<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 16, 1999
REGISTRATION NO. 333-79611
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------------------------
Repligen Corporation
(Exact name of Registrant as specified in its charter)
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<TABLE>
<S> <C> <C>
DELAWARE 2836 04-2729386
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
117 FOURTH AVENUE
NEEDHAM, MA 02494
(781) 449-9560
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
----------------------------------------
WALTER C. HERLIHY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
REPLIGEN CORPORATION
117 FOURTH AVENUE
NEEDHAM, MA 02494
(781) 449-9560
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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COPIES OF ALL COMMUNICATIONS, INCLUDING ALL COMMUNICATIONS SENT TO THE
AGENT FOR SERVICE, SHOULD BE SENT TO:
LAWRENCE S. WITTENBERG, ESQ.
Testa, Hurwitz & Thibeault, LLP
High Street Tower
125 High Street
Boston, Massachusetts 02110
(617) 248-7000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the Only Securities Being Registered On This Form are Being Offered
Pursuant to Dividend or Interest Reinvestment Plans, Please Check the Following
Box. / /
If Any of the Securities Being Registered On This Form are to be Offered On
a Delayed or Continuous Basis Pursuant to Rule 415 Under the Securities Act of
1933, Other Than Securities Offered Only in Connection With Dividend or Interest
Reinvestment Plans, Check the Following Box. /X/
If This Form is Filed to Register Additional Securities for an Offering
Pursuant to Rule 462(B) Under the Securities Act, Please Check the Following Box
and List the Securities Act Registration Statement Number of the Earlier
Effective Registration Statement for the Same Offering. / /
If This Form is a Post-effective Amendment Filed Pursuant to Rule 462(C)
Under the Securities Act, Check the Following Box and List the Securities Act
Registration Statement Number of the Earlier Effective Registration Statement
for the Same Offering. / /
If Delivery of the Prospectus is Expected to be Made Pursuant to Rule 434,
Please Check the Following. / /
REPLIGEN HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL REPLIGEN SHALL FILE A FURTHER
AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES
ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH
DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
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<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchnage Commission is effective. This prospectus is nto an offer
to sell securities, and it is not soliciting offers to buy these securities in
any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JUNE 16, 1999
REPLIGEN CORPORATION
3,600,000 Shares
Common Stock
These shares are being offered for sale by the selling stockholders
listed on Page 12.
Repligen's common stock is traded on the Nasdaq National Market under
the symbol "RGEN." The last reported sales price of the common stock on the
Nasdaq National Market on June 15, 1999 was $3.0313 per share.
--------------------------
INVESTING IN THE COMMON STOCK INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 3.
--------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is June __, 1999.
<PAGE>
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. THE SELLING STOCKHOLDERS ARE OFFERING TO SELL, AND
SEEKING OFFERS TO BUY, SHARES OF COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS
AND SALES ARE PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS
ACCURATE ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF
DELIVERY OF THIS PROSPECTUS OR OF ANY SALE OF THE COMMON STOCK.
------------------------
TABLE OF CONTENTS
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PAGE
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The Company...................................................................................... 2
Risk Factors..................................................................................... 3
Legal Proceedings................................................................................ 6
Selected Consolidated Financial Data............................................................. 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations............................................... 8
Use of Proceeds.................................................................................. 12
Selling Stockholders............................................................................. 12
Plan of Distribution............................................................................. 17
Legal Matters.................................................................................... 18
Experts.......................................................................................... 18
Where You Can Find More Information.............................................................. 18
</TABLE>
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THE COMPANY
We develop new drugs for neurological disease, organ transplantation and
cancer. To expand our drug development program, on March 9, 1999, we acquired
the exclusive rights to patent applications for the use of secretin in the
treatment of autism from Autism Research Foundation, a not-for-profit
organization, and Victoria A. Beck, both holders of rights to such patent
applications. Autism is a developmental disorder characterized by poor
communication skills, negative behavior, irregular sleep patterns and diminished
ability to learn. Secretin is a hormone produced in the small intestine which
regulates the function of the pancreas as part of the process of digestion. A
form of secretin derived from pigs is approved by the FDA for use in diagnosing
problems with pancreatic function. Recent anecdotal reports indicate that
secretin may have beneficial effects in autism, including improvements in sleep,
digestive function, speech and social behavior. Following media reports of the
potential benefits of secretin, more than 2,000 autistic children have been
treated with the pig-derived hormone. We intend to manufacture a human,
synthetic form of secretin and evaluate it in FDA approved clinical trials in
order to confirm the benefits of secretin in treating autism and to determine
the optimal dosing schedule. There are currently no drugs approved by the FDA
for the treatment of autism.
We are also developing a product named "CTLA4-Ig," which has been shown to
suppress unwanted immune responses in animal models of organ transplants and
autoimmune diseases, such as lupus or multiple sclerosis, in which the immune
system mistakenly attacks the body. Our product candidate is a derivative of a
natural protein whose role is to turn-off an immune response. In animal models
of organ transplantation and autoimmune diseases, CTLA-Ig has been shown to
block the rejection of a transplanted organ or the effects of the autoimmune
disease. Initial clinical testing of CTLA4-Ig has been carried out in patients
receiving a bone marrow transplant, which is a potential cure for several
diseases of the immune system, including leukemia, myeloma, lymphoma and sickle
cell anemia. Despite the clinical success of bone marrow transplants, a
significant number of patients experience a severe and potentially
life-threatening complication known as Graft Versus Host Disease, in which the
newly transplanted immune system attacks the host (i.e., the patient). In
December 1998, investigators from the Dana-Farber Cancer Institute, a research
hospital in Boston, reported that treatment of bone marrow from a family member
who was taking CTLA4-Ig substantially reduced Graph Versus Host Disease in
twelve transplant patients. We intend to further evaluate CTLA4-Ig in bone
marrow transplants for leukemia. In July 1998, we filed a complaint to assert
our ownership rights of United States patents issued to Bristol-Myers Squibb
Corporation relating to the use of and manufacture of CTLA4-Ig. We believe that
one of our Licensees is a co-inventor of these patents and we are seeking to
obtain co-inventor rights of these patents. We have also filed our own patents
related to compositions of matter and methods of use of CTLA4-Ig.
In preclinical studies, we are evaluating low molecular weight
compounds which block new blood vessel growth by inhibiting the action of a key
growth factor which stimulates the growth of new blood vessels. Drugs which
block the growth of new blood vessels may arrest the growth of solid tumors and
stop the progression of eye diseases characterized by uncontrolled blood vessel
growth. This program is based on our patented, high throughput screening assays
and proprietary libraries of compounds. Our program to block new blood vessel
growth is supported, in part, by a grant from the National Cancer Institute.
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<PAGE>
We develop, manufacture and market products for the production of
therapeutic antibodies. We currently market a line of products for the
purification of antibodies based on a naturally occurring protein, Protein A,
which can specifically bind to antibodies. In December 1998, we entered into a
ten year agreement to supply recombinant Protein A to Amersham Pharmacia
Biotech, a leading supplier to the biopharmaceutical market.
Repligen's executive offices are located at 117 Fourth Avenue, Needham,
Massachusetts 02494, and Repligen's telephone number is (781) 449-9560.
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE MAKING
AN INVESTMENT DECISION. ADDITIONAL RISKS AND UNCERTAINTIES THAT WE ARE UNAWARE
OF OR THAT WE CURRENTLY DEEM IMMATERIAL ALSO MAY BECOME IMPORTANT FACTORS THAT
AFFECT REPLIGEN.
IF ANY OF THE FOLLOWING RISKS OCCUR, OUR BUSINESS, FINANCIAL CONDITION
OR RESULTS OF OPERATIONS COULD BE MATERIALLY HARMED. IN THAT CASE THE TRADING
PRICE OF OUR COMMON STOCK COULD DECLINE, AND YOU MAY LOSE ALL OR PART OF YOUR
INVESTMENT.
THIS PROSPECTUS ALSO CONTAINS FORWARD LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
INCLUDING THE RISKS FACED BY US DESCRIBED BELOW AND ELSEWHERE IN THIS
PROSPECTUS.
IF WE DO NOT OBTAIN ADDITIONAL CAPITAL, WE WILL BE UNABLE TO DEVELOP OR DISCOVER
NEW DRUGS.
We need additional long-term financing to develop our drug development
programs through the clinical trial process as required by the FDA and our
bioprocessing products business. We also need additional long-term financing to
support future operations and capital expenditures, including capital for
additional personnel and facilities. If we spend more money than currently
expected for our drug development programs and our bioprocessing products
business, we will need to raise additional capital by selling debt or equity
securities, by entering into strategic relationships or through other
arrangements. We may be unable to raise any additional amounts on reasonable
terms when they are needed due to the volatile nature of the biotechnology
marketplace. If we are unable to raise this additional capital, we may have to
delay or postpone critical clinical studies or abandon other development
programs.
BECAUSE OUR OPERATING RESULTS FLUCTUATE FROM QUARTER TO QUARTER, SO DOES OUR
STOCK PRICE, WHICH MEANS INVESTORS MAY HAVE TO SELL THEIR STOCK AT A LOSS IF
THEY ARE UNABLE TO WAIT FOR A REBOUND. OUR QUARTERLY AND ANNUAL OPERATING
REVENUES AND EXPENSES MAY FLUCTUATE DUE TO A NUMBER OF FACTORS INCLUDING:
o the timing and size of increased research and development
expenses;
o expenses associated with clinical development of our products; or
o the timing and size of product orders.
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<PAGE>
Our product development activities often focus on unproven technologies
and undeveloped markets. As a result, we may experience difficulty in
forecasting operating expenditures, and we cannot know when or whether our
efforts will result in commercially successful products. The expenses or losses
associated with these product development activities could materially adversely
affect our operating results.
