Charles River Laboratories International, Inc. (NYSE:CRL) Q4 2022 Earnings Call Transcript

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Maybe. Probably not. They couldn’t pivot overnight to another animal model. So again, I just have to go back to where I’ve been on this whole call, the animals are available. There are enough animals available. The farm that we use, we provided really good oversight. And we think it’s well-run farm, and we think the animals are of high quality. And we have to get through this logged in, and it’s not like €“ think about your question, it’s not like literally are there enough animals available in the world to satisfy the demand because there aren’t. These animals typically are pests in these countries, and then they take the test, and they use them as initial breed stock. So they’re wild. And then we sell usually the second generation, occasionally the first, but the second generation.

So the animals are clean, and we’ve had an opportunity to ensure their viral and bacteriological and genetic profiles are as it were €“ as you want it to be. So we are €“ trust me, we talk daily about alternative models, what our responsibility would be, how we would go at it, how we support our clients. And that may happen over the next €“ I don’t know the time frame, let’s say, five years. But that doesn’t satisfy any of the short-term needs right now. So I do think that €“ we’re quite hopeful in the final analysis, organizations like NIH and the FDA will weigh it seriously about how important these animals are, support us and the work that we do. And so ensure in a long-term basis, these animals are available.

Dan Leonard: Thank you for that perspective. And if I could ask a quick follow-up, can you help me better understand the complexity of showing parentage for NHPs? Presumably, this isn’t just a 2023 Ames test. It’s more complicated than that, but I’d love to be able to better understand that.

Jim Foster: Yes. It’s €“ I don’t think it’s all that complicated. You just €“ you’re proving genetics. And there are also sort of genetic assays that are available. The issue is actually more trivial. It’s just actual scale depending on how many of the animals they want tested. And how do you do that on a large enough scale quickly enough so it doesn’t impede the speed, the velocity of your business. So we’re hopeful. We’re speaking to a few organizations right now. We’re hopeful that we can enhance the technology to be able to do it faster. So that would be good for us, that would be good for our clients. And I think that’s €“ speed is an issue of the regulatory folks. They just want proof with it.

Dan Leonard: Appreciate that perspective. Thank you.

Jim Foster: Sure.

Operator: Thank you. Our next question will come from Casey Woodring with JPMorgan. Your line is open.

Casey Woodring: Hi, thanks for taking my question. So just curious, is this your max impact from NHPs? Or do you think there’s more downside to that range for 2023? I guess, does that headwind include any pricing offset? Is there any way to go back to the table and renegotiate price for work that you maybe had booked last year pre-supply crunch year? And then just as a follow-up, how much of your existing supply will have run through in 2023? Does that downside case that you laid out assume you’d be entering 2024 with only 40% of your NHP supply available? Thank you.

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