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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission file number: 0-21700
REPLIGEN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 04-2729386
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
117 Fourth Avenue, Needham, Massachusetts 02194
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 617-449-9560
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- -----------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Common stock, $0.01 per share
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
State the aggregate market value of the voting stock held by non-affiliates of
the registrant. The approximate aggregate market value, computed by reference to
the closing sale price of such stock quoted on NASDAQ on June 14, 1996 was
approximately $17,552,859.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock as of June 14, 1996: 15,602,542.
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<PAGE>
PART I
Item 1: BUSINESS
Repligen Corporation is a biopharmaceutical company engaged in the
research and development of therapeutic products for human health care. During
fiscal year 1996 the Company completed a major downsizing and consolidation of
its operations, including the termination of certain research programs, in order
to stabilize its financial condition and preserve its cash resources. The
Company's research and development programs are now primarily focused on the
development of new therapies for chronic and acute inflammation and
immunosuppression and the development of enabling technologies for discovery of
new drugs by rapid screening of combinatorial chemical libraries.
As of June 14, 1996, Repligen had approximately 15 employees including
five with doctoral degrees. The Company's strategy is to use internal resources
for research and preclinical studies and to use pharmaceutical companies or
third party contractors to provide manufacturing and clinical development
support and for certain administrative functions. Significant expansion of the
Company's research or clinical development efforts is dependent on future
financing or new partnerships with pharmaceutical companies.
Repligen was incorporated in May 1981. The Company's principal executive
offices are located at 117 Fourth Avenue, Needham, Massachusetts 02194, and its
telephone number is (617) 449-9560. As used herein, "Repligen" or the "Company"
refers to Repligen Corporation and its wholly-owned subsidiaries, RGEN
Corporation, Amira, Inc., Repligen Development Corporation and Glycan
Pharmaceuticals, Inc.
Recent Developments
Restructuring. During the past year the Company restructured its
operations in order to preserve its capital and ensure continued operations. The
restructuring included a substantial reduction in its workforce, the termination
of several programs and in May 1996 the closing of its Cambridge research and
manufacturing facility. The corporate headquarters has been transferred to
facilities previously used by the Company for manufacturing in Needham,
Massachusetts. In April and May 1996 the Company negotiated settlements with the
holders of certain equipment and facility lease agreements which were in default
for an aggregate cost of $3,300,000. Subsequently, surplus equipment owned by
Repligen was sold for approximately $1,250,000, net of expenses. As a result of
the reduction of operating expenses and elimination of debt, the Company
believes it has adequate cash reserves at March 31, 1996 to sustain its
operations at their current levels for at least the next twenty four months.
Acquisition of Glycan Pharmaceuticals, Inc. In March 1996, Repligen
acquired Glycan Pharmaceuticals, Inc. ("Glycan"), a private company in
Cambridge, Massachusetts founded by three former senior managers of Repligen.
Simultaneously with the acquisition, Repligen's senior management resigned or
announced their resignations to take place shortly after the acquisition, and
Glycan's management assumed senior management positions at the Company. Glycan
has focused on the development of enabling technologies for the discovery of new
drugs by rapid screening of combinatorial chemical libraries. As a consequence
of the Glycan acquisition, Repligen acquired a majority interest in ProsCure,
Inc., a subsidiary of Glycan. ProsCure has licensed the rights to certain Glycan
discovery technologies and lead compounds for application to the field of
cancer.
PF4 Program Termination. Since February 1992, Repligen has carried out
research and development on recombinant Platelet Factor-4 ("rPF4") on behalf of
Repligen Clinical Partners, L.P. (the "Partnership"). The Partnership's funding
for the development of rPF4 has been substantially consumed, and the Company
believes that significant additional funding will be required to commercialize
rPF4. In April 1995, the Company announced the termination of the Product
Development Agreement and the Purchase Agreement with the Partnership and
stopped development of rPF4. Repligen will assist the Partnership in exploring
alternatives to maximize the value of the rPF4 program for the benefit of the
Partnership.
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Repligen's Research and Development Programs
The following table lists Repligen's research and development programs,
potential therapeutic indications or clinical trial populations and current
status, and is qualified in its entirety by reference to the more detailed
descriptions elsewhere in this report.
<TABLE>
<CAPTION>
Program Indication/Clinical Trial Status
- ------- ------------------------- ------
<S> <C> <C>
CD11b Acute Inflammation
Healthy volunteers Phase I (completed)
Chronic lung inflammation Phase I (completed)
Cardiopulmonary bypass surgery Phase I/II (completed)
Thorocoabdominal aortic aneurysm Phase I/II (completed)
Immune Modulation Transplantation, autoimmune disease Preclinical
Chemokine Mutants Myeloprotection Preclinical
Glyceptor Antagonists Chronic inflammation, atherogenesis Research
</TABLE>
CD11b Program
The Company's program for the inhibition of acute inflammation is based
on the use of monoclonal antibodies to CD11b, a protein on the surface of
certain white blood cells called neutrophils, to inhibit neutrophil-mediated
inflammation and tissue damage. Neutrophils are a type of white blood cell which
normally protect the body from bacterial infection. Once activated by an
infection, neutrophils bind to receptors on the endothelial cells that line the
blood vessels and subsequently migrate through the vessel wall to the site of
infection where they eliminate the bacteria by producing cytotoxic products.
Neutrophils can also cause injury following reperfusion, an event in which blood
flow to tissue is interrupted and subsequently restored. Restricted blood flow
causes a lack of oxygen for tissue adjacent to the restriction site, and
neutrophil activation signals are inappropriately produced. When blood flow is
restored, the site is flooded with activated neutrophils capable of damaging
healthy tissue, resulting in reperfusion injury. Animal models of reperfusion
injury have demonstrated that blocking CD11b with a monoclonal antibody prevents
the neutrophils from binding to the blood vessel wall and damaging otherwise
healthy tissue.
In November 1990, the Company entered into an exclusive, worldwide
license agreement with the University of Michigan for two issued U.S. patents
and corresponding foreign patent applications covering the use of monoclonal
antibodies capable of blocking CD11b to inhibit inflammation. In January 1991,
the Company entered into an exclusive, worldwide license agreement with the Fred
Hutchinson Cancer Research Center for a hybridoma cell line designated as 60.1
that secretes a monoclonal antibody capable of specifically binding to the CD11b
antigen. In September 1991, Kabi Pharmacia AB licensed to the Company on an
exclusive basis a U.S. patent relating to the use of anti-CD11b and anti-CD18
antibodies in reperfusion therapy. With the exception of the Fred Hutchinson
Cancer Research Center license, these licenses are subject to the payment of
royalties by Repligen.
In May 1992, the Company entered into a research, collaboration and
license agreement with Eli Lilly and Company ("Lilly") pursuant to which the
Company and Lilly agreed to develop and market antibody-based anti-inflammatory
therapeutics including particular antibodies and antibody fragments that bind to
CD11b. In 1993, the Company and Lilly began Phase I clinical testing of its lead
product candidate for acute inflammation, a murine monoclonal antibody fragment
called m60.1. Initial studies evaluated the safety and pharmacology of m60.1 in
patients with chronic lung inflammation and in healthy volunteers. These two
studies indicated that m60.1 was well tolerated and had an acceptable half-life
in circulation. Following these trials, the Company and Lilly initiated two
Phase I/II studies of m60.1 in patients undergoing cardiopulmonary bypass
surgery and in patients undergoing scheduled surgery to treat thorocoabdominal
aortic aneurysm. The Company has initially targeted the acute inflammatory
response associated with these surgical procedures since they most closely
resemble the models of reperfusion injury for which antibodies to
3
<PAGE>
CD11b have shown efficacy in animal models. Additional potential clinical
indications include more complex diseases such as trauma, myocardial infarct
(heart attack), adult respiratory distress syndrome or related disorders in
which over-activation of the neutrophil may lead to significant morbidity and
mortality.
In September 1995, Lilly terminated its licensing and collaboration
agreement with the Company and the rights to the CD11b program were returned to
Repligen. Since September 1995 patient accrual for the cardiopulmonary bypass
trial and the thorocoabdominal aortic aneurysm trial has been completed and the
data analysis will be completed in 1996. Repligen has also produced a humanized
form of this monoclonal antibody called h60.1 which may have a reduced potential
for eliciting an antibody response in patients. Preclinical studies completed to
date indicate that m60.1 and h60.1 are substantially equivalent in their ability
to bind to CD11b and block neutrophil activity in animal models and the Company
intends to carry out future clinical studies with h60.1 following regulatory
approval. The Company believes that the clinical data collected to date justify
continued development of 60.1, and it intends to seek additional financing or a
corporate partner to support the program.
Immune Modulation Program
Repligen's immune modulation program focuses on the manipulation of
costimulatory factors (CD28, B7, CTLA4), molecules on the surface of certain
immune system cells, to suppress or activate an immune response. Based on
preclinical data, the Company believes that drugs which block the activity of
these costimulatory factors could suppress unwanted immune responses following
transplantation and could treat autoimmune diseases such as certain forms of
multiple sclerosis, rheumatoid arthritis and diabetes. The currently available
treatments to prevent transplant rejection are powerful drugs which cause
overall immune suppression, leaving recipients dangerously vulnerable to
infection. Over the last four years, Repligen secured rights to a series of
patent applications covering several costimulatory factors and their methods of
use.
The Company has produced a soluble form of the factor CTLA4 as a hybrid
with an immunoglobulin ("CTLA4-IgG"). The molecule binds to B7 on the surface of
certain antigen processing cells and appears to block the activation of T cells
which is mediated through the CD28 receptor. CTLA4-IgG has demonstrated activity
in several animal models of organ transplant including heart transplant and bone
marrow transplant. Activity has also been observed in animal models of multiple
sclerosis and autoimmune diabetes. These results support continued development
of CTLA4-IgG as a product candidate, and Repligen intends to seek a corporate
partner or licensee for this technology. The animal data obtained with CTLA4-IgG
validate the importance of CD28 as a modulator of the immune response, and
Repligen intends to pursue the discovery of small molecules capable of blocking
the activation of CD28 by high throughput screening of libraries of compounds.
In September 1995, Repligen assigned its patent rights for these three
costimulatory factors to Genetics Institute, Inc. and received a fee of
$2,000,000. The Company retained the right to independently use the intellectual
property and reagents for the discovery of small molecules which block or
activate these costimulatory factors. In January 1996, Genetics Institute
returned all the rights to a specific product candidate, CTLA4-IgG. Repligen has
the right to sublicense its rights to CTLA4-IgG and the small molecule discovery
program and intends to seek licensees or partners to develop this technology.
Chemokine Mutants Program
Many existing agents for cancer chemotherapy are toxic because they
destroy the myeloid progenitor cells which ultimately mature into platelets, red
blood cells and certain white blood cells. This can lead to anemia or
susceptibility to infection in the patient and limit use of the drug. If an
agent were available to temporarily block the maturation and proliferation of
the myeloid progenitor cells during chemotherapy thereby protecting them from
destruction, it may allow for higher doses of therapy to be used with fewer side
effects.
4
<PAGE>
The chemokines are a family of closely related proteins that produce a
number of important biological effects included mediating inflammatory responses
and blocking the proliferation of the myeloid progenitor cells. Repligen has
generated modified versions ("mutants") of the proinflammatory chemokine
interleukin 8 ("IL-8") which lack the inflammatory neutrophil activating
property of the parent molecule, but which retain the ability to suppress the
proliferation of the progenitor cells. Certain of the mutant proteins are active
in small animals models. These novel molecules may have therapeutic utility in
protecting these progenitor cells from the toxic effects of anti-cancer drugs.
Patent applications covering the composition of the mutant proteins have been
filed in the United States and in foreign countries. The Company will seek a
partner to develop its chemokine mutants.
Glyceptor Antagonist Program
Through the acquisition of Glycan, Repligen acquired a series of high
throughput screening assays to facilitate the discovery of new compounds capable
of blocking the interaction of certain proteins, including inflammatory factors,
with a type of cell surface carbohydrate known as a glycosaminoglycan. The
Company believes that such compounds will have anti-inflammatory action.
Glycan's research on two specific inflammatory factors is supported by a
research contract with Glaxo Wellcome plc., a leading international
pharmaceutical company. Glycan has filed a patent application in the U.S. and
certain foreign countries.
Glycan has also developed a combinatorial chemistry technology which is
capable of rapidly producing large libraries of compounds. This technology is
capable of efficiently producing compounds which resemble natural peptides
("peptidomimetic"). Unlike natural peptides, however, the Company's
peptidomimetic compounds have a wider range of chemical functional groups than
are found in the twenty natural amino acids. In addition, the Company believes
that the peptidomimetic compounds may be significantly more stable in vivo than
natural peptides, a problem that often prevents natural peptides from being
suitable drug candidates. The Glycan synthesis technology is based on solution
phase synthesis which is accomplished by simple mixing of solutions containing
the reactive starting materials, a process which can be automated to construct
large libraries very efficiently.
Glycan has employed this technology to construct libraries of compounds
whose structures are customized to the characteristics of the drug discovery
target thereby increasing the probability of finding lead compounds. Repligen
intends to further develop this technology and will seek to apply it to
additional drug discovery targets through the construction of customized
libraries. The Company will also seek to develop or license additional
technologies which may improve the efficiency of the drug discovery with high
throughput screening.
Commercial Products
Recombinant Protein A. Protein A is a naturally occurring molecule which
has the ability to bind tightly to certain classes of antibodies. The Company
has developed and produces recombinant Protein A ("rProtein A") in sufficient
quantity and quality to be used in the commercial production of antibodies.
The development, manufacture and marketing of rProtein A has been funded
and conducted by Repligen without the assistance of a commercial partner.
Repligen sells rProtein A directly and through distributors, including Itochu
Techno Chemical, Ltd. (Japan), Kem-En-Tec (Denmark), Pelichem A.G.
(Switzerland), and Inter Medico (Canada).
In August 1991, the United States Patent and Trademark Office (the
"PTO") ruled in favor of Repligen in an interference proceeding with Pharmacia
AB involving competing patent applications for rProtein A. A cross-licensing
agreement between the Company and Pharmacia AB with respect to rProtein A
remains in effect. Repligen has now been awarded patents covering rProtein A in
the United States, Europe and Canada. In addition, the Company has been awarded
patents in the United States covering a modified version of Protein A.
5
<PAGE>
Patents, Licenses and Proprietary Rights
It is not known how the PTO or a court will resolve issues that may
arise relating to the validity, scope and inventorship of patents owned by, or
licensed by, the Company. In general, the patent position of biotechnology firms
is highly uncertain and involves complex legal, scientific and factual
questions. Issues remain as to whether patent applications of the type made by,
or licensed by, the Company will ultimately be granted as well as to the
ultimate degree of protection or commercial benefit that will be afforded to
Repligen by any patents issuing from such applications. There can be no
assurance that any patents issued to, or licensed by, the Company will not be
infringed or circumvented by others or will provide any commercial benefit to
the Company.
The Company's products and processes might conflict with patents that
have been or may be granted to competitors, universities or others. Issues may
arise with respect to claims of others to rights in the Company's patents or
patent applications. As the biotechnology industry expands and more patents are
issued, the risk increases that the Company's processes and products may give
rise to claims that they infringe the patents of others. Such other person could
bring legal actions against Repligen or its commercial partners claiming damages
and seeking to enjoin them from manufacturing, marketing and clinically testing
the affected product or process. If any such action were successful, in addition
to any potential liability for damages, Repligen or its commercial partners
could be required to obtain a license in order to continue to manufacture or
market the affected product or to use the affected process. No assurance can be
given that Repligen or its commercial partners could prevail in any such action
or that any license required under any such patent would be made available or,
if available, would be available on acceptable terms. Repligen expects that
there may be significant litigation in the industry regarding patent and other
intellectual property rights and that such litigation could consume substantial
resources.
The Company requires all employees, consultants and commercial partners
to agree to keep the Company's proprietary information confidential. There can
be no assurance, however, that these agreements will be honored.
Competition
Repligen is engaged in a business characterized by extensive research
efforts, rapid developments and intense competition. Competition can only be
expected to increase in the future. Repligen competes with specialized
biotechnology companies and large pharmaceutical companies, many of which have
more capital, more extensive research and development capabilities and greater
marketing and human resources than the Company. There are numerous competitors
in the area of anti-inflammatories, immune modulation and the Company's other
research programs. At this time, it is impossible to determine which approach,
if any, currently being pursued will ultimately become successful, and
consequently, any one of Repligen's competitors has the potential to develop a
successful approach to inflammation inhibition. However, the Company believes
that its multiple approaches to the inhibition of inflammation are unique and
prosecutable by patents and may give the Company a potential competitive
advantage in this market.
Government Regulation
The Company's business activities are subject to extensive regulation
for safety and efficacy by numerous governmental authorities in the United
States and other countries. In the United States, the Company's activities are
subject to rigorous regulation by the United States Food and Drug Administration
("FDA"), and other Federal, state and local agencies governing, among other
things, research and development activities and the testing, manufacturing,
safety, effectiveness, labeling, storage, record keeping, approval, advertising
and promotion of the Company's current products and any products which may be
developed by the Company and its commercial partners. Further, additional
government regulation may be established which could affect regulatory approval
of the Company's products.
The standard process required by the FDA before a pharmaceutical agent
may be marketed in the United States includes (i) preclinical laboratory and
animal tests, (ii) adequate and well-controlled human clinical trials to
establish the safety and efficacy of the drug in its intended indication, (iii)
submission to the
6
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FDA of a New Drug Application ("NDA") with respect to drugs and a Product
License Application ("PLA") with respect to biologics for approval prior to any
commercial sale or shipment of the drug or biologic. Clinical trials are
typically conducted in three sequential phases, which may overlap. In Phase I,
the initial introduction of the drug to humans, the drug is tested for safety
(adverse effects), dosage tolerance, mechanism of action and metabolism. Phase
II involves studies in a limited patient population to (i) evaluate the
effectiveness of the drug for specific targeted indications, (ii) determine
dosage tolerance and optimal dosage and (iii) identify possible adverse effects
and safety risks. When a compound is found to be effective and to have an
acceptable safety profile in Phase II evaluations, Phase III trials are
undertaken to further evaluate clinical effectiveness and to further test for
safety within an expanded patient population at geographically dispersed
clinical study sites. There can be no assurance that Phase I, Phase II or Phase
III testing will be completed successfully within any specified time period, if
at all, with respect to any of the Company's products subject to such testing.
Repligen will have its product candidates manufactured by third parties who are
able to comply with the good manufacturing requirements of the FDA.
The process of completing clinical testing and obtaining FDA approval
for a new human drug or biologic is likely to take a number of years and require
the expenditure of substantial resources. Even after initial FDA approval has
been obtained, further studies may be required to provide additional data on
safety or to gain approval for the use of a product as a treatment for clinical
indications other than those for which the product was initially tested. Also,
the FDA may require post-marketing testing and surveillance programs to monitor
the drug's efficacy and side effects. Results of these post-marketing programs
may prevent or limit the further marketing of the products. There can be no
assurance that required regulatory approvals for processes or products
containing Company products will be sought or obtained, that significant delays
will not be encountered or that substantial expenses will not be incurred.
Product Liability
The manufacturing, testing and marketing of products entails an inherent
risk of product liability. While the Company has taken and will continue to take
what it believes are adequate precautions, there can be no assurance that it
will avoid significant product liability exposure. The Company maintains limited
product liability insurance. There can be no assurance that adequate insurance
coverage will be available at acceptable costs, if at all, to cover potential
liability claims. An inability to obtain insurance at acceptable costs or to
otherwise protect against potential product liability claims could inhibit or
prevent the commercialization of products developed by the Company. The
obligation to pay any product liability claim or recall could have a material
adverse effect on the business or financial condition of the Company.
