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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to ____________________
Commission File Number 0-14656
REPLIGEN CORPORATION
(exact name of registrant as specified in its charter)
Delaware 04-2729386
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
117 Fourth Avenue
Needham, Massachusetts 02494
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 449-9560
-----------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of July 31, 1999.
Common Stock, par value $.01 per share 21,868,085
-------------------------------------- ----------------
Class Number of Shares
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2
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REPLIGEN CORPORATION
INDEX
<TABLE>
<CAPTION>
PAGE
----
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of June 30, 1999 (Unaudited)
and March 31, 1999 (Audited) 4
Condensed Consolidated Statements of Operations (Unaudited) for
the Three Months Ended June 30, 1999 and 1998 5
Condensed Consolidated Statement of Cash Flows (Unaudited)
for the Three Months Ended June 30, 1999 and 1998 6
Notes to Condensed Consolidated Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities None
Item 4. Submissions of Matters to a Vote of Security Holders None
Item 5. Other Information None
Item 6. Exhibits and Reports on Form 8-K 15
Signature 17
Exhibit Index 18
Exhibits 19
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
REPLIGEN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1999 March 31, 1999
------------- -------------
ASSETS (Unaudited) (Audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 11,817,472 $ 3,250,751
Accounts receivable 404,370 429,720
Inventories 581,762 630,329
Prepaid expenses and other current assets 267,704 181,617
------------- -------------
Total current assets 13,071,308 4,492,417
Property and equipment, at cost:
Equipment 969,471 944,644
Furniture and fixtures 139,385 101,376
Leasehold improvements 467,368 460,319
------------- -------------
1,576,224 1,506,339
Less: accumulated depreciation and amortization 936,053 862,934
------------- -------------
640,171 643,405
Other assets, net 81,411 88,472
------------- -------------
$ 13,792,890 $ 5,224,294
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 352,800 $ 268,708
Accrued expenses 338,244 313,926
Unearned income 27,384 49,969
------------- -------------
Total current liabilities 718,428 632,603
Commitments and contingencies -- --
Stockholders' equity:
Preferred stock, $.01 par value --
authorized -- 5,000,000 shares --
outstanding - none -- --
Common stock, $.01 par value --
authorized -- 30,000,000 shares --
outstanding - 21,868,085 shares
at June 30, 1999 and 18,264,285
shares at March 31, 1999 218,680 182,642
Additional paid-in capital 140,141,927 131,272,607
Accumulated deficit (127,286,145) (126,863,558)
------------- -------------
Total stockholders' equity 13,074,462 4,591,691
------------- -------------
$ 13,792,890 $ 5,224,294
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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REPLIGEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------
June 30,1999 June 30, 1998
------------ ------------
<S> <C> <C>
Revenues:
Research and development $ 378,502 $ 268,406
Product 232,470 229,138
Investment income 46,538 61,691
Other 30,658 33,188
------------ ------------
688,168 592,423
------------ ------------
Costs and expenses:
Research and development 488,203 466,069
Selling, general and administrative 426,169 356,932
Cost of products sold 196,383 112,282
------------ ------------
1,110,755 935,283
------------ ------------
Net loss $ (422,587) $ (342,860)
============ ============
Basic and diluted net loss per share $ (0.02) $ (0.02)
============ ============
Basic and diluted weighted average common shares outstanding 18,744,863 18,001,785
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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REPLIGEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (422,587) $ (342,860)
Adjustments to reconcile net loss to net cash
used in operating activities -
Depreciation and amortization 73,119 64,213
Changes in assets and liabilities -
Accounts receivable 25,349 (193,724)
Inventories 48,567 (37,111)
Prepaid expenses and other current assets (86,087) 44,512
Accounts payable 84,094 (1,208)
Accrued expenses 24,318 116,491
Unearned income (22,585) (33,332)
------------ ------------
Net cash used in operating activities (275,812) (383,019)
------------ ------------
Cash flows from investing activities:
Purchases of property and equipment, at cost (69,886) (55,953)
Changes in other assets 7,061 --
------------ ------------
Net cash used in investing activities (62,825) (55,953)
------------ ------------
Cash flows from financing activities:
Net proceeds from the issuance of common stock and warrants,
net of issuance costs 8,905,358 --
------------ ------------
Net cash provided by financing activities 8,905,358 --
------------ ------------
Net increase (decrease) in cash and cash equivalents 8,566,721 (438,971)
Cash and cash equivalents, beginning of period 3,250,751 4,725,544
------------ ------------
Cash and cash equivalents, end of period $ 11,817,472 $ 4,286,573
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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REPLIGEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The condensed consolidated financial statements included herein have been
prepared by Repligen Corporation (the "Company" or "Repligen"), pursuant to the
rules and regulations of the Securities and Exchange Commission for quarterly
reports on Form 10-Q and do not include all of the information and footnote
disclosures required by generally accepted accounting principles. These
financial statements should be read in conjunction with the audited financial
statements and notes thereto included in the Company's Form 10-K for the year
ended March 31, 1999.
In the opinion of management, the accompanying unaudited financial
statements include all adjustments, consisting of only normal, recurring
adjustments, necessary to present fairly, the consolidated financial position,
results of operations and cash flows. The results of operations for the interim
periods presented are not necessarily indicative of results to be expected for
the entire year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. Net Loss Per Share
The Company has adopted Statement of Financial Accounting Standards (SFAS)
No. 128, Earnings per Share, effective December 15, 1998. 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.
