Good day, ladies and gentlemen, and welcome to Repligen Corporation’s Third Quarter of 2015 Earnings Conference Call. My name is Brian and I will be your coordinator. [Operator Instructions] I would now like to turn the call over to your host for today’s call, Sondra Newman, Senior Director of Investor Relations for Repligen.

Thank you, Brian. Good morning, everyone. Today the purpose of our call is to discuss our third quarter and year-to-date 2015 financial results to discuss recent business highlights and to review our financial guidance for the year. Joining me today are Tony Hunt, our President and CEO; and Jon Snodgres, our CFO. Today’s discussion may contain forward-looking statements, which are subject to risks and uncertainties that may cause our plans to change or results to vary. In particular, unforeseen events outside of our control may adversely impact future results. Additional information concerning these factors is discussed in our annual report on Form 10-K, the current report on Form 8-K, which we filed today, and other filings that we make with the Securities and Exchange Commission. The forward-looking statements in this discussion reflect management’s current views and may become obsolete as a result of new information, future events or otherwise. We may not update such forward-looking statements, except as required by law. And now, I’ll turn the call over to Jon for a financial review.

Thank you, Sondra. Good morning. Today, we are reporting our financial results for the third quarter and first nine months of 2015 highlighted by revenue growth ahead of our expectations across all product offerings. For the third quarter of 2015, product revenue reached $19.8 million, an increase of 31% on a GAAP basis and 38% at constant currency, compared to the third quarter of 2014. Year-to-date, we reported product revenue of $62.1 million, an increase of 38% on a GAAP basis or 47% at constant currency, compared to the same period in 2014. As a reminder, all revenues for the first nine months of 2015 were derived from bioprocessing product sales. During the first nine months of 2014, we received non-product revenue of $2.1 million from BioMarin, under the terms of our therapeutic outlicensing agreement. For the third quarter, product gross profit was $11.4 million compared with $8.2 million for the third quarter of 2014. Year-to-date, we reported $37 million of product gross profit compared to $25.1 million for the same period in 2014. Our product gross margin for the third quarter was 57.4%, an increase of 310 basis points compared to the third quarter of 2014. Year-to-date, product gross margin was 59.6% compared to 55.7% for the first nine months of 2014. As indicated in our second quarter call, we are seeing a reduction in gross margin percent in the second half of the year, based on shifts in product mix. Research and development expenses of $1.5 million for the third quarter were 9.7% lower than the third quarter of 2014, based on timing of project spend. Year-to-date R&D spend of $4.3 million is consistent with 2014 levels. SG&A expenses of $6 million during the third quarter were $1.5 million higher than the same period in 2014. Year-to-date SG&A…

Great, thank you, Jon. As Jon highlighted, Q3 was an excellent quarter for our business and our year-to-date growth has been very strong. We believe this growth has been driven by new drug approvals along with overall growth in the industry and excellent execution by our team to make Repligen a leader in bioprocessing technologies. As you may recall, we started 2015 with the goal to build out our commercial organization and drive adoption of our direct portfolio of products. I’m pleased to report that the expanded commercial organization is having a significant impact here in Q3 and in the second half of 2015. As noted in our Q2 call, the adoption of OPUS and ATF products is accelerating, as customers implement these technologies as platform solutions at their sites. OPUS sales were very strong in the third quarter and this momentum is carrying forward into Q4. We are seeing particular strength in OPUS orders from contract manufacturing organizations, from large pharma customers, and from our key accounts that continue to adopt OPUS at multiple manufacturing sites. Just as important, we are adding new customers, which is a direct result of our expanded commercial organization. In fact, here in Q3, 30% of our OPUS revenues came from new accounts. Orders for OPUS 60 columns accelerated during the quarter, very much in line with what we observed for OPUS 45-centimeter columns in late 2014, six to eight months after launch. Discussions with our customers are now focused on displacing glass columns with pre-packed columns. We are seeing an increase in the number of accounts placing multi-column orders and forecasting long-term demand for their manufacturing sites where the availability of larger OPUS columns is a major driver of change. We continue to create clear differentiation between us and our competitors in the…

[Operator Instructions] Our first question comes from the line of Brandon Couillard with Jefferies. Your line is now open. Please go ahead.