IF WE ARE UNABLE TO CONTINUE TO HIRE AND RETAIN SKILLED TECHNICAL AND SCIENTIFIC
PERSONNEL, THEN WE WILL HAVE TROUBLE DEVELOPING PRODUCTS.
Our success depends largely upon the continued service of our
management and scientific staff and our ability to attract, retain and motivate
highly skilled scientific, management and marketing personnel. Potential
employees with an expertise in the field of biochemistry, regulatory affairs
and/or clinical development of new drug and biopharmaceutical manufacturing are
not generally available in the market and are difficult to attract and retain.
We also face significant competition for such personnel from other companies,
research and academic institutions, government and other organizations who have
superior funding and resources to be able to attract such personnel. The loss of
key personnel or our inability to hire and retain personnel who have technical
and scientific backgrounds could materially adversely affect our product
development efforts and our business.
WE COMPETE WITH LARGER, BETTER FINANCED AND MORE MATURE PHARMACEUTICAL AND
BIOTECHNOLOGY COMPANIES WHO ARE CAPABLE OF DEVELOPING NEW APPROACHES THAT COULD
MAKE OUR PRODUCTS AND TECHNOLOGY OBSOLETE.
The market for therapeutic and bioprocessing products is intensely
competitive, rapidly evolving and subject to rapid technological change.
Pharmaceutical and mature biotechnology companies have substantially greater
financial, manufacturing, marketing, research and development resources than we
have. New approaches to the treatment of our targeted diseases by these
competitors may make our products and technologies obsolete or noncompetitive.
IF WE ARE UNABLE TO OBTAIN AND MAINTAIN PATENTS FOR OUR PRODUCTS, WE WILL NOT BE
ABLE TO SUCCEED COMMERCIALLY.
We must obtain patent and trade secret protection for our products and
processes in order to protect them from unauthorized use and to produce a
financial return consistent with the significant time and expense required to
bring our products to market. Our success will depend, in part, on our ability
to:
o obtain patent protection for our products and manufacturing
processes;
o preserve our trade secrets; and
o operate without infringing the proprietary rights of third
parties.
There can be no assurance that any patent applications relating to our
products will be filed in the future or that any currently pending applications
will issue on a timely basis, if ever. Since patent applications in the United
States are maintained in secrecy until patents issue and since publication of
discoveries in the scientific or patent literature often lag behind actual
discoveries, we cannot be certain that we were the first to make the inventions
covered by each of our pending patent applications or that we were the first to
file patent applications for such
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<PAGE>
inventions. Even if patents are issued, the degree of protection afforded by
such patents will depend upon the:
o scope of the patent claims;
o validity and enforceability of the claims obtained in such
patents; and
o our willingness and financial ability to enforce and/or defend
them.
The patent position of biotechnology and pharmaceutical firms is often
highly uncertain and usually involves complex legal and scientific questions.
Moreover, no consistent policy has emerged in the United States and in many
other countries regarding the breadth of claims allowed in biotechnology
patents. Patents which may be granted to us in certain foreign countries may be
subject to opposition proceedings brought by third parties or result in suits by
Repligen which may be costly and result in adverse consequences for Repligen.
If our competitors prepare and file patent applications in the United
States that claim technology also claimed by us, we may be required to
participate in interference proceedings declared by the U.S. Patent and
Trademark Office to determine priority of invention, which would result in
substantial COSTS to us. For instance, in July 1998, we filed a complaint to
assert our ownership rights of United States patents issued to Bristol-Myers
Squibb Corporation relating to the use of and manufacture of CTLA4-Ig. We
believe that one of our licensees is a co-inventor of these patents and we are
seeking to obtain co-inventor rights of these patents. We may incur substantial
costs defending these and other infringement or patent interference proceedings,
which proceedings may result in adverse consequences for Repligen.
In addition, patents blocking our manufacture, use or sale of our
products could be issued to third parties in the United States or foreign
countries. The issuance of blocking patents or an adverse outcome in an
interference or opposition proceeding, could subject us to significant
liabilities to third parties and require us to license disputed rights from
third parties on unfavorable terms, if at all, or cease using the technology.
WE ARE NOT YEAR 2000 COMPLIANT, AND AS A RESULT, MAY FACE, AND BE LIABLE FOR,
DATA CORRUPTION, COMPUTER FAILURE AND DISRUPTION OF OPERATIONS.
Many existing computer systems and software products do not properly
recognize dates after December 31, 1999. This "Year 2000" problem could result
in miscalculations, data corruption, system failures or disruptions of
operations. We are subject to potential Year 2000 problems affecting our
computers' systems, our internal systems and the systems of our vendors and
scientific collaborators, any of which could have a material adverse affect on
our business operating results and financial conditions.
Based on our assessments to date, we believe that our internal systems are
substantially Year 2000 compliant although there can be no assurance that Year
2000 errors or defects will not be discovered in our internal software systems
and, if such errors or defects are discovered, there can be no assurance that
the costs of making such systems Year 2000 compliant will not be material.
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<PAGE>
Year 2000 errors or defects in the internal systems maintained by our
vendors of clinical trial collaborators could require us to incur significant
delays in our product development programs and unanticipated expenses to remedy
any problems or replace affected vendors.
LEGAL PROCEEDINGS
On July 17, 1998, Repligen filed a complaint at the United States
District Court for the District of Massachusetts in Boston, Massachusetts. The
complaint relates to a United States patent issued in 1995 to Bristol-Myers
Squibb Corporation claiming a method of treating immune system diseases with
CTLA4-Ig. In December 1998, related patents were issued to Bristol-Myers
claiming the composition of CTLA4-Ig. Thereafter, the complaint was amended to
include the patents claiming the composition of CTLA4-Ig. In the amended
complaint, we seek to assert our ownership rights in, and to obtain co-inventor
rights of, the Bristol-Myers patents and we also seek unspecified monetary
damages. If we are successful in our claims, a licensor of such intellectual
property rights Repligen will be named as a co-inventor of the Bristol-Myers
patents which will give Repligen and Bristol-Myers shared rights to the patents.
There can be no assurances that the litigation will conclude in a result
beneficial to Repligen. Repligen's failure to obtain shared ownership rights in
the patents may restrict Repligen's ability to commercialize CTLA4-Ig for
certain applications.
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<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected financial data are derived from, and are
qualified in their entirety by reference to, the consolidated financial
statements of repligen as of and for the years ended march 31, 1995, 1996, 1997,
1998 and 1999 which consolidated financial statements have been audited by
arthur andersen llp, independent public accountants. The selected financial data
set forth below should be read in conjunction with the consolidated financial
statements of repligen and the related notes thereto and "management's
discussion and analysis of financial condition and results of operations"
included elsewhere in this prospectus.
<TABLE>
<CAPTION>
Years Ended March 31,
-------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
(In Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C> <C>
OPERATING STATEMENT DATA:
Revenues
Research and development .................. $ 1,268 $ 917 $ 1,180 $ 7,949 $ 10,988
Product ................................... 1,010 1,114 1,554 1,874 3,885
Investment and other ...................... 312 354 1,068 1,036 2,069
-------- -------- -------- -------- --------
Total Revenue .............................. 2,590 2,385 3,802 10,859 16,942
-------- -------- -------- -------- --------
Costs and expenses
Research and development .................. 1,847 1,420 1,378 11,980 31,012
Charge for purchased patent rights ........ 1,035 -- -- -- --
Selling, general & administrative ......... 1,563 1,281 1,940 4,925 4,673
Cost of product sales ..................... 689 480 537 1,516 1,535
Charge for acquired research &
development .............................. -- -- 549 334 --
Restructuring (credit) charge ............. -- -- (111) 3,567 11,300
Interest .................................. -- -- -- 58 372
-------- -------- -------- -------- --------
TOTAL COSTS AND EXPENSES ................. 5,134 3,181 4,293 22,380 48,892
-------- -------- -------- -------- --------
Net loss .................................. $ (2,544) $ (796) $ (491) $(11,521) $(31,950)
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Net loss per common share ................. $ (0.14) $ (0.05) $ (0.03) $ (0.75) $ (2.08)
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Weighted average common shares
outstanding............................... 18,018 16,502 15,678 15,370 15,356
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and investments..................... $ 3,251 $ 4,726 $ 3,538 $ 7,222 $ 15,302
Working capital.......................... 3,860 5,377 3,990 4,154 9,070
Total assets............................. 5,224 6,513 5,621 9,231 31,330
Accumulated deficit...................... (126,864) (124,320) (123,533) (123,042) (111,520)
Stockholders' equity..................... 4,592 6,124 4,919 4,809 15,576
</TABLE>
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
THE FOLLOWING MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS CONTAINS FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES. WHEN USED IN THIS PROSPECTUS, THE WORDS
"INTEND," "ANTICIPATE," "BELIEVE," "ESTIMATE," "PLAN" AND "EXPECT" AND SIMILAR
EXPRESSIONS AS THEY RELATE TO US ARE INCLUDED TO IDENTIFY FORWARD-LOOKING
STATEMENTS. REPLIGEN'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS ARE A RESULT OF CERTAIN FACTORS,
INCLUDING THOSE SET FORTH UNDER RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS.
RESULTS OF OPERATIONS
FISCAL YEAR ENDED MARCH 31, 1999 COMPARED WITH FISCAL YEAR ENDED MARCH 31, 1998
REVENUES. Total revenues for fiscal 1999 were $2,590,000 as compared
to $2,385,000 in fiscal 1998, an increase of $205,000. Research and development
revenues for fiscal 1999 totaled $1,268,000, including revenues relating to drug
discovery collaboration arrangements with pharmaceutical partners, licensing
revenue, and revenue generated from a Phase II Small Business Innovation
Research (SBIR) grant from the National Institute of Health. The increase in
research and development revenues of $351,000 or 38% from fiscal 1998 levels is
primarily attributable to licensing payments relating to intellectual property
rights licensed to Neocrin, Inc.
