SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 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 0-14656
REPLIGEN CORPORATION
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
------------------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report.)
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 the number of shares outstanding of each of the issuer's classes
of common stock, as of February 10, 1997.
Common Stock, par value $.01 per share 15,903,211
- -------------------------------------- ----------------
Class Number of Shares
<PAGE>
REPLIGEN CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
PAGE
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
December 31, 1996 and March 31, 1996 3
Condensed Consolidated Statements of Operations
for the Three and Nine Months Ended December 31, 1996
and March 31, 1996 4
Condensed Consolidated Statement of Cash Flows for
the Nine Months Ended December 31, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities
None
Item 4. Submissions of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K 11
(a) Exhibits
10.1 Form of Stock Exchange Agreement
10.2 Form of Warrant Exchange Agreement
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None
Signature 12
Exhibit Index 13
Exhibits 14
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
REPLIGEN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31, March 31,
1996 1996
ASSETS ------------ ---------
Current assets:
Cash and cash equivalents $ 3,317,172 $ 6,944,140
Marketable securities 140,411 278,115
Accounts receivable 663,974 421,254
Amounts due from affiliates -- 42,284
Inventories 444,440 701,224
Prepaid expenses and other current assets 153,367 188,554
----------- -----------
Total current assets 4,719,364 8,575,571
Property, plant and equipment, at cost:
Equipment 701,146 688,091
Furniture and fixtures 25,966 20,422
Leasehold improvements 350,421 2,000
----------- -----------
1,077,533 710,513
Less: accumulated depreciation and amortization 301,747 176,946
----------- -----------
775,786 533,567
Restricted cash 104,466 --
Other assets, net 115,489 121,389
----------- -----------
$ 5,715,105 $ 9,230,527
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $253,875 $ 546,129
Accrued expenses 332,826 3,720,881
Unearned income 233,314 154,998
----------- -----------
Total current liabilities 820,015 4,422,008
Commitments and contingencies
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 -- 15,903,211 and
15,602,542 shares at December
31, 1996 and March 31, 1996, respectively 159,032 156,025
Additional paid-in capital 128,111,286 127,694,145
Accumulated deficit (123,375,228) (123,041,651)
----------- -----------
Total stockholders' equity 4,895,090 4,808,519
----------- -----------
$ 5,715,105 $ 9,230,527
=========== ============
See accompanying notes to consolidated financial statements.
3
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REPLIGEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended December 31, Nine Months Ended December 31,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Research and development $ 440,180 $ 1,674,850 $ 890,641 $ 7,534,479
Product 503,049 169,289 1,123,827 1,543,026
Investment income 98,744 161,394 206,543 624,111
Other 24,593 98,833 667,180 258,184
--------- --------- --------- ---------
1,066,566 2,104,366 2,888,191 9,959,800
--------- --------- --------- ---------
Costs and expenses:
Research and development 240,139 2,863,923 934,599 10,194,582
Selling, general and administrative 353,775 1,426,515 1,540,137 4,469,977
Cost of goods sold 211,538 113,828 363,187 1,103,505
Interest -- 2,125 -- 66,601
Charge for purchased research &
development 365,285 -- 365,285 --
--------- --------- --------- ---------
1,170,737 4,406,391 3,203,208 15,834,665
Net loss $(104,171) $(2,302,025) $ (315,017) $(5,874,865)
========= ========= ========= =========
Net loss per common share $ (0.01) $ (0.15) $ (0.02) $ (0.38)
========= ========= ========= =========
Weighted average common shares
outstanding 15,605,846 15,358,938 15,603,639 15,358,555
========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
REPLIGEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended December 31,
------------------------------
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (315,017) $ (5,874,865)
Adjustments to reconcile net loss to net cash
used in operating activities -
Depreciation and amortization 128,709 1,126,356
Compensation charge from stock options 32,395 --
Equity in net loss of an affiliate -- 227,636
Charge for purchased research & development 365,285 --
Net proceeds from sales of property, plant & equipment -- 133,389
Changes in assets and liabilities -
Accounts receivable (242,720) 1,436,993
Amounts due from affiliates 42,284 960,435
Inventories 256,784 (9,149)
Prepaid expenses and other current assets 35,187 187,973
Accounts payable (292,254) (223,829)
Accrued expenses (3,388,055) (2,720,615)
Unearned income 78,316 (203,000)
----------- -----------
Net cash used in operating activities (3,299,086) (4,958,676)
----------- -----------
Cash flows from investing activities:
Decrease in marketable securities 137,704 116,488
Purchases of property, plant and equipment, net (367,020) (687,581)
Decrease in other assets 5,900 --
(Increase) decrease in restricted cash (104,466) 273
----------- -----------