The Company has applied the provisions of SFAS No. 128, retroactively to all
periods presented. Basic and diluted net loss per share represents net loss
divided by the weighted average number of common shares outstanding during the
period. The dilutive effect of the 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 at June 30, 1999 and 1998 excluded the potential common shares from
warrants and stock options because to do so would be antidilutive for the
periods presented. At June 30, 1999, there are 1,335,491 options outstanding
with a weighted average exercise price of $1.82 and 3,207,050 warrants
outstanding with a weighted average exercise price of $3.19.
3. Cash and Cash Equivalents
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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 June 30, 1999 and
March 31, 1999:
Three Months Ended
June 30,1999 March 31, 1999
------------ --------------
U.S. Government and Agency securities ...... $ 5,585,426 $ 1,197,624
Commercial paper ........................... 5,185,168 1,136,119
Money markets .............................. 969,188 802,755
Cash ....................................... 77,690 114,253
----------- -----------
Total cash and cash equivalents ......... $11,817,472 $ 3,250,751
=========== ===========
4. Inventories
Inventories are stated at the lower of cost (first-in, first-out) or
market and consist of the following:
June 30, 1999 March 31,1999
(Unaudited)
Raw materials and work-in-process $420,726 $412,480
Finished goods 161,036 217,849
-------- --------
Total $581,762 $630,329
======== ========
Work in process and finished goods inventories consist of material, labor,
outside processing costs and manufacturing overhead.
5. Comprehensive Income
Effective January 1, 1998, the Company adopted SFAS No. 130 Reporting
Comprehensive Income, effective January 1, 1998. SFAS No. 130 establishes
standards for reporting and display of comprehensive income and its components
in financial statements. Comprehensive income includes all changes in equity
during a period except those resulting from investments by owners and
distributions to owners. The comprehensive net loss is the same as net loss for
all periods presented.
6. Disclosures about Segments of an Enterprise and Significant
Customers
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
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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:
Three Months Ended June 30,
-----------------------------------------
1999 1998 1997
---- ---- ----
United States 56% 57% 85%
Sweden 25% 4% 1%
United Kingdom 14% 12% 8%
Other 5% 27% 6%
Total 100% 100% 100%
During the three months ended June 30,1999, there were two significant
customers which accounted for approximately 25% and 14% of the Company's
revenues or $172,000 and $96,000. The related accounts receivable for these two
customers at June 30, 1999 was fully paid and $96,000, respectively.
7. Sale of Securities
Pursuant to two stock purchase agreements dated as of April 30, 1999 and
May 14, 1999, respectively, by and among Repligen and the respective parties
thereto, Repligen issued to the parties thereto an aggregate of 3,600,000 shares
of Common Stock of Repligen for an aggregate purchase price of $9 million. Based
on the representations of the investing parties and a reasonable belief of
Repligen that all such parties were "accredited" (as such term is defined in
Rule 501 of the Securities Act of 1933) and that the parties were acquiring the
shares of Common Stock of Repligen for investment and not with a view to the
distribution thereof, Repligen consummated a private placement of the 3,600,000
shares of Common Stock of Repligen pursuant to Regulation D, Rule 506 of the
Securities Act of 1933. Repligen closed the private placement transaction on
June 23, 1999. There were no underwriters involved in such private placement
transaction. Repligen will use the proceeds from the private placement
transaction for working capital and other general corporate purposes. Repligen
filed a registration statement with the Securities and Exchange Commission on
Form S-3 on June 16, 1999 for the resale of the 3,600,000 shares of Common Stock
of Repligen sold to the parties in the private placement transaction. The
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Securities and Exchange Commission declared such resale registration statement
effective on June 23, 1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-Looking Statements
Statements in this Quarterly Report on Form 10-Q as well as oral
statements that may be made by the Company or by officers, directors or
employees of the Company acting on the Company's behalf, that are not
historical facts constitute "forward-looking statements" within the meaning
of Section 21E of the Securities Exchange Act of 1934. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
that could cause the actual results of the Company to be materially different
from the historical results or from any results expressed or implied by such
forward-looking statements. The Company's future operating results are
subject to risks and uncertainties and are dependent upon many factors,
including, without limitation, the Company's ability to (i) meet its working
capital and future liquidity needs, (ii) successfully implement its strategic
growth strategies, (iii) understand, anticipate and respond to rapidly
changing technologies and market trends, (iv) develop, manufacture and
deliver high quality, technologically advanced products on a timely basis to
withstand competition from competitors which may have greater financial,
information gathering and marketing resources than the Company, (v) obtain
and protect licensing and intellectual property rights necessary for the
Company's technology and product development on terms favorable to the
Company, (vi) recruit and retain highly talented professionals in a
competitive job market, (vii) realize future revenues, (viii) maintain a
timeline for clinical activity, (ix) obtain successful results of pending or
future clinical trials, (x) continue to establish collaborative arrangements
with third parties, and (xi) compete against the biotechnology and
pharmaceutical industries. Further information on potential factors that
could affect the Company's financial results are included in filings made by
the Company from time to time with the Securities and Exchange Commission
included in the section entitled "Risk Factors" contained in the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 1999 (File
No.000-14656).
