Less than a decade ago, Repligen (NASDAQ:RGEN) was toiling away in clinical trials in an attempt to bring experimental drugs to market. Today, the company's former drug pipeline is a distant memory. It has instead gone all-in on bioprocess engineering products -- the filters, chromatography columns, sensors, and other tools needed to manufacture biologic drugs. 

The niche has served the company and its shareholders well: Shares of Repligen have gained 2,430% in the last decade. But the growth opportunities are far from exhausted. To better understand where the company is headed, it helps to understand how the company arrived at its current state of operations. Here are some numbers that shine a light on its trajectory.

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1. Acquisitions have greatly diversified revenue sources

Repligen wouldn't have become a major player in bioprocess engineering products without acquisitions. The business completed five acquisitions in the six-year period spanning 2014 to 2019. Total revenue grew from $60 million to $270 million in that span.

The overall revenue growth has been impressive, but so, too, has the diversification of revenue. In 2014, Repligen generated 72% of its revenue by selling proteins for purification products. Much of that revenue came from two or three customers. Meanwhile, the second- and third-largest sources of revenue were responsible for just 16% (chromatography products) and 11% (filtration products) of total revenue, respectively.

In 2019, Repligen generated 44% of its revenue from filtration products (by far the largest addressable market for the business) and 24% from chromatography products. Protein sales accounted for another 24% of total revenue last year, but a recently expired contract and growth from the rest of the business should cause that to drop further.

Meanwhile, the latest acquisition of C Technologies thrust Repligen into the process analytics market, which will add a fourth major source of revenue. Management expects process analytics to generate at least 10% of total revenue in 2020.

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2. Repligen has a solid acquisition track record

The five acquisitions made by Repligen from 2014 to 2019 have been responsible for roughly 40% of total revenue generated in that span. They've also provided a solid foundation for internal research and development (R&D) efforts, which have led to the commercialization of 12 new products since 2014.

It's not quite clear how the company distinguishes between contributions from acquisitions and products launched through R&D (many of which were made possible by acquisitions), but the track record speaks for itself. Consider how each acquisition has fared in the first year of Repligen ownership. 

Acquisition (Date)

Product Category

Pro-forma Revenue, Revenue Growth in First Year of Ownership

Refine Technology (June 2014)

Filtration

$10.6 million, 48%

Atoll (April 2016)

Chromatography

$4.6 million, 26%

TangenX (December 2016)

Filtration

$5.8 million, 37%

Spectrum Labs (August 2017)

Filtration

$37 million, 24%

C Technologies (May 2019)

Process analytics

$24 million*, TBD

Data source: Repligen. * = company estimate.

Investors shouldn't be surprised if another acquisition is on the way. Repligen began 2020 with $528 million in cash on hand. It also completely lacks exposure to a handful of major opportunities in bioprocessing, such as mini bioreactors used in the development of cell lines. Given the company's new process analytics capabilities (which are heavy in software know-how) and large cash position, it's not a stretch to imagine the acquisition or development of tools specifically aimed at mini bioreactor platforms -- or a new platform altogether.

3. Gene therapy customers provided 15% of 2019 revenue

The overnight rise of gene therapy caught many off guard, including Repligen. While the business likely didn't make any of its past acquisitions with gene therapy in mind specifically, they've all positioned the company to tap into the opportunity. 

In 2019, the company generated 15% of total revenue from gene therapy customers. That's up from just 4% of total revenue in 2017. The numbers suggest Repligen has grown gene therapy end-market sales from $6 million in 2017 to $40 million in 2019.

Repligen sells filtration, chromatography, and process analytics products to gene therapy developers. The products can be used throughout the development process, from lab-scale experiments all the way through clinical trials and commercial production. There are over 750 clinical trials involving gene therapy drug candidates underway in the U.S., and Repligen generated 70% of total direct revenue (excluding proteins) from clinical markets in 2019. That suggests the business is well-positioned to exploit the high-growth opportunity for the foreseeable future.

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4. CDMOs are increasingly important customers

Here's something most investors might skip over: contract development and manufacturing organizations (CDMO) are becoming increasingly important customers. Drug developers often tap the manufacturing specialists to offload the high costs of biologic drug manufacturing, increased regulatory scrutiny, and upfront investments required for success. As a result, CDMOs are becoming increasingly important players in the production of biologic drugs, especially monoclonal antibodies and gene therapies. 

Building long-term relationships with manufacturing specialists helps to de-risk growth for Repligen. CDMOs manufacture multiple drug products for multiple biopharmaceutical companies, which insulates the bioprocess products leader from any single clinical failure or commercial delay.

Repligen generated 14% of total revenue from CDMOs in 2018, which increased to 19% of total revenue in 2019. That suggests revenue from CDMOs grew from $27 million to $51 million, or 89%, in the year-over-year period.

5. At least $500 million in revenue by 2023

Investors appeared to have been disappointed by Repligen's full-year 2020 revenue guidance. The company expects year-over-year revenue growth of 14% to 18%, which admittedly doesn't look so great considering revenue grew 39% from 2018 to 2019. But the direct comparison leaves out some important nuance.

For instance, an important contract for protein sales expired at the end of 2019 as expected, which will provide a headwind in 2020. Additionally, the quick rise of the gene therapy market led to better-than-expected growth last year. Management is conservatively telling investors not to expect that again this year. 

Even if investors consider full-year 2020 guidance to be disappointing, it helps to consider the bigger picture. Repligen expects to achieve $500 million to $600 million in annual revenue by 2023. That's a significant increase from the $270 million generated last year, or the $319 million expected this year. That should also solidify the growth stock's reputation among investors with a long-term mindset.