Net cash used in investing activities (327,882) (570,820)
----------- -----------
Cash flows from financing activities:
Proceeds from sales of common stock -- 418,726
Proceeds from note receivable due from affiliate -- 4,620,000
Payment of term loan to bank -- (4,620,000)
----------- -----------
Net cash provided by financing activities -- 418,726
----------- -----------
Net decrease in cash and cash equivalents (3,626,968) (5,110,770)
Cash and cash equivalents, beginning of period 6,944,140 13,821,387
----------- -----------
Cash and cash equivalents, end of period $ 3,317,172 $ 8,710,617
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid for interest $ -- $ 280,042
=========== ===========
Supplemental disclosure of non-cash financing activities:
Restricted cash released to lessor of certain equipment $ -- $ 1,000,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
REPLIGEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The condensed consolidated financial statements included herein have
been prepared by Repligen Corporation (the "Company" or "Repligen"),
pursuant to the rules and regulations of the Securities and Exchange
Commission for quarterly reports on Form 10-Q and do not include all of
the information and footnote disclosures required by generally accepted
accounting principles. These financial statements should be read in
conjunction with the audited financial statements and notes thereto
included in the Company's Form 10-K for the year ending March 31, 1996.
In the opinion of management, the accompanying unaudited financial
statements include all adjustments consisting of only normal, recurring
adjustments necessary to present fairly, the consolidated financial
position, results of operations and cash flows. The results of operations
for the interim periods presented are not necessarily indicative of
results to be expected for the entire year.
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 reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
2. Net Loss Per Common Share
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 as the effect would be
antidilutive and as the company anticipates a loss for fiscal 1997 no
common stock equivalents are used for the net income per share
calculation. Fully diluted net loss per common share has not been
presented as it is not significantly different.
3. Cash Equivalents and Marketable Securities
The Company considers all highly liquid investments with a maturity of
three months or less at the time of acquisition to be cash equivalents.
Included in cash equivalents at December 31, 1996 are $589,000 of money
market funds and $2,588,000 of commercial paper. Investments with a
maturity period of greater than three months are classified as marketable
securities and consist of approximately $140,000 of marketable securities
and approximately $45,000 of collateralized mortgage obligations at
December 31, 1996. These collarateralized mortgage obligations are
reported at amortized cost, which approximates fair market value at
December 31, 1996.
4. Inventories
Inventories are stated at the lower of cost (first-in, first-out) or
market and consist of the following:
December 31, March 31,
1996 1996
----------- --------
Raw materials and work-in-process $141,662 $ 1,955
Finished goods 302,778 699,269
-------- --------
$444,440 $701,224
======== ========
6
<PAGE>
Work in process and finished goods inventories consist of material,
labor and manufacturing overhead.
5. Restructuring of Operations
During the fiscal year ended March 31, 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.
During the first quarter of fiscal 1997, ended June 30, 1996, the
Company paid approximately $300,000 and $3,033,000 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
$1,314,000, net of selling expenses.
In addition to the settlement payment of $300,000 made to the facility
landlord, the Company was also required to set aside $250,000 of
restricted cash in an escrow account. These funds are to be invested by
the Company, with the landlord's prior approval, in leasehold
improvements, primarily refurbishment of laboratory spaces at its Needham,
Massachusetts headquarters. As of December 31, 1996, the balance in this
escrow account was $104,466.
5. Charge for Purchased Research & Development
In the three months ended December 31, 1996, the company acquired, in
exchange for the Company's common stock, all of the outstanding preferred
shares and warrants to purchase common stock of Glycan's subsidiary,
ProsCure, Inc. This acquisition increases Repligen's interest in ProsCure
from 63% to 90%. Proscure has licensed the rights to certain drug
discovery technologies and lead compounds for application to the field of
cancer from Glycan, a wholly owned subsidiary of the Company. The
technology acquired will require further development by the Company.
Accordingly, these costs were expensed as of the acquisition date.
Expenses for the three and nine months ended December 31, 1996 include
this non-recurring charge of $365,000 for purchased research and
development.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-Looking Statements
Statements in this Quarterly Report on Form 10-Q under this caption,
"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 facts 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.