Overview
Repligen develops new drugs for the treatment of neurological disease,
organ transplantation and cancer. To expand our drug development program, on
March 9, 1999, Repligen acquired the exclusive rights to patent applications for
the use of secretin in the treatment of autism. Autism is a developmental
disorder characterized by poor communication and social 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 United States Food and Drug Administration for use in
diagnosing problems with pancreatic function. Recent anecdotal reports indicate
that secretin may have beneficial effects in treating
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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. Currently there
are no drugs approved by the FDA for the treatment of autism.
Repligen also is 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, CTLA4-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. Repligen intends to further evaluate CTLA4-Ig in
bone marrow transplants for leukemia.
Repligen develops, manufactures and markets 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, Repligen entered
into a ten year relationship to supply recombinant Protein A to Amersham
Pharmacia Biotech, a leading supplier to the biopharmaceutical market.
Results of Operations
Revenues
Total revenues for the three month period ended June 30, 1999 and 1998
were approximately $688,000 and $592,000, respectively, an increase of
approximately $96,000 or 16%. This increase was largely attributable to
increased research and development revenue.
Research and development revenues for the three month period ended June
30, 1999 and 1998 were approximately $379,000 and $268,000, respectively, an
increase of approximately $111,000 or 41%. This increase was largely
attributable to a licensing payment received during the three months ended June
30, 1999 offset by decreased revenues associated with research collaborations on
its drug discovery programs during the
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three months ended June 30, 1999.
Product revenues for the three month period ended June 30, 1999 and 1998
were approximately $232,000 and $229,000, respectively, an increase of $3,000 or
1%. This increase is attributable to increased sales of Protein A products
offset by decreased sales of reagent products.
Investment income for the three month period ended June 30, 1999 and
1998 was approximately $47,000 and $62,000, respectively, a decrease of
approximately $15,000 or 24%. This decrease is largely attributable to higher
average funds available for investment and higher interest rates during the
three months ended June 30, 1998. The Company completed its common stock
financing on June 23, 1999.
Other revenues for the three month period ended June 30, 1999 were
approximately $31,000, a decrease of $2,000 or 6% from the comparable period
ended June 30, 1998. This decrease is primarily due to the sale of equipment
held by Repligen reported as other income in fiscal 1999.
Expenses
Total expenses for the three month period ended June 30, 1999 and 1998
increased to approximately $1,111,000 from $935,000, an increase of $176,000 or
18%.
Research and development expenses for the three month period ended June
30, 1999 and 1998 were approximately $488,000 and $466,000, respectively, an
increase of $22,000 or 5%. This increase reflects increased staffing in research
and development as Repligen expands its investment in its drug development
programs.
Selling, general and administrative expenses for the three months ended
June 30, 1999 and 1998 were approximately $426,000 and $357,000, respectively,
an increase of $69,000 or 19%. This increase is attributable to increased costs
in administrative salaries and associated benefits.
Cost of products sold for the three months ended June 30, 1999 and 1998
were approximately $196,000 and $112,000, respectively, an increase of $84,000,
or 75%. Cost of products sold in the three months ended June 30, 1999 and 1998
were 85% and 49%, respectively, of product revenues. This increase is largely
attributable to costs associated with the startup of its manufacturing contract
for AP Biotech during the three month period ended June 30, 1999.
Liquidity and Capital Resources
Repligen's total cash and cash equivalents increased to $11,817,000 at
June 30, 1999 from $3,251,000 at March 31, 1999. This increase of $8,566,000
reflects $8,900,000 of proceeds resulting from the sale of Common Stock to
certain investors through a private placement that closed during the three
months ended June 30, 1999, offset by a net
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loss from operations incurred during the three month period ended June 30, 1999
of approximately $423,000, an increase in prepaid expenses of $86,000 and
capital expenditures of $70,000, offset in part by the increase in accrued
expenses and accounts payable of $108,000 and accounts receivable of $49,000.
Working capital increased to $12,353,000 at June 30, 1999 from $3,860,000 at
March 31, 1999.
Repligen has entered into agreements with a number of collaborative
partners and licensees. Under the terms of these agreements, Repligen may be
eligible to receive research support, additional milestones or royalty revenue
if these collaborations result in clinical evaluation and commercialization of
products developed. Repligen can not be certain of the continuation of these
collaborations or of receiving any future payments related to these agreements.
While the cost of operations is anticipated to increase in fiscal 2000 as
Repligen expands its investment in proprietary product development, Repligen
believes that the private placement financing, yielding an aggregate of
$8,900,000 in net proceeds 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, Repligen may not be able to secure such financing, or
obtain such financing on favorable terms because of the volatile nature of the
biotechnology market place.
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 internal 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
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.
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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.
Item 1. LEGAL PROCEEDINGS
On July 17, 1998, Repligen filed a complaint at the United States District
Court for the District of Massachusetts in Boston, Massachusetts seeking
correction of inventorship of certain United States patents which claim
compositions and methods of use for CTLA4 as well as unspecified monetary
damages. A correction of inventorship would result in the University of Michigan
being designated as a co-assignee on any corrected Bristol-Myers patent.