Employees
As of June 14, 1996, the Company had 15 employees. Of the 15 employees,
7 were engaged in research and development and 8 in administrative and marketing
functions. Doctoral degrees are held by 5 of the Company's employees.
Cautionary Statement Regarding Forward-Looking Statements
Statements in this Annual Report on Form 10-K under the captions
"Business" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations," as well as oral statements that may be made by the
Company or by officers, directors or employees of the Company acting on the
Company's behalf, that are not historical fact constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that could cause the actual results of the
Company to be materially different from the historical results or from any
results expressed or implied by such forward-looking statements.
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Item 2: DESCRIPTION OF PROPERTY
The Company's principal executive offices, primary research and
production facilities are located at 117 Fourth Avenue in Needham,
Massachusetts. The Company occupies approximately 13,000 square feet of
research, manufacturing and office space in Needham under a four year sublease
from T Cell Sciences, Inc. In May 1996 the Company's lease at One Kendall
Square, Cambridge, Massachusetts expired and the Company terminated all of its
operations at this facility. The 10,500 square feet of laboratory space located
at 83 Rogers Street, Cambridge, Massachusetts has been subleased by the Company
to BIODEVELOPMENT Laboratories, Inc. In conjunction with the acquisition of
Glycan, the Company has assumed a lease for approximately 2,000 square feet of
office and laboratory space at 100 Inman Street, Cambridge, Massachusetts which
terminates on September 30, 1996.
Item 3: LEGAL PROCEEDINGS
Not applicable.
Item 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders of the Company
through solicitation of proxies or otherwise, during the last quarter of the
fiscal year ended March 31, 1996.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the names, ages and positions of the
executive officers of the Company:
<TABLE>
<CAPTION>
Name Age Positions
---- --- ---------
<S> <C> <C>
Walter C. Herlihy 44 President, Chief Executive Officer and Director
James R. Rusche 42 Vice President, Research and Development
Daniel P. Witt 48 Vice President, Business Development
Avery W. Catlin* 48 Vice President, Finance and Chief Financial Officer
</TABLE>
* In April 1996, Mr. Catlin left the Company to pursue other interests.
Walter C. Herlihy, Ph.D. joined the Company in March 1996 as President,
Chief Executive Officer and Director in connection with the Company's merger
with Glycan Pharmaceuticals, Inc. From 1993 to 1996, Dr. Herlihy was the
President and CEO of Glycan. From 1981 to 1993, he held numerous research
positions at Repligen, most recently as Senior Vice President, Research and
Development. Dr. Herlihy holds an A.B. degree in chemistry from Cornell
University and a Ph.D. in chemistry from MIT.
James R. Rusche, Ph.D. joined the Company in March 1996 as Vice
President, Research and Development in connection with the Company's merger
with Glycan Pharmaceuticals, Inc. From 1994 to 1996, Dr. Rusche was a Vice
President, Research and Development of Glycan. From 1985 to 1993, he held
numerous research positions at Repligen, most recently as Vice President,
Discovery Research. Dr. Rusche holds a B.S. degree in microbiology from the
University of Wisconsin, LaCrosse and a Ph.D. in immunology from the University
of Florida.
8
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Daniel P. Witt, Ph.D. joined the Company in March 1996 as Vice President,
Business Development in connection with the Company's merger with Glycan
Pharmaceuticals, Inc. From 1993 to 1996, Dr. Witt was Vice President, Business
Development of Glycan. From 1981 to 1993, he held numerous research positions at
Repligen, most recently as Vice President, Technology Acquisition. Dr. Witt
holds a B.A. degree in chemistry from Gettysberg College and a Ph.D. in
biochemistry from the University of Vermont.
Avery W. Catlin left the Company in April 1996 to pursue other interests.
Prior to leaving, he was Vice President, Finance, Chief Financial Officer,
Secretary and Treasurer of the Company. He joined the Company in June 1992 as
Corporate Controller.
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PART II
Item 5: MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
Market Information
The Company's Common Stock is traded on the Nasdaq National Market
System under the symbol RGEN. The following table sets forth for the periods
indicated the high and low sale prices for the Common Stock as reported by
NASDAQ.
Fiscal 1995: High Low
----------- ---- ---
First Quarter $6.00 $3.25
Second Quarter 4.125 2.125
Third Quarter 3.375 1.625
Fourth Quarter 3.125 1.625
Fiscal 1996:
-----------
First Quarter $3.00 $1.25
Second Quarter 2.125 1.188
Third Quarter 1.938 0.875
Fourth Quarter 1.688 0.938
On June 14, 1996, the reported closing price of the Common Stock as
reported by NASDAQ was $1.125 per share.
Stockholders
As of June 14, 1996, there were approximately 1,092 stockholders of
record of the Company's common stock, excluding stockholders whose shares were
held in nominee name.
Dividends
The Company has not paid any dividends since its inception and does not
intend to pay any dividends on its Common Stock in the foreseeable future.
10
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Item 6: SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
Years Ended March 31,
------------------------------------------------------------------
1996 1995 1994 1993 1992
-------- --------- -------- -------- ---------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Operating Statement Data:
Revenues:
Research and development $ 7,949 $ 10,988 $ 19,392 $ 21,444 $ 6,658
Product 1,874 3,885 4,947 2,113 1,998
Investment and other 1,036 2,069 2,494 3,765 3,003
--------- --------- -------- -------- --------
10,859 16,942 26,833 27,322 11,659
--------- --------- -------- -------- --------
Costs and expenses:
Research and development 12,314 31,012 35,919 30,705 13,741
Cost of goods sold 1,516 1,535 3,933 1,194 865
Selling, general and
administrative 4,925 4,673 6,206 6,710 4,064
Interest 58 372 312 -- --
Restructuring charge 3,567 11,300 -- -- --
Charge for acquired
research and development -- -- -- -- 5,764
--------- --------- -------- -------- --------
22,380 48,892 46,370 38,609 24,434
--------- --------- -------- -------- --------
Net loss $ (11,521) $ (31,950) $(19,537) $(11,287) $(12,775)
========= ========= ========= ========= =========
Net loss per common share $ (0.75) $ (2.08) $ (1.53) $ (0.93) $ (1.14)
========= ========= ======== ======== ========
Weighted average common
shares outstanding 15,370 15,356 12,788 12,085 11,218
========= ========= ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
March 31,
------------------------------------------------------------------
1996 1995 1994 1993 1992
-------- --------- -------- -------- ---------
(In thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:1/
Cash and investments2/ $ 7,222 $ 15,302 $ 29,215 $ 40,090 $ 38,685
Working capital 4,154 9,070 32,517 31,026 34,185
Total assets 9,231 31,330 59,611 63,483 54,191
Long-term debt -- -- -- 4,620 --
Accumulated deficit (123,042) (111,520) (79,570) (60,033) (48,745)
Stockholders' equity 4,809 15,576 46,737 48,877 50,937
</TABLE>
- ----------------
1/ No dividends were declared or paid during any of the periods presented.
2/ Includes long-term investment securities of $4,591,000 and $7,329,000 in
fiscal years 1993 and 1992, respectively.
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Item 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Repligen is a biopharmaceutical company engaged in the research and
development of therapeutic products for human health care. A substantial portion
of the Company's revenues and expenses has been associated with research and
development activities conducted in collaboration with commercial partners and
Repligen Clinical Partners, L.P. (the "Partnership"). In September 1995 and
April 1996, respectively, the Company's arrangements with its primary commercial
partner, Eli Lilly and Company ("Lilly") and the Partnership were terminated.
The Company currently does not have any significant research and development
funding arrangements. The Company also devotes significant resources to the
research and development of proprietary products. In addition, the Company
receives income from its investments and through the sale of products that are
manufactured by the Company. The Company has incurred cumulative operating
losses since its inception in 1981. As of March 31, 1996, its accumulated
deficit was $123,042,000. During fiscal 1996, the Company completed a major
downsizing and restructuring of its activities, including the termination of
certain research programs, which significantly reduced its cash burn rate. These
actions were completed in an effort to stabilize Repligen's financial condition
and preserve its cash resources. As a result of the reduction of operating
expenses and elimination of debt, the Company believes it has adequate cash
reserves at March 31, 1996 to finance its operations at their current levels for
at least the next twenty four months.
Results of operations
Fiscal Year Ended March 31, 1996 Versus Fiscal Year Ended March 31, 1995
Revenues. Total revenues for fiscal 1996 were $10,859,000 as compared to
$16,942,000 in fiscal 1995, a decrease of $6,083,000. Research and development
revenues for fiscal 1996, totaling $7,949,000, decreased by $3,040,000 or 28%
from fiscal 1995 levels. This decrease reflects reduced product development
funding from Lilly with respect to the Company's inflammation inhibition (CD11b)
program and from the Partnership with respect to rPF4, offset in part by a
$2,000,000 fee paid by Genetics Institute, Inc. in September 1995 for the
assignment of intellectual property and the transfer of certain reagents
associated with the Company's immune modulation technology and a $525,000
license fee paid by Genentech, Inc. in December 1995 for the exclusive
sublicense to make and sell antibody fragments, engineered peptides and other
small molecules that bind to CD18 and CD11a. The decrease in funding from Lilly
in fiscal 1996 was due to the termination of the CD11b program. Lilly terminated
its collaboration and licensing agreement with the Company in September 1995,
with respect to the joint development of the CD11b program. Under the terms of
the agreement, the entire CD11b program, including preclinical and clinical data
packages for product candidates m60.1 and h60.1, were returned to the Company.
Revenues recognized under the Lilly agreement totaled $2,613,000 in fiscal 1996.
The decrease in funding from the Partnership reflects a decrease in billings
based on lower levels of research activity and a decrease in the need for
process development and manufacturing activity as both products under
development had entered Phase I/II clinical trials and is also due to lack of
resources of the Partnership, limiting the Partnership's ability to fund the
rPF4 program. Research and development revenues recognized under the rPF4
program totaled $2,693,000 in fiscal 1996.
Product revenues for fiscal 1996 were $1,874,000 compared to $3,885,000
in fiscal 1995. The decrease of $2,011,000 or 52% was due to a reduction in
product sales volume of the Company's rProtein A(TM) and diagnostic reagent
products by $590,000, sales of product to Hoffmann-LaRoche and Abbott
Laboratories totaling $2,049,000 in fiscal 1995 which were not realized in
fiscal 1996, offset in part by the recognition of contract service revenues of
$549,000 generated by the Company.
Investment income decreased by $687,000 from fiscal 1995 levels due
primarily to lower average funds available for investment in fiscal 1996. The
Company expects investment income to continue to decrease due to its current
cash position. Other revenues for the fiscal 1996 period decreased by $346,000
from fiscal 1995 due primarily to a decrease in management fees received from
the Partnership.
12
<PAGE>
Expenses. During fiscal 1996, the Company substantially downsized and
consolidated its operations in order to stabilize the Company's financial
condition and preserve its cash reserves. During the fourth quarter, the Company
recorded a charge of $3,567,000 to cover severance costs and related benefits,
the settlement of equipment and facility lease obligations and the write-off of
certain leasehold improvements and equipment no longer being utilized, reduced
in part by cash received from the sale of assets and the reversal of certain
accruals no longer required due to the downsizing. The total restructuring
charge of $3,567,000 included cash related expenditures of $1,246,000 and a
non-cash charge of $2,321,000. The cash related expenditures consisted of
$333,000 of severance and related benefits for approximately 20 terminated
employees, $1,991,000 of lease settlement payments and $172,000 in legal fees
associated with the restructurings, offset by cash of $1,250,000 received from
the sale of excess equipment. The non-cash charge related to the writeoff of
leasehold improvements and equipment no longer being utilized, offset by the
reversal of accruals no longer required. See Note 2 of Notes to Consolidated
Financial Statements.
Research and development expenses for fiscal 1996, totaling $12,314,000,
decreased by $18,698,000, or 60%, from fiscal 1995 levels. The decrease in
expenses reflects a reduction in research and development headcount and related
expenses, decreased development activities, lower expenditures for clinical
trials and the Company's efforts to reduce costs. The Company expects research
and development expenses to be significantly reduced in 1997 as compared to 1996
due to the restructuring.
Cost of goods sold for fiscal 1996 decreased by $20,000 from the prior
fiscal year. Cost of goods sold in fiscal 1996 were 80% of product revenues
versus 40% of product revenues for fiscal 1995. The increase in this percentage
is the result of a change in product mix between fiscal years and is
attributable to lower margins experienced on contract service revenues in fiscal
1996 and the writeoff of products no longer being sold.
Selling, general and administrative expenses for fiscal 1996, totaling
$4,925,000, increased $251,000 from fiscal 1995 due primarily to increases in
legal expenses and employee retention costs offset in part by a decrease in
administrative personnel and related expenses as part of the Company's cost
reduction efforts. The Company expects administrative expenses to be
significantly reduced in 1997 as compared to 1996 due to the restructuring.
Interest expense for fiscal 1996 reflects interest incurred by the
Company through May 1995 when its term loan with a bank was paid in full and the
decrease from the comparable fiscal 1995 period reflects a full twelve months of
interest incurred in fiscal 1995.
Fiscal Year Ended March 31, 1995 Versus Fiscal Year Ended March 31, 1994
Revenues. Total revenues for fiscal 1995 were $16,942,000 as compared to
$26,833,000 in fiscal 1994, a decrease of $9,891,000. Research and development
revenues for fiscal 1995 decreased by $8,403,000 or 43% from fiscal 1994 levels.
This decrease reflects reduced product development funding from Lilly with
respect to the Company's CD11b program and from the Partnership with respect to
rPF4. The decrease in funding from Lilly in fiscal 1995 was caused by a decrease
in the need for process development, preclinical research and manufacturing
activity as the product under development had entered phase I/II trials.
Revenues recognized under the Lilly agreement totaled $6,262,000 in fiscal 1995.
The decrease in funding from the Partnership reflects a decrease in billings
based on lower levels of research activity and the decision of Repligen
management to fund a greater portion of the program out of its own cash reserves
in order to preserve the funds available of the Partnership. Research and
development revenues recognized under the rPF4 program totaled $4,352,000 in
fiscal 1995. In fiscal 1995, Repligen financed approximately $1,641,000 of the
program with its own funds through absorption of such expenditures.
Product revenues for fiscal 1995 were $3,885,000 compared to $4,947,000
in fiscal 1994. The decrease of $1,062,000 or 21% was due to reductions in
product sales volume and contract manufacturing revenues resulting from a supply
arrangement obtained as part of the Company's acquisition of certain assets from
Abbott Biotech, Inc. in May 1992.
13
<PAGE>
Investment income increased by $44,000 from fiscal 1994 levels due to
higher interest rates, offset in part by lower average funds available for
investment in fiscal 1995. Other revenues for fiscal 1995 decreased by $469,000
from fiscal 1994 due primarily to a decrease in management fees received from
the Partnership.
Expenses. During fiscal 1995, the Company substantially restructured its
operations in an effort to reduce its rate of expenditures and preserve its
available cash and investment balances. In the second quarter, the Company
recorded a charge of $975,000 to cover severance costs and related benefits, as
well as certain rental losses associated with the sublease of certain
facilities. During the fourth quarter of fiscal 1995, the Company recorded a
charge of $10,325,000 to cover severance costs and related benefits, rental
losses associated with the sublease of certain facilities, the write-off of
certain leasehold improvements, equipment and intangible assets which were no
longer utilized and to reserve for future operating lease payments for equipment
which was also no longer utilized. The restructurings were done in order to
reorganize certain business operations and the Company's senior management team
to focus on the clinical development of certain lead product candidates. The
total restructuring charge of $11,300,000 included cash related expenditures of
$6,545,000 and a non-cash charge of $4,755,000. The cash related expenditures
consist of $2,035,000 of severance and related benefits for approximately 140
terminated employees, $3,250,000 of future operating lease payments for assets
no longer being utilized, $940,000 of rental losses associated with the sublease
of surplus lab and office space, and $320,000 of contract termination fees.
Approximately $1,076,000 of these expenses were paid during fiscal 1995 with the
majority of the balance paid during fiscal 1996. The non-cash charge related to
leasehold improvements, equipment and other intangibles no longer being
utilized. See Note 2 of Notes to Consolidated Financial Statements.
Research and development expenses for fiscal 1995 decreased by
$4,907,000, or 14%, from fiscal 1994 levels. The decrease in expenses reflects
decreased development activities, lower expenditures for clinical trials and the
Company's efforts to reduce costs and to focus its resources on the clinical
development of its two lead product candidates.
Cost of goods sold for fiscal 1995 decreased by $2,398,000 from the
prior fiscal year due primarily to decreased contract manufacturing revenues in
fiscal 1995. Cost of goods sold in fiscal 1995 were 40% of product revenues
versus 79% of product revenues for fiscal 1994. The decrease in this percentage
is the result of a change in product mix between fiscal years and is
attributable to higher margins experienced on contract manufactured products
shipped in fiscal 1995 which had been partly reserved in fiscal 1994 due to
uncertainty in future shipments.
Selling, general and administrative expenses for fiscal 1995 decreased
$1,533,000 from fiscal 1994 due primarily to decreases in administrative
personnel and related expenses as part of the Company's cost reduction efforts.
Interest expense for fiscal 1995 reflects interest incurred by the Company on
its term loan with a bank and the increase from the comparable fiscal 1994
period reflects increased interest rates.
Capital Resources and Liquidity
The Company's total cash, cash equivalents and marketable securities
decreased to $7,222,000 at March 31, 1996 from $15,302,000 at March 31, 1995.
This decrease is due in part to net losses during the period of $11,522,000,
reductions in payables and accruals of $6,664,000 and the payment of a term loan
payable to a bank of $4,620,000, offset primarily from noncash related charges
of $3,759,000 for depreciation and amortization and restructuring related
charges, reductions in receivables and the collection of amounts due from the
Partnership totaling $6,806,000, a reduction in prepaid expenses of $851,000 and
a reduction in other assets of $1,400,000. Working capital decreased to
$4,153,563 at March 31, 1996 from $9,070,000 at March 31, 1995.
The Company has funded operations primarily with cash derived from sales
of its equity securities, research and development contracts, product sales,
investment income, proceeds from a term loan with a bank, the sale of the
Company's share of a joint venture and leasing of certain equipment. In May
1992, the Company entered into a research and development agreement with Lilly
which provided $2,613,000, $6,262,000 and
14
<PAGE>
$7,790,000 in research funding in fiscal 1996, 1995 and 1994, respectively.
In September 1995, Lilly terminated its collaboration and licensing agreement
with the Company with respect to the joint development of the CD11b Program and
the rights to the Program were returned to Repligen.
The Company has received research and development funding from the
Partnership pursuant to the Product Development Agreement. The Company
recognized $2,693,000, $4,352,000 and $10,762,000 of such funding as revenue in
fiscal 1996, 1995 and 1994, respectively. In April 1996, the Company announced
the termination of the Product Development Agreement and the Purchase Agreement
with the Partnership. Under the terms of the various agreements between the
parties, the rights to the rPF4 technologies remain with the Partnership.
In September 1995, Genetics Institute, Inc. paid a $2,000,000 fee for
the assignment of intellectual property and the transfer of certain reagents
associated with the Company's immune modulation technology. Genetics Institute
has exclusive rights to commercialize any protein-based drugs that originate
from this technology with the exception of CTLA4-IgG, for which the Company
retains its rights, and to develop small molecule drugs based on this
technology. The Company retained the rights to independently commercialize small
molecule-based drugs in the therapeutic area. In December 1995, Genentech, Inc.
paid a $525,000 license fee for the exclusive sublicense to make, use and sell
antibody fragments, engineered polypeptides and other small molecules that bind
to CD18 and CD11a.