Fiscal 1996 Restructuring
During the 1996 fiscal year ended March 31,1996, 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. 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. 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 product development efforts is dependent on increased product sales,
future financing or new partnerships with pharmaceutical companies.
Certain Factors That May Affect Future Results
The Company's future operating results are subject to risks and
uncertainties and are dependent upon many factors, including, without
limitation, the Company's ability to (i) meet its working capital and future
liquidity needs, (ii) successfully implement its restructuring and strategic
growth strategies, (iii) understand, anticipate and respond to rapidly changing
technologies and market trends, (iv) develop, manufacture and deliver high
quality, technologically advanced products on a timely basis to withstand
competition from competitors which may have greater financial, information
gathering and marketing resources than the Company, (v) obtain and protect
licensing and intellectual property rights necessary for the Company's
technology and product development on terms favorable to the Company, and (vi)
recruit and retain highly talented professionals in a competitive job market.
Each of these factors, and others, are discussed from time to time in the
filings made by the Company with the Securities and Exchange Commission.
Results of Operations
Revenues
Total revenues for the three month periods ended December 31, 1996 and
1995 were $1,067,000 and $2,104,000, respectively, a decrease of
approximately 49%. Year to date total revenues decreased approximately 71%
to $2,888,000 at December 31, 1996 from $9,960,000 at December 31, 1995.
8
<PAGE>
Research and development revenues for the three month period ended
December 31, 1996 were $440,000 compared to $1,675,000 in the comparable
fiscal 1996 period. The decrease in the second quarter of fiscal 1997 from
the comparable fiscal 1996 period is due primarily to the loss of
significant revenues related to contracts with Eli Lilly and Company
("Lilly") and Repligen Clinical Partners, L.P. (the "Partnership"). In the
first nine months of fiscal 1997, the Company recorded research and
development revenues totaling $891,000 consisting primarily of $662,000
from contracted research and development programs and $229,000 from
licensing revenues. In the first nine months of fiscal 1996, research and
development revenues were $7,534,000.
Product revenues for the three months ended December 31, 1996 and 1995
were $503,000 and $169,000, respectively, and were $1,124,000 and
$1,543,000 for the nine months ended December 31, 1996 and 1995,
respectively. The decrease in product sales is attributable to the
discontinuance by Repligen of contract manufacturing that took place
during fiscal 1996, partially offset by an increase in sales of the
Protein A product line.
Investment income decreased in fiscal 1997 over the comparable three
and nine month periods in fiscal 1996 primarily due to lower average funds
available for investment.
Other revenues for the three and nine month periods ended December 31,
1996 increased from the comparable fiscal 1996 periods primarily due to
the one-time sale of equipment and furnishings by the Company for $207,000
and the one-time sale of non-investment securities held by the Company for
approximately $300,000.
Expenses
During fiscal 1996, the Company substantially restructured its
operations, resulting in a significant reduction in its current rate of
expenditures. In May 1996, the Company relocated its headquarters
operations from Cambridge, Massachusetts to approximately 13,000 square
feet of subleased office and laboratory space in Needham, Massachusetts.
This move has resulted in a substantial savings in rent and related
facility costs. If the move had been effective as of April 1, 1996,
facility related expenses during the nine months ended December 31, 1996
would have been lower by approximately $436,000.
Total expenses for the three month periods ended December 31, 1996 and
1995 decreased 73% to $1,171,000 from $4,406,000 and decreased 80% to
$3,203,000 from $15,835,000 for the nine months ended December 31, 1996
and 1995, respectively. The decrease in expenses reflects lower operating
costs as a result of the fiscal 1996 restructuring efforts, including
significantly lower headcount.
Research and development expenses for the three months ended December
31, 1996 and 1995 were $240,000 and $2,864,000 and for the nine months
ended December 31, 1996 and 1995 were $935,000 and $10,195,000. The
decrease in expenses in fiscal 1997 from the comparable period in fiscal
1996 reflect the discontinuation of activities pursuant to the contract
with Lilly and the Partnership and the Company's efforts to reduce costs.
Selling, general and administrative expenses for the three month and
nine month periods ended December 31, 1996 were $354,000 and $1,540,000,
respectively, which reflects a decrease of $1,073,000 and $2,930,000 from
the comparable 1996 periods. These decreases resulted from the reduction
of administrative personnel and related expenses as part of the Company's
cost reduction efforts.