Repligen would then have rights to such technology pursuant to a 1992 License
Agreement with the University of Michigan, a 1995 Asset Acquisition Agreement
with Genetics Institute, and other related agreements. On July 13, 1999, the
court dismissed the complaint without prejudice citing a lack of legal standing
of Repligen to bring such a complaint. We believe that the court's finding on
standing was in error. The court did not rule on the validity of Repligen's
inventorship claim. Repligen continues to believe that the University of
Michigan is a rightful co-assignee of the aforesaid Bristol-Myers patents and we
intend to continue to pursue the correction of inventorship. There can be no
assurances that litigation will conclude in a result beneficial to Repligen, and
failure to obtain shared ownership rights in the patents may restrict Repligen's
ability to commercialize CTLA4-Ig.
Item 2. CHANGES IN SECURITIES
Pursuant to two stock purchase agreements dated as of April 30, 1999 and
May 14, 1999, respectively, by and among Repligen and the respective parties
thereto, Repligen issued to the parties thereto an aggregate of 3,600,000 shares
of Common Stock of Repligen for an aggregate purchase price of $9 million. Based
on the representations of the investing parties and a reasonable belief of
Repligen that all such parties were "accredited" (as such term is defined in
Rule 501 of the Securities Act of 1933) and that the parties were acquiring the
shares of Common Stock of Repligen for investment and not with a view to the
distribution thereof, Repligen consummated a private placement of the 3,600,000
shares of Common Stock of Repligen pursuant to Regulation D, Rule 506 of the
Securities Act of 1933. Repligen closed the private placement transaction on
June 23, 1999. There were no underwriters involved in such private placement
transaction. Repligen will use the proceeds from the private placement
transaction for working capital and other general corporate purposes. Repligen
filed a registration statement with the Securities and Exchange Commission on
Form S-3 on June 16, 1999 for the resale of the 3,600,000 shares of Common Stock
of Repligen sold to the parties to the private placement transaction. The
Securities and Exchange Commission declared such resale registration statement
effective on June 23, 1999.
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
EXHIBIT DESCRIPTION
3.1 Restated Certificate of Incorporation, dated June 30,
1992 and filed July 13, 1992 (filed as Exhibit 4.12
to Repligen Corporation's Annual Report on Form 10-K
File No. 0-14656 for the year ended March 31, 1993
and incorporated herein by reference).
3.2 By-laws (filed as Exhibit 3.4 to Repligen
Corporation's Form S-1 Registration Statement No.
33-3959 and incorporated herein by reference).
4.1 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 (previously
filed as Exhibit 4.1 to Repligen's current report on
Form 8-K on May 17, 1999 and incorporated herein by
reference).
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 (previously filed as
Exhibit 4.2 to Repligen's current report on Form 8-K
on May 17, 1999 and incorporated herein by
reference).
10.1* Supply Agreement dated as of May 26, 1999 by and
between Repligen Corporation and Amersham Pharmacia
Biotech AB (with certain confidential information
deleted) (filed herewith).
27.1 Financial Data Schedule (filed herewith)
* The Appendixes to the Supply Agreement, included as Exhibit 10.1 hereto,
are not being filed herewith. The Supply Agreement filed herewith contains a
list briefly identifying the contents of all appendixes to such document. The
Company undertakes to furnish a copy of any omitted appendix to the Commission
upon request (except that Appendix C and D thereto shall
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remain confidential). Pursuant to Item 601 (b) (2) of Regulation S-K, set forth
below is a list of the omitted appendixes.
SUPPLY AGREEMENT (EXHIBIT 10.1 HERETO)
Appendix A Biotech IPA Products
Appendix B Certificate of Analysis
Appendix C Price Schedule for First Contract Year
Appendix D New Product
(b) Reports on Form 8-K
1. Current Report on Form 8-K/A filed with the Securities and Exchange
Commission on June 15, 1999 (amending Current Report on Form 8-K
filed March 24, 1999) (description of transaction relating to
acquisition of all rights to certain patent applications).
2. Current Report on Form 8-K filed with the Securities and Exchange
Commission on May 17, 1999 (description of private placement
transaction relating to sale of common stock of the Company for an
aggregate purchase price of $9 million).
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
REPLIGEN CORPORATION
(Registrant)
Date: August 13, 1999 By: /s/ Walter C. Herlihy
------------------------------
Chief Executive Officer and President,
Principal Financial and Accounting Officer
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Repligen Corporation
Exhibit Index
EXHIBIT DESCRIPTION
3.1 Restated Certificate of Incorporation, dated June 30, 1992
and filed July 13, 1992 (filed as Exhibit 4.12 to Repligen
Corporation's Annual Report on Form 10-K File No. 0-14656
for the year ended March 31, 1993 and incorporated herein
by reference).
3.2 By-laws (filed as Exhibit 3.4 to Repligen Corporation's
Form S-1 Registration Statement No. 33-3959 and
incorporated herein by reference).
4.1 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 (previously filed as Exhibit 4.1 to
Repligen's current report on Form 8-K on May 17, 1999 and
incorporated herein by reference).
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 (previously filed as Exhibit 4.2 to
Repligen's current report on Form 8-K on May 17, 1999 and
incorporated herein by reference).