Product revenues for fiscal 1999 were $1,010,000 compared to $1,114,000
in fiscal 1998. The decrease in the product sales volume is attributed to a
decrease in sales of reagent products partially offset by the increase in sales
of Protein A.
Investment income for fiscal 1999 was $212,000, a decrease of $13,000
from $225,000 for fiscal 1998. This decrease in investment income was due
primarily to the sale of non-investment securities held by Repligen offset by
higher average funds available for investment during fiscal 1999. Other revenues
for the fiscal 1999 period decreased by approximately $29,000 from the
comparable fiscal 1998 period, due in large part, to the one-time sale of
equipment and furnishings by Repligen.
EXPENSES. During fiscal 1999, total expenses were $5,134,000,
significantly higher than fiscal 1998 expenses of $3,181,000. Higher level of
expenses in fiscal 1999 was largely due to the $1,035,000 charge associated with
Repligen's acquisition of the rights to certain patent applications for the use
of secretin in the treatment of autism. Research and development expenses for
fiscal 1999, totaled $1,847,000, an increase of $427,000, or 30%, from fiscal
1998 levels due to an increase in both personnel and laboratory expenses
associated with the expansion of Repligen's research and development program.
Repligen anticipates that research and development expenses will continue to
increase significantly as Repligen increases its investment in its drug
development programs during fiscal 2000.
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<PAGE>
Cost of product sales for fiscal 1999 totaled $689,000, an increase of
$209,000 from the prior fiscal year. Cost of product sales in fiscal 1999 were
68% of product revenues versus 43% of product revenues for fiscal 1998. This
increase is largely attributable to a write off of certain obsolete raw
materials and work in process resulting from the introduction of a new Protein A
product in fiscal 1999.
Selling, general and administrative expenses for fiscal 1999 were
$1,563,000, an increase from fiscal 1998 of $282,000. This increase is
attributable to a noncash charge associated with the issuance of warrants for
legal services related to Repligen's complaint filed against Bristol-Myers
Squibb. In addition, Repligen incurred increased expenses relating to legal and
shareholder services as Repligen sought additional financing.
In March 1999, Repligen acquired all rights to certain patent
applications covering the use of secretin in the treatment of autism. The rights
were acquired pursuant to a patent purchase agreement. In addition, Repligen
agreed to make certain milestone payments upon (a) Repligen's filing of a new
drug application with the United States Food and Drug Administration for a
clinical indication covered by the intellectual property rights transferred by
the patent purchase agreement and (b) the approval by the FDA of a product
covered by the intellectual property rights transferred to Repligen pursuant to
the patent purchase agreement. Finally, Repligen agreed to pay certain royalty
payments if Repligen is able to derive sales and/or licensing revenues from the
intellectual property rights acquired pursuant to the patent purchase agreement.
Under terms of the patent purchase agreement, Repligen may be required to
repurchase up to a maximum of 100,000 shares of common stock issued in
connection with the patent purchase agreement at a price of $1.59 per share.
This obligation to repurchase the common stock expires in June 1999.
Approximately $1,035,000 was charged to the accompanying 1999 statement of
operations as the cost of the purchased patent rights.
FISCAL YEAR ENDED MARCH 31, 1998 COMPARED WITH FISCAL YEAR ENDED MARCH 31, 1997
REVENUES. Total revenues for fiscal 1998 were $2,385,000 as compared
to $3,802,000 in fiscal 1997, a decrease of $1,417,000. Research and development
revenues for fiscal 1998 totaled $917,000, compared to $1,180,000 in fiscal
1997. The research and development revenues for fiscal year 1998 include
revenues relating to drug discovery collaboration arrangements with
pharmaceutical partners, licensing revenue, receipt of a milestone payment, and
revenue generated from two Phase I Small Business Innovation Research (SBIR)
grants from the National Institute of Health. The reduction in research and
development revenues of $263,000 or 22% from fiscal 1997 levels is primarily
attributable to the termination of its collaborations with Eli Lilly and Company
and Repligen Clinical Partners, L.P.
Product revenues for fiscal 1998 were $1,114,000 compared to $1,554,000
in fiscal 1997. The decrease of $440,000 in the product sales volume is largely
attributed to the timing of large production scale orders of Protein A offset by
an increase in sales of reagent products.
Investment income decreased by $44,000 from $269,000 for fiscal 1997 to
$225,000 for fiscal 1998 and was due primarily to lower average funds available
for investment during fiscal 1998. Other revenues for the fiscal 1998 of
$129,000 decreased by approximately $660,000 from the comparable fiscal 1997
other revenue of $799,000 and was primarily due to a restructuring of
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<PAGE>
Repligen, pursuant to which Repligen made a one-time sale of equipment and
furnishings for $317,000 and the one-time sale of non investment securities for
approximately $300,000 as part of the restructuring.
EXPENSES. During fiscal 1998, total expenses of $3,181,000 were
significantly lower than fiscal 1997 expenses of $4,293,000, a decrease of
$1,112,000 or 26% from fiscal 1997. The higher level of expenses in fiscal 1997
was primarily a result of expenditures associated with Repligen's former
facility in Cambridge, Massachusetts. Research and development expenses for
fiscal 1998, totaling $1,420,000, compared to $1,378,000 in fiscal 1997, an
increase of $42,000, or 3%, from fiscal 1997.
Cost of product sales decreased $57,000 from $537,000 in fiscal 1997 to
$480,000 in fiscal 1998. Cost of product sales in fiscal 1998 were 43% of
product revenues versus 35% of product revenues for fiscal 1997. The decrease in
the cost of product sales is the result of a change in the product mix between
fiscal years and the result of the realization of inventory in fiscal 1997 that
had been reserved for in fiscal 1996.
Selling, general and administrative expenses for fiscal 1998 were
$1,281,000, compared to $1,949,000 in fiscal 1997, a decrease from fiscal 1997
of $659,000. This decrease is a result of Repligen's restructuring efforts that
took place during fiscal 1997 and 1996. As a result of Repligen's relocation to
smaller office and laboratory space, Repligen realized savings in rent and
related facility costs. In addition, this decrease in expenses is a result of
the reduction of administrative personnel and related expenses that took place
during fiscal 1997.
In the year ended March 31, 1997, Repligen acquired, in exchange for
Repligen's common stock, all of the outstanding shares of ProsCure, Inc., a
subsidiary of Glycan Pharmaceuticals, Inc. 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 Repligen. Since the
technology acquired will require further development by Repligen, this
acquisition was accounted for as a purchase, wit the excess of the purchase
price and acquisition costs over the fair value of the assets acquired of
approximately $549,000, charged to operations.
LIQUIDITY AND CAPITAL RESOURCES
Repligen's total cash, cash equivalents and marketable securities
decreased to $3,251,000 at March 31, 1999 from $4,726,000 at March 31, 1998.
This decrease is primarily attributable to the operating loss incurred in the
year ended March 31, 1999 of approximately $1,509,000. In addition, this
decrease is attributable to an increase in accounts receivable and prepaid
expenses of $242,000, partially offset by an increase of accounts payable and
accrued expenses of $228,000. Working capital decreased by $1,517,000 to
$3,860,000 at March 31, 1999 from $5,377,000 at March 31, 1998 due to cash
outlays to fund operating losses, the purchase of equipment, furniture and
fixtures and leasehold improvements, and an increase in accounts receivable
outstanding at the end of fiscal year 1998 offset by an increase accounts
payable and accrued expenses.
-10-
<PAGE>
Capital expenditures for fiscal 1999 and 1998 were $252,000 and
$114,000, respectively. The capital expenditures in both fiscal 1999 and fiscal
1998 reflect leasehold improvements and the purchase of research and development
and manufacturing equipment.
Repligen entered into agreements with a number of collaborative
partners and licenses. Under the terms of these agreements, Repligen may be
eligible to receive research support, additional milestones or royalty revenue
if these collaborations continue to clinical evaluation and commercialization.
Repligen can not be assured to the continuation of these collaborations or any
future payments.
Repligen has funded operations primarily with cash derived from the
sales of its equity securities, revenue derived from research and development
contracts, product sales and investment income. In April and May 1999, the
selling stockholders entered into binding common stock purchase agreements to
purchase from Repligen an aggregate of 3,600,000 shares of common stock of
Repligen for an aggregate purchase price of $9,000,000 in a private placement
transaction. The closing of the private placement for financing is subject to
Repligen filing a registration statement covering the resale of the shares and
causing such registration statement to become effective immediately after the
closing. This registration statement is being filed to effect the registration
of the resale of the 3,600,000 shares purchased by the selling stockholders
pursuant to the common stock purchase agreements.
While Repligen anticipates that the cost of operations will increase in
fiscal 2000 as it continues to expand its investment in proprietary product
development, Repligen believes that the private placement financing yielding
(upon the closing) an aggregate of $9,000,000 in gross proceeds to Repligen
(before related transactional expenses) will provide sufficient funding to
satisfy its working capital and capital expenditure requirements for the next
twenty-four months. Should Repligen need to secure additional financing to meet
its future liquidity requirements, there can be no assurances that Repligen will
be able to secure such financing, or that such financing, if available, will be
on terms favorable to Repligen.
YEAR 2000
Repligen has undertaken an initial review of its information technology
computer systems and it believes that the Year 2000 problem does not pose
significant operational problems to its information technology systems. The
majority of Repligen's software and computer equipment has been purchased within
the last five years from third-party vendors who have already provided upgrades
intended to bring their products into Year 2000 compliance. Repligen has begun
to address the small number of interna systems that are not yet Year 2000
compliant, and expects full compliance by the end of 1999. Repligen currently
believes that the costs of addressing these issues should not exceed $50,000 and
will not have a material adverse impact on Repligen's financial position.