Cost of goods sold for the three month and nine month periods ended
December 31, 1996 were $212,000 and $363,000 respectively, as compared to
$114,000 and $1,104,000 for the three and nine months ended December 31,
1995. Cost of goods sold in the three month and nine month periods ended
December 31, 1996 and 1995 were 42% and 32% of product revenues and were
67% and 72% in the comparable 1996 periods. The decreases in cost of sales
as a percentage of revenue
9
<PAGE>
are primarily a result of the realization of inventory that had previously
been reserved for and the discontinuation of contract manufacturing
activity in fiscal 1996.
In the three months ended December 31, 1996, the company acquired, in
exchange for the Company's common stock, all of the outstanding preferred
shares of Glycan's subsidiary, ProsCure, Inc. This acquisition increases
Repligen's interest in ProsCure from 63% to 90%. Proscure has licensed the
rights to certain drug discovery technologies and lead compounds for
application to the field of cancer from Glycan, a wholly owned subsidiary
of the Company. The technology acquired will require further development
by the Company. Accordingly, these costs were expensed as of the
acquisition date. Expenses for the three and nine months ended December
31, 1996 include this non-recurring charge of $365,000 for purchased
research and development.
Capital Resources and Liquidity
The Company's total cash, cash equivalents and marketable securities
decreased to $3,458,000 at December 31, 1996 from $7,222,000 at March 31,
1996, a decrease of $3,764,000 or 52%. The decrease reflects net losses
during the nine month period ended December 31, 1996 of approximately
$315,000, the reduction of accounts payable and accrued expenses of
$3,680,000 including the net payment of accrued restructuring expenses of
$2,469,000, offset in part by the reduction in inventories and prepaid
expenses of $292,000. Working capital decreased to $3,899,000 at December
31, 1996 from $4,154,000 at March 31, 1996.
The Company has funded operations primarily with cash derived from the
sales of its equity securities, research and development contracts,
product sales, investment income and the sale of the Company's share of a
joint venture. The Company believes it has sufficient cash equivalents and
marketable securities to satisfy working capital and capital expenditure
requirements for the next twelve months. Should the Company need to secure
additional financing to meet its future liquidity requirements, there can
be no assurances that the Company will be able to secure such financing,
or that such financing, if available, will be on terms favorable to the
Company. Management believes that the Company's current operations are not
materially impacted by the effects of inflation.
10
<PAGE>
PART II. OTHER INFORMATION
Item 2. CHANGES IN SECURITIES
On December 30, 1996 the Company issued 300,669 shares of common stock in
exchange for all of the outstanding preferred shares and warrants to purchase
common stock of Glycan's subsidiary, Proscure, Inc. The Company claims that the
offer and sale of the shares were exempt from registration pursuant to Rule 505
of Regulation D under the Securities Act of 1933, as amended, in reliance upon
the representations and warranties of the purchasers of the shares.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT DESCRIPTION
------- -----------
10.1 Form of Stock Exchange Agreement
10.2 Form of Warrant Exchange Agreement
27.1 Financial Data Schedule
(b) Reports on Form 8-K
No current reports on Form 8-K were filed by the Company during the
quarter covered by this report.
11
<PAGE>
SIGNATURE
Pursuant to the requirements 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
(Registrant)
Date: February 10, 1997 By: /S/ Walter C. Herlihy
---------------------
Chief Executive Officer
Signing on behalf of the Registrant
and as Principal Financial and
Accounting Officer
12
<PAGE>
REPLIGEN CORPORATION AND SUBSIDIARIES
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE
----------- ----------- ----
10.1 Form of Stock Exchange Agreement 15
10.2 Form of Warrant Exchange Agreement 19
27.1 Financial Data Schedule 23
13
<PAGE>
EXHIBIT 10.1 FORM OF STOCK EXCHANGE AGREEMENT
((Name))
-----------------------
Name of Stockholder
STOCK EXCHANGE AGREEMENT
Repligen Corporation
117 Fourth Avenue
Needham, Massachusetts 02194
Ladies and Gentlemen:
1. Exchange. Subject to the terms and conditions hereof, the
undersigned hereby irrevocably agrees to exchange (the "Exchange") an aggregate
of ((PShares)) shares of ((Series)) Preferred Stock, $.01 par value (the
"Preferred Shares"), of ProsCure, Inc., a Delaware corporation ("ProsCure"), for
((RShares)) shares of Common Stock, $.01 par value (the "Repligen Shares"), of
Repligen Corporation, a Delaware corporation ("Repligen"), and tenders herewith
the certificate or certificates representing the Preferred Shares and a
completed stockpower (the "Stockpower") transferring ownership of such shares to
Repligen. The Preferred Shares tendered herewith shall be deemed transferred to
Repligen effective as of the Closing (as defined below) and the undersigned
shall be deemed to have received the Repligen Shares as of the Closing.