10.1 Supply Agreement dated as of May 26, 1999 by and
between Repligen Corporation and Amersham Pharmacia
Biotech AB (with certain confidential information
deleted) (filed herewith).
27.1 Financial Data Schedule (filed herewith)
18
<PAGE>
EXHIBIT 10.1
SUPPLY AGREEMENT
This agreement ("Agreement") is made as of May 26, 1999, by and between Repligen
Corporation ("REPLIGEN"), a Delaware corporation with principal offices at 117
Fourth Ave., Needham, MA 02494 and Amersham Pharmacia Biotech AB ("BIOTECH"), a
corporation incorporated in Sweden with principal offices at Bjorkgatan 30,
SE-751 84 Uppsala (each a "Party" and collectively "the Parties").
WHEREAS, REPLIGEN possesses capabilities relating to the large scale
manufacture of recombinant proteins including protein A; and
WHEREAS, BIOTECH utilizes a proprietary form of recombinant protein A in a
variety of products marketed and sold by BIOTECH; and [*]
WHEREAS, the Parties wish to enter a long term relationship wherein
REPLIGEN will be the preferred manufacturer of recombinant protein A for
BIOTECH's use.
NOW THEREFORE, for the mutual covenants contained herein, and for other
good and valuable considerations, the Parties agree as follows:
1. DEFINITIONS
For the purpose of this Agreement, the terms set forth hereunder shall be
defined as follows:
a. "Biotech IPA" means those forms of immobilized Biotech rPA which are
manufactured, marketed, and sold to the general public by BIOTECH as
further described in Appendix A attached hereto.
b. "Biotech rPA" means that form of unimmobilized recombinant protein A
which is proprietary to BIOTECH.
c. "Biotech Specifications" means that set of physical, chemical, and
functional characteristics that are reported in the Certificate of
Analysis, attached hereto as Appendix B. Biotech Specifications may
be modified from time to time by mutual agreement of the Parties.
19
[*] indicates material which has been omitted and for which confidential
treatment has been requested. All such material has been filed with the
Commission pursuant to rule 24b-2 promulgated under the Securities Exchange Act
of 1934, as amended.
<PAGE>
d. "Confidentiality Agreement" shall mean that confidentiality
agreement dated April 20, 1998 entered into by and between the
Parties.
e. "New Product" means that product described in Appendix D.
f. "First Agreement" means that agreement made by and between the
Parties on September 29, 1992.
g. "License Agreement" means that agreement between the Parties made
effective on the execution date of this Agreement in which REPLIGEN
grants to BIOTECH i) a non-exclusive license to US Patent No.
5,084,559 ("Protein A Domain Mutants") and ii) a license to
technology, know-how, and certain other rights relating to New
Product.
h. "Process Technology" means any and all know-how, proprietary
materials and reagents, documentation, trade secrets, and technology
relating to the production of Biotech rPA.
i. "Repligen rPA" means those forms of unimmobilized recombinant
protein A which are proprietary to REPLIGEN.
j. "Master Agreement" means that agreement made by and between the
Parties and dated December 17, 1998.
k. "Contract Year" means each calendar year during the term of the
Agreement.
l. "Article(s)" shall mean either or both of Biotech rPA and New
Product produced by REPLIGEN for BIOTECH under this Agreement.
2. MANUFACTURING
a. During the term of this Agreement, REPLIGEN agrees to manufacture
Biotech rPA in compliance with the Biotech Specifications and those
documented processes or any modification thereto to which the
Parties may mutually agree and to supply it to BIOTECH according to
the terms and conditions herein.
b. During the term of this Agreement, REPLIGEN agrees to manufacture
New Product in compliance with the documented procedures developed
by REPLIGEN and to supply it to
20
<PAGE>
BIOTECH according to the terms and conditions of this Agreement and
the License Agreement.
c. Any and all subcontractors engaged by REPLIGEN to carry out any
aspect of the manufacture of Biotech rPA will be bound by a
confidential disclosure agreement ("CDA") with terms and conditions
substantially similar to the Confidentiality Agreement. BIOTECH will
have the right to consent to all subcontractors involved in
manufacture of Biotech rPA which consent shall not be unreasonably
withheld. Following consent by BIOTECH and execution by the
subcontractor of a CDA, REPLIGEN may share Process Technology with
such party. BIOTECH may not contact REPLIGEN's sub-contractors with
specific reference to the manufacture of Biotech rPA without the
prior consent of REPLIGEN. REPLIGEN may utilize alternative
facilities under its control in the manufacture of Biotech rPA.
REPLIGEN will give BIOTECH nine (9) months prior written notice of
any intended change in facility or sub-contractor for approval by
BIOTECH, such approval not to be unreasonably withheld by BIOTECH.
d. From time to time, BIOTECH may request that reasonable changes be
made in the process used by REPLIGEN to manufacture Biotech rPA and
REPLIGEN agrees to use best efforts to incorporate such changes. In
the event that requested changes may effect the cost of production,
the Parties shall agree on new firm prices prior to the
implementation of said change.
e. REPLIGEN shall inform BIOTECH nine (9) months in advance of any
changes which it may wish to make in the process used to manufacture
Biotech rPA or any major changes which it may wish to make in the
process used to manufacture New Product and BIOTECH shall have
ninety (90) days to approve such change, such approval not to be
unreasonably withheld. If BIOTECH cannot approve such change,
REPLIGEN agrees to continue to supply Biotech rPA and/or New Product
as manufactured by the mutually agreed upon process.
f. Changes to any aspect of the manufacturing process for New Product
which are not considered to constitute a major
21
<PAGE>
process change may be made at any time by mutual agreement of the
Parties.
g. REPLIGEN represents that it possesses the resources required
including personnel, machinery and premises, to meet its obligations
under the terms of this Agreement in all material respects provided
that BIOTECH complies with its obligations under this Agreement.