Tony, you spoke to this I guess a little bit in your prepared remarks but as far as OPUS 45 and 60 are concerned, can you speak to the breadth of the customer base; any round numbers you can give us in terms of current users; and where you see the opportunity for new contacts going into next year or so?

Yes, I mean we saw throughout Q3 and as we look at our Q4 order loads, clearly our contract manufacturers; large pharmas, they’re definitely moving forward with OPUS implementation. So, instead of having, say one column in a process, we’re now getting two and three. I think the fact that our commercial organization is now up to speed and the second half of the year, we’re seeing an increase in the number of new accounts, I think it’s significant that 30% of our revenues came from new accounts. And when we look across the board, there is a really good percent of 45s and 60 columns that make up these new customers. I will say that we are also seeing strength in our 20 and 30-centimeter diameter columns as well. So, it’s really across the board. We see good momentum and we see the momentum also heading into 2016.

Any chance you could give us the book-to-bill for ATF in the period or -- I know you had pretty strong orders in the first half of the year that are likely shipping here in the second half, curious if you could speak to the order growth.

No, we’re really pleased with the way the ATF business has panned out this year. We are typically taking orders towards the last month of every quarter for the following quarter, so we have strong order load for Q4. And as I said earlier, we expect Q4 to be another strong quarter for ATF. As we go into 2016, we’ll see what the order load is like, as we head into Q1. But you should remember of course that this is capital expenditure and so Q4, if you go back to a year ago, we had a very strong Q4 for ATF in 2014. And we don’t expect that to be anything different this year, with yearend spend.

Tony, as you look out to next year, I realize it may be a little bit early, but to what degree do you believe the current trajectory ahead of your longer term 10% to 15% organic growth target is really sustainable, into next year? How much visibility do you have into 2016, at this point?

Yes, it’s a little early Brandon. You can see what’s going on with OPUS and ATF; it’s strong. We’ve been pretty clear with everyone that longer term organic growth for the Company is in that 10% to 15% range. You know that we have two very large customers that will give us forecasts into 2016, but we haven’t got those yet. So, as we get towards the end of the year, we’ll have a little better handle on how all our businesses are going to perform, or at least some trajectory on that. And when we get back to you at our Q4 call, we’ll be able to give you a little bit more guidance on how we are going to perform in 2016. But, we’re very happy with our end markets and the strength that we’re seeing in our end markets.

Our next question comes from the line of Paul Knight with Janney Montgomery. Your line is now open. Please go ahead.

Hi, Tony; you mentioned the benchtop ATF System. Should we read that early stage projects are accelerating; any read-through on what that benchtop comment meant?

So, we use the benchtop units as a real -- we try and understand where the scale-up is going to come from. So, if our benchtop units -- these are the ATF2s that people are adopting, then that means the process development labs are implementing and evaluating ATF Systems. So growth there is a leading indicator that there is strength in our customer base. And what you’d expect over the next one to two years is, those customer scaling up from ATF2s to ATF4s to ATF10s.

And then, on the OPUS business, would it be fair to say that OPUS sales were higher than they were in the second quarter?

Yes. I mean when you look at H1 this year versus H2, we had a good growth in OPUS in the first half of the year. But if you might recall, we were really ramping up in our commercial organization; we got everybody in place by really the end of Q1, early Q2; and we’re seeing the benefit of a broader commercial organization and more feet on the street, as we head into the second half. And that’s why Q3 was higher. And we have also -- we can see Q4 is going to be a good quarter for OPUS as well.

And customer enthusiasm seems high, correct? And then follow-on to that is, is it because -- what are the attributes they are pointing out, they like the most about OPUS?

