and as you know, we did probably much better than several others last year. I mean, our CapEx -- our hardware business was in 2025 versus 2024, where at least one of our direct competitor mentioned being down high teens in 2025. So we definitely did better than others. But it's -- we agree with others that CapEx spending has not been back yet to the level we would like to see it. And that would be definitely something I think all of us, including ourselves, are hoping to see happening more this year accelerating because that will become a huge tailwind. So we're absolutely confident once the tap is open, it's going to become a huge tailwind for everybody. We would just like to see that happening a little bit faster. But again, this year, we are absolutely confident we are going to have a very nice growth it's fair to say like from '27 onward, we think really growth will accelerate further again because of all of these tailwinds we are seeing. A couple of other topics are obviously a small biotech. I mean as you know, we've had three really good quarters in a row. I mean, of order intake growing really nicely. Interestingly, this came at the same time kind of toward the end of the year where funding became much bigger as well. But we've always said normally, funding doesn't come to those companies in the first 6 months. So you would think that combining the rebound we already saw plus hopefully, in our money reaching those customers, that should be potentially another good tailwind for the industry as well. So we are watching all of this stuff. I mean, I mentioned about MFN, so-called MFN digestion and FDA approval. That's the last piece. I will just repeat again once more here, partly FDA approval. I mean, we are now, what, 18th of March, I mean, there have been almost no biologic drug approved this year. I mean that is something we want to see improving because where it might not have a huge impact in the very short term. I mean, for the pharma ecosystem, it is important to see FDA approval. I mean, it's absolutely critical because this is restoring confidence from the entire ecosystem to invest further and then to push for more innovation across the board. So that is something we want to see improving as well and now, but we are still very confident for the future.

Olivier, Jason, Jacob, we really appreciate your time today. I guess the closing question I would have, Olivier is a lot of things were pretty negative last year, I guess, for pharma, discussions with the FDA or the new Head of FDA, et cetera. Tariff pricing. Is that -- was it as bad as that talking to pharma last year?

No. I mean, obviously, and I'd like to do a parallel between the rebound with seat Big Pharma about 2 years ago or so, then we saw CDMO rebounding a year ago. And now finally, we're seeing small biotech rebounding as well. So from a customer segment point of view, you want to say like everything is much, much better obviously than it was 2 years ago. Much better than a year ago. And then we're obviously very excited about all of that. We want to see a little bit how those MFM deal plays out. I mean we know like a lot of things are going to happen. We still believe like we want to see people pulling the trigger now and saying, "Hey, do I really now push the onshoring button full speed and then we're going to be entering into what's going to be an incredible growth cycle for probably several years." And we just want this pattern to be pushed. And then I think everybody will feel like extremely bullish again. That's the only thing I think everybody is waiting for at this stage, plus a bit more FDA approval as well, Paul. But yes, am I optimistic for the future of bioprocessing? Absolutely. And I think we're going to have several years of very nice growth in front of us here.

Thank you so much. Thank you, Jacob. Thank you, Jason.

Thank you, Paul.