3. PURCHASE AND SALE OF PRODUCT
a. During the term of this Agreement, BIOTECH agrees to purchase and
REPLIGEN agrees to sell Biotech rPA and New Product according to the
terms and conditions set forth herein.
b. During each Contract Year, BIOTECH intends to purchase from REPLIGEN
and REPLIGEN agrees to maintain the ability to manufacture for
BIOTECH no less than [*] of BIOTECH's total requirements for Biotech
rPA. In any Contract Year in which BIOTECH does purchase [*] of said
annual requirements from REPLIGEN, REPLIGEN shall be considered to
be the preferred supplier ("Preferred Supplier") to BIOTECH for
Biotech rPA.
c. BIOTECH shall purchase a minimum quantity of New Product from
REPLIGEN during the first Contract Year, i.e. calendar 1999,
according to the following schedule:
[*]
[*]
as well as such additional quantities which it may elect to
purchase.
d. Within 20 days following the completion of each quarter of a
Contract Year, BIOTECH will inform REPLIGEN as to the status of: i)
the inventory of Biotech rPA and Biotech IPA on hand as well as the
aggregate quantity of Biotech IPA that has been sold during the
preceding quarter, ii) the inventory of New Product on hand, and
iii) the total quantities of BIOTECH rPA ordered from third party
suppliers in said preceding quarter. REPLIGEN will have the right to
audit all relevant records of BIOTECH with respect to this
information, however BIOTECH shall have no
22
[*] indicates material which has been omitted and for which confidential
treatment has been requested. All such material has been filed with the
Commission pursuant to rule 24b-2 promulgated under the Securities Exchange Act
of 1934, as amended.
<PAGE>
obligation to reveal the terms or conditions of any arrangements
regarding third parties.
4. PRODUCT PRICING
a. The price paid by BIOTECH to REPLIGEN for all Biotech rPA purchased
during the first Contract Year, i.e. calendar 1999, will be
according to the schedule set forth in Appendix C:
b. The price for Biotech rPA purchased by BIOTECH from REPLIGEN in each
Contract Year after the first year of the Agreement will be based
upon the price schedule in Appendix C and adjusted on the basis of
the average yield obtained in the previous year according to the
following formula:
[*]
wherein average yield is the average yield obtained over all
manufacturing runs carried out in the immediately preceding calendar
year of production.
c. The price paid to REPLIGEN by BIOTECH for New Product under the
Agreement will be as set forth in Appendix C:
d. On or before October 31 of each Contract Year, the Parties will
agree upon new, firm pricing for the subsequent Contract Year based
upon: i) any price reduction based on yield according to this
Section 4b herein, ii) any change in the United States Consumer
Price Index as published at the end of the third quarter of the
preceding calendar year or some other index or indices as may be
mutually agreed upon by the parties, and iii) any other factors,
such as justifiable and documented changes in REPLIGEN's cost of
manufacture, altered market conditions, process modifications, etc.
The new, firm prices will be made effective as of January 1 of the
following Contract Year and will remain in effect throughout said
Contract Year. In the event that the Parties cannot agree on any
price changes, the prices shall remain unchanged for the following
Contract Year.
23
[*] indicates material which has been omitted and for which confidential
treatment has been requested. All such material has been filed with the
Commission pursuant to rule 24b-2 promulgated under the Securities Exchange Act
of 1934, as amended.
<PAGE>
5. ORDERS, FORECASTS, AND PAYMENT
a. On or before September 30, 1999 and thereafter prior to the end of
each calendar quarter while this Agreement is in force BIOTECH shall
deliver a written rolling forecast by quarter of its estimated need
of Articles during the coming twelve-month period, stating Article
numbers, and quantities with reasonable detail. This forecast will
provide a basis for REPLIGEN's resource planning with regard to
component and materiel procurement and production capacity. The
first, third, and fourth quarterly forecast within each rolling
twelve-month forecast shall be non-binding upon either of BIOTECH
and REPLIGEN. The forecast for the second quarter within each
rolling twelve-month forecast ("Set Quarter") will have certain
binding obligations upon each of the Parties with respect to said
second quarter, as set forth in this Section 5 hereunder. Once the
forecast which establishes a Set Quarter has been received by
REPLIGEN, it shall not be changed except by mutual agreement of the
Parties.
b. Commencing January 1, 2000 (i.e. the first Set Quarter to occur
under this Agreement) and thereafter throughout the term of the
Agreement, BIOTECH shall, from time to time and as it deems
appropriate, issue written, binding purchase orders to REPLIGEN,
stating the Article number, quantity, shipping destination, and
shipping date for each Article. Shipping for international
destinations shall be solely on Mondays. The stated shipping date
shall be based on the agreed lead time. Lead time is defined as the
number of days from the date on which BIOTECH issues the order until
the date on which product is delivered by REPLIGEN according to
Section 6 herein.