2. The Closing. Subject to the terms of this Agreement, the exchange of
the shares shall take place at a closing (the "Closing") to be held at the
offices of Testa, Hurwitz and Thibeault, LLP at 10:00am on or before December
18, 1996 (the "Closing Date"), or at such other place and time as may be
mutually agreed upon.
3. Condition to Exchange; Escrow Account. The undersigned understands
and agrees that the Closing of the Exchange is conditional upon the receipt by
Repligen of commitments to exchange not fewer than an aggregate of 245,000
shares of Series A Preferred Stock, $.01 par value, and Series B Preferred
Stock, $.01 par value, of ProsCure from the stockholders listed on Schedule A
attached hereto. The undersigned understands that the certificate or
certificates representing the Preferred Shares and the Stockpower will be
returned to the undersigned if all conditions precedent to Closing are not
satisfied by December 18, 1996. It is understood and agreed that if all
conditions precedent to Closing are satisfied, the Preferred Shares tendered
herewith shall be deemed transferred to Repligen effective as of the Closing and
the undersigned shall be deemed to have received the Repligen Shares as of the
Closing.
4. Representations and Warranties of the Undersigned. In
connection with the exchange of the Preferred Shares for the Repligen Shares,
the undersigned hereby represents and warrants to Repligen as follows:
(a) The undersigned has, and on the Closing Date will have,
valid and unencumbered title to the Preferred Shares to be exchanged by the
undersigned, free and clear of all liens, charges, restrictions, claims and
encumbrances of any nature other than those imposed under any applicable federal
and state securities laws.
(b) The undersigned has the full right, power and authority to
enter into this Agreement and to sell, assign, transfer and deliver the
Preferred Shares to Repligen, free and clear of all liens, restrictions, claims
and encumbrances of any nature other than those imposed under applicable federal
and state securities laws, and upon the delivery of the Repligen Shares as
payment for the Preferred Shares hereunder, Repligen will acquire valid and
unencumbered title to the Preferred Shares to be transferred by the undersigned.
14
<PAGE>
(c) The undersigned confirms that the undersigned understands
and has fully considered for purposes of this investment the risks of this
investment and understands that (i) this investment is suitable only for an
investor who is able to bear the economic consequences of losing his, her or its
entire investment, (ii) the exchange of the Preferred Shares for the Repligen
Shares is a speculative investment which involves a high degree of risk, and
(iii) there are substantial restrictions on the transferability of, and there
will be no immediate public market for, the Repligen Shares, and accordingly, it
may not be possible for the undersigned to liquidate his, her or its investment
in case of emergency.
(d) The undersigned has such knowledge and experience in
financial and business matters to be capable of evaluating the merits and risks
of this speculative investment and of making an informed investment decision.
The undersigned has reviewed copies of Repligen's filings with the Securities
and Exchange Commission that were sent to the undersigned along with this
Agreement.
(e) The Repligen Shares are being acquired by the undersigned
solely for the undersigned's own personal account, for investment purposes only,
and not with a view to, or in connection with, any resale or distribution
thereof. The undersigned has no contract, undertaking, understanding, agreement
or arrangement, formal or informal, with any person to sell, transfer or pledge
to any person the Repligen Shares, or any part thereof, or any interest therein
or any rights thereto. The undersigned has no present plans to enter into any
such contract, undertaking, agreement or arrangement. The undersigned must bear
the economic risk of the investment for an indefinite period of time because the
Repligen Shares have not been registered under the Securities Act and applicable
state securities laws and, therefore, cannot be sold unless they are
subsequently registered under the Securities Act and applicable state securities
laws or unless an exemption from such registration is available.
(f) This Agreement has been duly executed and delivered by the
undersigned and constitutes the legal, valid and binding obligation of the
undersigned, enforceable in accordance with its terms.