Repligen has recently begun interviewing various third parties,
including vendors and suppliers of Repligen, to determine their exposure to Year
2000 issues, their anticipated risks and responses to those risks. To date, the
third parties that have been contacted have indicated that their hardware or
software is or will be Year 2000 compliant in a time frame that meets Repligen's
requirements. Even with the vendor compliance however, Repligen intends to
-11-
<PAGE>
continue to assess its exposure to Year 2000 noncompliance on the part of any of
its material vendors. There can be no assurance that the vendor's systems will
be Year 2000 compliant in a time frame satisfactory to Repligen.
Repligen does not have a contingency plan in the event Year 2000
compliance cannot be achieved in a timely manner. A contingency plan will be
developed immediately upon completion of Repligen's Year 2000 compliance
assessment.
USE OF PROCEEDS
Repligen will not receive any of the proceeds from the sale of the
shares of its common stock by the selling stockholders hereunder. See "Selling
Stockholders" and "Plan of Distribution". The principal purpose of this offering
is to effect an orderly disposition of the shares of common stock of Repligen
being offered and sold from time to time by the selling stockholders.
SELLING STOCKHOLDERS
Unless otherwise noted below in the table, each person has sole voting and
investment power over the shares shown as beneficially owned except to the
extent authority is shared by spouses under applicable law and except as set
forth in the footnotes to the table. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission. The
following are deemed to be beneficially owned and outstanding for purposes of
calculating the number of shares and the percentag beneficially owned by that
person or entity:
o shares of common stock issuable by Repligen to that person upon
the exercise of options which may be exercised within 60 days
after May 28, 1999; and
o shares of common stock issuable by Repligen to that person upon
the exercise of warrants which may be exercised within 60 days
after May 28, 1999.
However, these shares are not deemed to be beneficially owned and outstanding
for purposes of computing the percentage beneficially owned by any other person
or entity.
For purposes of determining the number of shares beneficially owned prior
to the offering and shares offered pursuant to this prospectus, we have assumed
the issuance of the 3,600,000 shares to the selling stockholders pursuant to the
terms of the stock purchase agreements between Repligen and the selling
stockholders.
For purposes of calculating the percentage beneficially owned, the number
of shares deemed outstanding after the offering includes:
o 18,264,285 shares of common stock outstanding as of May 28,1999
and assumes the issuance of the 3,600,000 shares to the selling
stockholders pursuant to the common stock purchase agreements; and
o the number of presently exercisable options and presently
exercisable warrants held by that person.
-12-
<PAGE>
The table below lists the following:
o the number of shares of common stock of Repligen beneficially
owned by the selling stockholders as of May 28, 1999 and before
this offering (and assuming the issuance of the 3,600,000 shares
to the selling stockholders pursuant to the common stock purchase
agreements);
o the maximum number of shares of common stock of Repligen that the
selling stockholders may offer and sell pursuant to this
prospectus (assuming the issuance of the 3,600,000 shares to the
selling stockholders pursuant to the common stock purchase
agreements);
o the number of shares owned by the selling stockholders after
completion of the offering (assuming that the selling stockholders
sell all of the shares offered pursuant to this prospectus); and
o the percentage (if one percent or more) of the class owned by the
selling stockholder after completion of the offering.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY SHARES SHARES BENEFICIALLY OWNED
OWNED OFFERED AFTER OFFERING (1)
PRIOR TO PURSUANT TO THIS -------------------------
SELLING STOCKHOLDER OFFERING PROSPECTUS NUMBER PERCENT
- ------------------- -------- ---------- ------ -------
<S> <C> <C> <C> <C>
North River Partners, L.P. (2)..... 93,500 93,500 0 *
North River Investors
(Bermuda) L.P. (2)................ 24,500 24,500 0 *
Global Health Care
Opportunity (2)................... 791,500 791,500 0 *
Saltonstall & Co. Health
Science Fund (2).................. 82,300 82,300 0 *
Sonic Healthcare Offshore Fund
Ltd.(2)........................... 88,700 88,700 0 *
WTC-CIF Biotechology
Portfolio (2)..................... 347,500 347,500 0 *
WTC-CTF Biotechnology
Portfolio (2) 191,100 191,100 0 *
The Church Pension Fund of
the Episcopal Church (2)........... 109,500 109,500 0 *
Sonic Healthcare Offshore
Fund Ltd. (2)...................... 71,400 71,400 0 *
</TABLE>
-13-
<PAGE>
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY SHARES SHARES BENEFICIALLY OWNED
OWNED OFFERED AFTER OFFERING (1)
PRIOR TO PURSUANT TO THIS -------------------------
SELLING STOCKHOLDER OFFERING PROSPECTUS NUMBER PERCENT
- ------------------- -------- ---------- ------ -------
<S> <C> <C> <C> <C>
Quisset Partners, L.P.(2).......... 230,000 230,000 0 *
Quisset Investors (Bermuda)
L.P. (2).......................... 144,000 144,000 0 *
Hartford Capital Appreciation
Fund (2).......................... 426,000 426,000 0 *
J.F. Shea Co., Inc. as Nominee
1998-28........................... 200,000 200,000 0 *
The Keys Foundation,
Curacao........................... 200,000 200,000 0 *
Tis Prager, Zumikon (4)............ 200,000 200,000 0 *
Bruno Widmer....................... 10,000 10,000 0 *
Elliott Broidy..................... 10,000 40,000 0 *
Peter L. Jensen.................... 10,000 10,000 0 *
Scott A. Katzmann.................. 20,000 20,000 0 *
MSB Research, Inc.................. 100,000 100,000 0 *
Esther Berg........................ 100,000 100,000 0 *
Timothy McInerney.................. 20,000 20,000 0 *
Martin Sutter...................... 25,000 25,000 0 *
E. Justin Kelly.................... 10,000 10,000 0 *
Joseph Edelman..................... 20,000 20,000 0 *
Joseph Natiello.................... 20,000 20,000 0 *
EWA Lipton......................... 20,000 20,000 0 *
Joseph & Barbara Strassman
TIC............................... 40,000 40,000 0 *
Mark Mazzer........................ 10,000 10,000 0 *
</TABLE>
-14-
<PAGE>
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY SHARES SHARES BENEFICIALLY OWNED
OWNED OFFERED AFTER OFFERING (1)
PRIOR TO PURSUANT TO THIS -------------------------
SELLING STOCKHOLDER OFFERING PROSPECTUS NUMBER PERCENT
- ------------------- -------- ---------- ------ -------
<S> <C> <C> <C> <C>
Fredrick Korniewicz............. 15,000 15,000 0 *
Mark Walko...................... 10,000 10,000 0 *
Fredrick Korniewicz............. 4,000 4,000 0 *
Aries Domestic Fund, L.P.
(5)............................ 901,200 15,000 886,200 4.05%
The Aries Master Fund (6)....... 1,165,000 35,000 1,130,000 5.17%
Domaco Venture Capital
Fund............................ 10,000 10,000 0 *
Anthony G. Polak "S" (7)........ 10,000 10,000 0 *
Anthony G. Polak (8)............ 10,000 10,000 0 *
Jonathan Rothschild (9)......... 10,000 10,000 0 *
Arterio, Inc.................... 10,000 10,000 0 *
Ronald Lazar.................... 6,000 6,000 0 *
</TABLE>
*Represents less than 1% of the outstanding shares.
(1) Assumes that the selling stockholders will sell all of the shares
registered hereunder. The stockholders may sell all or part of their
shares pursuant to this prospectus.
(2) Wellington Management Company, LLP ("WMC"), is an investment adviser
registered with the Securities and Exchange Commission under Section
203 of the Investment Advisers Act of 1940, as amended. WMC, in its
capacity as investment adviser, may be deemed to have beneficial
ownership of shares of common stock of Repligen that are owned of
record by investment advisory clients of WMC. Except as otherwise
noted herein, the selling stockholder is an investment advisory client
of WMC, and WMC has shared voting and investment power over all of the
shares being offered pursuant to this prospectus by such selling
stockholder. WMC disclaims beneficial ownership of all such shares of
such selling stockholder.
-15-
<PAGE>
(3) WMC does not exercise voting power over shares owned by The Church
Pension Fund of the Episcopal Church.
(4) The shares beneficially owned do not include shares offered pursuant
to this prospectus by The Keys Foundation, Curacao of which Mr. Prager
is chairman. Mr. Prager has sole voting and investment power over the
shares beneficially owned by The Keys Foundation, Curacao. Mr. Prager
may be deemed to beneficially own the shares of The Keys Foundation,
Curacao, but Mr. Prager disclaims beneficial ownership, except to the
extent of his pecuniary interest therein, if any.
(5) Paramount Capital Asset Management, Inc. is the general partner of
Aries Domestic Fund, L.P., a Delaware limited partnership. Lindsay A.
Rosenwald, M.D. is the chairman and sole stockholder of Paramount.
Accordingly, each of Paramount and Dr. Rosenwald may be deemed to
beneficially own the shares of Repligen held by Aries Domestic Fund
and to have voting and investment power thereof. Each of Paramount
and Dr. Rosenwald disclaim beneficial ownership of the Securities
held by the Partnership, except to the extent of their pecuniary
interest therein, if any.
(6) Paramount Capital Asset Management, Inc. serves as the investment
manager to The Aries Master Fund, a Cayman Islands exempted company.
Lindsay A. Rosenwald, M.D. is the chairman and sole stockholder of
Paramount. Accordingly, each of Paramount and Dr. Rosenwald may be
deemed to beneficially own the shares of Repligen held by the Aries
Master Fund and to have voting and investment power thereof . Each of
Paramount and Dr. Rosenwald disclaim beneficial ownership of the
securities held by the Aries Master Fund, except
to the extent of their pecuniary interest therein, if any.
(7) Does not include 10,000 shares beneficially owned by Anthony G. Polak
over which Anthony G. Polak has sole voting and investment power.
(8) Does not include 10,000 shares beneficially held in the Anthony G.
