Rapid Micro Biosystems, Inc. (NASDAQ:RPID) Q3 2023 Earnings Call Transcript

Rapid Micro Biosystems, Inc. (NASDAQ:RPID) Q3 2023 Earnings Call Transcript November 3, 2023

Rapid Micro Biosystems, Inc. beats earnings expectations. Reported EPS is $-0.31086, expectations were $-0.32.

Operator: Thank you for holding, and welcome, everyone, to the Rapid Micro Biosystems’ Third Quarter 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be question-and-answer session. [Operator Instructions] Thank you. I’ll now turn the call over to Mike Beaulieu. Investor Relations. Mr. Beaulieu, go ahead.

Michael Beaulieu: Good morning, and thank you for joining the Rapid Micro Biosystems’ Third Quarter 2023 Earnings Call. Joining me on the call are Rob Spignesi, President and Chief Executive Officer; and Sean Wirtjes, Chief Financial Officer. Earlier today, we issued a press release announcing our third quarter 2023 financial results. A copy of the release is available on the company’s website at rapidmicrobio.com under Investors in the News & Events section. Before we begin, I’d like to remind you that many statements made during this call may be considered forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the securities — Private Securities Litigation Reform Act of 1995.

Any statements contained in this call that relate to expectations or predictions of future events, results or performance are forward-looking statements, including, but not limited to, statements relating to Rapid Micro’s financial condition, anticipated year-end cash balance, cash runway, future revenue and system placements, expectations for and planned activities related to the company’s business development and growth, customer interest and adoption of the Growth Direct System, expectations for RMBNucleus Mold Alarm and Rapid Sterility and the potential impact of macroeconomic uncertainty on Rapid Micro’s business. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors.

For a list and description of the risks and uncertainties associated with Rapid Micro’s business, please refer to the Risk Factors section of our annual report on Form 10-K filed with the Securities and Exchange Commission on March 10, 2023, as amended as such risk factors are updated in our subsequent filings with the SEC. We urge you to consider these factors and you should be aware that these statements should be considered estimates only and are not a guarantee of future performance. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 3, 2023. Rapid Micro disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise.

And with that, I’ll turn the call over to Rob.

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Q&A Session

Robert Spignesi: Thank you, Mike. Good morning, everyone, and thank you for joining us to review our third quarter 2023 results. I will begin this morning’s call with an overview of our third quarter performance, followed by a review of the progress we have made in advancing our growth strategy. I will then turn the call over to Sean for a more detailed review of our financial results and outlook. Total revenue was $6.1 million, representing a 30% increase compared to Q3 last year and above our guidance for the third consecutive quarter. The strength was broad-based with growth of approximately 30% in both product and service revenue for the second consecutive quarter. Based on our solid year-to-date results, and supported by a strong balance sheet, we are reaffirming our guidance of at least $22 million in revenue, representing approximately 30% in growth for the full year.

During the third quarter, we placed five Growth Direct systems, including at least one in each of North America, Europe and Asia. This included the placement of a system with a new top five global pharma customer. As a result, our customer base now includes two-third of the global top 20 pharmaceutical manufacturers. We also completed four validations in the quarter. With all three sales regions staffed, our funnel has expanded meaningfully since the start of the year and is well balanced geographically. Biologics and cell and gene therapy customers remain our largest opportunity, as Growth Direct is ideally suited for the high-volume testing, full automation, robust data integrity and fast turnaround time required in these segments. That being said, we also have meaningful opportunities in segments such as small molecule and sterile injectable manufacturing where our global commercial presence is providing insight and access to new opportunities.

As many of you are aware, there are several thousand clinical trials for biologics and approximately 1,000 clinical trials for cell and gene therapies ongoing today. With the Growth Direct, customers can achieve faster time to results, improved data integrity, enhanced accuracy and greater sample capacity than current methods. In these high-value segments, the value proposition of using the only fully automated rapid detection platform for microbial quality control clearly resonates with this customer base. In fact, the Growth Direct is currently being used in the manufacturer of five of the six commercially approved CAR-T therapies and expect to place a system with the one remaining therapy later this quarter. We also have a significant footprint within biologics manufacturing, which remains our largest segment for system placements.

Notably, according to the FDA, there are close to 700 licensed biologic therapies currently on the market which creates a large growth opportunity. Our significant progress and penetration into the commercial cell and gene and biologics market, combined with our presence within the majority of the global top 20 pharma companies speaks to the value proposition of the Growth Direct. We are proud to be trusted partners on these critical life-saving therapies and believe that this level of success keeps us on a path to establishing the Growth Direct as the industry standard for pharma microbial QC testing globally. As we continue to focus on our commercial execution and specifically on accelerating system placements, one of our objectives is to increase opportunity generation and the velocity of our funnel through direct customer engagement.

We recently opened a growth direct demonstration lab in our Lexington, Massachusetts facility and have already hosted several prospective customers. This new lab complements our state-of-the-art automated consumable manufacturing line and provides a platform to showcase our comprehensive set of manufacturing and operations capabilities to customers. During these tailored customer interactions, we include detailed discussions about professional services, which include validation and system integration support. This high-touch approach to selling instills confidence in our customers and reinforces our position as a trusted long-term strategic partner of choice. Additionally, we continue to use our customer demonstration lab near Munich, Germany to host high-value events for our European customers.