c. In each Set Quarter during the term of the Agreement, REPLIGEN
agrees to deliver to BIOTECH with a two week lead time up to one
hundred-fifty percent (150%) of the quantity of Articles forecast
for that Set Quarter. If, in any Set Quarter, REPLIGEN does not
deliver Articles up to said 150% of that forecast according to said
two week lead time, BIOTECH is entitled to reduce the price paid for
such Articles by 1% for each week of delay up to a maximum of 10%.
d. For quantities of Articles ordered by BIOTECH in any Set Quarter
that exceed 150% but do not exceed 200% of the
24
<PAGE>
amount forecasted for that Set Quarter, REPLIGEN shall make best
efforts to deliver said quantities with a lead time of six (6)
weeks. If, in any Set Quarter, REPLIGEN does not deliver Articles in
excess of 150% but less than 200% of that forecast according to said
six week lead time, BIOTECH is entitled to reduce the price paid for
such Articles by 1% for each week of delay up to a maximum of 10%.
For any quantities of Articles ordered by BIOTECH in any Set Quarter
that exceed 200% of the amount forecasted for that Set Quarter,
REPLIGEN shall have no obligation to meet prescribed lead time for
shipping with respect to those excess quantities. REPLIGEN shall,
however, in all cases use reasonable efforts to adhere to a two week
lead time, to keep BIOTECH informed as to expected shipping dates,
and to supply BIOTECH with such excess quantities as promptly as
possible.
e. In the event of the occurrence of Force Majeure or any other event
beyond the reasonable control of REPLIGEN which results in the
inability of REPLIGEN to deliver Articles according to prescribed
lead times of this Section 5, REPLIGEN's sole obligations hereunder
shall be: i) to give BIOTECH prompt notice of said event in writing
and ii) to seek diligently to deliver such Articles at the earliest
opportunity.
f. [*] of the forecast for each Set Quarter shall be binding upon
BIOTECH with respect to purchase of Articles in that quarter. Prior
to the last Monday of any quarter in which BIOTECH has failed to
submit purchase orders that total [*] of the amount which was
forecast for that quarter when it was a Set Quarter, REPLIGEN shall
request that an order be placed by BIOTECH for such quantity of
Articles as represents the difference between the quantity of
Articles ordered for that quarter to date and the amount of Articles
binding on BIOTECH for that Set Quarter. In response to such
request, BIOTECH agrees to place a purchase order in respect of such
quantity prior to the end of said Set Quarter.
g. Nothing in any purchase order submitted by BIOTECH or invoice or
order acknowledgment submitted by REPLIGEN pursuant to this
Agreement shall be construed as superseding or amending the terms of
this Agreement absent
25
[*] indicates material which has been omitted and for which confidential
treatment has been requested. All such material has been filed with the
Commission pursuant to rule 24b-2 promulgated under the Securities Exchange Act
of 1934, as amended.
<PAGE>
written agreement by the other Party which specifically references
this Agreement.
h. Payment shall be made in full, in US dollars, thirty (30) days after
invoice. Invoices shall be sent upon delivery of the Articles
i. If BIOTECH fails to make timely payment, REPLIGEN shall be entitled
to charge interest on the aggregate amount of the overdue payment
commencing on the due date at a rate equal to the current discount
rate set by the US Federal Reserve Board plus five (5) percentage
points.
j. Within three (3) days of receipt of a purchase order for Articles,
REPLIGEN shall inform BIOTECH as to when delivery should be made.
REPLIGEN shall further inform BIOTECH at that time as to whether any
delay in delivery may be expected.
6. DELIVERY, SHIPPING, AND TITLE
a. Delivery shall be made as FCA, Repligen, 117 Fourth Ave. Needham, MA
as defined by Incoterms.
b. The ownership, right to possession, title to and all risk of loss of
all Articles shall pass to BIOTECH at the time of delivery.
7. OTHER OBLIGATIONS
a. For any Contract Year in which REPLIGEN is the Preferred Supplier
under this Agreement, BIOTECH's obligation to pay royalties to
REPLIGEN under the First Agreement shall be waived and no royalties
shall be due.
b. For any Contract Year in which REPLIGEN does not achieve Preferred
Supplier status due to a failure on the part of BIOTECH to submit
purchase orders to REPLIGEN, royalties under the First Agreement
will be retroactively due on all product sales which occurred during
that Contract Year according to terms of the First Agreement. Such
royalties shall be due and payable in full within 90 days of the end
of any Contract Year in which REPLIGEN is not the Preferred Supplier
due to the failure of BIOTECH to submit purchase orders.
26
<PAGE>
c. For any Contract Year in which REPLIGEN does not achieve Preferred
Supplier status due to a failure on the part of REPLIGEN to deliver
Biotech rPA in response to purchase orders from BIOTECH, BIOTECH's
obligation to pay royalties to REPLIGEN under the First Agreement
shall be waived and no royalties shall be due.