At March 31, 1996, the Company was in default under a facility lease and
three equipment lease agreements. Subsequent to year end, under the terms of
negotiated settlement arrangements, the Company paid approximately $300,000 and
$3,000,000 in settlement fees to the facility landlord and equipment lessors,
respectively. The settlement fees with respect to the operating equipment lease
agreements represent discounted remaining lease obligations and the purchase
price of certain leased equipment from the equipment lessors. In May 1996, a
substantial amount of this equipment originally on lease as well as certain
surplus Company owned equipment was sold at pubic auction for approximately
$1,250,000, net of selling expenses. The obligation for the settlement payments
to the lessors and landlord, net of funds received from the sale of equipment,
has been reflected in the restructuring accrual at March 31, 1996.
In March 1993, the Company entered into an unsecured term loan agreement
with a bank whereby the bank loaned the Company $4,620,000 at such bank's base
rate plus one-half of one percent. The loan matured in March 1995 and was
subsequently paid in full.
Capital expenditures for fiscal 1996 and 1995 were $643,000 and
$556,000, respectively. The capital expenditures in fiscal 1996 and 1995
primarily reflect the purchase of research, development and manufacturing
equipment.
15
<PAGE>
Item 8: FINANCIAL STATEMENTS
REPLIGEN CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Public Accountants 17
Consolidated Financial Statements:
Consolidated Balance Sheets at March 31, 1996 and 1995 18
Consolidated Statements of Operations for Years
Ended March 31, 1996, 1995 and 1994 19
Consolidated Statements of Stockholders' Equity for Years
Ended March 31, 1996, 1995 and 1994 20
Consolidated Statements of Cash Flows for Years
Ended March 31, 1996, 1995 and 1994 21
Notes to Consolidated Financial Statements 22
16
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Repligen Corporation:
We have audited the accompanying consolidated balance sheets of Repligen
Corporation (a Delaware corporation) and subsidiaries as of March 31, 1996 and
1995, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended March 31,
1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Repligen Corporation
and subsidiaries as of March 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
March 31, 1996, in conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
May 8, 1996 (except with respect
to the matters discussed in Notes
2 and 10 as to which the date
is May 30, 1996)
17
<PAGE>
REPLIGEN CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
-----------------------------------
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $6,944,140 $ 13,821,387
Marketable securities 278,115 1,480,712
Accounts receivable, less reserves
of $152,000 and $300,000, respectively 421,254 1,686,902
Amounts due from affiliate 42,284 962,361
Inventories 701,224 1,213,379
Note receivable from affiliate -- 4,620,000
Prepaid expenses and other current assets 188,554 1,039,197
----------- ------------
Total current assets 8,575,571 24,823,938
Property, plant and equipment, at cost:
Equipment 688,091 7,625,094
Furniture and fixtures 20,422 869,590
Leasehold improvements 2,000 11,801,854
----------- ------------
710,513 20,296,538
Less -- accumulated depreciation and amortization 176,946 15,312,326
----------- ------------
533,567 4,984,212
Restricted cash -- 1,000,000
Other assets, net 121,389 521,803
----------- ------------
$ 9,230,527 $ 31,329,953
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 546,129 $ 1,221,277
Accrued expenses and other 3,720,881 9,709,292
Unearned income 154,998 203,000
Term loan payable to a bank -- 4,620,000
----------- ------------
Total current liabilities 4,422,008 15,753,569
Commitments and contingencies (Notes 2, 10 and 12)
Stockholders' equity:
Preferred stock, $.01 par value -- authorized --
5,000,000 shares -- outstanding -- none -- --
Common stock, $.01 par value -- authorized --
30,000,000 shares -- outstanding -- 15,602,542
shares and 15,357,030 shares
at March 31, 1996 and 1995, respectively 156,025 153,570
Additional paid-in capital 127,694,145 126,942,925
Accumulated deficit (123,041,651) (111,520,111)
------------ -----------
Total stockholders' equity 4,808,519 15,576,384
------------ -----------
$ 9,230,527 $31,329,953
============ ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
18
<PAGE>
REPLIGEN CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended March 31,
----------------------------------------------
1996 1995 1994
------------ ----------- -----------
<S> <C> <C> <C>
Revenues:
Research and development $5,424,304 $10,988,567 $19,391,977
Sale of intellectual property rights 2,525,000 -- --
Product 1,873,687 3,884,642 4,946,893
Investment income 737,536 1,424,558 1,380,672
Other 298,350 644,548 1,113,152
------------ ------------ ------------
10,858,877 16,942,315 26,832,694
------------ ------------ ------------
Costs and expenses:
Research and development 12,314,385 31,011,893 35,918,605
Selling, general and administrative 4,925,345 4,673,580 6,206,511
Cost of goods sold 1,515,637 1,535,026 3,932,732
Interest 58,050 372,133 312,007
Restructuring charge 3,567,000 11,300,000 --
------------ ------------ ------------
22,380,417 48,892,632 46,369,855
------------ ------------ ------------
Net loss $(11,521,540) $(31,950,317) $(19,537,161)
============ ============ ============
Net loss per common share $ (0.75) $ (2.08) $ (1.53)
========= ========= ========
Weighted average common
shares outstanding 15,370,252 15,356,136 12,788,406
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
19
<PAGE>
REPLIGEN CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock
------------------------
Number of Additional Accumulated
Shares Par Value Paid-in Capital Deficit
---------- --------- --------------- --------------
<S> <C> <C> <C> <C>
Balance, March 31, 1993 12,400,075 $124,001 $108,785,421 $(60,032,633)
Net loss -- -- -- (19,537,161)
Exercise of stock options 27,600 276 138,714 --
Sale of common stock, net of issuance costs
of $302,034 and underwriters'
commissions 2,875,000 28,750 15,884,216 --
Issuance of warrants in connection with
Repligen Clinical Partners, L.P. -- -- 1,345,136 --
---------- -------- ------------ -------------
Balance, March 31, 1994 15,302,675 153,027 126,153,487 (79,569,794)
Net loss -- -- -- (31,950,317)
Contribution of common stock to ESOP 54,355 543 373,140 --
Issuance of warrants in connection with
Repligen Clinical Partners, L.P., net of
exchange warrants costs of $733,613 -- -- 416,298 --
---------- -------- ------------ -------------
Balance, March 31, 1995 15,357,030 153,570 126,942,925 (111,520,111)
Net loss -- -- -- (11,521,540)
Issuance of common stock in connection
with the acquisition of Glycan
Pharmaceutical, Inc. 243,600 2,436 332,514 --
Exercise of stock options 1,912 19 2,978 --
Issuance of warrants in connection with
Repligen Clinical Partners, L.P. -- -- 415,728 --
---------- -------- ------------ -------------
Balance, March 31, 1996 15,602,542 $156,025 $127,694,145 $(123,041,651)
=========== ======== ============ =============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
20
<PAGE>
REPLIGEN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended March 31,
-------------------------------------------------
1996 1995 1994
------------- ------------ -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(11,521,540) $(31,950,317) $(19,537,161)
Adjustments to reconcile net loss to net cash
used in operating activities --
Depreciation and amortization 1,438,356 2,602,182 2,362,587
Contribution of common stock to ESOP -- 373,683 --
Equity in net loss of an affiliate 20,504 65,766 138,709
Research and development charge associated with
the acquisition of Glycan Pharmaceuticals, Inc. 333,811 -- --
Restructuring charge associated with the
write-off of leasehold improvements,
equipment and other intangibles 2,321,000 4,754,593 --
Changes in assets and liabilities, net of
acquisition of Glycan Pharmaceuticals, Inc.
Accounts receivable 1,279,915 939,146 (1,510,362)
Amounts due from affiliates 920,077 4,955,143 (4,845,753)
Inventories 512,155 96,956 601,088
Prepaid expenses and other current assets 866,212 663,413 (286,918)
Accounts payable (678,022) (804,581) (2,024,345)
Accrued expenses and other (4,592,680) 4,483,274 745,825
Unearned income (203,000) (799,740) (453,432)
------------ ------------ ------------
Net cash used in operating activities (9,303,212) (14,620,482) (24,809,762)
------------ ------------ ------------
Cash flows from investing activities:
Decrease in marketable securities 1,202,597 79,680 3,382,349
Decrease in investment securities -- -- 4,591,063
Acquisition of Glycan Pharmaceuticals, Inc. (144,836) -- --
Purchases of property, plant and equipment, net (463,378) (556,174) (3,804,404)
Decrease in restricted cash 1,000,000 -- --
Proceeds from a note receivable from affiliate 4,620,000 -- --
Decrease (increase) in other assets 412,857 484,091 (199,633)
------------ ------------ ------------
Net cash provided by
investing activities 6,627,240 7,597 3,969,375
------------ ------------ ------------
Cash flows from financing activities:
Proceeds from sales of common stock and issuance of
warrants, net of issuance costs and commissions 418,725 416,298 16,812,092
Payment of term loan to a bank (4,620,000) -- --
Proceeds from leasing transactions -- 362,913 1,126,951
------------ ------------ -----------
Net cash (used in) provided by
financing activities (4,201,275) 779,211 17,939,043
------------ ------------ -----------
Net decrease in cash and cash equivalents (6,877,247) (13,833,674) (2,901,344)
Cash and cash equivalents, beginning of year 13,821,387 27,655,061 30,556,405
------------- ------------ ------------
Cash and cash equivalents, end of year $ 6,944,140 $ 13,821,387 $ 27,655,061
============ ============ ============
Supplemental disclosure of cash flow information:
Cash paid for interest $ 58,050 $ 372,133 $ 312,007
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
21
<PAGE>
REPLIGEN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Operations
Repligen Corporation (the "Company") is a biopharmaceutical company
engaged in the research and development of therapeutic products for human health
care. The Company's research and development programs are primarily focused on
the development of new therapies for chronic and acute inflammation and
immunosuppression and the development of enabling technologies for discovery of
new drugs by rapid screening of combinatorial chemical libraries.
The Company has incurred significant operating losses since inception
and has undergone significant restructuring of its operations in fiscal 1996 and
1995 (see Note 2). During fiscal 1996, the Company completed a major downsizing
and consolidation of its activities, including the termination of certain
research programs, in an effort to stabilize its financial condition and to
preserve its cash resources. The Company has completed the restructurings and
has consolidated its 15 employees into a new facility.
On March 14, 1996, the Company issued 243,600 shares of its common stock
for all of the common stock of Glycan Pharmaceuticals, Inc. ("Glycan"). The
acquisition was accounted for as a purchase, with the excess of the purchase
price and acquisition costs over the fair value of the assets acquired charged
to operations of approximately $334,000 as the cost of acquired research and
development. The Company acquired assets having a fair value of approximately
$296,000, consisting primarily of cash and equipment, and assumed liabilities of
approximately $295,000. Results of operations for Glycan are included in the
consolidated financial statements of the Company subsequent to March 14, 1996.
Unaudited pro forma information with respect to Glycan's pre-acquisition
operating results has not been presented as it is not material.
2. Restructuring of Operations
During fiscal 1996, the Company completed a major downsizing and
consolidation of its operations in an effort to stabilize its financial
condition and preserve its cash resources. The restructuring included a
substantial reduction in the Company's work force, the termination of several
research programs and the closing of its Cambridge research and manufacturing
facility. During the fourth quarter of fiscal 1996, the Company recorded a
charge of $3,567,000 to cover severance costs and related benefits, the
settlement of operating equipment lease and facility lease obligations, the
write-off of certain leasehold improvements and equipment no longer being
utilized, reduced in part by cash received from the sale of assets and the
reversal of certain accruals no longer required.
From October 1992 through March 1995, the Company entered into three
operating equipment lease arrangements involving the sale and leaseback of
certain equipment at its Cambridge and Needham facilities. At March 31, 1996,
the Company was in default under a facility lease and these operating equipment
leases. Subsequent to year end, under the terms of negotiated settlement
arrangements, the Company paid approximately $300,000 and $3,000,000 in
settlement fees to the facility landlord and equipment lessors, respectively.
The settlement fees with respect to the operating equipment lease agreements
represent discounted remaining lease obligations and the purchase price of
certain leased equipment from the equipment lessors. In May 1996, a substantial
amount of this equipment originally on lease as well as certain surplus Company
owned equipment was sold at public auction for approximately $1,250,000, net of
selling expenses. The obligation for the settlement payments to the lessors and
the landlord, net of funds received from the sale of equipment, has been
reflected in the restructuring accrual at March 31, 1996.
During fiscal 1995, the Company also substantially restructured its
operations in an effort to reduce its rate of expenditures and preserve its
available cash and investment balances. In the second quarter of fiscal 1995,
the Company recorded a charge of $975,000 to cover severance costs and related
benefits, as well as certain rental losses associated with the sublease of
certain facilities. During the fourth quarter of fiscal 1995,
22
<PAGE>
the Company recorded a charge of $10,325,000 to cover severance costs and
related benefits, certain rental losses associated with the sublease of certain
facilities, the write-off of certain leasehold improvements, equipment and other
intangible assets that were no longer utilized and to reserve for future
operating lease payments for equipment that was longer utilized. The
restructurings in fiscal 1995 were done in order to reorganize certain business
operations and the senior management team to focus on the clinical development
of certain lead product candidates. The details of the total restructuring
charges for both fiscal years are as follows:
<TABLE>
<CAPTION>
Amounts (in 000s) 1996 1995
- ----------------- ----- -------
<S> <C> <C>
Severance and related benefits for terminated employees $ 333 $ 2,035
Reserve for future operating lease payments
for assets no longer being utilized 1,991 3,250
Reserve for rental losses associated with
the sublease of surplus lab and office space -- 940
Contract termination fees -- 320
Legal fees 172 --
Less -- cash received from the sale of surplus
equipment (1,250) --
------ -------
Cash related expenditures 1,246 6,545
Write-off of leasehold improvements, equipment
and other intangibles no longer being utilized 3,854 4,755
Less -- reversal of accruals no longer required due to
changes in operations (1,533) --
------ -------
Non-cash related expenditures 2,321 4,755
------ -------
$3,567 $11,300
====== =======
</TABLE>
The accrued restructuring activity for fiscal 1996 is as follows:
<TABLE>
<S> <C> <C>
Balance, beginning of year $5,490,000 $ --
Payments (4,321,000) (1,076,000)
Provision 2,496,000 6,545,000
Write-off of leasehold improvements, equipment
and other intangibles no longer being utilized,
net of auction proceeds (2,604,000) --
Less -- reversal of accruals no longer required
due to changes in operations 1,533,000 --
---------- -----------
Balance, end of year $2,594,000 $ 5,467,000
========== ===========
</TABLE>
3. Significant Accounting Policies
The accompanying consolidated financial statements reflect the
application of certain accounting policies described in this note and elsewhere
in the accompanying notes to consolidated financial statements.
0
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the
23
<PAGE>
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All material intercompany accounts
and transactions have been eliminated in consolidation.
Revenue Recognition
Substantially all of the Company's research and development revenues are
derived from collaborative arrangements. Research and development revenue is
recognized as earned under cost plus fixed-fee contracts, or on a straight-line
basis over the development contract, which approximates when work is performed
and costs are incurred. In addition, under certain contracts, the Company
recognizes research and development revenues as milestones are achieved.
Unearned income represents amounts received prior to recognition of revenue.
Research and development expenses in the accompanying consolidated statements of
operations include funded and unfunded expenses. See Note 12 for a discussion of
research and development agreements.
During 1996, the Company recognized $2 million of revenue related to the
sale of patent rights of its immune modulation technology and $525,000 for the
sale of certain sublicenses related to CD18 and CD11a rights as part of the
restructuring of operations.
The Company recognizes revenue related to product sales upon shipment of
the product.
Other revenue includes the management fee received from Repligen
Clinical Partners, L.P. The management fee revenue is recognized as earned (see
Note 12).
Depreciation and Amortization
The Company provides for depreciation and amortization by charges to
operations in amounts estimated to allocate the cost of fixed assets over their
estimated useful lives, on a straight-line basis, as follows:
Description Life
- ----------- ----
Equipment 5 years
Furniture and fixtures 5-7 years
Leasehold improvements Shorter of term of the lease or
estimated useful life
Marketable Securities
The Company adopted Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" ("SFAS No.
115"), effective March 31, 1994. Under SFAS No. 115, securities that the Company
has the positive intent and ability to hold to maturity are classified as
"held-to-maturity." These securities include cash, cash equivalents and
corporate bonds with maturities of less than one year. The held-to-maturity
securities are reported at amortized cost, which approximates fair market value
at March 31, 1996 and 1995. Securities purchased to be held for indefinite
periods of time, and not intended at the time of purchase to be held until
maturity, are classified as "available-for-sale" securities. These securities
consist of collateralized mortgage obligations with average maturities in excess
of 10 years. The Company also carries these investments at amortized cost, which
approximates fair market value at March 31, 1996 and 1995. The estimated fair
market value of marketable securities is based primarily on market quotations.
Net Loss Per Common Share
Primary net loss per common share has been computed by dividing net loss
by the weighted average number of shares outstanding during the period. Common
stock equivalents have not been included for any
24
<PAGE>
period, as the amounts would be antidilutive. Fully diluted net loss per
common share has not been presented for any period, as the amounts would not
differ from primary net loss per common share.
Post-retirement Benefits
The Company has no obligation for post-retirement benefits.
Financial Instruments
SFAS No. 107, "Disclosure About Fair Value of Financial Instruments",
requires disclosure about fair value of financial instruments. Financial
instruments consist of cash equivalents, marketable securities and accounts
receivable. The estimated fair value of these financial instruments approximates
their carrying value.
4. Cash Equivalents and Marketable Securities
The Company considers all highly liquid investments with original
maturities of three months or less at the time of acquisition to be cash
equivalents. Included in cash equivalents at March 31, 1996 are approximately
$5,498,000 of money market funds and $1,300,000 of commercial paper. Cash
equivalents at March 31, 1995 include $10,821,000 of money market funds and
$3,000,000 of bank time deposits. Investments with a maturity period of greater
than three months are classified as marketable securities and consist of
approximately $278,000 of collateralized mortgage obligations at March 31, 1996
and $984,000 of corporate bonds and $497,000 of collateralized mortgage
obligations at March 31, 1995.
5. Inventories
Inventories are stated at the lower of cost (first-in, first-out) or
market and consist of the following:
March 31,
-----------------------
1996 1995
-------- ----------
Raw materials and work-in-process $ 1,955 $ 240,044
Finished goods 699,269 973,335
-------- ----------
Total $701,224 $1,213,379
======== ==========
Work-in-process and finished goods inventories consist of material,
labor and manufacturing overhead.
6. Accrued Expenses and Other
Accrued expenses and other consisted of the following:
March 31,
-----------------------
1996 1995
-------- ----------
Restructuring charges $ 2,594,478 $ 5,468,656
Payroll and payroll-related costs 78,958 1,709,831
Professional and consulting fees 677,818 1,607,047
Other accrued expenses 369,627 923,758
----------- ------------
Total $ 3,720,881 $ 9,709,292
=========== ============
25
<PAGE>
7. Income Taxes
The Company accounts for income taxes under SFAS No. 109, "Accounting
for Income Taxes." At March 31, 1996, the Company had net operating loss
carryforwards for income tax purposes of approximately $83,700,000. The Company
also had available tax credit carryforwards of approximately $4,846,000 at March
31, 1996 to reduce future federal income taxes, if any. Net operating loss
carryforwards and available tax credits are subject to review and possible
adjustment by the Internal Revenue Service and may be limited in the event of
certain changes in the ownership interest of significant stockholders.