Polak "S" account over which Anthony G. Polak has sole voting and
investment power.
(9) Does not include shares beneficially owned by Arterio, Inc. of which
Mr. Rothschild is President and sole stockholder. Mr. Rothschild has
sole voting and investment power over the shares beneficially owned by
Arterio, Inc. Mr. Rothschild disclaims beneficial ownership of the
shares of common stock of Repligen held by Arterio, Inc., except to
the extent of his pecuniary interest therein if any.
Except as otherwise indicated in this prospectus, none of the selling
stockholders have any material relationship with Repligen.
Each selling stockholder acquired its shares of common stock of
Repligen in private placement transactions pursuant to common stock purchase
agreements entered into in April and May, 1999 at a purchase price per share of
$2.50. In the common stock purchase agreements between Repligen and the selling
stockholders, the selling stockholders have represented to Repligen that they
acquired the shares of common stock of Repligen as principal for their own
-16-
<PAGE>
accounts, for investment purposes only and not with a view to, or for sale in
connection with, any sale, assignment, transfer or other distribution of the
shares of common stock of Repligen which would violate the Securities Act of
1933 or any other federal or state securities laws. In recognition of the fact,
however, that the selling stockholders may want to be able to sell the shares of
common stock of Repligen when the selling stockholders considers it appropriate,
we agreed, in the common stock purchase agreements, to file this registration
statement with the Securities and Exchange Commission to allow the selling
stockholders to publicly sell the shares of Repligen common stock. In the stock
purchase agreements, we also agreed to keep the registration statement effective
until the earliest of (a) the second anniversary of the closing date, (b) the
date on which the selling stockholders may sell all of the shares offered
pursuant to this prospectus without restriction under Rule 144(k) of the
Securities Act, or (c) the time that the selling stockholders have sold all of
the shares of common stock of Repligen offered pursuant to this prospectus;
provided that in the event that, prior to such time, Repligen fails to remain
current or comply with its filing obligations with the SEC under the Securities
Exchange Act of 1934 or Rule 144 of the Securities Act, we have agreed to
maintain the effectiveness of this Registration Statement until the second
anniversary of the closing date.
PLAN OF DISTRIBUTION
The selling stockholders are offering shares of common stock of
Repligen which were acquired by them from Repligen in private placement
transactions, pursuant to those certain common stock purchase agreements between
Repligen and the selling stockholders. This prospectus covers the resale by the
selling stockholders of 3,600,000 shares of common stock of Repligen.
In accordance with registration rights granted to the selling
stockholders in connection with the common stock purchase agreements, Repligen
has filed with the Securities and Exchange Commission, under the Securities Act,
a registration statement on Form S-3, with respect to the resale of the shares
of common stock of Repligen from time to time on the Nasdaq National Market or
in privately-negotiated transactions and has agreed to prepare and file such
amendments and supplements to the registration statement as may be necessary to
keep such registration statement effective until the Shares are no longer
required to be registered for the sale thereof by the selling stockholders.
In the common stock purchase agreements, Repligen is responsible for
the expenses incurred in connection with the registration of the shares of
common stock of Repligen, except that the selling stockholders will pay or
assume brokerage commissions and similar charges, the legal fees and expenses of
counsel for the selling stockholders and any stock transfer taxes or other
expenses incurred in connection with the sale of the shares of common stock of
Repligen. Repligen will not receive any of the proceeds from this offering.
The shares of common stock of Repligen offered by the selling
stockholders may be sold from time to time in transactions on the Nasdaq
National Market, in negotiated transactions, through the writing of options on
the shares of common stock of Repligen, or a combination of such methods of
sale, at fixed prices that may be changed, at market prices prevailing at the
time of sale, at prices relating to such prevailing market prices or at
negotiated prices. In addition, the selling stockholders may sell the shares of
common stock of Repligen covered by this prospectus through customary brokerage
channels, either through broker-dealers acting as agents or brokers, or
-17-
<PAGE>
through broker-dealers acting as principals, who may then resell the shares of
common stock of Repligen, or at private sale or otherwise, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The selling stockholders may effect such
transactions by selling shares of common stock of Repligen to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions, commissions, or fees from the selling stockholders
and/or purchasers of the shares of common stock of Repligen for whom such
broker-dealers may act as agent or to whom they sell as principal, or both
(which compensation to a particular broker-dealer might be in excess of
customary commissions). Any broker-dealers that participate with the selling
stockholders in the distribution of shares of common stock of Repligen may be
deemed to be underwriters and any commissions received by them and any profit on
the resale of shares of common stock of Repligen placed by them might be deemed
to be underwriting discounts and commissions within the meaning of the
Securities Act, in connection with such sales.
Any shares covered by the prospectus that qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under Rule 144 rather than
pursuant to this prospectus.
Since the selling stockholders are not restricted as to the price or
prices at which they may sell the shares of common stock of Repligen, sales of
such shares of common stock of Repligen at less than the market prices may
depress the market price of the common stock of Repligen.
EquiServe, 150 Royall Street, Canton, MA 02021, is the transfer agent
for the shares of common stock of Repligen.
LEGAL MATTERS
The validity of the shares of common stock of Repligen offered hereby
will be passed upon by Testa, Hurwitz & Thibeault, LLP, Boston, Massachusetts.
EXPERTS
The financial statements included in and incorporated by reference in
this prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in auditing and accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
Repligen files annual, quarterly and special reports, proxy statements
and other information with the SEC. You may read and copy any document we file
with the SEC at the SEC's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on operation of the public reference room. Our SEC filings are also
available to the public from the SEC's website at "http://www.sec.gov." Our
website is located at " http://www.repligen.com." Information contained on our
website is not part of this prospectus.
The SEC allows Repligen to "incorporate by reference" the information
we file with them, which means that we can disclose important information to you
by referring you to those
-18-
<PAGE>
documents. The information incorporated by reference is considered to be part of
this prospectus, and information that we file later with the SEC will
automatically update and supersede this information. Repligen incorporates by
reference the documents listed below and any future filings we will make with
the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (File No.
000-14656):
1. Annual report on Form 10-K for the year ended March 31, 1998;
2. Repligen's proxy statement, filed on July 20, 1998, for the 1998
annual meeting of shareholders;
3. Quarterly reports on Form 10-Q for the quarters ended June 30,
1998, September 30, 1998 and December 31, 1998;
4. Repligen's current report on Form 8-K filed March 24, 1999, as
amended by Form 8-K/A filed June 15, 1999 and current report on
Form 8-K filed May 17, 1999; and
5. The "Description of Registrant's Securities to be Registered"
contained in Repligen's registration statement filed on Form 8-A,
dated May 28, 1986.
You may request a copy of these filings, at no cost, by writing or
telephoning our Chief Financial Officer at the following address:
Repligen Corporation
117 Fourth Avenue
Needham, MA 02494
(781) 449-9560
This prospectus is part of a registration statement we filed with the
SEC. You should rely only on the information or representations provided in this
prospectus. We have authorized no one to provide you with different information.
We are not making an offer of these securities in any state where the offer is
not permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the front of the document.
-19-
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Public Accountants F-2
Balance Sheets as of March 31, 1999 and 1998 F-3
Statements of Operations for the Years
Ended March 31, 1999, 1998 and 1997 F-4
Statements of Stockholders' Equity for the Years Ended March 31, 1999, 1998 and 1997
F-5
Statements of Cash Flows for the Years
Ended March 31, 1999, 1998 and 1997 F-6
Notes to Financial Statements F-7
</TABLE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Repligen Corporation:
We have audited the accompanying balance sheets of Repligen Corporation
(a Delaware corporation) as of March 31, 1999 and 1998, and the related
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended March 31, 1999. 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
as of March 31, 1999 and 1998, and the results of its operations and its cash
flows for each of the three years in the period ended March 31, 1999, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
May 14, 1999
<PAGE>
REPLIGEN CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF MARCH 31,
-------------------------------------
ASSETS
1999 1998
----------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,250,751 $ 4,725,544
Accounts receivable, less reserves of $25,000 429,720 212,857
Inventories 630,329 670,818
Prepaid expenses and other current assets 181,617 156,228
------------ ------------
Total current assets 4,492,417 5,765,447
Property, plant and equipment, at cost:
Equipment 944,644 770,512
Leasehold improvements 460,319 442,528
Furniture and fixtures 101,376 40,563
------------ ------------
1,506,339 1,253,603
Less -- accumulated depreciation and amortization 862,934 594,719
------------ ------------
643,405 658,884
Other assets, net 88,472 88,472
------------ ------------
$5,224,294 $ 6,512,803
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 268,708 $ 100,719
Accrued expenses and other 313,926 254,312
Unearned income 49,969 33,332
------------ ------------
Total current liabilities 632,603 388,363
Commitments and contingencies (Note 6)
Stockholders' equity:
Preferred stock, $.01 par value -- authorized --
5,000,000 shares -- issued and outstanding -- none -- --
Common stock, $.01 par value -- authorized --
30,000,000 shares --issued and outstanding --
18,264,285 shares and 18,001,785 shares
at March 31, 1999 and 1998, respectively 182,642 180,017
Additional paid-in capital 131,272,607 130,264,048
Accumulated deficit (126,863,558) (124,319,625)
------------ ------------
Total stockholders' equity 4,591,691 6,124,440
------------ ------------
$ 5,224,294 $ 6,512,803
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
REPLIGEN CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
-----------------------------------------------------
1999 1998 1997
--------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Research and development $ 1,268,036 $ 916,726 $1,179,980
Product 1,009,655 1,114,452 1,553,598
Investment income 212,157 224,913 268,645
Other 99,711 128,885 799,319
--------- --------- ---------
2,589,559 2,384,976 3,801,542
--------- --------- ---------
Costs and expenses:
Research and development 1,847,210 1,419,825 1,378,391
Charge for purchased patent rights (Note 7) 1,034,914 -- --
Selling, general and administrative 1,562,750 1,281,090 1,939,881
Cost of product sales 688,618 480,089 536,685
Charge for purchased research & development -- -- 548,978
Restructuring credit -- -- (111,000)
--------- --------- ---------
5,133,492 3,181,004 4,292,935
--------- --------- ---------
Net loss $(2,543,933) $ (796,028) $ (491,393)
--------- --------- ---------
--------- --------- ---------
Basic and diluted net loss per share $ (0.14) $ (0.05) $ (0.03)
--------- --------- ---------
--------- --------- ---------
Basic and diluted weighted average
shares outstanding 18,017,650 16,501,785 15,677,998
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
REPLIGEN CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Total
Number of $.01 Additional Deferred Accumulated Stockholders'
Common Shares Par Value Paid-in Capital Compensation Deficit Equity
<S> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1996 15,602,542 $156,025 $127,694,145 $ -- $(123,041,651) $ 4,808,519
Net loss -- -- -- -- (491,393) (491,393)
Issuance of common stock in connection
with the acquisition of ProsCure, Inc. 405,669 4,057 544,921 -- -- 548,978
Compensation relating to issuance of
stock options -- -- 79,364 (26,447) -- 52,917
---------- ------- ----------- --------- ----------- ---------
Balance, March 31, 1997 16,008,211 160,082 128,318,430 (26,447) (123,533,044) 4,919,021
Net loss -- -- -- -- (796,028) (796,028)
Retirement of common stock issued
in connection with the acquisition of (6,426) (65) (9,382) -- 9,447 --
ProsCure, Inc.