We’re really viewed as the one vendor in this area that’s flexible. They like our flexibility because we’ll pack any resin; we’re very flexible when it comes to the column bed heights and diameters. So, we’ve got this breadth of column diameters. And it’s the customization of the product line that makes it easy for customers to use. I think what’s happened Paul over the last few years is that as people adopt OPUS, and maybe they’ve only put it into one process, let’s say a year ago and now they see the performance and they see the service that we provide, they’re coming back and saying okay, let’s put OPUS into a couple of steps in the process. And we are benefiting from being in the market now for three years.

And then lastly, can you talk to tax rate going forward and where are we in Q4 in the forward-looking tax rate?

Yes. So, this quarter we actually incurred a high tax rate for two reasons: One, similar to what we had in the first quarter, very, very high percentage, well over 100% of our earnings pretax were generated in Sweden where we’re taxed on a 22% rate; then, we had a loss in the U.S. entity obviously with no tax. So that really drives up the rate per se, to 31% in the quarter. We expect that to lighten up through the fourth quarter and we expect more profitable situation in the U.S. or less of a loss position and more leveling of our profits between the two locations. So, we expect through the -- by the end of the year to be roughly in that $4 million range of taxes or 25%, 26% range.

Thank you. [Operator Instructions] We have a follow-up question from the line of Brandon Couillard with Jefferies. Your line is now open. Please go ahead.

Tony, the decision to I guess stop pursuing the proprietary Protein A media opportunity, could you elaborate on the rationale for that? I mean was there a change in your view of the market opportunity or was this more perhaps based on let’s say feedback from some of your partners?

No. So, as I reported back Brandon on our last earnings call, we were in beta site testing. Feedback from our beta sites was favorable; the product performed well. And customers basically said to us that they were going to put it on their resin screening program; so not getting implemented into any particular process. We know that the adoption cycle is pretty long and the revenues that we were forecasting were going to be modest. So, as part of our strategic review process, we were reviewing all of our products and we were looking at the -- we looked at revenue impact, we looked at adoption cycles, we looked at resource allocation. And we’re seeing the acceleration that’s happening in OPUS and ATF. And we just made the strategic decision for the Company that we wanted to put our valuable resources into OPUS and ATF and drive and accelerate their growth versus further dilution. So that was really the decision in terms of why we didn’t move forward with product launch.

And then any update you can share with us on the M&A pipeline, any opportunities that you’re seeing out there, and whether some of the volatility in the public markets has let’s say, loosened up valuation expectations at all?

I think we’ve been pretty consistent in terms of our goals as we go through this year and into next year. As we continue to talk to companies, we have specific targets, we think are good fits for Repligen. We want to really focus on our growing products that we have in our portfolio and see if there are deals that could bolster and strengthen those portfolios. Nothing right now that we can talk about. But obviously as we finish out the year and go into 2016, we’ll update you [Audio Gap] the valuations have changed dramatically. I think it’s really -- even though the markets have been volatile over the last month, I don’t know if a month really reflects changes that might be happening in terms of valuation. So, we’ll see as we move forward.

Thank you. Our next question comes from the line of William March with Janney Montgomery. Your line is now open. Please go ahead.

I just wanted to ask about the single-use ATF. If you guys could give us an update about where you are at in that process; and maybe big picture, how you think that fits in the workspace or the workflow.

As I said earlier, the single-use ATF product still in development, but we’re definitely moving into the external testing phase, here in the fourth quarter. We expect that we’ll launch it in -- early in 2016. There’s a strong interest in our customer base. As you might recall, customers are moving towards single-use technology. So, we see [Audio Gap] products are in a number of commercial processes, late stage processes. We expect the single-use products will get tested and evaluated in early stage opportunities. And as we go through 2016, we’ll see how it all plays out. But, we’re very positive about the development and look forward to getting it into our installed base where I think it will have a positive impact.

Thank you. I’m showing no further questions. I would now like to turn the call back to Sondra Newman, Senior Director of Investor Relations for Repligen, for closing remarks.

Thank you everyone for joining our Q3 earnings call today. Should you have any follow-up questions for management, please feel free to reach out to me at investors@repligen.com. Thanks. Have a great day.

Ladies and gentlemen, this does conclude today’s program. You may all disconnect. Everybody, have a wonderful day.