Repligen (RGEN) has been trending nicely higher since early 2018 and it has made a big move since reporting Q1 results in early May. We wanted to provide some color on what they do and update investors on its recent Q1 report.
Repligen is a provider of bioprocessing technology used in the process of manufacturing biologic drugs. The company does not actually make the drugs, but its products help biopharma companies and CMOs to substantially increase manufacturing efficiencies, increase yields, and make factories more flexible.
Its bioprocessing portfolio includes filtration products, chromatography products (OPUS), process analytics products (RGEN recently acquired C Technologies to boost this segment), and protein products.
RGEN sees itself as disruptor in its marketplace and a leading innovator in the fast-growing bioprocessing market. At a recent Jefferies Healthcare Conference, CFO Jon Snodgres said "what we try to do is bring differentiated and really disruptive products to market to help [customers] address efficiency concerns and run their factories more efficiently..." Snodgres went on to say that RGEN's "focus over the last several years has really been to establish ourselves as a technology forerunner in the industry and then use that to propel ourselves into a major player in bioprocessing."
Repligen should stand to benefit from trends in its industry. The company expects the manufacture of biologic drugs is about a $9 bln annual revenue market and it should grow 8-9% over the next four years, which is pretty good for a large market.
A nice tailwind should be the accelerating approval of monoclonal antibodies, which fight cancer by using the body's immune system. According to the company, there are about 85 monoclonal antibodies marketed in the US today, over 50% of those have been approved just since 2015.
RGEN says there are a lot of emerging new drug classifications coming into its space, with gene therapy and cell therapy being the most prominent. Also, the industry is getting some significant investments over the next four years, with manufacturing capacity expected to grow by over 40%.
The company is still pretty small and competes against some much larger players in this space, including GE Healthcare and MilliporeSigma, which happen to also be RGEN's two largest customers. This makes us think RGEN could be a takeover candidate at some point by one of these companies.
Despite its small size, RGEN is growing nicely and is currently profitable. On May 9, RGEN reported that revenue grew 35.3% yr/yr to $60.6 mln while adjusted EPS jumped 65% yr/yr to $0.28. Both results were a good bit better than expected. The company also raised full year guidance. One thing that's attractive about RGEN is that it has a strong stream of recurring revenue with consumables making up about 80% of total revenue.
In sum, Repligen is not well known but it's in an attractive area within the biopharmaceutical space. A nice thing about it is that it has biopharma market exposure but does not have drug approval risk exposure. We think the recent Q1 report is getting people to finally take notice of RGEN's potential.