5. Representations and Warranties of Repligen.
(a) Repligen has full power and authority and has taken all
required corporate and other action necessary to permit it to execute and
deliver and to carry out the terms of this Agreement and all other documents or
instruments required hereby.
(b) The Repligen Shares have been duly authorized and when
issued in accordance with the terms of this Agreement will be validly issued,
fully paid and nonassessable with no personal liability attaching to the
ownership thereof.
6. Restrictive Legend: The undersigned consents to the placement
of a restrictive legend on the certificate(s) for the Repligen Shares as
required by applicable securities laws.
7. Registration Rights. Repligen hereby agrees to use its best efforts
to prepare and file a registration statement on Form S-3 under the Securities
Act of 1933, as amended (the "Registration Statement"), within 180 days
following the Closing Date to register the Repligen Shares issued hereunder for
resale in the public market. Repligen will use its best efforts to achieve and
maintain the effectiveness of such Registration Statement until the earlier of
(i) the third anniversary of the Closing Date or (ii) all shares originally
registered under such Registration Statement shall have been sold. Repligen may
from time to time amend or supplement the Registration Statement and the
prospectus contained therein (the "Prospectus") to the extent necessary to
comply with the Securities Act of 1933, as amended, and any applicable state
securities statue or regulation. Repligen will pay all expenses incident to
Repligen's performance or compliance with this Section 7, including, without
limitation, all registration and filing fees, all printing expenses, all
transfer agents' fees and all fees and disbursements of Repligen's counsel.
8. Transferability. The undersigned agrees that its interest
hereunder are not assignable or transferable, and further agrees that the
assignment and transfer of the Repligen Shares acquired pursuant hereto shall
be made only in accordance with all applicable laws.
15
<PAGE>
9. Miscellaneous. This Agreement constitutes the entire agreement
between the parties relative to the subject matter of the Exchange, and
supersedes all proposals or agreements, written or oral, and all other
communications between the parties relating to the subject matter of this
Agreement. No provision of this Agreement shall be waived, amended, modified,
superseded, canceled, terminated, renewed or extended except in a written
instrument signed by both parties hereto. Any waiver shall be limited to the
particular instance and for the particular purpose when and for which it is
given. The invalidity, illegality or unenforceability of any provision of this
Agreement shall in no way effect the validity, legality or enforceability of any
other provision of this Agreement and this Agreement shall be construed and
reformed by any court of competent jurisdiction to give full effect to the
essential purposes of this Agreement. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the laws of the state of Delaware and the federal securities laws. All notices
provided for in this Agreement shall be given in writing and shall be effective
when either served by personal delivery, express overnight courier service,
electronic facsimile transmission, or by first class mail, postage prepaid,
addressed to the parties at their respective addresses herein set forth, or to
such other address or addresses as either party may later specify by written
notice to the other. This Agreement may be executed in duplicate counterparts,
which, when taken together, shall constitute one instrument and each of which
shall be deemed to be an original instrument.
10. Survival of Representations. The representations and warranties of
the undersigned contained in Section 4 are true and accurate as of the date of
this Agreement and shall be true and accurate as of the date of the Closing and
the undersigned's receipt of the Repligen Shares, and such representations and
warranties shall survive such delivery and acceptance. If in any respect such
representations and warranties shall not be true and accurate, the undersigned
shall give immediate written notice of such fact to Repligen specifying which
representations and warranties are not true and accurate and the reasons
therefor.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
16
<PAGE>
IN WITNESS WHEREOF, the undersigned has hereby executed this Stock
Exchange Agreement as of this ___ day of ________, 1996.
- ------------------------------ --------------------------------
Signature Street Address
--------------------------------
- ------------------------------ City of Town
Print Name
--------------------------------
State Zip Code
- ------------------------------ --------------------------------
Social Security Number Telephone Number
REPLIGEN CORPORATION
By:_____________________________
Walter C. Herlihy
President
17
<PAGE>
EXHIBIT 10.2 FORM OF WARRANT EXCHANGE AGREEMENT
((Name))
--------
Name of Warrant holder
WARRANT EXCHANGE AGREEMENT
Repligen Corporation
117 Fourth Avenue
Needham, Massachusetts 02194
Ladies and Gentlemen:
1. Exchange. Subject to the terms and conditions hereof, the
undersigned hereby irrevocably agrees to exchange (the "Exchange") a warrant
(the "Warrant") to purchase an aggregate of ((PShares)) shares of common stock,
$.01 par value, of ProsCure, Inc., a Delaware corporation ("ProsCure"), for
((RShares)) shares of Common Stock, $.01 par value (the "Repligen Shares"), of
Repligen Corporation, a Delaware corporation ("Repligen"), and tenders herewith
the original Warrant and a completed assignment (the "Assignment") transferring
ownership of such shares to Repligen. The Warrant tendered herewith shall be
deemed transferred to Repligen as of the Closing (as defined below) and the
undersigned shall be deemed to have received the Repligen Shares as of the
Closing.