The net operating loss carryforwards and tax credit carryforwards expire
approximately as follows:
Net Operating Tax Credit
Expiration Date Loss Carryforwards Carryforwards
- --------------- ------------------ -------------
1997 $ 200,000 $ 17,000
1998 300,000 11,000
1999 400,000 32,000
2000 1,000,000 104,000
2001 1,300,000 109,000
2002-2011 80,500,000 4,573,000
----------- ----------
Total $83,700,000 $4,846,000
=========== ==========
The components of the deferred tax amounts, carryforwards and the
valuation allowance are approximately as follows:
March 31,
-----------------------
1996 1995
-------- ----------
Temporary differences $ 6,000,000 $10,100,000
Operating loss carryforwards 33,500,000 28,800,000
Tax credit carryforwards 4,900,000 4,900,000
----------- ------------
44,400,000 43,800,000
Valuation allowance (44,400,000) (43,800,000)
----------- ------------
$ -- $ --
=========== ============
A valuation allowance has been provided, as it is uncertain if the
Company will realize the deferred tax asset. The increase in the valuation
allowance during the year ended March 31, 1996 was primarily the result of the
current year operations.
8. Term Loan
In March 1993, the Company entered into an unsecured term loan agreement
with a bank whereby the bank loaned the Company $4,620,000. The loan was paid in
full in May 1995.
9. Common Stock
At March 31, 1996, common stock reserved for issuance was as follows:
Reserved for Shares
------------ ---------
Incentive and nonqualified stock option plans 3,356,351
Warrants granted in connection with the Repligen
Clinical Partners, L.P. offering (see Note 12) 2,158,950
Warrants assumed in connection with the Glycan acquisition 21,000
---------
5,536,301
=========
26
<PAGE>
10. Commitments
In May 1996, the Company terminated its leases at its former corporate
headquarters in Cambridge, Massachusetts and moved its primary operations to a
13,000 square foot facility in Needham, Massachusetts, which it leases under a
four year sublease agreement with T Cell Sciences, Inc. In connection with the
acquisition of Glycan, the Company assumed a lease for approximately 2,000
square feet of laboratory space at 100 Inman Street, Cambridge, Massachusetts,
which terminates September 30, 1996.
Obligations under these noncancellable operating leases as of March 31,
1996, exclusive of those accrued as part of the restructuring charge discussed
in Note 2, are approximately as follows:
Year ending March 31,
1997 $532,000
1998 110,000
1999 110,000
2000 110,000
2001 9,000
--------
Total minimum lease payments $871,000
========
Rent expense charged to operations under operating leases was
approximately $2,932,000, $5,926,000 and $6,091,000 for the years ended March
31, 1996, 1995 and 1994, respectively.
11. Employee Stock Ownership and Stock Option Plans
The Company maintains a qualified employee stock ownership plan ("ESOP")
with a plan year ending on December 31. Under the plan, contributions by the
Company may be in the form of cash, capital stock or other property and are
allocated to eligible employees based on each participant's relative
compensation. Individual benefits vest at a rate of 20% each year after one year
of service. For the plan year ended December 31, 1993, the Company contributed,
in April 1994, approximately $374,000 in shares of its common stock, as valued
on the date of contribution. The Company elected not to make contributions for
the December 31, 1994 and 1995 plan years. At March 31, 1996, no amount has been
accrued for the December 31, 1996 plan year contribution.
During fiscal 1993, the Company adopted the 1992 Repligen Corporation
Stock Option Plan (the "1992 Plan"). The 1992 Plan authorizes the grant of
either incentive stock options or nonqualified stock options to employees for
the purchase of the Company's common stock at a price not less than the fair
market value at the date of grant and also allows for the grant of nonqualified
stock options to other participants. The 1992 Plan allows for the grant of up to
2,000,000 shares of the Company's common stock plus any shares previously
authorized but unused under the Company's previous plans. The options generally
vest over five years and expire no more than 10 years from the date of grant. At
March 31, 1996, the Company had 2,403,305 options available for grant under the
1992 Plan. Options previously issued and outstanding under the 1982 Incentive
Stock Option and 1987 Non-Statutory Stock Option plans generally vest over a
five-year period.
27
<PAGE>
A summary of stock option activity under all plans is as follows:
<TABLE>
<CAPTION>
Years Ended March 31,
------------------------------------------------------------------------------------
1996 1995 1994
---- ---- ----
Option Option Option
No. of Price No. of Price No. of Price
Shares Per Share Shares Per Share Shares Per Share
---------- ----------- ----------- ----------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning of
period 1,291,730 $0.05-19.25 2,045,905 $0.05-19.25 1,971,191 $0.05-19.25
Granted 454,550 1.25-2.44 1,524,056 2.06-5.25 382,775 6.43-8.47
Exercised (1,912) 1.57 -- -- (27,600) 0.79-8.00
Forfeited (791,322) 1.50-19.25 (2,278,231) 2.59-19.25 (280,461) 1.90-19.25
--------- ---------- ----------- ---------- --------- ----------
Outstanding at
end of period 953,046 $0.05-19.25 1,291,730 $0.05-19.25 2,045,905 $0.05-19.25
======= =========== ========= =========== ========= ===========
Exercisable at
end of period 343,129 $0.05-19.25 137,395 $0.05-19.25 891,383 $0.05-19.25
======= =========== ========= =========== ========= ===========
</TABLE>
In August 1994, the Board of Directors authorized the issuance of new
stock options to employees who voluntarily terminated their existing outstanding
stock options. New options were issued which covered either 72.5% or 85% of the
original amount of those previously outstanding options priced above market
value for an aggregate 872,721 new options granted. Such new options were
granted at an exercise price of $2.75 per share and vest over a three year
period.
In connection with the acquisition of Glycan, the Company granted to the
three officers of Glycan options to purchase an aggregate 220,000 shares of the
Company's common stock at $1.25 (the fair market value at that date).
12. Research and Development Agreements and Significant Customers
Revenues received from related parties and other significant customers
are approximately as follows:
Years Ended March 31,
----------------------------------------
1996 1995 1994
---------- ---------- -----------
Eli Lilly and Company $2,613,000 $6,262,000 $ 7,790,000
Repligen Clinical Partners, L.P. 2,693,000 4,902,000 11,973,000
Hoffmann-LaRoche, Inc. -- 1,300,000 3,034,000
Genetics Institute, Inc. 2,000,000 -- --
Eli Lilly and Company
In May 1992, the Company entered into a Research, Collaboration and
License Agreement with Eli Lilly and Company ("Lilly"), whereby the Company
granted Lilly an exclusive license to make, use and sell products utilizing
antibodies, antibody fragments and engineered polypeptides that bind to CD11b
(the "Products"). Under the terms of the agreement, Lilly paid the Company
$3,250,000 for past research and development and $500,000 for the grant of the
license, both of which are included in research and development revenues for the
year ended March 31, 1993. In addition, the Company recognized revenues of
approximately $2,613,000, $6,262,000 and $7,790,000 for research and development
performed in fiscal 1996, 1995 and 1994, respectively. In September 1995, Lilly
terminated its collaboration and licensing agreement with the Company with
respect to the joint development of the CD11b Program and the rights to the
Program were returned to Repligen.
28
<PAGE>
Repligen Clinical Partners, L.P.
In February 1992, Repligen Clinical Partners, L.P. (the "Partnership")
completed a private placement of 900 limited partnership units, with net
proceeds of approximately $40,300,000 in cash and notes receivable, to be
received by the Partnership over a three-year period. In connection with the
formation of the Partnership, the Company granted to the Partnership an
exclusive license to all technology and know-how related to the manufacture, use
and sale of recombinant platelet factor-4 ("rPF4") in the United States, Canada
and Europe. A wholly owned subsidiary of the Company is the General Partner of
the Partnership.
In April 1996, the Company terminated its arrangements with the
Partnership regarding the development and marketing of the rPF4 program. Under
the terms of the various agreements between the parties, the rights to the rPF4
technologies remain with the Partnership. The Company will assist the
Partnership in exploring alternatives to maximize the value of the rPF4 program
for the benefit of the Partnership.
The Partnership's primary source of funding and capital resources has
been the capital contributions made by the Limited Partners and General Partner,
which totaled approximately $40,582,000 through March 31, 1996. During fiscal
1996 and 1995, the Partnership wrote off approximately $1,637,000 and
$3,325,000, respectively, of notes receivable relating to limited partnership
units which were foreclosed on for failure to pay their installments.
As of March 31, 1996 and 1995, the Partnership owed the Company
approximately $42,000 and $962,000, respectively, for amounts due under the
Product Development Agreement and interest relating to the note payable. In
addition, at March 31, 1995, the Partnership owed Repligen a note payable of
$4,620,000 which was the result of a loan from the Company to the Partnership to
fund certain organization and syndication costs. In May 1995, the note payable
and related interest due was paid in full by the Partnership.
The Company has received research and development funding from the
Partnership pursuant to the Product Development Agreement. The Company
recognized $2,693,000, $4,352,000 and $10,762,000 of such funding as revenue in
fiscal 1996, 1995 and 1994, respectively. During fiscal 1995, the Company
incurred an additional $1,641,000 of research and development costs which could
have been charged to the Partnership, but which was absorbed by the Company in
an effort to preserve the funds of the Partnership. Included in other revenues
for the years ended March 31, 1996, 1995 and 1994 are approximately $311,000,
$550,000 and $1,211,000, respectively, representing the 10% management fee under
the Product Development Agreement. Profits and losses are allocated 1% to the
General Partner and 99% to the Limited Partners. The Company accounts for its
investment on the equity method and has recorded losses of approximately
$21,000, $66,000 and $139,000 as its share of the losses from the Partnership in
the accompanying consolidated statements of operations for the years ended March
31, 1996, 1995 and 1994, respectively.
In connection with the initial capitalization of the Partnership, the
Company issued warrants to purchase common stock of Repligen to the limited
partners of the Partnership (the "Original Warrants"). In June 1994, the Company
completed an exchange pursuant to which a majority of the holders of the
Original Warrants exchanged their Original Warrants for new warrants (the
"Exchange Warrants"). Subsequently, in March 1995, the Company offered to modify
a majority of the remaining Original Warrants and the Exchange Warrants. Each
warrant holder of an outstanding warrant who was not then in default of its
obligations to the Partnership was free to accept or reject such modifications.
As of March 31, 1996, 623 1/2 of the 712 nondefaulted limited partnership units
had accepted the modifications. Accordingly, as of that date, there were issued
and outstanding Original Warrants to purchase 75,400 shares of the Company's
common stock, modified Original Warrants to purchase 163,850 shares of the
Company's common stock, Exchange Warrants to purchase 197,200 shares of the
Company's common stock and modified Exchange Warrants to purchase 1,722,500
shares of the Company's common stock.
29
<PAGE>
Item 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not applicable.
PART III
Item 10-13: INFORMATION WITH RESPECT TO DIRECTORS AND EXECUTIVE OFFICERS
The information required for Part III of this Annual Report on Form 10-K
is hereby incorporated by reference from the Company's definitive proxy
statement relating to the annual meeting of stockholders of the Company
scheduled to be held on September 10, 1996, which statement is to be filed with
the Securities and Exchange Commission. Such information will be contained in
the sections of such proxy statement captioned "Election of Directors",
"Information with Respect to the Board of Directors and Committees", "Stock
Ownership of Principal Stockholders and Management", "Summary of Executive
Compensation" and "Compensation Committee Report to Stockholders." Information
regarding executive officers of the Company is also furnished in Part I of this
Annual Report on Form 10-K, "Executive Officers of the Registrant." See Cross
Reference Sheet for Part III.
30
<PAGE>
PART IV
Item 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
Item 14(a) The following documents are filed as part of this Annual Report
on Form 10-K:
Item 14(a)(1) Financial Statements: See "Index to Consolidated Financial
Statement" in Item 8.
Item 14(a)(2) Financial Statement Schedules:
1. Schedule II - Valuation and Qualifying Accounts
Other financial statement schedules have not been included because they
are not applicable or the information is included in financial statements or
notes thereto.
Item 14(a)(3) Exhibits.
The following is a list of exhibits filed as part of this Annual Report
on Form 10-K:
3. Articles of Incorporation and By-laws
3.1 -- Restated Certificate of Incorporation, dated June
30, 1992 and filed July 13, 1992 (filed as Exhibit
4.12 to Repligen Corporation's Annual Report on Form
10-K for the year ended March 31, 1993 and
incorporated herein by reference).
3.2 -- By-laws (filed as Exhibit 3.4 to Repligen
Corporation's Form S-1 Registration Statement
No. 33-3959 and incorporated herein by reference).
4. Instruments Defining the Rights of Security Holders
4.2 -- Specimen Stock Certificate (filed as Exhibit 4.2 to
Repligen Corporation's Form S-1 Registration
Statement No. 33-3959 and incorporated herein by
reference).
4.8 -- Form of Limited Partner Warrant, dated as of
February 28, 1992 (filed as Exhibit 4.9 to Repligen
Corporation's Annual Report on Form 10-K for the year
ended March 31, 1992 and incorporated herein by
reference).
4.9 -- Form of Class B Limited Partner Warrant, dated as
of February 28, 1992 (filed as Exhibit 4.10 to
Repligen Corporation's Annual Report on Form 10-K for
the year ended March 31, 1992 and incorporated herein
by reference).
4.10 -- Form of Incentive Warrant, dated as of February 28,
1992 (filed as Exhibit 4.11 to Repligen Corporation's
Annual Report on Form 10-K for the year ended March
31, 1992 and incorporated herein by reference).
4.11 -- Form of Fund Warrant, dated as of February 28, 1992
(filed as Exhibit 4.12 to Repligen Corporation's
Annual Report on Form 10-K for the year ended March
31, 1992 and incorporated herein by reference).
4.12 -- The 1992 Repligen Corporation Stock Option Plan
(filed as Exhibit 4.12 to Repligen Corporation's
Annual Report on Form 10-K for the year ended March
31, 1993 and incorporated herein by reference).
31
<PAGE>
10. Material Contracts
10.1 -- License Agreement, dated December 2, 1980, between
the Trustees of Leland Stanford Junior University and
Repligen Corporation (filed as Exhibit 10.1 to
Repligen Corporation's Form S-1 Registration Statement
No. 33-3959 and incorporated herein by reference).
10.5 -- Consulting Agreement, dated October 1, 1981, between
Dr. Paul Schimmel and Repligen Corporation (filed as
Exhibit 10.14 to Repligen Corporation's Form S-1
Registration Statement No. 33-3959 and incorporated
herein by reference).
10.6 -- Consulting Agreement, dated November 1, 1981, between
Dr. Alexander Rich and Repligen Corporation (filed as
Exhibit 10.15 to Repligen Corporation's Form S-1
Registration Statement No. 33-3959 and incorporated
herein by reference).
10.17 -- Employment Agreement, dated August 28, 1986,
between Sandford D. Smith and Repligen Corporation
(filed as Exhibit 10.26 to Repligen Corporation's
Annual Report on Form 10-K for the year ended March
31, 1990 and incorporated herein by reference).
10.18 -- License Agreement, dated November 14, 1990, between
the Regents of the University of Michigan and Repligen
Corporation (filed as Exhibit 10.27 to Repligen
Corporation's Annual Report on Form 10-K for the year
ended March 31, 1991 and incorporated herein by
reference).
10.19 -- Agreement and Plan of Merger, dated as of September
30, 1991, by and among Repligen Corporation, AI
Acquisition Corp. and Amira, Inc. (filed as Exhibit
2.1 to Repligen Corporation's Form 8-K filed December
3, 1991 and incorporated herein by reference).
10.20 -- Amendment No. 1 to Agreement and Plan of Merger,
dated as of October 29, 1991, by and among Repligen
Corporation, AI Acquisition Corp. and Amira, Inc.
(filed as Exhibit 2.2 to Repligen Corporation's Form
8-K filed December 3, 1991 and incorporated herein
by reference).
10.22 -- Product Development Agreement, dated as of February
2, 1992, between Repligen Corporation and Repligen
Clinical Partners, L.P. (filed as Exhibit 10.29 to
Repligen Corporation's Annual Report on Form 10-K for
the year ended March 31, 1992 and incorporated herein
by reference).
10.23 -- Purchase Agreement, dated February 2, 1992, between
Repligen Corporation and each of the Limited Partners
from time to time of Repligen Clinical Partners, L.P.
(filed as Exhibit 10.30 to Repligen Corporation's
Annual Report on Form 10-K for the year ended March
31, 1992 and incorporated herein by reference).
10.30 -- License Agreement, dated as of September 1, 1991,
by and between Repligen Corporation and Kabi Pharmacia
AB (filed as Exhibit 10.37 to Repligen Corporation's
Annual Report on Form 10-K for the year ended March
31, 1992 and incorporated herein by reference).
10.37 -- Building Lease, dated July 10, 1992, between Trustees
of the Cambridge East Trust and Amira, Inc., relating
to 79 and 83 Rogers Street, Cambridge, Massachusetts
(filed as Exhibit 10.37 to Repligen Corporation's
Annual Report on Form 10-K for the year ended March
31, 1993 and incorporated herein by reference).
10.41 -- Employment Agreement, dated May 8, 1992, between
Repligen Corporation and Avery W. Catlin (filed as
Exhibit 10.41 to Repligen Corporation's Annual Report
32
<PAGE>
on Form 10-K for the year ended March 31, 1995 and
incorporated herein by reference).
10.42 -- Plan of Reorganization and Agreement of Merger,
dated March 14, 1996, between Repligen Corporation
and Glycan Pharmaceuticals, Inc. (omitting
schedules and exhibits).
10.43 -- Employment Agreement, dated March 14, 1996, between
Repligen Corporation and Walter C. Herlihy.
10.44 -- Employment Agreement, dated March 14, 1996, between
Repligen Corporation and James R. Rusche.
10.45 -- Employment Agreement, dated March 14, 1996, between
Repligen Corporation and Daniel P. Witt.
10.46 -- Sublease Agreement dated as of May 1, 1996 between
T Cell Sciences, Inc. and Repligen Corporation.
22 -- Subsidiaries of Repligen Corporation.
Item 14(b) Reports on Form 8-K.
No Current Reports on Form 8-K were filed by the Company during the last
quarter of the period covered by this report.
33
<PAGE>
FINANCIAL STATEMENT SCHEDULE
Schedule II - Valuation and Qualifying Accounts
34
<PAGE>
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Form 10-K Items
Incorporated By Page of 1996
Reference Proxy Statement
- ---------------- ----------------------
<S> <C> <C>
PART III
Item 10 Directors and Executive Officers of Registrant
Item 11 Executive Compensation
Item 12 Security Ownership of Certain Beneficial Owners and Managers
Item 13 Certain Relationships and Transactions
</TABLE>
35
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
To Repligen Corporation:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in this Form 10-K, and have issued
our report thereon dated May 8, 1996. Our audit was made for the purpose of
forming an opinion on those statements taken as a whole. The schedule listed in
Item 14(a)(2) is the responsibility of the Company's management and is presented
for purposes of complying with the Securities and Exchange Commission's rules
and is not part of the basic financial statements. This schedule has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, fairly states in all material respects the
financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.
/s/ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
May 8, 1996
36
<PAGE>
SCHEDULE II
REPLIGEN CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Item Balance at Addition Deduction Balance at End
Beginning of Period of Period
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Allowance for
Doubtful Accounts
1996 $300,000 $102,000 $250,000 $152,000
1995 205,000 95,000 -- 300,000
1994 10,000 195,000 -- 205,000
</TABLE>
37
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
REPLIGEN CORPORATION
By: /S/ Walter C. Herlihy
----------------------------
Walter C. Herlihy, President
and Chief Executive Officer
Date: June 24, 1996
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby makes, constitutes and appoints Walter C. Herlihy and Daniel P.
Witt, and each of them, with full power to act without the other, his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities to sign any or all amendments to this Form 10-K, and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents of any of
them, or any substitute or substitutes, lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Alexander Rich
- -------------------------- Co-Chairman of the Board of Directors June 25, 1996
Alexander Rich, M.D.
/s/ Paul Schimmel
- -------------------------- Co-Chairman of the Board of Directors June 25, 1996
Paul Schimmel, Ph.D.