Issuance of common stock and
warrants, net of
issusance costs 2,000,000 20,000 1,955,000 -- -- 1,975,000
Compensation relating to issuance of
stock options
-- -- -- 26,447 -- 26,447
---------- ------- ----------- --------- ----------- ---------
Balance, March 31, 1998 18,001,785 180,017 130,264,048 -- (124,319,625) 6,124,440
Issuance of common stock and warrants 262,500 2,625 1,008,559 -- -- 1,011,184
Net loss -- -- -- -- (2,543,933) (2,543,933)
---------- ------- ----------- --------- ----------- ---------
Balance, March 31, 1999 18,264,285 $182,642 131,272,607 $ -- $(126,863,558) $ 4,591,691
---------- ------- ----------- --------- ----------- ---------
---------- ------- ----------- --------- ----------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
REPLIGEN CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
---------------------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(2,543,933) $( 796,028) $ ( 491,393)
Adjustments to reconcile net loss to net cash
used in operating activities --
Depreciation and amortization 268,217 245,607 172,167
Issuance of stock options and warrants for services 126,270 26,447 52,917
Non cash portion of purchased patent rights charge 884,914 -- --
Non cash in-process research and development charge -- -- 548,978
Restructuring credit, noncash portion -- -- (111,000)
Changes in assets and liabilities
Accounts receivable (216,863) 322,072 (113,675)
Amounts due from affiliates -- -- 42,284
Inventories 40,488 (218,577) 248,983
Prepaid expenses and other current assets (25,389) 9,493 22,834
Accounts payable 167,989 (67,550) (377,860)
Accrued expenses and other 59,614 (145,676) (3,209,893)
Unearned income 16,637 (99,981) (21,685)
----------- ---------- ---------
Net cash used in operating activities (1,222,056) (724,193) (3,237,344)
----------- ---------- ---------
Cash flows from investing activities:
Sales of marketable securities -- 72,353 205,762
Purchases of property, plant and equipment, net (252,737) (114,021) (429,070)
Decrease (increase) in restricted cash -- 50,087 (50,087)
Decrease in other assets -- 437 32,480
----------- ---------- ---------
Net cash (used in) provided by investing activities (252,737) 8,856 (240,915)
----------- ---------- ---------
Cash flows from financing activities:
Proceeds from issuance of common stock and
warrants, net of issuance costs -- 1,975,000 --
----------- ---------- ---------
Net cash provided by financing activities -- 1,975,000 --
----------- ---------- ---------
Net (decrease) increase in cash and cash equivalents (1,474,793) 1,259,663 (3,478,259)
Cash and cash equivalents, beginning of year 4,725,544 3,465,881 6,944,140
----------- ---------- ---------
Cash and cash equivalents, end of year $ 3,250,751 $ 4,725,544 $3,465,881
----------- ---------- ---------
----------- ---------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
REPLIGEN CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Repligen Corporation ("Repligen" or the "Company") is engaged in the
development of new drugs for the treatment of cancer, organ transplant and
neurological diseases. The Company's products are designed to offer patients
improved treatment options based on the modulation of newly discovered disease
mechanisms. The Company also manufactures a set of patented products based on
Protein A, which are used by the pharmaceutical industry to produce antibodies
for therapeutic use. In addition, the Company has licensed certain intellectual
property pertaining to its former programs on biological products.
The accompanying financial statements reflect the application of
certain accounting policies described in this note and elsewhere in the
accompanying notes to the financial statements.
USE OF ESTIMATES
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.
PRINCIPLES OF CONSOLIDATION
The financial statements for the years ended March 31, 1998 and 1997
include the accounts of the Company and its wholly owned subsidiaries, ProsCure,
Inc. and Glycan Pharmaceuticals, Inc . All material intercompany accounts and
transactions were eliminated in consolidation. These subsidiaries were dissolved
during the year ended March 31, 1999.
REVENUE RECOGNITION
Research and development revenue derived from collaborative
arrangements 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 statements of
operations include funded and unfunded expenses.
The Company recognizes revenue related to product sales upon shipment
of the product.
Revenues recognized from the one-time sale of equipment and non
investment securities are also included as other revenue during the years ended
March 31, 1998 and 1997.
CASH AND CASH EQUIVALENTS
The Company considers highly liquid investments purchased with
original maturities at the date of acquisition of three months or less to be
cash equivalents. Cash equivalents consist of the following at March 31, 1999
and 1998.
F-7
<PAGE>
<TABLE>
<CAPTION>
Year Ended March 31,
------------------------------------
1999 1998
---- ----
<S> <C> <C>
U.S. Government and Agency securities......... $ 1,197,624 $ 498,200
Commercial paper.............................. 1,136,119 3,708,580
Money markets................................. 802,755 292,624
Cash.......................................... 114,253 226,140
----------- ----------
Total cash and cash equivalents............ $ 3,250,751 $ 4,725,544
----------- ----------
----------- ----------
</TABLE>
INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or
market. Work-in-process and finished goods inventories consist of material,
labor, outside processing costs and manufacturing overhead.
Inventories at March 31, 1999 and 1998 consist of the following:
<TABLE>
<CAPTION>
Year Ended March 31,
------------------------------------
1999 1998
---- ----
<S> <C> <C>
Raw materials and work-in-process............................ $412,480 $388,727
Finished goods............................................... 217,849 282,091
------- -------
Total..................................................... $630,329 $670,818
------- -------
------- -------
</TABLE>
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:
<TABLE>
<CAPTION>
DESCRIPTION USEFUL LIFE
----------- -----------
<S> <C>
Equipment 5 years
Leasehold improvements Shorter of term of the lease or estimated useful life
Furniture and fixtures 5-7 years
</TABLE>
EARNINGS PER SHARE
The Company has adopted Statement of Financial Accounting Standards
(SFAS) No.128, EARNINGS PER SHARE. SFAS No. 128 establishes standards for
computing and presenting earnings per share and applies to entities with
publicly held common stock or potential common stock. Basic net loss per share
represents net loss divided by the weighted average number of common shares
outstanding during the period. The dilutive effect of potential common shares,
consisting of outstanding stock options and warrants, is determined using the
treasury stock method in accordance with SFAS No. 128. Diluted weighted average
shares outstanding for 1999, 1998 and 1997 exclude the potential common shares
from warrants and stock options because to do so would have been antidilutive
for the years presented. The potential common shares prior to application of the
treasury stock method at March 31, 1999, 1998 and 1997 were 4,496,341, 3,572,741
and 2,787,089 shares, respectively.
FAIR VALUE OF FINANCIAL INSTRUMENTS
In accordance with SFAS No. 107, DISCLOSURE ABOUT FAIR VALUE OF
FINANCIAL INSTRUMENTS, the carrying amounts of the Company's cash and cash
equivalents, accounts receivable and accounts payable approximate fair value due
to the short-term nature of these instruments.
F-8
<PAGE>
CONCENTRATIONS OF CREDIT RISK
Financial instruments that subject the Company to significant
concentrations of credit risk consist primarily of cash and cash equivalents and
accounts receivable. The Company's cash equivalents are invested in financial
instruments with high credit ratings. Concentration of credit risk with respect
to accounts receivable is limited to customers to whom the Company makes
significant sales. The Company does not believe significant risk exists at March
31, 1999. To control credit risk, the Company performs regular credit
evaluations of its customers' financial condition and maintains allowances for
potential credit losses.
Revenues from significant customers as a percentage of the Company's
total revenues were as follows:
<TABLE>
<CAPTION>
Year Ended March 31,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Customer A 15% -- --
Customer B 12% -- 1%
Customer C 11% 1% --
Customer D 3% 23% 6%
</TABLE>
SEGMENT REPORTING
The Company has adopted SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED Information, in the fiscal year ended March 31, 1999.
SFAS No. 131 establishes standards for reporting information regarding operating
segments in annual financial statements and requires selected information for
those segments to be presented in interim financial reports issued to
stockholders. SFAS No. 131 also establishes standards for related disclosures
about products and services and geographic areas. Operating segments are
identified as components of an enterprise about which separate discrete
financial information is available for evaluation by the chief operating
decision maker, or decision making group, in making decisions now to allocate
resources and assess performance. To date, the Company has viewed its operations
and manages its business as principally one operating segment. As a result, the
financial information disclosed herein, represents all of the material financial
information related to the Company's principal operating segment.