2. The Closing. Subject to the terms of this Agreement, the Exchange
shall take place at a closing (the "Closing") to be held at the offices of
Testa, Hurwitz and Thibeault, LLP at 10:00am on or before December 18, 1996 (the
"Closing Date"), or at such other place and time as may be mutually agreed upon.
3. Condition to Exchange; Escrow Account. The undersigned understands
and agrees that the Closing of the Exchange is conditional upon the receipt by
Repligen of commitments to exchange not fewer than an aggregate of 245,000
shares of Series A Preferred Stock, $.01 par value, and Series B Preferred
Stock, $.01 par value, of ProsCure from the stockholders listed on Schedule A
attached hereto. The undersigned understands that the Warrant and the Assignment
will be returned to the undersigned if all conditions precedent to Closing are
not satisfied by December 18, 1996. It is understood and agreed that if all
conditions precedent to the Closing of the Exchange are satisfied, the Warrant
shall be deemed transferred to Repligen effective as of the Closing and the
undersigned shall be deemed to have received the Repligen Shares as of the
Closing.
4. Representations and Warranties of the Undersigned. In
connection with the exchange of the Warrant for the Repligen Shares, the
undersigned hereby represents and warrants to Repligen as follows:
(a) The undersigned has, and on the Closing Date will have,
valid and unencumbered title to the Warrant to be exchanged by the undersigned,
free and clear of all liens, charges, restrictions, claims and encumbrances of
any nature other than those imposed under any applicable federal and state
securities laws.
(b) The undersigned has the full right, power and authority to
enter into this Agreement and to sell, assign, transfer and deliver the Warrant
to Repligen, free and clear of all liens, restrictions, claims and encumbrances
of any nature other than those imposed under applicable federal and state
securities laws, and upon the delivery of the Repligen Shares as payment for the
Warrant hereunder, Repligen will acquire valid and unencumbered title to the
Warrant to be transferred by the undersigned.
18
<PAGE>
(c) The undersigned confirms that the undersigned understands
and has fully considered for purposes of this investment the risks of this
investment and understands that (i) this investment is suitable only for an
investor who is able to bear the economic consequences of losing his, her or its
entire investment, (ii) the exchange of the Warrant for the Repligen Shares is a
speculative investment which involves a high degree of risk, and (iii) there are
substantial restrictions on the transferability of, and there will be no
immediate public market for, the Repligen Shares, and accordingly, it may not be
possible for the undersigned to liquidate his, her or its investment in case of
emergency.
(d) The undersigned has such knowledge and experience in
financial and business matters to be capable of evaluating the merits and risks
of this speculative investment and of making an informed investment decision.
The undersigned has reviewed copies of Repligen's filings with the Securities
and Exchange Commission that were sent to the undersigned along with this
Agreement.
(e) The Repligen Shares are being acquired by the undersigned
solely for the undersigned's own personal account, for investment purposes only,
and not with a view to, or in connection with, any resale or distribution
thereof. The undersigned has no contract, undertaking, understanding, agreement
or arrangement, formal or informal, with any person to sell, transfer or pledge
to any person the Repligen Shares, or any part thereof, or any interest therein
or any rights thereto. The undersigned has no present plans to enter into any
such contract, undertaking, agreement or arrangement. The undersigned must bear
the economic risk of the investment for an indefinite period of time because the
Repligen Shares have not been registered under the Securities Act and applicable
state securities laws and, therefore, cannot be sold unless they are
subsequently registered under the Securities Act and applicable state securities
laws or unless an exemption from such registration is available.
(f) This Agreement has been duly executed and delivered by the
undersigned and constitutes the legal, valid and binding obligation of the
undersigned, enforceable in accordance with its terms.
5. Representations and Warranties of Repligen.
(a) Repligen has full power and authority and has taken all
required corporate and other action necessary to permit it to execute and
deliver and to carry out the terms of this Agreement and all other documents or
instruments required hereby.