/s/ Walter C. Herlihy
- -------------------------- President, Chief Executive Officer and Director June 24, 1996
Walter C. Herlihy (Principal Financial and Accounting Officer)
/s/ Boruch B. Frusztajer
- -------------------------- Director June 25, 1996
Boruch B. Frusztajer
/s/ G. William Miller
- -------------------------- Director June 25, 1996
G. William Miller
<PAGE>
- -------------------------- Director June ___, 1996
Alfred M. Zeien
- -------------------------- Director June ___, 1996
Elizabeth Greetham
- -------------------------- Director June ___, 1996
Sandford D. Smith
</TABLE>
<PAGE>
EXHIBIT INDEX
ITEM DESCRIPTION
---- -----------
10.42 Plan of Reorganization and
Agreement of Merger dated March
14, 1996 between Repligen
Corporation and Glycan
Pharmaceuticals, Inc. (omitting
schedules and exhibits).
10.43 Employment Agreement, dated March
14, 1996, between Repligen
Corporation and Walter C. Herlihy.
10.44 Employment Agreement, dated March
14, 1996, between Repligen
Corporation and James R. Rusche.
10.45 Employment Agreement, dated March
14, 1996, between Repligen
Corporation and Daniel P. Witt.
10.46 Sublease Agreement dated as of May
1, 1996 between T Cell Sciences,
Inc. and Repligen Corporation.
22 Subsidiaries of Repligen
Corporation.
23 Consent of Independent Public
Accountants
EXHIBIT 10.42
PLAN OF REORGANIZATION AND AGREEMENT OF MERGER
PLAN OF REORGANIZATION AND AGREEMENT OF MERGER ("this Agreement"), dated
as of March 14, 1996, among Repligen Corporation, a Delaware corporation
("Repligen"), Repligen Acquisition Corp., a Delaware corporation ("Newco"),
Glycan Pharmaceuticals, Inc., a Delaware corporation ("Glycan") and, solely for
the purposes of Article 5 hereof, the additional signatories hereto under the
caption "Stockholders" on the signature page hereof (collectively, the
"Stockholders"). As used herein, Glycan and Newco shall be referred to,
together, as the "Constituent Corporations" and, individually, as a "Constituent
Corporation".
W I T N E S S E T H:
WHEREAS, each of the respective Boards of Directors of the Constituent
Corporations and Repligen deem it advisable for the general welfare and
advantage of the Constituent Corporations and their respective shareholders that
the Constituent Corporations merge into a single corporation pursuant to this
Agreement, and the Constituent Corporations respectively desire to so merge
pursuant to this Agreement and pursuant to the applicable provisions of the laws
of the State of Delaware.
WHEREAS, the respective Boards of Directors of the Constituent
Corporations and Repligen intend that the transactions contemplated in this
Agreement constitute a "reorganization" within the meaning of Section
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereby agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.1. The Merger.
(i) Subject to the terms and conditions of this Agreement, at the
Effective Time (as defined below), Newco shall be merged with and into Glycan
(the "Merger") in accordance with the Delaware General Corporation Law (the
"DGCL"), whereupon the separate existence of Newco shall cease, and Glycan shall
be the surviving corporation (the "Surviving Corporation") with the name of
"Glycan Pharmaceuticals, Inc."
(ii) The consummation of the Merger shall take place at the
Effective Time (as hereinafter defined). Newco and Glycan shall execute and
deliver to the Secretary of State of the State of Delaware a Certificate of
Merger in proper form for filing under the DGCL, and the Merger shall become
effective upon the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware or at such later time as may be specified in the
Certificate of Merger, such time being herein called the "Effective Time."
(iii) The Merger shall have the effects set forth herein and in
the DGCL. Without limiting the generality of the foregoing, at the Effective
Time (a) the Surviving Corporation shall possess all assets and property of
every description, and every interest therein, wherever located, and the rights,
privileges, immunities, powers, franchises, and authority, of a public as well
as of a private nature, of each of Glycan and Newco and all obligations
belonging to or due each of them shall be vested in the Surviving Corporation
without further act or deed; (b) title to any real estate or any interest
therein vested in either of Glycan or Newco shall not revert or in any way be
impaired by reason of the Merger; (c) all rights of creditors and all liens on
any property of Glycan and Newco shall be preserved unimpaired; and (d) the
Surviving Corporation shall be liable for all the obligations of Glycan and
Newco, and any claim existing, or action or proceeding pending, by or against
either of them, may be prosecuted to judgment with the right of appeal, as if
the Merger had not taken place.
SECTION 1.2. Effect on Capital Stock. Upon consummation of the Merger at
the Effective Time and without any action on the part of the holders of any
shares of capital stock of Glycan or Newco:
(i) Glycan Common Stock. Each share of Common Stock, par value
$.01 per share, of Glycan issued and outstanding immediately prior to the
Effective Time (including shares of Common Stock which shall then be held in the
treasury of Glycan) shall thereupon be exchanged for .280 shares of Common
Stock, par value $.01 per share, of Repligen. Options and warrants issued prior
to the date of this Agreement by Glycan shall be assumed by Repligen in the
manner, and shall be exercisable by the holders thereof to the extent, as
provided in Sections 4.2 and 4.3 hereof. At the Effective Time, all shares of
Common Stock of Glycan outstanding immediately prior to the effective Time shall
cease to exist and all certificates representing such shares shall be deemed
cancelled.
(ii) Newco Common Stock. Each share of Common Stock of Newco
outstanding immediately prior to the Effective Time shall become an issued and
outstanding share of Common Stock of Glycan at the Effective Time. Each
certificate representing immediately prior to the Effective Time issued and
outstanding shares of Common Stock of Newco shall, immediately upon the
Effective Time, evidence ownership of the same number of fully paid,
nonassessable shares of Common Stock of "Glycan Pharmaceuticals, Inc."
(iii) Treasury Stock. At the Effective Time all shares of Common
Stock of Glycan that shall be then held in its treasury shall cease to exist,
and all certificates representing such shares shall be cancelled.
(iv) By-laws. The by-laws of Glycan as in effect at the Effective
Time shall, from and after the Effective Time, be and continue to be the by-laws
of the Surviving Corporation unless and until changed as therein provided.
(v) Officers and Directors. At the Effective Time, the persons
named in Exhibit A hereto shall be the directors and officers of the Surviving
Corporation until their successors have been duly elected and qualified or until
earlier death, resignation or removal in accordance with Certificate of
Incorporation and elected in accordance with the by-laws of the Surviving
Corporation. Walter Herlihy will be elected to the Board of Directors of
Repligen, effective as of the Effective Time of the Merger.
(vi) Further Action. From time to time, as and when reasonably
requested by the Surviving Corporation, or by its successors or assigns, Glycan
shall execute and deliver or cause to be executed and delivered all such
necessary deeds and other instruments, and shall take or cause to be taken all
such further actions, as the Surviving Corporation, or its successors or assigns
may deem necessary or desirable in order to vest in and confirm to the Surviving
Corporation, and its successors or assigns, title to and possession of all the
property, rights, privileges, powers and franchises referred to herein and
otherwise to carry out the intent and purposes of this Agreement.
(vii) Appraisal Demands. Notwithstanding anything in this
Agreement to the contrary, shares of Glycan Common Stock which are outstanding
immediately prior to the Effective Time, the holders of which shall have
delivered to Glycan a written demand for appraisal of such shares in the manner
provided in Section 262 of the DGCL ("Dissenting Shares"), shall not be
converted into the right to receive, or be exchangeable for, the shares of
Repligen otherwise issuable in exchange for such shares of Glycan Common Stock
pursuant to this Section 1.2 but, instead, the holders thereof shall be entitled
to payment of the appraised value of such Dissenting Shares in accordance with
the provisions of Section 262 of the DGCL; provided, however, that (i) if any
holder of Dissenting Shares shall subsequently deliver a written withdrawal of
his demand for appraisal of such shares (with the written approval of the
Surviving Corporation, if such withdrawal is not tendered within 60 days after
the Effective Time), or (ii) if any holder fails to establish his entitlement to
appraisal rights as provided in such Section 262 of the DGCL, or (iii) if
neither any holder of Dissenting Shares nor the Surviving Corporation has filed
a petition demanding a determination of the value of all Dissenting Shares
within the time provided in Section 262 of the DGCL, such holder or holders (as
the case may be) shall forfeit the right to appraisal of such shares of Glycan
Common Stock and each of such shares shall thereupon be deemed to have been
converted into the right to receive, and to have become exchangeable for, as of
the Effective Time, the shares of Repligen otherwise issuable in exchange for
such shares of Glycan Common Stock pursuant to this Section 1.2, without any
interest thereon.
SECTION 1.3 . Exchange of Certificates.
(i) Exchange Agent. As of the Effective Time, Repligen shall
deposit with Bank of Boston (the "Exchange Agent"), for the benefit of the
holders of shares of Glycan's Common Stock for exchange in accordance with this
Article I, through the Exchange Agent, certificates representing the shares of
Repligen's Common Stock (such shares, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund") issuable pursuant to the Merger in exchange for outstanding
shares of Glycan's Common Stock. The Exchange Agent shall, pursuant to
irrevocable instructions from Repligen, deliver the Common Stock of Repligen
contemplated to be issued pursuant to the Merger to the (non-dissenting)
Stockholders out of the Exchange Fund. The Exchange Fund shall not be used for
any other purpose.
(ii) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Glycan's common stock (the "Certificates") (a)
a letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Exchange Agent and shall be in such form and have such
other provisions as Repligen and Glycan may reasonably specify) and (b)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing shares of Repligen's common stock. Upon surrender
of a Certificate for cancellation to the Exchange Agent or to such other agent
or agents as may be appointed by Repligen and Newco, together with such letter
of transmittal, duly executed, and any other required documents (including a
signed counter-part of this Agreement indicating the intention of such holder to
be bound by the provisions of Article 5 hereof applicable to it), the holder of
such Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of Repligen's common stock which such
holder has the right to receive in the Merger pursuant to the provisions of this
Article I, and the Certificate so surrendered shall forthwith be canceled. In
the event of a transfer of ownership of Glycan common stock which is not
registered in the transfer records of Glycan, a certificate representing the
proper number of shares of Repligen common stock may be issued to a transferee
if the Certificate representing such Glycan common stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 1.3, each Certificate
shall be deemed at any time after the Effective Time to represent only the right
to receive upon such surrender the certificate representing shares of Repligen
common stock as contemplated by this Section 1.3. The Exchange Agent shall not
be entitled to vote or exercise any rights of ownership with respect to the
Repligen common stock held by it from time to time hereunder, except that it
shall receive and hold all dividends or other distributions paid or distributed
with respect thereto for the account of persons entitled thereto.
(iii) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Repligen's common stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to the
shares of Repligen common stock represented thereby until the holder of record
of such Certificate shall surrender such Certificate, as provided above. Subject
to the effect of applicable laws, following surrender of any such Certificate,
there shall be paid to the record holder of the Certificates representing shares
of Repligen common stock issued in exchange therefor, without interest, (a) the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such shares of Repligen common
stock, and (b) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to surrender
and a payment date subsequent to surrender payable with respect to such shares
of common stock.
(iv) No Further Ownership Rights in Glycan Common Stock. All
shares of Repligen common stock issued upon the surrender for exchange of shares
of Glycan common stock in accordance with the terms hereof (including any cash
paid pursuant to Section 1.3(iii)) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Glycan common stock,
subject, however, to the Surviving Corporation's obligation to pay any dividends
or make any other distributions with a record date prior to the Effective Time
which may have been declared or made by Glycan on such shares prior to the
Effective Time and which remain unpaid at the Effective Time, and after the
Effective Time there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of Glycan common stock
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided herein.
(v) No Fractional Shares. No fractional shares of Common Stock of
Repligen shall be issued in the Merger. The number of shares of Repligen's
common stock issuable in exchange for shares of common stock of Glycan in the
Merger shall in each case be rounded up to the nearest whole number.
(vi) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the former stockholders of Glycan upon the
first anniversary of the Effective Time shall be delivered to Repligen upon
demand, and any stockholders of Glycan who have not theretofore complied with
this Section 1.3 shall thereafter look only to Repligen in respect of their
claim for Repligen common stock in connection with the Merger and any dividends
or distributions with respect thereto.
(vii) No Liability. Neither Repligen nor Glycan shall be liable
to any stockholder of Glycan or Repligen, as the case may be, for any shares of
common stock of Repligen or Glycan (or dividends or distributions with respect
thereto) delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. Any amounts remaining unclaimed by holders of
any such shares two years after the Effective Time (or such earlier date
immediately prior to such time as such amounts would otherwise escheat to or
become property of any governmental entity) shall, to the extent permitted by
applicable law, become the property of Repligen free and clear of any claims or
interest of any such holders or their successors, assigns or personal
representatives previously entitled thereto.
ARTICLE 2
REPRESENTATIONS OF GLYCAN
Glycan hereby represents and warrants to, and agrees with, Repligen and
Newco as follows:
SECTION 2.1. Organization, Standing and Power. Glycan is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware, has the corporate power to own and lease its properties and to carry
on its business as now being conducted and is duly qualified to do business and
is in good standing in every jurisdiction (including foreign countries) in which
the properties owned or leased by it make such qualification necessary, except
where failure to so qualify is not reasonably likely to have a material adverse
effect on the business operations or prospects of Glycan, such jurisdictions
being set forth in Schedule 2.1 hereto. Glycan has the statutory power to enter
into and perform the terms and provisions of this Agreement.
SECTION 2.2. Due Execution. The execution, delivery and performance of
this Agreement by Glycan and the consummation by it of the transactions
contemplated hereby have been approved by all necessary corporate action on the
part Glycan and this Agreement and any other agreement or instrument delivered
in connection herewith constitutes the valid and binding obligation of Glycan
enforceable in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws from time to time in effect which affect creditors' rights
generally and by legal and equitable limitations on the availability of specific
performance and other equitable remedies against Glycan under or by virtue of
this Agreement or such other agreement or instrument.
SECTION 2.3. No Consents, No Defaults. The execution, delivery and
performance of this Agreement by Glycan and the consummation by it of the
transactions contemplated hereby (i) do not require the consent, waiver,
approval, license or authorization of any person or entity or public authority
which has not been obtained, (ii) do not violate, with or without the giving of
notice or the passage of time or both, in any material respect any provision of
law applicable to Glycan or any of the "Glycan Subsidiaries" (as hereinafter
defined), and (iii) do not conflict with or result in a breach or termination of
any provision of, or constitute a default in any material respect under, or
result in the creation of any lien, charge or encumbrance upon any of the
property or assets of Glycan or the Glycan Subsidiaries pursuant to their
respective certificates of incorporation or by-laws or any mortgage, deed or
trust, indenture or other agreement or instrument, or any order, judgment,
decree, statute, regulation or any other restriction of any kind or character,
to which Glycan or any of the Glycan Subsidiaries (as hereinafter defined) is a
party or by which Glycan or any of the Glycan Subsidiaries may be bound, except
where such conflict, breach or termination is not reasonably likely to have a
material adverse effect on Glycan and its Subsidiaries taken as a whole.
SECTION 2.4. Subsidiaries. Glycan owns, directly or indirectly, all or a
majority of the outstanding shares of the corporations set forth on Schedule 2.4
hereto. The authorized capital stock, the number of shares duly issued and
outstanding and the number thereof held by Glycan, the jurisdiction of
incorporation and the jurisdictions (including foreign countries) of
qualification of each such corporation are as set forth on Schedule 2.4. The
shares of each such corporation owned by Glycan are fully paid and
nonassessable, and Glycan owns outright all such shares free and clear of all
mortgages, liens or other encumbrances, whatsoever, and none of such shares is
subject to any covenant or other restriction, preventing or limiting the right
to transfer such shares. Each such corporation is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power to own and lease its properties and to
carry on its business as now being conducted and is duly qualified to do
business and is in good standing in every jurisdiction (including foreign
countries) in which the character of the properties owned or leased by it makes
such qualification necessary, except where failure to so qualify is not
reasonably likely to have a material adverse effect on the business operations
or prospects of Glycan. Such corporations, including ProsCure, Inc.
("ProsCure"), are hereinafter collectively referred to as the "Glycan
Subsidiaries". Glycan does not control, directly or indirectly, or own any
capital stock or other proprietary interest in, any corporation, partnership,
joint venture or other entity except as described in Schedule 2.4 hereto. Glycan
has delivered to Repligen true and complete copies of the certificate of
incorporation and by-laws of Glycan and each of the Glycan Subsidiaries as in
effect on the date hereof, certified by the Secretary of the respective
corporations in the case of by-laws and by the Secretary of State or other
appropriate governmental official of the appropriate jurisdiction in the case of
certificates of incorporation.
SECTION 2.5. Capitalization. The total authorized capital stock of
Glycan consists solely of 2,000,000 shares of Common Stock, par value $.01 per
share, warrants to acquire a total of 75,000 shares of Common Stock, and options
outstanding to purchase a total of 8,000 shares of Common Stock. As of this
date, there are 870,000 shares of Glycan Common Stock issued and outstanding.
The total authorized capital stock of ProsCure consists solely of 1,700,000
shares of Common Stock, par value $.01 per share, 1,200,000 shares of Preferred
Stock, par value $.01 per share and warrants to purchase a total of 150,000
shares of Common Stock. As of this date, there are 140,000 shares of ProsCure
Common Stock, 1,060,000 shares of ProsCure Series A Preferred Stock, and 113,334
shares of ProsCure Series B Preferred Stock issued and outstanding. All
outstanding shares of capital stock of Glycan and ProsCure have been duly
authorized and validly issued and are fully paid and nonassessable and free of
pre-emptive rights, and none of them is held in treasury. Except as set forth on
Schedule 2.5, there are outstanding (i) no other shares of capital stock or
other voting securities of Glycan or ProsCure, (ii) no securities of Glycan or
ProsCure convertible into or exchangeable for shares of capital stock or voting
securities of Glycan or ProsCure, and (iii) no other options or other rights to
acquire from Glycan or ProsCure, and no obligation of Glycan or ProsCure to
issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of Glycan or ProsCure (the
items in clauses (i), (ii) and (iii) being referred to collectively as the
"Glycan Securities"). There are no outstanding obligations of Glycan or ProsCure
to repurchase, redeem or otherwise acquire or purchase any Glycan Securities.
SECTION 2.6. Officers, Directors, Shareholders. Attached hereto as
Schedule 2.6 is a list of (i) the officers and directors of Glycan and each of
the Glycan Subsidiaries and (ii) all persons owning of record or beneficially
shares of capital stock of Glycan and each of the Glycan Subsidiaries (together
with their respective stockholdings in such corporations).
SECTION 2.7. Financial Statements; Financial Matters.
(i) Financial Statements. Glycan has furnished Repligen with the
unaudited balance sheet of Glycan and its consolidated subsidiaries as of
December 31, 1995 (the "Glycan Interim Balance Sheet"), and the related
unaudited consolidated statements of loss and deficit and changes in financial
position for the period then ended. Such financial statements (a) are in
accordance with the books and records of Glycan and the Glycan Subsidiaries, (b)
are correct and complete, (c) fairly present the financial position and the
results of operations of Glycan and the Glycan Subsidiaries as of the respective
dates indicated (subject, in the case of the unaudited statements, to normal,
recurring adjustments, none of which will be material), and (d) have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis.
(ii) Except as and to the extent set forth on the Glycan Interim
Balance Sheet, Glycan and the Glycan Subsidiaries do not have any liability or
obligation of any nature (whether accrued, absolute, contingent or otherwise),
except for liabilities and obligations incurred since January 31, 1996 which (a)
were incurred in the ordinary course of business and (b) would not, individually
or in the aggregate, have a material adverse effect on the business of Glycan
and the Glycan Subsidiaries, taken as a whole.
