Repligen: +ve Pre-A Outshines Mixed Feedback on BLFS Acquisition

Research evidence excerpt

Repligen: +ve Pre-A Outshines Mixed Feedback on BLFS Acquisition

Barclays | Repligen

However, this is not a bet-the-business on CT type of deal. While it is significant in scale (the

biggest in company history), it does not mean that RGEN is going all in on CT and ignoring the

rest of the market. RGEN will continue to have most exposure to mAbs/traditional modalities

(75% pro-forma of the business, see Figure 2), so the CT risk is more mitigated and more likely a

source of upside than downside on drug approvals vs. failures. The asset creates noise around

the new modality business, which has been a source of weakness over the past year, so we

understand the pushback. But as we said, we do not think that this signals a major pivot in

strategy for the company and it is more a function of mgmt seeing an opportunity to acquire a

quality asset at the trough of the market. If RGEN continues to accumulate assets that help

bend the CT cost curve and becomes an enabling player that unlocks CT potential, that would

be meaningful upside and cement its position within the market. There are a lot of ifs in this

blue-sky scenario, and we are certainly not baking this into our long-term assumptions. But the

potential is there and presents an interesting thesis for the business longer term. In the

meantime, RGEN should continue to benefit from the growth/penetration of traditional

modalities and grow above market as we saw today.

Lastly, RGEN provided a +ve pre-A with organic growth coming in at 13%. We think this adds

credence to DHR’s claims of timing pushouts, as excluding those pushouts the company would

have done ~8% growth in biopro consumables, which would set RGEN’s 13% 500bps above

market. Tomorrow will go a long way in proving the thesis that DHR’s issues are not a market