The following table represents the Company's revenue by country:
<TABLE>
<CAPTION>
Year Ended March 31,
------------------------------------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
US 70% 76% 77%
Germany 11% 7% 1%
United Kingdom 8% 10% 11%
Other 11% 7% 11%
</TABLE>
NEW ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board (FASB) issued
SFAS No. 130, REPORTING COMPREHENSIVE INCOME. SFAS No. 130 requires disclosure
of all components of comprehensive income on an annual and interim basis.
Comprehensive income is defined as the change in equity of a business enterprise
during a period from transactions and other events and circumstances from
nonowner sources. SFAS No. 130 is effective for fiscal years beginning after
December 15, 1997. The Company adopted SFAS No. 130 effective April 1, 1998. The
Company's comprehensive loss for the years ended March 31, 1999, 1998 and 1997
was equal to its net loss for the same periods.
American Institute of Certified Public Accountants (AICPA) Statement of
Position (SOP) 98-05, REPORTING ON THE COSTS OF START-UP ACTIVITIES, was issued
in April 1998. SOP 98-05 requires that all nongovernmental entities expense the
costs of start-up activities, including
F-9
<PAGE>
organizational costs, as those costs are incurred. The Company has recorded and
will continue to record start-up costs as expense when incurred.
In June 1998, the FASB issued SFAS No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES. SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to as
derivatives) and for hedging activities. It requires that an entity recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. SFAS No. 133 is effective
for all fiscal quarters of fiscal years beginning after June 15, 2000. This new
standard is not anticipated to have a significant impact on the Company's
financial statements based on its current structure and operations.
2. ACCRUED EXPENSES
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
Year Ended March 31,
------------------------------------
1999 1998
---- ----
<S> <C> <C>
Payroll and payroll-related costs............................ $ 112,758 $ 60,371
Professional and consulting fees............................. 65,050 113,000
Other accrued expenses....................................... 136,118 80,941
--------- ---------
Total..................................................... $ 313,926 $ 254,312
--------- ---------
--------- ---------
</TABLE>
3. INCOME TAXES
The Company accounts for income taxes under SFAS No. 109, ACCOUNTING
FOR INCOME TAXES. At March 31, 1999, the Company had net operating loss
carryforwards for income tax purposes of approximately $98,600,000. The Company
also had available tax credit carryforwards of approximately $4,690,000 at March
31, 1999 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 are
approximately as follows:
<TABLE>
<CAPTION>
Net Operating
Expiration Date Loss Tax Credit
Carryforwards Carryforwards
----------------------------------------------
<S> <C> <C>
2000 $ 1,001,000 $ 104,000
2001 1,334,000 109,000
2002 2,500,000 73,000
2003 4,807,000 346,000
2004 6,642,000 408,000
2005-2013 82,316,000 3,650,000
---------- ----------
Total $ 98,600,000 $ 4,690,000
---------- ----------
---------- ----------
</TABLE>
The deferred tax asset consists of the following:
<TABLE>
<CAPTION>
Year Ended March 31,
-----------------------------------
1999 1998
----- ----
<S> <C> <C>
Temporary differences......................... $ 3,800,000 $ 3,900,000
Operating loss carryforwards................. 39,400,000 36,500,000
Tax credit carryforwards...................... 4,690,000 4,840,000
------------ ------------
47,890,000 45,240,000
Valuation allowance............................ (47,890,000) (45,240,000)
------------ ------------
$ -- $ --
------------ ------------
------------ ------------
</TABLE>
F-10
<PAGE>
A full valuation allowance has been provided, as it is uncertain if the
Company will realize the deferred tax asset.
4. COMMON STOCK
In March 1999, the Company entered into an agreement for legal services
relating to a complaint filed against Bristol-Myers Squibb. Under the terms of
the agreement, the Company is required to pay $50,000 in annual fees and if
successful in the litigation, a portion of any financial recovery will be paid
and warrants to purchase 100,000 shares of common stock will be issued. In
addition, the Company issued a fully vested warrant to purchase 100,000 shares
of common stock at an exercise price of $1.63 per share. The Company valued
these warrants at fair value and recorded legal expense of $126,270 relating to
this issuance.
In March 1999, the Company acquired all rights to certain patent
applications relating to the use of secretin in the treatment of autism. The
rights were acquired pursuant to a Patent Purchase Agreement (the "Purchase
Agreement") whereby, the Company paid $150,000 in cash, issued a warrant to
purchase 350,000 shares of common stock of the Company with an exercise price of
$1.59 per share, and issued 262,500 shares of common stock of the Company (See
Note 7). The Company valued the shares and warrants issued at fair market value.
In December 1997, the Company completed a $2.0 million private
placement of its securities. The Company received net proceeds of $1.975 million
for the issuance of 2,000,000 shares of common stock and warrants to purchase an
aggregate of 750,000 shares of common stock at a price of $1.50 per share.
In connection with the initial capitalization of the Repligen Clinical
Partners, L.P. (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, Repligen completed an exchange pursuant to which a
majority of the holders of Original Warrants exchanged their Original Warrants
for new warrants (the Exchange Warrants). Subsequently, in March 1995, Repligen
offered to modify the majority of the remaining Original Warrants and the
Exchange Warrants. Each holder of an outstanding warrant who was not in default
under its obligations to the Partnership was free to accept or reject such
modifications.
As of March 31, 1999, 620 of the 711.5 nondefaulted limited partnership
units had accepted the modifications. Accordingly, as of that date, there were
issued and outstanding modified Original Warrants to purchase 163,850 shares of
the Company's common stock at $9.00 per share, Exchange Warrants to purchase
189,950 shares of the Company's common stock at $9.00 per share and modified
Exchange Warrants to purchase 1,653,250 shares of the Company's common stock at
$2.50 and $3.50 per share. These warrants expire between 2000 and 2001.
At March 31, 1999, common stock reserved for issuance was as follows:
<TABLE>
<CAPTION>
Reserved for Shares
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Incentive and nonqualified stock option plans 3,353,277
Warrants granted in connection with the Repligen
Clinical Partners, L.P. offering 2,007,050
Warrants granted in connection with the private placement
with BVF and affiliates 750,000
Warrants granted in connection with the Patent
Purchase Agreement 350,000
Warrants granted for payment of services 100,000
-----------
6,560,327
-----------
-----------
</TABLE>
F-11
<PAGE>
5. STOCK OPTION PLANS
The Company has three stock option plans. The plans authorize the grant
of either incentive stock options or nonqualified stock options. Incentive stock
options are granted to employees at the fair market value at the date of grant.
Nonqualified stock options are granted to employees or nonemployees. The options
generally vest over four or five years and expire no more than 10 years from the
date of grant. As of March 31, 1999, the Company had 2,063,986 shares of common
stock available for grant.
A summary of stock option activity under all plans is as follows:
<TABLE>
<CAPTION>
Years Ended March 31,
---------------------------------------------------------------------------------------------
1999 1998 1997
------------------------------- -------------------------------- ------------------------------
Weighted Weighted Weighted
Average Average Average
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 740,291 $2.05 704,639 $ 2.20 953,046 $ 3.16
Granted 568,500 1.38 117,500 1.41 180,500 .93
Exercised -- -- -- -- -- --
Forfeited (19,500) 1.18 (81,848) 2.45 (428,907) 3.66
--------- ----- ------- ------ ------- ------
Outstanding at
end of period 1,289,291 $ 1.78 740,291 $ 2.05 704,639 $ 2.20
--------- ----- ------- ------ ------- ------
Exercisable at
end of period 529,691 $ 2.33 461,713 $ 2.43 367,236 $ 5.33
--------- ----- ------- ------ ------- ------
--------- ----- ------- ------ ------- ------
</TABLE>
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
----------------------------------------------- --------------------------------
Weighted Weighted Weighted
Average Average Average
Remaining Exercse Exercise
Range of Number Contractual Price Number Price Per
Exercise Price Outstanding Life Per Share Outstanding Share
-------------- ----------- ---- --------- ----------- -----
<S> <C> <C> <C> <C> <C>
$ .05-$ .50 ..... 89,541 7.05 $ .45 89,541 $ .45
$ .88-$ 1.00 ..... 30,000 7.88 .94 30,000 .94
$ 1.03-$ 1.50 ..... 919,000 8.41 1.36 193,400 1.30
$ 1.53-$ 1.63 ..... 47,000 8.42 1.59 13,000 1.63
$ 2.75-$ 2.75 ..... 158,750 5.36 2.77 158,750 2.77
$ 3.13-$ 3.13 ..... 10,000 5.55 3.13 10,000 3.13
$ 6.56-$12.45 ..... 45,000 3.26 10.10 45,000 10.10
--------- ---- ------ ------- -----
1,289,291 7.74 $ 1.78 529,691 $ 2.33
--------- ---- ------ ------- -----
</TABLE>
The Company accounts for its stock-based compensation under SFAS No.
123 ACCOUNTING FOR STOCK BASED COMPENSATION. The Company has adopted the
disclosure-only alternative for employee grants and, accordingly, will continue
to account for stock based compensation for employees under APB Opinion No. 25.