SECTION 2.8. Taxes. Glycan and the Glycan Subsidiaries have filed all
tax returns which are required to be filed by them; and all such returns are
true and correct. Glycan and the Glycan Subsidiaries have paid or provided
adequate reserves for all taxes which have become due pursuant to such returns
or pursuant to any assessments received by them or which any of them is
obligated to withhold from amounts owing to any employee, creditor or other
third party. The Federal income tax returns of Glycan and the Glycan
Subsidiaries have never been audited by the Internal Revenue Service. Neither
Glycan nor any of the Glycan Subsidiaries has waived any statute of limitations
in respect of taxes, or has agreed to any extension of time with respect to a
tax assessment or deficiency.
SECTION 2.9. Real Property. Neither Glycan nor any of the Glycan
Subsidiaries owns any real estate.
SECTION 2.10. Title. Except as shown in the Glycan Interim Balance Sheet
or in the notes thereto and except for liens, restrictions or encumbrances which
do not interfere with or adversely affect the use of properties and assets owned
by Glycan and the Glycan Subsidiaries, Glycan and each of the Glycan
Subsidiaries own outright all their respective properties and assets (other than
leased properties or assets), free and clear of all mortgages, liens,
restrictions, encumbrances, options, rights of first refusal or other claims
whatsoever.
SECTION 2.11. Intangible Property. Glycan owns, directly or indirectly,
all patents, patent licenses, trade names, trademarks, service marks, brand
marks, brand names, copyrights, or registrations or licenses thereof or
applications therefor or interests therein, or know-how or other proprietary or
trade rights, the use of which is necessary for the business of Glycan and the
Glycan Subsidiaries as now conducted. As of the date hereof, no suits are
pending or to the knowledge of Glycan threatened against Glycan or the Glycan
Subsidiaries before any court of the United States or any state thereof in which
it is claimed that Glycan or any such subsidiary is in violation or infringement
of any United States patent, patent license, trade name, trademark, service
mark, brand mark, brand name, copyright, know-how or other proprietary or trade
rights of any third party, the outcome of which could have a materially adverse
effect on the consolidated financial condition or results of operations of
Glycan and the Glycan Subsidiaries.
SECTION 2.12. Material Contracts.
(i) Except as set forth on Schedule 2.12, neither Glycan nor any
of the Glycan Subsidiaries is party to or bound by any (a) material lease or
license with respect to any property, real or personal, tangible or intangible,
whether as landlord, tenant, licensor or licensee; (b) agreement, contract, or
indenture relating to the borrowing of money by Glycan or any of the Glycan
Subsidiaries; (c) management agreement, employment, consulting or severance or
"parachute" or other similar contract or arrangement; (d) agreement with any
present or former officer, director or shareholder of Glycan or any of the
Glycan Subsidiaries; or (e) other contract, agreement or other commitment which
involve a payment by Glycan or any of such subsidiaries of more than $25,000 in
one year.
(ii) Neither Glycan nor any of the Glycan Subsidiaries is in
material breach or material default under any agreement or commitment required
to be set forth in Schedule 2.12 (a "Material Agreement"); and there has not
occurred any event which, after the giving of notice, the lapse of time or
otherwise, would constitute any such default under, or result in any such breach
of, any such Material Agreement.
SECTION 2.13. Litigation. Attached as Schedule 2.13 is a brief
description of all actions, suits and proceedings pending, or to the best of
Glycan's knowledge, threatened against or affecting Glycan and the Glycan
Subsidiaries or their respective properties or business, at law or in equity or
admiralty and before or by any Federal, state, province or other governmental
body or any arbitration board, domestic or foreign. Glycan has no knowledge or
notice of, or otherwise has any reason to believe that there exist, any grounds
for any other action, suit or proceeding. Neither Glycan nor any of the Glycan
Subsidiaries is, to the knowledge of Glycan, subject to or in default with
respect to any order, writ, injunction or decree of any court or Federal, state,
province or other governmental body, domestic or foreign.
SECTION 2.14. Certain Activities. Except as set forth in Schedule 2.14
attached hereto, since December 31, 1995, neither Glycan nor any of the Glycan
Subsidiaries has done or agreed to do any of the following: (a) issue any stock
(other than pursuant to the exercise of existing stock options or warrants),
notes, or other Glycan Securities or debt instruments, or grant any options,
warrants or other rights calling for the issue thereof; (b) incur, or become
subject to, any indebtedness, obligation, or liability (absolute or contingent)
except current liabilities and obligations incurred in the ordinary course of
business; (c) pay any obligation or liability (absolute or contingent) other
than current liabilities reflected in or shown on the Glycan Interim Balance
Sheet, and current liabilities incurred since January 31, 1996 in the ordinary
course of business; (d) declare or make any payment of dividends or
distributions of any assets of any kind whatsoever to stockholders or purchase
or redeem any of its stock; (e) purchase or lease any real property; (f)
mortgage, pledge or subject to lien, charge or any other encumbrance of any of
its assets, tangible or intangible; or (g) enter into any transaction other than
in the ordinary course of business.
SECTION 2.15. Compliance with Laws. Glycan and the Glycan Subsidiaries
have complied in all material respects with all laws, ordinances, regulations
and orders, which have application to its business, the violation of which is
reasonably likely to have a material adverse effect on its financial condition
or results of operation, and possess all governmental licenses and permits
material to and necessary in the conduct of its business, the absence of which
is reasonably likely to have a material adverse effect on its financial
condition or results of operation. All such licenses and permits are in full
force and effect, no violations are or have been recorded in respect to any such
licenses or permits, and no proceeding is pending or threatened to revoke or
limit any such licenses or permits. Each such license or permit shall remain
valid and in full force and effect upon consummation of the Merger without any
restriction or required consent or approval of any third party which will not
have been obtained on or prior to the Effective Time.
SECTION 2.16. Bank Accounts. Glycan has supplied Repligen with a
complete list of all bank accounts maintained by Glycan and the Glycan
Subsidiaries and the signatories thereunder.
ARTICLE 3
REPRESENTATIONS OF REPLIGEN AND NEWCO
Repligen and Newco each hereby represent and warrant to and agree with
Glycan as follows:
SECTION 3.1. Organization, Standing and Power of Repligen. Repligen and
Newco are corporations duly organized, validly existing, and Newco is in good
standing under the laws of the State of Delaware, and Repligen and Newco have
all requisite corporate power and authority to own, operate and lease their
properties, to carry on their businesses as now being conducted and are duly
qualified to do business and are in good standing in every jurisdiction
(including foreign countries) in which the properties owned or leased by them
make such qualification necessary, except where failure to so qualify is not
reasonably likely to have a material adverse effect on the business operations
or prospects of Repligen or Newco, such jurisdictions being set forth in
Schedule 3.1 hereto. Repligen and Newco have the statutory power to enter into
this Agreement and perform their obligations hereunder.
SECTION 3.2. Due Execution. The execution, delivery and performance of
this Agreement by Repligen and Newco and the consummation by each of them of the
transactions contemplated hereby have been approved by all necessary corporate
action on the part of each of them and this Agreement and any other agreement or
instrument delivered in connection herewith constitutes the valid and binding
obligation of Repligen and Newco enforceable in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws from time to time in
effect which affect creditors' rights generally and by legal and equitable
limitations on the availability of specific performance and other equitable
remedies against Repligen or Newco under or by virtue of this Agreement or such
other agreement or instrument.
SECTION 3.3. No Consents, No Defaults. The execution, delivery and
performance of this Agreement by Repligen and Newco and the consummation by each
of them of the transactions contemplated hereby (i) do not require the consent,
waiver, approval, license or authorization of any person or entity or public
authority which has not been obtained, (ii) do not violate, with or without the
giving of notice or the passage of time or both, in any material respect any
provision of law applicable to Repligen, Newco, or either of them, and (iii) do
not conflict with or result in a breach or termination of any provision of, or
constitute a default in any material respect under, or result in the creation of
any lien, charge or encumbrance upon any of the property or assets of Repligen
or Newco pursuant to their respective certificates of incorporation or by-laws
of any mortgage, deed or trust, indenture or other agreement or instrument, or
any order, judgment, decree, statute, regulation or any other restriction of any
kind or character, to which Repligen or Newco is a party or by which Repligen or
any of its Repligen Subsidiaries (as hereinafter defined) may be bound, except
where such conflict, breach or termination is not reasonably likely to have a
material adverse effect on Repligen and Newco taken as a whole.
SECTION 3.4. Subsidiaries. Repligen owns, directly or indirectly, all or
a majority of the outstanding shares of the corporations set forth in Schedule
3.4 hereto, including Newco. The authorized capital stock, the number of shares
duly issued and outstanding and the number thereof held directly or indirectly
by Repligen, the jurisdiction of incorporation and the jurisdiction (including
foreign countries) of qualification of each are as set forth in Schedule 3.4.
The shares of each such corporation owned, directly or indirectly, by Repligen
are fully paid and nonassessable, and Repligen owns, directly or indirectly, all
such shares free and clear of all mortgages, liens or other encumbrances
whatsoever, and none of such shares is subject to any covenant or restriction
preventing or limiting the right to transfer such shares. Each of such
corporations is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has the
corporate power to own and lease its properties and to carry on its business as
now being conducted and is duly qualified to do business and is in good standing
in every jurisdiction (including foreign countries) in which the character of
the properties owned or leased by its makes such qualification necessary, except
where failure to qualify is not reasonable likely to have a material adverse
effect on the business operations or prospects of Repligen and the Repligen
Subsidiaries. Such corporations, together with Newco, are hereinafter also
collectively referred to as the "Repligen Subsidiaries". Repligen does not
control, directly or indirectly, or own any capital stock or other proprietary
interest in any corporation, partnership, joint venture, or other entity other
than the Repligen Subsidiaries as described in Schedule 3.4. Repligen has
delivered to Glycan true and complete copies of the certificate of incorporation
and by-laws of Repligen and each of its Repligen Subsidiaries as in effect on
the date hereof, certified by the Secretary of the respective corporations in
the case of by-laws and by the Secretary of State of the appropriate
jurisdiction in the case of certificates of incorporation.
SECTION 3.5. Capitalization. The authorized capital stock of Repligen
consists of 25,000,000 shares of common stock and 5,000,000 shares of preferred
stock. As of February 2, 1996, there were outstanding 15,358,938 shares of
common stock; no shares of preferred stock; stock options to purchase an
aggregate of 759,401 shares of common stock of which options to purchase an
aggregate of 345,070 shares were exercisable; and warrants to purchase 2,160,400
shares of common stock. All outstanding shares of capital stock of Repligen have
been duly authorized and validly issued and are fully paid and nonassessable,
and none of them is held in the treasury of Repligen. Except as set forth in
this Section, there are outstanding (a) no other shares of capital stock or
other voting securities of Repligen, (b) no securities of Repligen convertible
into or exchangeable for shares of capital stock or voting securities of
Repligen, and (c) no other options or other rights to acquire from Repligen, and
no obligation of Repligen to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of Repligen (the items in clauses (a), (b) and (c) being referred to
collectively as the "Repligen Securities"). There are no outstanding obligations
of Repligen to repurchase, redeem or otherwise acquire any Repligen Securities.
The authorized capital stock of Newco consists of 100 shares of common stock,
all of which are validly issued and outstanding, fully paid and nonassessable
and owned by Repligen.
SECTION 3.6. Officers; Directors; Shareholders. Attached hereto as
Schedule 3.6 is a list of (i) the officers and directors of Repligen and each of
the Repligen Subsidiaries and (ii) all persons owning of record or, to the
knowledge of Repligen, beneficially more than 10% of Repligen's common stock.
SECTION 3.7. Financial Statements.
(i) Repligen has furnished Glycan with the unaudited consolidated
balance sheet of Repligen and its consolidated subsidiaries as of January 31,
1996 (the "Repligen Interim Balance Sheet"), and the related unaudited
consolidated statements of loss and deficit and changes in financial position
for the ten months then ended. Such financial statements (a) are in accordance
with the books and records of Repligen and the Repligen Subsidiaries, (b) are
correct and complete, (c) fairly present the financial position and the results
of operations of Repligen and the Repligen Subsidiaries as of the respective
dates indicated (subject, in the case of the unaudited statements, to normal,
recurring adjustments, none of which will be material), and (d) have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis.
(ii) Except as and to the extent set forth on the Repligen Balance Sheet
or in the SEC Reports (as defined in Section 3.16), Repligen and the Repligen
Subsidiaries do not have any liability or obligation of any nature (whether
accrued, absolute, contingent or otherwise), except for liabilities and
obligations incurred since January 31, 1996 which (a) were incurred in the
ordinary course of business and (b) would not, individually or in the aggregate,
have a material adverse effect on the business of Repligen and the Repligen
Subsidiaries, taken as a whole.
SECTION 3.8. Taxes. Repligen and the Repligen Subsidiaries have filed
all tax returns which are required to be filed by them; and all such returns are
true and correct. Repligen and the Repligen Subsidiaries have paid or provided
adequate reserves for all taxes which have become due pursuant to such returns
or pursuant to any assessments received by them or which any of them is
obligated to withhold from amounts owing to any employee, creditor or other
third party. The Federal income tax returns of Repligen and the Repligen
Subsidiaries have never been audited by the Internal Revenue Service. Neither
Repligen nor any of the Repligen Subsidiaries has waived any statute of
limitations in respect of taxes, or has agreed to any extension of time with
respect to a tax assessment or deficiency.
SECTION 3.9. Real Property. Neither Repligen nor any of the Repligen
Subsidiaries owns any real estate.
SECTION 3.10. Title. Except as shown in the SEC Reports or in the
Repligen Balance Sheet or in the notes thereto and except for liens,
restrictions or encumbrances which do not interfere with or adversely affect the
use of properties and assets owned by Repligen and the Repligen Subsidiaries,
Repligen and each of the Repligen Subsidiaries own outright all their respective
properties and assets (other than leased properties or assets), free and clear
of all mortgages, liens, restrictions, encumbrances, options, rights of first
refusal or other claims whatsoever.
SECTION 3.11. Intangible Property. Except as set forth on Schedule 3.11,
Repligen owns, directly or indirectly, all patents, patent licenses, trade
names, trademarks, service marks, brand marks, brand names, copyrights, or
registrations or licenses thereof or applications therefor or interests therein,
or know-how or other proprietary or trade rights, the use of which is necessary
for the business of Repligen and the Repligen Subsidiaries as now conducted. As
of the date hereof no suits are pending or to the knowledge of Repligen
threatened against Repligen or the Repligen Subsidiaries before any court of the
United States or any state thereof in which it is claimed that Repligen is in
violation or infringement of any United States patent, patent license, trade
name, trademark, service mark, brand mark, brand name, copyright, know-how or
other proprietary or trade rights of any third party, the outcome of which would
have a materially adverse effect on the consolidated financial condition or
results of operations of Repligen and the Repligen Subsidiaries.
SECTION 3.12. Material Contracts.
(i) Except as set forth on Schedule 3.12, neither Repligen nor
any of the Repligen Subsidiaries is party to or bound by any (a) material lease
or license with respect to any property, real or personal, tangible or
intangible, whether as landlord, tenant, licensor or licensee; (b) agreement,
contract, or indenture relating to the borrowing of money by Repligen or any of
the Repligen Subsidiaries; (c) management agreement, employment, consulting,
severance, "parachute" or other similar contract or arrangement; (d) agreement
with any present or former officer, director or shareholder of Repligen or any
of the Repligen Subsidiaries; or (e) other contract, agreement or other
commitment which involve a payment by Repligen or any of the Repligen
Subsidiaries of more than $25,000 in one year.
(ii) Except as set forth on Schedule 3.12 or as disclosed in the
SEC Reports, neither Repligen nor any of the Repligen Subsidiaries is in
material breach or material default under any agreement or commitment required
to be disclosed in Schedule 3.12 (a "Material Agreement"); and there has not
occurred any event which, after the giving of notice, the lapse of time or
otherwise, would constitute any such default under, or result in any such breach
of, any such Material Agreement.
SECTION 3.13. Litigation. Except as set forth in Schedule 3.13 attached
hereto, as of the date hereof there are no actions, suits or proceedings pending
or, to the best of the knowledge of Repligen, threatened against Repligen or the
Repligen Subsidiaries at law or in equity or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, the outcome of which would have a materially adverse effect on
the consolidated financial condition or results of operation of Repligen and the
Repligen Subsidiaries or have an adverse effect on the Merger.
SECTION 3.14. Certain Activities. Except as set forth in Schedule 3.14
attached hereto or in the SEC Reports, since December 31, 1995, neither Repligen
nor any of the Repligen Subsidiaries has done or agreed to do any of the
following: (a) issue any stock (other than pursuant to the exercise of existing
stock options or warrants), notes, or other Repligen Securities or debt
instruments, or grant any options, warrants or other rights calling for the
issue thereof; (b) incur, or become subject to, any indebtedness, obligation, or
liability (absolute or contingent) except current liabilities and obligations
incurred in the ordinary course of business; (c) pay any obligation or liability
(absolute or contingent) other than current liabilities reflected in or shown on
the Repligen Interim Balance Sheet, and current liabilities incurred since
January 31, 1996 in the ordinary course of business; (d) declare or make any
payment of dividends or distributions of any assets of any kind whatsoever to
stockholders or purchase or redeem any of its stock; (e) purchase or lease any
real property; (f) mortgage, pledge or subject to lien, charge or any other
encumbrance of any of its assets, tangible or intangible; or (g) enter into any
transaction other than in the ordinary course of business.
SECTION 3.15. Compliance with Laws. Repligen and the Repligen
Subsidiaries have complied in all material respects with all laws, ordinances,
regulations and orders, which have application to its business, the violation of
which is reasonably likely to have a material adverse effect on its financial
condition or results of operation, and possess all governmental licenses and
permits material to and necessary in the conduct of its business, the absence of
which is reasonably likely to have a material adverse effect on its financial
condition or results of operation. All such licenses and permits are in full
force and effect, no violations are or have been recorded in respect to any such
licenses or permits, and no proceeding is pending or threatened to revoke or
limit any such licenses or permits. Each such license or permit shall remain
valid and in full force and effect upon consummation of the Merger without any
restriction or required consent or approval of any third party which will not
have been obtained on or prior to the Effective Time.
SECTION 3.16. SEC Filings. Repligen has timely filed all reports
required to be filed with the Securities and Exchange Commission pursuant to the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"). Repligen
has delivered to Glycan (i) its annual reports on Form 10-K for its fiscal years
ended March 31, 1993, 1994 and 1995, (ii) its quarterly reports on Form 10-Q for
its fiscal quarters September 30, 1995 and December 31, 1995, (iii) its proxy or
information statements relating to its annual meeting of stockholders held on
September 14, 1995, and (iv) all of its other reports, statements, schedules and
registration statements filed with the SEC since September 14, 1995
(collectively the "SEC Reports"). As of its filing date, no SEC Report contained
any untrue statement of material fact or omitted to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading in any material
respect.
ARTICLE 4
ADDITIONAL AGREEMENTS OF REPLIGEN
SECTION 4.1. Certificates for Repligen Common Stock. (i) The shares of
Repligen's common stock deliverable to holders of shares of common stock of
Glycan pursuant to or as a result of the Merger will not be registered under the
Securities Act of 1933, as amended (the "Act"), and are expected to be issued
under exemptions from registration provided by Section 4(2) and Section 3(b) and
Regulation D thereunder. Accordingly, the certificates representing such shares
shall be stamped or imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), and may not be transferred in the absence of an effective
registration statement under the Act covering the shares or of an
opinion of counsel to the Corporation that such transfer will not
require registration of such shares under the Act."