(b) The Repligen Shares have been duly authorized and when
issued in accordance with the terms of this Agreement will be validly issued,
fully paid and nonassessable with no personal liability attaching to the
ownership thereof.
6. Restrictive Legend: The undersigned consents to the placement
of a restrictive legend on the certificate(s) for the Repligen Shares as
required by applicable securities laws.
7. Registration Rights. Repligen hereby agrees to use its best efforts
to prepare and file a registration statement on Form S-3 under the Securities
Act of 1933, as amended (the "Registration Statement"), within 180 days
following the Closing Date to register the Repligen Shares issued hereunder for
resale in the public market. Repligen will use its best efforts to achieve and
maintain the effectiveness of such Registration Statement until the earlier of
(i) the third anniversary of the Closing Date or (ii) all shares originally
registered under such Registration Statement shall have been sold. Repligen may
from time to time amend or supplement the Registration Statement and the
prospectus contained therein (the "Prospectus") to the extent necessary to
comply with the Securities Act of 1933, as amended, and any applicable state
securities statue or regulation. Repligen will pay all expenses incident to
Repligen's performance or compliance with this Section 7, including, without
limitation, all registration and filing fees, all printing expenses, all
transfer agents' fees and all fees and disbursements of Repligen's counsel.
8. Transferability. The undersigned agrees that its interest
hereunder are not assignable or transferable, and further agrees that the
assignment and transfer of the Repligen Shares acquired pursuant hereto shall
be made only in accordance with all applicable laws.
19
<PAGE>
9. Miscellaneous. This Agreement constitutes the entire agreement
between the parties relative to the subject matter of the Exchange, and
supersedes all proposals or agreements, written or oral, and all other
communications between the parties relating to the subject matter of this
Agreement. No provision of this Agreement shall be waived, amended, modified,
superseded, canceled, terminated, renewed or extended except in a written
instrument signed by both parties hereto. Any waiver shall be limited to the
particular instance and for the particular purpose when and for which it is
given. The invalidity, illegality or unenforceability of any provision of this
Agreement shall in no way effect the validity, legality or enforceability of any
other provision of this Agreement and this Agreement shall be construed and
reformed by any court of competent jurisdiction to give full effect to the
essential purposes of this Agreement. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the laws of the state of Delaware and the federal securities laws. All notices
provided for in this Agreement shall be given in writing and shall be effective
when either served by personal delivery, express overnight courier service,
electronic facsimile transmission, or by first class mail, postage prepaid,
addressed to the parties at their respective addresses herein set forth, or to
such other address or addresses as either party may later specify by written
notice to the other. This Agreement may be executed in duplicate counterparts,
which, when taken together, shall constitute one instrument and each of which
shall be deemed to be an original instrument.
10. Survival of Representations. The representations and warranties of
the undersigned contained in Section 4 are true and accurate as of the date of
this Agreement and shall be true and accurate as of the date of the Closing and
the undersigned's receipt of the Repligen Shares, and such representations and
warranties shall survive such delivery and acceptance. If in any respect such
representations and warranties shall not be true and accurate, the undersigned
shall give immediate written notice of such fact to Repligen specifying which
representations and warranties are not true and accurate and the reasons
therefor.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
20
<PAGE>
IN WITNESS WHEREOF, the undersigned has hereby executed this Warrant
Exchange Agreement as of this ___ day of ________, 1996.
- ------------------------------ -------------------------------
Signature Street Address
-------------------------------
- ------------------------------ City of Town
Print Name
-------------------------------
State Zip Code
- ------------------------------ -------------------------------
Social Security Number Telephone Number
REPLIGEN CORPORATION
By:___________________________
Walter C. Herlihy
President
21
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> DEC-31-1996
<CASH> 3,317
<SECURITIES> 140
<RECEIVABLES> 664
<ALLOWANCES> 0
<INVENTORY> 444
<CURRENT-ASSETS> 4,719
<PP&E> 1,078
<DEPRECIATION> 302
<TOTAL-ASSETS> 5,715
<CURRENT-LIABILITIES> 820
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,895
<TOTAL-LIABILITY-AND-EQUITY> 5,715
<SALES> 1,124
<TOTAL-REVENUES> 2,888
<CGS> 363
<TOTAL-COSTS> 3,203
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
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<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (315)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