The Company has computed the pro forma disclosures required under SFAS
No. 123 for all stock options granted to employees in 1999, 1998 and 1997 using
the Black-Scholes option pricing model prescribed by SFAS No. 123. The
assumptions used and the weighted average information for the years ended March
31, 1999, 1998 and 1997 are as follows:
F-12
<PAGE>
<TABLE>
<CAPTION>
Year ended March 31,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Risk-free interest rates 5.12% 6.76% 6.44%
Expected dividend yield -- -- --
Expected lives 10 years 10 years 10 years
Expected volatility 93% 56% 106%
Weighted-average grant date fair value of options
granted during the period $1.12 $1.41 $.87
Weighted-average remaining contractual life of
options outstanding 7.7 years 8.4 years 8.9 years
</TABLE>
If compensation expense for the Company's stock option plan had been determined
consistent with SFAS No. 123 pro forma net loss and net loss per share would
have been as follows:
<TABLE>
<CAPTION>
Year Ended March 31,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net loss-
As reported...................................... ($2,543,933) ($796,028) ($491,393)
Pro forma........................................ ($2,768,827) ($908,353) ($573,077)
Basic and diluted net loss per share-
As reported...................................... $ (.14) $ (.05) ($.03)
Pro forma........................................ $ (.15) $ (.06) ($.04)
</TABLE>
6. COMMITMENTS
The Company leases their facilities. Obligations under noncancellable
operating leases as of March 31, 1999 are approximately as follows:
<TABLE>
<CAPTION>
Year Ending March 31,
<S> <C>
2000.............................. 281,000
2001.............................. 158,000
2002.............................. 74,000
--------
Total minimum lease payments $513,000
--------
--------
</TABLE>
Rent expense charged to operations under operating leases was
approximately $281,000, $281,000, and $717,000 for the years ended March 31,
1999, 1998 and 1997, respectively.
7. PURCHASED PATENT RIGHTS
In March 1999, the Company acquired all rights to certain patent
applications relating to the use of secretin in the treatment of autism. The
rights were acquired pursuant to a Patent Purchase Agreement. In addition,
the Company has agreed to make minimum annual royalty payments of $500,000
and certain milestone payments upon (a) the Company's filing of a new drug
application with the United States Food and Drug Administration ("FDA") for a
clinical indication covered by the intellectual property rights transferred
by the Purchase Agreement and (b) upon the approval by the FDA of a product
covered by the intellectual property rights transferred to the Company
pursuant to the Purchase Agreement. These milestone payments, in the
aggregate sum of $700,000, will be largely credited against certain royalty
payments in the event the Company is able to derive sales and/or license
revenues from the intellectual property rights acquired pursuant to the
Purchase Agreement. Under terms of this agreement, the Company may be
required to repurchase up to a maximum of 100,000 shares of common stock
issued in connection with the Purchase Agreement at a price of $1.59 per
share. This obligation to repurchase the common stock expires in June 1999.
F-13
<PAGE>
In order for the Company to commercialize secretin as a treatment for
autism, the Company will need to expend a substantial amount in research and
development, preclinical testing and clinical trials, regulatory clearances and
manufacturing, distribution and marketing arrangements. The outcome of which is
uncertain. The cost and time to complete the development of the technology is
significant and difficult to estimate given the uncertainties of research and
development and regulatory process. Accordingly, the net realizable value of the
patent rights acquired is uncertain. Approximately $1,035,000 was charged to the
accompanying 1999 statement of operations as the cost of the purchased patent
rights.
8. PURCHASED RESEARCH & DEVELOPMENT
During fiscal 1997, the Company issued 405,669 shares of its common
stock for all of the outstanding stock of ProsCure, Inc. ("ProsCure"). 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 of
approximately $549,000 charged to operations as the cost of acquired research
and development in process. The Company acquired assets having a fair value of
approximately $170,000, consisting primarily of cash and receivables. Results of
operations for ProsCure are included in the financial statements of the Company,
since March 14, 1996, as ProsCure is a subsidiary of Glycan Pharmaceuticals,
Inc. Unaudited pro forma information with respect to ProsCure's pre-acquisition
operating results has not been presented as it is not material to the fiscal
1997 operating results.
9. RELATED PARTIES
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.
The Company has received research and development funding from the
Partnership pursuant to a Product Development Agreement, whereby the Company
performed research and development work and charged the Partnership for actual
costs incurred plus a 10% management fee. The Company recognized $12,000 and
$190,000 of such funding as revenue in fiscal 1998 and 1997, respectively. Other
revenues for the years ended March 31, 1997 included $25,000 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.
Although the Company was allocated a loss of approximately $1,000 and $2,400 for
the year ended March 31, 1998 and 1997, respectively, the Company had previously
written down all of its original investment.
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.
10. SUBSEQUENT EVENTS (UNAUDITED)
In April and May 1999, certain private investors agreed to invest
approximately $9.0 million in the Company through a private placement of
3,600,000 shares of its common stock. As a condition of closing, the Company
agreed to file a registration statement with the Securities and Exchange
Commission covering the resale of the shares issued in connection with this
private placement. The financing is expected to close by June 30, 1999. Repligen
expects to receive net proceeds of approximately $8.8 million after deducting
the estimated expenses of the transaction.
F-14
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth an estimate (other than with respect to the
Registration Fee and the Nasdaq National Market additional listing fee expense)
of the expenses expected to be incurred in connection with the issuance and
distribution of the securities being registered, other than underwriting
discounts and commissions:
<TABLE>
<S> <C>
Registration Fee -- Securities and Exchange Commission................$ 2,783
Nasdaq National Market additional listing fee.........................$17,500
Blue Sky Fees and Expenses............................................$ 1,000
Accounting Fees and Expenses..........................................$ 3,000
Legal Fees and Expenses...............................................$10,000
Transfer Agent fees and expenses......................................$ 1,000
Miscellaneous.........................................................$ 5,000
-------
TOTAL........................................................$40,283
-------
-------
</TABLE>
Repligen will bear all expenses shown above.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Delaware General Corporation Law, Article Seventh of Repligen's
Restated Certificate of Incorporation, as amended, and Article V of Repligen's
By-laws provide for indemnification of Repligen's directors and officers for
liabilities and expenses that they may incur in such capacities. In general,
directors and officers are indemnified with respect to actions taken in good
faith in a manner reasonably believed to be in, or not opposed to, the best
interests of Repligen, and with respect to any criminal action or proceeding,
actions that the indemnitee had no reasonable cause to believe were unlawful.
Repligen maintains directors and officers liability insurance for the
benefit of its directors and certain of its officers.
II-1
<PAGE>
ITEM 16. EXHIBITS.
The following exhibits, required by Item 601 of Regulation S-K, are filed
as a part of this Registration Statement. Exhibit numbers, where applicable, in
the left column correspond to those of Item 601 of Regulation S-K.
Exhibit No. Item and Reference
- ----------- ------------------
4.1 -- Stock Purchase Agreement dated as of April 30, 1999, by and
among Repligen Corporation and Wellington Management
Company, LLP, as Investment Advisor to the investors listed
on Schedule I thereto. (Incorporated by reference to Exhibit
4.1 of the Company's Current Report on Form 8-K filed May
17, 1999)
4.2 -- Stock Purchase Agreement dated as of May 14, 1999, by and
among Repligen Corporation and the investors listed on the
Schedule I thereto. (Incorporated by reference to Exhibit
4.2 of the Company's Current Report on Form 8-K filed May
17, 1999)
5 -- *Legal Opinion of Testa, Hurwitz & Thibeault, LLP
23.1 -- Consent of Arthur Andersen LLP
23.2 -- *Consent of Testa, Hurwitz & Thibeault, LLP
24 -- *Power of Attorney
* Previously filed
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this regi
stration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represents a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
II-2
<PAGE>
securities offered (if the total dollar value of securities offered would not
exceed that which was registered ) and any deviation from the low or high and of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termina tion
of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to provisions described in Item 14 above, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against suc liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudi cation of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized in the Town of Needham, Commonwealth of
Massachusetts on June 16, 1999.
Repligen Corporation
By: /s/ Walter C. Herlihy
-------------------------------
Walter C. Herlihy
President and Chief Executive
Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement on Form S-3 has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Name Capacity Date
- ---- -------- ----
<S> <C> <C>
/s/ Walter C. Herlihy President and Chief Executive Officer, June 16, 1999
- ------------------------- Chief Financial Officer and Director
Walter C. Herlihy (principal executive, financial and
accounting officer)
/s/ Alexander Rich, M.D.* Co-Chairman of the Board of Directors June 16, 1999
- -------------------------
Alexander Rich, M.D.
/s/ Paul Schimmel, PH.D.* Co-Chairman of the Board of Directors June 16, 1999
- -------------------------
Paul Schimmel, Ph.D.
/s/ Robert J. Hennessey* Director June 16, 1999
- -------------------------
Robert J. Hennessey
/s/ G. William Miller* Director June 16, 1999
- -------------------------
G. William Miller
*By:/s/ Walter C. Herlihy
---------------------
Attorney-in-Fact
</TABLE>
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<PAGE>
INDEX TO EXHIBITS
Exhibit No. Item and Reference
- ----------- ------------------
4.1 -- Stock Purchase Agreement dated as of April 30, 1999, by and
among Repligen Corporation and Wellington Management
Company, LLP, as Investment Advisor to the investors listed
on Schedule I thereto. (Incorporated by reference to
Exhibit 4.1 of the Company's Current Report on Form 8-K
filed May 17, 1999)
4.2 -- Stock Purchase Agreement dated as of May 14, 1999, by and
among Repligen Corporation and the investors listed on the
Schedule I thereto. (Incorporated by reference to
Exhibit 4.2 of the Company's Current Report on Form 8-K
filed May 17, 1999)
5 -- *Legal Opinion of Testa, Hurwitz & Thibeault, LLP
23.1 -- Consent of Arthur Andersen LLP (filed herewith)
23.2 -- *Consent of Testa, Hurwitz & Thibeault, LLP (included in
Exhibit 5)
24 -- *Power of Attorney
*Previously filed.
II-5
<PAGE>
Arthur Andersen LLP
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of
our reports included in this registration statement and to the incorporation
by reference in this registration statement of our report dated May 12, 1998
included in Repligen Corporation's Form 10-K for the year ended March 31,
1998 and to all references to our Firm included in this Registration
Statement.
/S/ ARTHUR ANDERSEN LLP
-----------------------
ARTHUR ANDERSEN LLP
Boston, Massachusetts
June 15, 1999