SECTION 4.2. Glycan Warrants. At the Effective Time or as soon as
reasonably practicable thereafter, Repligen shall deliver to each holder of a
valid, outstanding warrant to purchase shares of Glycan's Common Stock a valid
and enforceable substitute warrant to purchase such number of shares of
Repligen's Common Stock as the holder of such warrant would have received had he
exercised such Glycan warrant in full immediately prior to the Effective Time of
the Merger. Each substitute warrant shall contain the same basic terms and
conditions as the Glycan warrant for which it is substituted; the purchase price
per share of Repligen Common Stock under such substitute warrant shall be
determined by dividing the aggregate purchase price of all unpurchased shares of
Glycan Common Stock under such Glycan warrant by the number of whole shares of
Repligen Common Stock covered by the substitute warrant and, if necessary, shall
be rounded to the next highest cent; no fractional shares of Repligen Common
Stock shall be covered by such substitute warrant; and any such fractions shall
be eliminated in calculating the number of shares of Repligen Common Stock
covered by each substitute warrant. In order to effectuate the foregoing,
Repligen shall reserve out of its authorized but unissued shares of Common Stock
sufficient shares to provide for the exercise of the substituted warrants. None
of the substituted warrants or the shares of Repligen Common Stock issuable upon
the exercise thereof will have been registered under the Act and therefore may
not be transferred or sold unless registered under the Act or in the opinion of
counsel to Repligen an exemption from registration is available.
SECTION 4.3. Glycan Options. At the Effective Time, all rights with
respect to Glycan Common Stock pursuant to stock options granted by Glycan under
the Glycan Stock Option Plans, including options granted under such Plans
pursuant to employment or acquisition agreements ("Glycan Options"), which are
outstanding at the Effective Time, whether or not then exercisable, shall be
converted into and become rights with respect to Repligen Common Stock and
Repligen shall assume each of such Glycan Options, in accordance with the terms
of the Stock Option Plan under which it was issued and the stock option or stock
appreciation rights agreement by which it is evidenced. From and after the
Effective Time, (i) each such Glycan Option may be exercised solely for shares
of Repligen Common Stock notwithstanding any contrary provisions of the Glycan
Stock Option Plans, (ii) the number of shares of Repligen Common Stock subject
to such Glycan Option shall be equal to the number of shares of Glycan Common
Stock subject to such Glycan Option immediately prior to the Effective Time
multiplied by the Exchange Ratio (with the product rounded down to the next
whole share), (iii) the per share exercise price shall be adjusted by dividing
the per share exercise price under each such Glycan Option by the Exchange
Ratio, and (iv) Repligen and its Compensation Committee shall be substituted for
Glycan and the Glycan Board of Directors administering the Glycan Stock Option
Plans. It is intended that the foregoing assumption shall be undertaken in a
manner that will not constitute a "modification" as defined in Section 424(b) of
the Internal Revenue Code as to any stock option which is an "incentive stock
option." The Repligen Board of Directors shall take such action as may be
required under the Glycan Stock Option Plans to effectuate the foregoing.
SECTION 4.4. Agreements. Repligen shall simultaneously herewith enter
into employment agreements with each of Messrs. Walter Herlihy, Jim Rusche and
Dan Witt; and a Registration Rights Agreement, each in the respective form
annexed hereto as Exhibits B, C, D and E, respectively.
ARTICLE 5
REPRESENTATION OF STOCKHOLDERS
SECTION 5.1. Securities Laws Matters. The Stockholders acknowledge that
none of the shares of Common Stock of Repligen to be issued to them pursuant to
or as a result of the Merger (collectively, the "Merger Securities") have been
registered under the Act, but are expected to be issued under exemptions from
registration provided by Sections 4(2) and 3(b) and Regulation D thereunder. The
Stockholders understand and acknowledge that the Merger Securities must be held
by each of them indefinitely unless registered under the Act or unless, in the
opinion of counsel to Repligen, an exemption from such registration is
available. The Stockholders understand that only Repligen may file a
registration statement with respect to the Merger Securities and that, except as
provided in Section 4.1(b), Repligen is under no obligation to do so with
respect to the Merger Securities. The Stockholders acknowledge that they have
been advised that an exemption from the registration with respect to the Merger
Securities may not be available or may not permit the Stockholders to transfer
the Merger Securities in the amounts or at the times desired by the
Stockholders. In addition, the Stockholders understand and acknowledge that Rule
144 under the Act, which provides for certain limited, routine sales of
unregistered securities of public companies through securities brokers, is not
presently available with respect to the Merger Securities, may never be
available, and in any event requires that the Merger Securities be held for a
minimum of two years before they may be resold under Rule 144. Each Stockholder
hereby represents and warrants to Repligen and Newco that: (a) he or she is
acquiring and will acquire the Merger Securities for his or her own account for
investment only and not with a view to, or for sale in connection with, a
distribution within the meaning of the Act; (b) he or she has no present
intention of selling or otherwise disposing of any portion of the Merger
Securities; (c) he or she has access to all information regarding Repligen and
its present and prospective business, assets, liabilities and financial
condition and the backgrounds of the executive officers of Repligen as such
Stockholder considers important in making the decision to acquire the Merger
Securities; (d) he or she recognizes that an investment in the Merger Securities
involves special and substantial risks because, among other things, Repligen has
incurred significant operating losses since inception, has undergone major
restructurings of its operations, several of Repligen's leading clinical
candidates, including its rPF4 and CD11b programs, have been terminated or
suspended and the economic viability of Repligen's remaining clinical products
is uncertain at this time, Repligen has limited financial resources and limited
access to new funding sources, and Repligen is presently in default and seeking
to restructure several of its long-term commitments, and such other matters as
are disclosed in Repligen's Form 10-Q for the quarter ended December 31, 1995
annexed hereto as Exhibit F; (e) he or she is financially capable of bearing a
total loss of his or her investment in the Merger Securities and is able to
evaluate the merits and risks of his or her investment in the Merger Securities
and to protect his or her own interests in this transaction; (f) at no time was
he or she presented with, or solicited by any publicly issued or circulated
newspaper, magazine, mail, radio or television or any other form or general
advertising or solicitation in connection with the acquisition of the Merger
Securities; and (g) to the best of his or her knowledge, no commission, discount
or other remuneration is due or payable in connection with this transaction.
ARTICLE 6
SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
SECTION 6.1. Survival. The representations and warranties of the parties
hereto shall not survive the Effective Time, except for the representation and
warranties of the Stockholders contained in Article 5.
ARTICLE 7
MISCELLANEOUS
SECTION 7.1. Payment of Expenses. Repligen and Glycan will each pay its
own expenses, and Repligen shall pay the expenses of Newco, incident to
preparing for entering into and performing this Agreement and to the
consummation of the transactions contemplated thereby.
SECTION 7.2. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware (without
giving effect to its conflict of laws principles) except to the extent that the
DGCL and the other laws of the State of Delaware shall govern the Merger.
SECTION 7.3. Cooperation, etc. Each of the parties hereto shall
cooperate with the others in every way in carrying out the transactions
contemplated herein, and delivering instruments to perfect the conveyances,
assignments and transfers contemplated herein, and in delivering all documents
and instruments deemed reasonably necessary or useful by counsel for any party
hereto.
SECTION 7.4. Assignability. This Agreement shall not be assignable by
either party and cannot be altered or otherwise amended except pursuant to an
instrument in writing signed by each of the parties hereto pursuant to authority
of their respective Boards of Directors, provided that any party hereto may
assign this Agreement at any time after the Effective Time to any entity in
connection with a merger of such party with or into such other entity or a sale
of all or substantially all of its assets.
SECTION 7.5. Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage prepaid. Any such notice shall be deemed
given when so delivered personally, telegraphed, telexed or sent by facsimile
transmission or, if mailed, three days after the date of deposit in the United
States mails, as follows:
(i) if to Newco or Repligen to:
Repligen Corporation
One Kendall Square
Building 700
Cambridge, MA 02139
(Attn: President)
Facsimile: 617-225-6060
with a copy to:
Stanley M. Johnson, Esq.
Bryan Cave
245 Park Avenue
New York, New York 10167
Facsimile: 212-692-1900
(ii) if to Glycan to:
One Kendall Square
Building 700
Cambridge, MA 02139
(Attn: Walter C. Herlihy Ph.D)
Facsimile:
with a copy to:
Lawrence S. Wittenberg, Esq.
Testa, Hurwitz & Thibeault
High Street Tower
125 High Street
Boston, MA 02110
SECTION 7.6. Execution in Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.
SECTION 7.7. Entire Agreement. This Agreement (including the Schedules
and Exhibits) and the agreements executed in connection with the consummation of
the transactions contemplated herein contain the entire agreement among the
parties with respect to the Merger and related transactions, and supersede all
prior agreements, written or oral, with respect thereto.
SECTION 7.8. Binding Effect; No Third Party Beneficiaries. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors, heirs, and legal representatives upon the execution
thereof by Repligen, Newco and Glycan. Nothing contained herein is intended or
shall be construed as creating third party beneficiaries to this Agreement.
SECTION 7.9. Variations in Pronouns. All pronouns and any variations
thereof refer to the masculine, feminine or neuter, singular or plural, as the
context may require.
SECTION 7.10. Exhibits and Schedules. The Exhibits and Schedules are a
part of this Agreement as if fully set forth herein. All references herein to
Sections, subsections, clauses, Exhibits and Schedules shall be deemed
references to such parts of this Agreement, unless the context shall otherwise
require.
SECTION 7.11. Headings. The headings in this Agreement are for reference
only, and shall not affect the interpretation of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above written.
ATTEST: REPLIGEN ACQUISITION CORP.
___________________________ By: _________________________________
Name:
Title:
ATTEST: GLYCAN PHARMACEUTICALS, INC.
___________________________ By: _________________________________
Name:
Title:
ATTEST: REPLIGEN CORPORATION
___________________________ By: _________________________________
Name:
Title:
Executed by the undersigned solely
to confirm their agreement with the
provisions of Article 5 hereof
applicable to them.
STOCKHOLDERS
-----------------------------------
-----------------------------------
-----------------------------------
<PAGE>
EXHIBIT A
GLYCAN OFFICERS AND DIRECTORS
OFFICERS AND DIRECTORS OF GLYCAN PHARMACEUTICALS, INC.
Directors
Paul Schimmel, Ph.D.
Walter C. Herlihy, Jr.
James Robert Rusche
Daniel Parker Witt
Officers
Walter C. Herlihy, Jr., President and Chief Executive Officers
James Robert Rusche, Vice President, Research and Development
Daniel P. Witt, Vice President, Business Development
EXHIBIT 10.43
DRAFT 1
Repligen Corporation
One Kendall Square
Building 700
Cambridge, Massachusetts 02139
(617) 225-6000
Walter C. Herlihy, Jr.
11 Brookhead Avenue
Beverly, MA 01915
Dear Mr. Herlihy:
This is to confirm that you will be appointed President, Chief Executive
Officer, and Director of Repligen Corporation effective 14 March, 1996.
Our understanding of the terms of your employment are as follows:
1. You will receive a base annual salary of $160,000. Bonuses, based
upon performance, may be given in the discretion of the Board of
Directors.
2. You will be awarded options for 100,000 shares of common stock of
Repligen Corporation which will vest evenly over a five-year
period and which will be governed by Repligen's stock option
plans. Notwithstanding the foregoing, 50% of any unvested options
shall vest immediately upon notice of termination of your
employment or a change in control of the Corporation.
3. You are entitled to all health, medical and life insurance benefits
that are provided, from time to time, by Repligen Corporation.
4. Your employment at Repligen may terminate, with or without cause,
upon 30 days' prior written notice from the Board of Directors or
from you. If your employment is terminated, you will be entitled
to severance remuneration of base salary at the rate then in
effect, payable monthly in arrears, until you find employment,
but for no longer than 8 months.
5. You agree to execute standard noncompetition and nondisclosure
agreements as soon as possible.
We look forward to an exciting collaboration between you, the Board of
Directors, and all the employees at Repligen.
Could you kindly indicate your agreement to the above by signing in the
space provided below and returning one copy to me.
REPLIGEN CORPORATION:
By:
Name:
Title:
Date:
I AGREE TO THE ABOVE:
- --------------------------------------
DATED:
EXHIBIT 10.44
DRAFT 2
Repligen Corporation
One Kendall Square
Building 700
Cambridge, Massachusetts 02139
(617) 225-6000
James Robert Rusche
18 Brigham Road
Framingham, MA 01701
Dear Mr. Rusche:
This is to confirm that you will be appointed Vice President, Research
and Development of Repligen Corporation effective 14 March, 1996.
Our understanding of the terms of your employment are as follows:
1. You will receive a base annual salary of $115,000. Bonuses, based
upon performance, may be given in the discretion of the Board of
Directors.
2. You will be awarded options for 60,000 shares of common stock of
Repligen Corporation which will vest evenly over a five-year
period and which will be governed by Repligen's stock option
plans. Notwithstanding the foregoing, 50% of any unvested options
shall vest immediately upon notice of termination of your
employment or a change in control of the Corporation.
3. You are entitled to all health, medical and life insurance benefits
that are provided, from time to time, by Repligen Corporation.
4. Your employment at Repligen may terminate, with or without cause,
upon 30 days' prior written notice from the Board of Directors or
from you. If your employment is terminated, you will be entitled
to severance remuneration of base salary at the rate then in
effect, payable monthly in arrears, until you find employment,
but for no longer than 6 months.
5. You agree to execute standard noncompetition and nondisclosure
agreements as soon as possible.
We look forward to an exciting collaboration between you, the Board of
Directors, and all the employees at Repligen.
Could you kindly indicate your agreement to the above by signing in the
space provided below and returning one copy to me.
REPLIGEN CORPORATION:
By:
Name:
Title:
Date:
I AGREE TO THE ABOVE:
- --------------------------------------
DATED:
EXHIBIT 10.45
DRAFT 3
Repligen Corporation
One Kendall Square
Building 700
Cambridge, Massachusetts 02139
(617) 225-6000
Mr. Daniel Parker Witt
288 Essex Street
Hamilton, MA 01982
Dear Mr. Witt:
This is to confirm that you will be appointed Vice President, Business
Development of Repligen Corporation effective 14 March, 1996.
Our understanding of the terms of your employment are as follows:
1. You will receive a base annual salary of $115,000. Bonuses, based
upon performance, may be given in the discretion of the Board of
Directors.
2. You will be awarded options for 60,000 shares of common stock of
Repligen Corporation which will vest evenly over a five-year
period and which will be governed by Repligen's stock option
plans. Notwithstanding the foregoing, 50% of any unvested options
shall vest immediately upon notice of termination of your
employment or a change in control of the Corporation.
3. You are entitled to all health, medical and life insurance benefits
that are provided, from time to time, by Repligen Corporation.
4. Your employment at Repligen may terminate, with or without cause,
upon 30 days' prior written notice from the Board of Directors or
from you. If your employment is terminated, you will be entitled
to severance remuneration of base salary at the rate then in
effect, payable monthly in arrears, until you find employment,
but for no longer than 6 months.
5. You agree to execute standard noncompetition and nondisclosure
agreements as soon as possible.
We look forward to an exciting collaboration between you, the Board of
Directors, and all the employees at Repligen.
Could you kindly indicate your agreement to the above by signing in the
space provided below and returning one copy to me.
REPLIGEN CORPORATION:
By:
Name:
Title:
Date:
I AGREE TO THE ABOVE:
- --------------------------------------
DATED:
EXHIBIT 10.46
SUBLEASE AGREEMENT
This Sublease Agreement is made as of May 1, 1996 and is by and between T
Cell Sciences, Inc., a Delaware corporation with a principal address at 115-119
Fourth Avenue, Needham, Massachusetts ("Sublessor"), and Repligen Corporation, a
Delaware corporation with a principal address at 117 Fourth Avenue, Needham,
Massachusetts ("Sublessee").
Reference is made to the following facts:
A. As of May 1, 1996, Fourth Avenue Ventures Limited Partnership (the
"Landlord") entered into a lease with Sublessor (the "Overlease") a true and
correct copy of which is attached hereto as Exhibit A, for certain office and
laboratory space (the "Main Premises") within the building located at 115-119
Fourth Avenue, Needham, Massachusetts, as more specifically described in the
Overlease (the "Building")
B. Subject to the terms and conditions of this Sublease Agreement,
Sublessor has agreed to sublease to Sublessee a portion of the Premises
hereinafter referred to as the "Subleased Premises." The Subleased Premises
shall consist of certain space to be used exclusively by Sublessee, which space
is shown on Exhibit B attached hereto and incorporated herein. For the purposes
of determining Sublessee's Annual Fixed Rent and Sublessee's proportionate share
of taxes, utilities and operating expenses, the square footage of the Subleased
Premises is approximately 13,000 rentable square feet.
C. Capitalized terms not otherwise defined herein shall have the meaning
set forth in the Overlease.
AGREEMENTS:
In consideration of the mutual covenants herein contained and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Sublessor and Sublessee hereby agree as follows:
1. Premises. Sublessor hereby leases to Sublessee, and Subleases hereby
leases from Sublessor, the Subleased Premises for all Permitted Uses described
in the Overlease, provided that such use is permitted by law or pursuant to a
special permit duly issued by the Town of Needham and in full force and effect.
The Subleased Premises consist of approximately 13,000 rentable square feet as
shown on Exhibit B attached hereto and incorporated herein by this reference.
Sublessee shall have, as appurtenant to the Subleased Premises, rights to use,
in common with others entitled thereto: (i) common lobbies, hallways, ramps,
stairways, freight elevators, shipping/receiving areas, and other common areas
of the Building, if any; (ii) the common walkways and driveways necessary for
access to the Building; (iii) the common hallways, emergency exits, stairways
and elevators within the Main Premises necessary for access to the Subleased
Premises, all as shown on Exhibit B, (iv) the HVAC systems and common utility
equipment, pipes, ducts, conduits, wires and appurtenant equipment serving the
Subleased Premises and (v) on a nonexclusive basis, twenty five (25) parking
spaces.
a. Sublessor shall deliver the Subleased Premises to Sublessee on May 1,
1996 (the "Commencement Date") in such condition as exists as of the date of
this Sublease, free of all occupants other than Sublessee.
2. Term. To have and to hold for a term of four (4) years, commencing on
May 1, 1996 and terminating on April 30, 2000 unless sooner terminated as
herein provided (the "Term").
Provided that Sublessor has not exercised its option to terminate the
Overlease on April 30, 2000, as provided in the Overlease, Sublessee shall have
the right to extend the term of this Sublease for two years, such that the
Sublease will expire on April 30, 2002. In order to exercise this option,
Sublessee must provide Sublessor with written notice of its exercise no later
than nine (9) months prior to the expiration of this Sublease.
Provided that Sublessee has exercised its extension option and is not then
in default hereunder beyond the expiration of any applicable cure period,
Sublessee shall have the right to terminate this Sublease at any time after May
1, 2000 upon the following terms and conditions: Sublessee must deliver to
Sublessor a notice of its intent to terminate this Sublease at least nine (9)
months prior to the proposed termination date. Such notice of termination may be
given no earlier than May 1, 2000, and, to be effective, such notice of
termination must be accompanied by a payment of $100,000.00 in good and
immediately available funds, and upon Sublessor's receipt of such notice and the
$100,000.00 payment, the termination date of this Sublease shall be changed to
the date that is nine (9) months after the date of such notice.
Effective on May 1, 2001, the termination payment for any notice of
termination given on or after May 1, 2001, will be reduced to $50,000.00,
provided that the Sublessee otherwise complies with all provisions of the
previous paragraph.
3. Fixed Rent. Sublessee covenants and agrees to pay to Sublessor without
setoff or deduction, rent (the "Fixed Rent") in equal monthly installments in
advance on the first day of each month of the Term at Sublessor's address shown
herein or at such place as Sublessor shall from time to time designate in
writing as follows:
Lease Year Monthly Fixed Rent
---------- ------------------
May 1, 1996-June 30, 1997 $ 9,208.33
July 1, 1997-April 30, 2000 $11,136.66
a. If the Sublessee extends the Term as provided in Section 2 hereof, from
May 1, 2000 and continuing to April 30, 2002, Sublessee will pay monthly rent of
Eleven Thousand One Hundred Thirty Six Dollars and 66/100 ($11,136.66).
b. If the Term includes a partial calendar month at its beginning or end,
the monthly installment of Rent for such partial month shall be prorated at the
rate of 1/30 of the monthly installment for each day in such partial month
within the Term and shall be payable in advance on the first day of such partial
month occurring within the Term.
