Rapid Micro Biosystems, Inc. (NASDAQ:RPID) Q4 2023 Earnings Call Transcript

Daniel Arias: Okay, appreciate it.

Operator: Next question comes from the line of Tejas Savant with Morgan Stanley. Your line is open.

Unidentified Analyst: Hi, this is Jason on for Tejas. Congratulations on the quarter. And thank you for taking my questions. So just some questions related to Sterility. Could you elaborate on the competitive landscape of Sterility versus other competitors in the space? And with the launch, do you anticipate the new offering opening up opportunities with new customers or expanding placements with existing customers? And I guess on a related note, do you anticipate that you’ll be building out a sales force to support Sterility sales? Or would you leverage your existing sales force? Thank you.

Robert Spignesi: Okay, thanks for the question. It’s Rob. So I think there’s three in there. The first one is the competitive landscape. So as with our other applications, the top competitor is the legacy method in Sterility. That being said, there is what I would call increased competitive activity from other suppliers of Rapid Sterility applications in the market versus our other applications. So it is a market where there are some incumbents offering, I’ll call it, technology-enabled rapid solutions. Now that being said, we do that coming into this market, and we specifically developed and designed this system to offer compelling differentiation, clearly against the legacy and traditional method, but also against the current, I’ll call it, technology-enabled methods.

And we like how we compare against the, I’ll call it the other offerings in the market, as I mentioned in my prepared remarks. The second question with regard to new and existing customers. I think the answer is both. I think the exciting thing about Sterility is that customers are excited about it, first and foremost, in our existing customer base. So the majority of our current customers are small molecules — I mean, I’m sorry, large molecules to include biologics and cell and gene. But Sterility will also get us more deeply into small molecule injectable manufacturing as well. So it’ll expand effectively our opportunity in a lot of ways and move our sales team more squarely into those segments. And then with regard to sales team specifically, we primarily are planning on leveraging our current sales team, which we now have up and running in all three regions.

That being said, we will have a dedicated Sterility, I’ll call it group TBD on the actual head count on that, but specialists focused on assisting and enabling our sales team with some of the technical elements and application elements of the Sterility-specific activities.

Unidentified Analyst: Got it. Thank you. That was helpful. And then if I could squeeze another question in. So with Sterility development in its final stages, what are the next areas of product or workflow development that could enhance the customer experience on Growth Direct? Thank you.

Robert Spignesi: Yes. So from a high level, we view the Growth Direct as a platform technology. And generally, our product strategy is to continue to influence the workflow in and around our platform technology. So we automate the microbial quality control process. We detect the contamination. We enumerate contamination. And we do that now — it’s really being launched or to be launched midyear across the primary microbial quality control test of environmental monitoring, water, bioburden and soon sterility. We also envision, over time, going downstream and providing more information to customers with regard to the organisms that they’re picking up and detecting in their workflows. I think the mold technology we released last year is a really good example of that, and there could be extensions around that.

And also data. We’re generating enormous amounts of digital data for customers. And this is the first time that these labs have had access to this kind of data, and how can we help customers use, manage, look into their data and look into their operations, not only on a site basis, but on a global basis. Our goal is to become the new quality control infrastructure. And as we grow our site network globally, we’re basically creating a new microbial quality control infrastructure for our customers. And with that, what kind of services and insights can we provide just given the enormous amount of data that we’re generating. I know this is a commitment or guidance per se, but it gives you a little bit of insight into how we’re thinking about expanding our influence up and down the quality control workflow within our customers’ manufacturing and quality operations.

Unidentified Analyst: Thank you. I appreciate the answers guys.

Robert Spignesi: Sure.

Operator: Next question comes from the line of Steven Mah with TD Cowen. Your line is open.

Steven Mah: Thanks and congrats on the quarter. And thanks for taking the questions. One on Samsung Biologics, them selecting the Growth Direct platform for their microbial QC. Can you remind us if it was a multisystem placement and was that multiple Samsung sites? And then if you could give us some color on the sense of the magnitude of Samsung going forward as you kind of expand across the Samsung global sites? When can you expect more Samsung placements? Obviously, it’s a pretty huge entity.

Robert Spignesi: Yes. So thanks, Steve. We’re clearly excited about the Samsung partnership and the company selecting us. Samsung is a great company, does their diligence and we think it speaks volumes they selected the Growth Direct. We did place a multisystem order at a single site last year. I won’t go into the forward-looking expectation, but I can tell you we’re looking forward — to your point, it’s a large organization and we’re very much looking forward to growing with Samsung in the coming quarters and the coming years.

Steven Mah: Okay. Great. No, I appreciate that. And then maybe a follow-up question on the CRO landscape. Given the current geopolitical sentiment and that proposed bipartisan BIOSECURE Act. Could you give us a sense of your exposure to CROs that were kind of named in that BIOSECURE Act?