4. Additional Rent. Sublessee covenants and agrees to pay monthly to
Sublessor as additional rent, upon payment of monthly installments of Fixed
Rent, Sublessee's proportionate share of all Operating Expenses and utilities
due from Sublessor to Landlord or any public utility under Sections 5 and 7 of
the Overlease on account of the Subleased Premises. Sublessee's proportionate
share is defined herein as 24%.
5. Additional Sublessor Covenants. Sublessor hereby covenants:
a. To pay all rents as they come due; subject to the provisions of Section
6(b) below, to repair and maintain in good working order the Subleased Premises,
including the HVAC and utility systems exclusively serving the Main Premises and
the Subleased Premises and to timely perform all of its other obligations under
the Overlease; and to promptly provide Sublessee with copies of all notices it
receives under the Overlease which relate to the Subleased Premises.
b. Sublessor further agrees to indemnify and hold Sublessee harmless from
any and all damages, costs, losses and the like suffered by Sublessee as a
result of a breach by Sublessor of any of its obligations arising under or
pursuant to the Overlease, said indemnification to include, without limitation,
reasonable attorney's fees, unless such breach was caused by a default of
Sublessee hereunder.
c. That Sublessee, upon paying the rent and performing the covenants of
this Sublease Agreement, shall peacefully and quietly have, hold and enjoy the
Subleased Premises and all rights granted to Sublessee in this Sublease
Agreement throughout the Term.
d. To diligently pursue enforcement of Landlord's obligations under the
Overlease if failure to perform such obligations materially, adversely affects
Sublessee's use or occupancy of the Subleased Premises. In no event shall
Sublessee have an independent right to enforce the Landlord's obligations under
the Overlease, nor shall Sublessee be subrogated to the rights of Sublessor to
enforce the Landlord's obligations under the Overlease.
e. For so long as Sublessee is not in default hereunder beyond applicable
cure periods, to provide Sublessee with support services, in addition to those
provided to the Main Premises by Landlord pursuant to the provisions of the
Overlease, for Sublessee's operations in the Subleased Premises. Sublessee shall
pay Sublessee's proportionate share of the cost for such support services as
additional rent upon payment of installments of Fixed Rent. Sublessee and
Sublessor will negotiate a mutually satisfactory services agreement for the
provision of such services to Sublessee by Sublessor.
f. To obtain and maintain all facility-based (as opposed to use or operator
based) local, state and federal permits and approvals necessary to operate the
Main Premises and the Subleased Premises for all Permitted Uses.
g. To indemnify, defend and hold Sublessee harmless from and against any
claim arising from Sublessor's use of the Main Premises; or the conduct of its
business or from any activity, work or thing done, permitted or suffered by
Sublessor on or about the Main Premises, or arising from any breach of
Sublessor's obligations hereunder, and from any claim for injury or damage to
any person or property while on or about the Sublessor's Premises; except for
any claim arising solely as a result of the negligence or willful misconduct of
Sublessee or Sublessee's employees or agents. This indemnification shall
specifically include indemnification under the provisions of Section 13.2 of the
Overlease with respect to any Hazardous Substance on the Subleased Premises.
h. To promptly report to Sublessee any incidents in which its employees,
agents or contractors report an illness or other adverse health effects
attributable to the Subleased Premises, the Building or any of the equipment,
fixtures or furnishings therein.
6. Additional Sublessee Covenants. Sublessee hereby covenants:
a. To comply with all the terms and provisions of the Overlease applicable
to the Subleased Premises except those terms that apply to the payment of Fixed
Rent and additional rent, and except Sections 9.15, 15.2, and 15.3 of the
Overlease, and to do nothing which will subject the Overlease to termination by
Landlord under the provisions of the Overlease,.
b. To maintain the Subleased Premises in the same condition as they are at
the commencement of the Term, reasonable wear and tear, damage by fire and other
casualty and eminent domain excepted. In the event that Sublessee defaults in
its obligations under this paragraph (b), Sublessor may, after at least ten (10)
days prior notice to Sublessee (except in an emergency, when no notice will be
required) cure such default, in which event Sublessee shall reimburse Sublessor
for any costs incurred by Sublessor to cure such default.
c. To remove all of Sublessee's personal property, business equipment,
goods and effects from the Subleased Premises at the earlier expiration or
termination of this Sublease Agreement and to deliver to Sublessor the Subleased
Premises in the same condition as they were at the commencement of the Term, or
as they were put in during the Term, reasonable wear and tear, damage by fire or
other casualty or eminent domain excepted. In the event of Sublessee's failure
to remove any of Sublessee's property from the Subleased Premises, Sublessor is
hereby authorized, without liability to Sublessee for loss or damage thereto,
and at the sole risk of Sublessee to remove and store any of such property at
Sublessee's expense, or to retain the same under Sublessor's control or to sell
at public or private sale, upon at least ten (10) days notice, any or all of the
property not so removed and to apply the net proceeds of such sale to the
payment of any sums due hereunder, or to destroy such property. Any remaining
balance will be paid to Sublessee.
d. In addition to the indemnification and obligations set forth in Section
13.2 of the Overlease (which apply to the Subleased Premises), to indemnity,
defend and hold the Sublessor harmless from and against any claim arising from
Sublessee's use of the Subleased Premises or the conduct of its business or from
any activity, work or thing done, permitted or suffered by Sublessee on or about
the Subleased Premises, or arising from any breach of Sublessee's obligations
hereunder, and from any claim for injury or damage to any person or property
while on or about the Subleased Premises, except for any claim arising solely as
a result of the negligence or willful misconduct of Sublessor or Sublessor's
employees or agents. This indemnification shall specifically include
indemnification under the provisions of Section 13.2 of the Overlease with
respect to any Hazardous Substance on the Subleased Premises.
e. To maintain comprehensive general liability insurance in amounts which
shall, at the beginning of the Term, be not less than those limits set forth in
Section 6 of the Overlease, and from time to time during the Term, in such
additional amounts which are customarily carried in the Greater Boston area on
property similar to the Building and used for similar purposes; Sublessee shall
also maintain all-risk property insurance for Sublessee's property. Prior to the
commencement of the Term, Sublessee shall deliver to Sublessor certificates of
all required insurance coverage naming Sublessor, Landlord and Landlord's
Mortgagee as additional insureds.
f. To obtain and maintain all local, state and federal permits and
approvals necessary solely for the conduct of Sublessee's business in the
Subleased Premises.
g. To comply with all applicable local, state and federal laws and
cooperate with Sublessor's health and safety regulations applicable to the
Subleased Premises.
h. To use the Subleased Premises only for the Permitted Uses set forth in
the Overlease, in compliance with applicable law, provided that if Sublessee's
production of any biological products shall result in a material increase in the
utility usage of the Subleased Premises, or if Sublessor's production of any
biological products shall result in a material increase in the utility usage of
the Main Premises, the parties hereto shall mutually agree upon an adjustment in
Sublessee's proportionate share of the cost of utilities to be paid by Sublessee
to Sublessor in accordance with the provisions of Paragraph 4 hereof. Subject to
the foregoing, Sublessor and Sublessee also agree that Sublessee shall have the
right to conduct animal research in the Subleased Premises, provided that (1)
Sublessee obtains all necessary federal, state and local approvals for such use
prior to commencement of such use, and (2) Sublessee and Sublessor mutually
agree upon the location of the room(s) in which the animals will be housed,
Sublessee's procedures for maintaining and operating such room and the animals
contained in such room. Sublessor shall thereafter have the right to monitor
Sublessee's compliance with all necessary permits for maintaining such use.
Sublessor's consent to the location of such animal room and Sublessee's
procedures for maintaining and operating such room will not be unreasonably
withheld, conditioned or delayed.
i. To appoint a representative or representatives to serve on the relevant
health and safety committees for the Building, and to provide Sublessor with
copies of all safety committee minutes, and to promptly notify Sublessor of any
safety concerns of Sublessee that arise out of such committee meetings, or
otherwise.
j. To regularly perform janitorial services and extermination services,
as necessary, to the Subleased Premises.
k. To, in accordance with a separate agreement with Landlord, construct
$250,000.00 of improvements to the Subleased Premises, which improvements will
remain part of the Subleased Premises on the expiration of the Term, and may not
be removed by Sublessee, unless such removal is required by Sublessor at the
time Sublessor approves the construction of such improvements. Sublessor shall
have the right to consent to the construction of such improvements, and in
obtaining such consent Sublessor and Sublessee shall follow the procedures set
forth in Section 10.b of a certain Settlement, Escrow and Security Agreement of
even date between Sublessee and Landlord, and Section 10.b of such Agreement is
incorporated herein by reference. Sublessor has consented to the schematic
showing some of the planned improvements that is attached hereto as Exhibit C,
and will not unreasonably withhold its consent to the remainder of the
improvements planned by Sublessee.
l. To be responsible for compliance with the provisions of the Americans
with Disabilities Act with respect to the Subleased Premises and all
improvements to be constructed in the Subleased Premises.
7. Condition and Alterations. By its execution hereto, Sublessee
acknowledges that:
a. Sublessee has inspected the Subleased Premises and accepts the same "AS
IS." Sublessor shall have no obligation or duty to Sublessee regarding the
preparation of the Subleased Premises for occupancy of Sublessee.
b. Other than the improvements to be constructed by Sublessee in accordance
with Section 6(k) hereof, in the event Sublessee desires to make alterations or
improvements to the Subleased Premises, Sublessee shall obtain the prior written
consent of both Sublessor and Landlord prior to conducting any such alterations
or improvements, and the approval process shall be as outlined in Section 9.4 of
the Overlease.
8. Fire, Casualty and Eminent Domain. In the event the Subleased Premises,
or a portion thereof, are rendered substantially unsuitable for their intended
use by fire or other casualty or are taken by eminent domain, a just and
proportionate abatement of rent shall be made to the extent Sublessor is
entitled to an abatement of rent under the Overlease. Sublessee hereby releases
and assigns to Sublessor all of Sublessee's right, title and interest in and to
any and all damages or injury to the Subleased Premises for any taking by
eminent domain or by reason of anything lawfully done in pursuance of public
authority. Sublessee further covenants to deliver such further assignment and
assurances thereof as Sublessor may from time to time request, hereby
irrevocably designating and appointing Sublessor as its attorney-in-fact to
execute anal deliver in Sublessee's name and behalf all such further assignments
thereof.
9. Common Space. Sublessor and Sublessee shall share use of the common
areas marked on Exhibit B, the common loading and receiving areas, and the
common hallways. Sublessor shall maintain such areas, as provided in the
Overlease, and Sublessee shall pay Sublessor for such maintenance as provided in
the services agreement to be signed by Sublessor and Sublessee.
10. Access to Subleased Premises. Sublessee shall, promptly after execution
of this Sublease, and no later than ninety (90) days after execution of this
Sublease, install at Sublessee's sole cost, a new front entry for the Subleased
Premises in the location shown on Exhibit B, and to construct all walls
necessary to physically separate the Subleased Premises from the Main Premises.
Such entry and walls shall be constructed to the satisfaction of both Sublessor
and Landlord. In addition, Sublessee shall have access to the Main Premises to
remove its equipment from the Main Premises, as provided in a Settlement, Escrow
and Security Agreement between Landlord and Sublessee of even date, such access
to terminate on June 15, 1996; or to construct the improvements to be
constructed in accordance with Section 6(k) hereof, if such access is necessary.
All such access shall be upon prior notice to Sublessor, shall be at Sublessee's
sole risk, notwithstanding any provision to the contrary herein, shall not
unreasonably interfere with the Sublessor's operation of its business, and
Sublessee indemnifies Sublessor from all claims, loss or damage related to such
access, and Sublessee agrees not to store any equipment in any conference room
of Sublessor or other location, during any such period of access.
11. Estoppel Certificate. Sublessee agrees, from time to time, upon not
less than ten (10) days' prior written request by either Sublessor or Landlord,
to execute, acknowledge and deliver to Sublessor a statement in writing,
addressed to such party as either Sublessor or Landlord shall designate in its
notice to Sublessee, certifying that this Sublease Agreement is unmodified and
in full force and effect and that Sublessee has no defenses, offsets or
counterclaims against its obligations to pay the Fixed Rent and additional rent
and to perform its other covenants under this Sublease Agreement (or if there
have been any modifications that the same is in full force and effect as
modified and stating the modifications and, if there are any defenses, offsets,
counterclaims or defaults, setting them forth in reasonable detail), the dates
to which the Fixed Rent and additional rent have been paid, a statement that
Sublessor is not in default hereunder (or if in default, the nature of such
default, in reasonable detail and any additional information reasonably
requested by either Sublessor or Landlord. Any such statement delivered pursuant
to this Section 12 may be relied upon by any prospective purchaser or mortgagee
of the Subleased Premises.
12. Sublease Subordinate. This Sublease Agreement shall be subject and
subordinate to any mortgage now or hereafter placed on the Main Premises,
or any portion or portions thereof or interest therein. This Section 13 shall be
self-operative and no further instrument of subordination shall be required.
13. Waiver of Subrogation. Any insurance carried by either party with
respect to the Main Premises (or any portion thereof and property therein or
occurrence thereon) shall, if it can be so written without additional premium,
or with an additional premium which the other party agrees to pay, include a
clause or endorsement denying to the insurer rights of subrogation against the
other party to the extent rights have been waived by the insured prior to
occurrence of injury or loss. Each party, notwithstanding any provisions of this
Lease to the contrary, hereby waives any rights or recovery against the other
for injury or loss due to hazards covered by insurance containing such clause or
endorsement to the extent of the indemnification received thereunder.
14. Access. Upon reasonable advance notice and at reasonable times, subject
to Sublessee's security practices and in such manner as to minimize interruption
of Sublessee's business operations, except in cases of emergency, in which case
no such notice shall be required, Sublessor or its representative may enter to
view the Subleased Premises to assure compliance with the terms of this Sublease
Agreement and for purposes of carrying out its maintenance and repair
obligations hereunder.
15. Assignment and Subletting. Sublessee shall not assign or Sublease the
Subleased Premises or any portion thereof, without the prior written consent of
Sublessor and Landlord, which consent may be withheld in the sole discretion of
either Sublessor or Landlord. Provided, however, that Sublessee may sublet a
portion of the Subleased Premises to Union Biometrica, Inc., upon prior written
notice to Sublessor and Landlord of such subletsublet no consent of either
Landlord or Sublessor shall be require, provided that such Sublease shall state
that it shall be wholly subject and subordinate to the terms of the Overlease
and this Sublease. Any such Sublease shall provide that it will terminate
immediately upon any default, beyond applicable cure periods, of Sublessee or
Sublessor under the Sublease and Lease, respectively.
16. Relationship between Sublessor and Sublessee. The parties hereto agree
that the relationship between Sublessor and Sublessee hereunder shall, except as
otherwise provided herein, be governed by the provisions of the Overlease as if
they were Landlord and Tenant under the Overlease.
17. Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed duly served if and when delivered by hand, by
overnight courier (nationally recognized) or mailed by registered, or certified
mail, postage prepaid, return receipt requested, and addressed;
If to Sublessor: T Cell Sciences, Inc.
115 Fourth Avenue
Dedham, MA 02192
Attention: General Counsel
with copies to: Robert Orsi, Esq.
Tarlow, Breed, Hart, Murphy & Rodgers, P.C.
21 Custom House Street
Boston, MA 02110
If to Sublessee: Repligen Corporation
117 Fourth Avenue
Needham, MA 02192
Attention: Walter Herlihy
with copies to: Testa, Hurwitz & Thibeault, L.L.P.
125 High Street
Boston, MA 02110
ATTN: Real Estate Department
Any of the persons named in this Section 17 may change the address for notices
by written notice sent to each of the other persons at the addresses as set
forth herein.
18. Severability. If any provision of this Sublease Agreement shall to
any extent be determined by any court of competent jurisdiction to be
invalid or unenforceable for any reason. the parties agree to amend this
Sublease Agreement so as to effectuate the original intent of Sublessor and
Sublessee.
19. Entire Agreement. Except for the services agreement to be executed
between the parties, this Sublease Agreement is the entire agreement between the
parties relating to the sublease or the Subleased Premises. This Sublease
Agreement may not be amended, altered or modified except by instrument in
writing and executed by Sublessor and Sublessee.
21. Governing Law. This Sublease Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts.
22. Bind and Inure. This Sublease Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and assigns.
23. Defined Terms. All capitalized terms not otherwise defined herein
shall have the meaning ascribed thereto in the Overlease.
24. Brokerage. Each of Sublessor and Sublessee represents and warrants that
it has not had any dealings with any realtors, brokers or agents in connection
with the negotiation of this Sublease. Each party shall defend, hold harmless
and indemnify the other and Landlord from and against any claims, liabilities,
losses or expenses, including reasonable attorneys fees, incurred by the other
or Landlord in connection with any breach of the foregoing representation and
warranty by such party.
25. Notwithstanding any contrary provision of this Sublease, in any
instance where a specific cure period is granted to Sublessor, as Tenant under
the Lease, before Sublessor is considered to be in default under the Lease, the
Sublessee, as tenant under this Sublease, shall be deemed to have the same cure
period, less three days, before Sublessee is considered in default beyond
applicable cure periods under this Sublease, except in the event of a failure in
the performance of any of Sublessee's obligations to pay any sum payable under
this Sublease, as to which the cure period shall be three days following receipt
of written notice of such default from Sublessor..
26. Sublessor's Representations and Warranties. Sublessor warrants and
represents that:
(i) The copy of the Overlease attached to this Sublease as Exhibit A
is a complete and accurate copy of the Overlease, which is in effect
and has not been amended;
(ii) To the best of Sublessor's knowledge, Landlord is not in default
under the Overlease, nor has any event occurred which, after any
applicable notice and/or the expiration of any grace period, shall
constitute a default by Landlord under the Overlease;
(iii) To the best of Sublessor's knowledge, Sublessor is not in
default under the Overlease, nor has any event occurred which, after
any applicable notice and/or the expiration of any grace period, shall
constitute a default by Sublessor under the Overlease;
(iv) All rent, additional rent and other charges due under the
Overlease have been paid as required through May 31, 1996;
(v) The Overlease is in full force and effect;
(vi) Landlord has represented to Sublessor that the Overlease has not
been encumbered by any prior transfer, assignment or encumbrance other
than a mortgage to Baybank, and to Metpath; and
(vii) Sublessor has full and lawful authority to enter into this
Sublease, subject only to Landlord's consent.
c. Notwithstanding the foregoing, as between Sublessor and Sublessee, the
terms and conditions hereof shall be controlling whenever the terms and
conditions of the Overlease are contradictory to or inconsistent with the terms
and conditions hereof. Sublessor shall, upon written request by Sublessee, at
Sublessee's cost use diligent efforts to obtain from Landlord all permissions,
consents, approvals and documents needed by Sublessee to perform any act
permitted by this Sublease by reason of the incorporation by reference of the
terms, covenants and conditions of the Overlease, but Sublessee shall bear any
monetary costs associated with obtaining such consents.
EXECUTED under seal as of the date first hereinabove set forth.
Sublessor:
T CELL SCIENCES, INC.
By: Alan W. Tuck, President
Sublessee:
REPLIGEN CORPORATION
By: Avery W. Catlin, Vice President, Finance
Exhibit 22
SUBSIDIARIES OF REPLIGEN CORPORATION
RGEN Corporation
Amira, Inc.
Repligen Development Corporation
Glycan Pharmaceuticals, Inc.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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