8. SECURITY STOCK AND DISASTER PLAN
a. As part of a comprehensive disaster plan and commencing upon April
1, 2000, REPLIGEN will maintain a security stock of [*] of Biotech
rPA, to be stored under controlled and documented conditions at
Livingston Health Care, 220 Lake Street, Newark, DE 19702 or an
equivalent facility(s) designated by Repligen. This security stock
will be turned over on an annual basis.
b. Within two months of the signing of this Agreement, REPLIGEN and
BIOTECH hereby agree to establish and set in place a detailed action
plan for how REPLIGEN will handle obligations under the Agreement in
case of a disruption of production due to such events as Force
Majeure or due to such similar events not within REPLIGEN's control.
The Parties agree that the establishment, implementation, and/or
maintenance of such disaster plan shall not result in significant
additional costs for REPLIGEN. The basic elements of the disaster
plan will consist of:
o maintenance of a security stock by REPLIGEN
o identification and qualification of a second
fermentation subcontractor before the end of the second
Contract Year
o plan for transfer of purification/finishing within a six
(6) week time frame to an alternative facility for a
period of up to six (6) months in the event that
REPLIGEN's facility becomes incapacitated
c. The presentation of such action plan shall not in any event be
interpreted as to affect BIOTECH's rights to
27
[*] indicates material which has been omitted and for which confidential
treatment has been requested. All such material has been filed with the
Commission pursuant to rule 24b-2 promulgated under the Securities Exchange Act
of 1934, as amended.
<PAGE>
other remedies in case of REPLIGEN's breach of the Agreement.
9. QUALITY ASSURANCE, CERTIFICATES, AND INSPECTIONS
a. REPLIGEN shall establish and maintain a quality assurance system
which, after being approved by BIOTECH, will enable REPLIGEN to
issue a Certificate of Analysis (CoA) showing that delivered
Articles are conforming to the Biotech Specifications. BIOTECH is
prepared to accept Articles received as complying with the Agreement
and with this CoA.
b. All Articles delivered by REPLIGEN to BIOTECH shall conform to the
Biotech Specifications and such conformance shall be documented by a
CoA. Articles delivered by REPLIGEN to BIOTECH shall also be in
compliance with all testing which may be required by the agreed and
documented procedures, this Agreement, and applicable law. All
testing procedures shall be in accordance with those documented
quality control procedures developed by the Parties in connection
with the process developed and approved by the Parties. REPLIGEN
shall accompany each shipment of Articles with a CoA evidencing that
the Article being shipped has passed all purity, quality control,
and other tests required hereunder.
c. With reasonable prior notice to REPLIGEN and at BIOTECH's sole
expense, BIOTECH is entitled to inspect and observe REPLIGEN's
manufacture of Articles, to audit REPLIGEN's quality control and
inspection procedures, and to have access to all data from such
control of the Article and to take samples and make such other
investigations as BIOTECH deems necessary. REPLIGEN shall reserve
the right for BIOTECH to perform such inspections on the premises of
subcontractors engaged by REPLIGEN, such inspections to be scheduled
by REPLIGEN following reasonable prior notice by BIOTECH and to be
carried out jointly by representatives of both Parties and at the
sole expense of BIOTECH. BIOTECH's right of inspection under this
head shall not diminish REPLIGEN's obligation to deliver Articles
which comply with the specifications of this Agreement.
10. WARRANTY
28
<PAGE>
a. Except as otherwise agreed in writing, REPLIGEN warrants that: i)
the Articles delivered to BIOTECH under this Agreement shall be
manufactured and tested in accordance with the documented
procedures, ii) the Articles will conform to the CoA, iii) the
requirements under this Agreement will have been performed and
satisfied, and iv) title to Articles will pass to BIOTECH free and
clear of all liens, charges, and encumbrances save for those which
occur pursuant to this Agreement (Warranty). This Warranty shall
survive receipt of the Articles by BIOTECH for twelve (12) months in
the case of Biotech rPA and for eighteen (18) months in the case of
New Product and no claim for a breach of this warranty may be
brought after the end of the applicable period. Except as otherwise
agreed by REPLIGEN in writing, the foregoing Warranty sets forth
REPLIGEN's sole and exclusive representations with respect to
Articles sold to BIOTECH under this Agreement. BIOTECH's remedies
under this Warranty shall be limited to the replacement of
non-conforming Articles according to the terms and conditions of
this Section 10 with REPLIGEN bearing the cost of shipping and
insurance. The foregoing Warranty shall not apply to defects
resulting from misuse, negligence, or accident on the part of
BIOTECH or any third party.
b. Following notification by BIOTECH that any Articles are
non-conforming under the Warranty, replacement under the Warranty
shall be made as follows:
i. REPLIGEN shall ship requested Articles to BIOTECH within
five (5) days of receipt of the replacement request from
BIOTECH at no cost for BIOTECH at such time.
ii. Within five (5) days of any replacement request, BIOTECH
shall ship a sample of the non-conforming Articles to
REPLIGEN and REPLIGEN shall complete comparative testing
between said non-conforming sample and an archived
sample from the same lot of Articles. If this
comparative testing demonstrates that both the
non-conforming sample and the archived sample do not
conform to the CoA, the Parties agree that the
replacement under i. falls under the Warranty. If,
however, REPLIGEN
29
<PAGE>
determines that the archived sample is conforming to the
CoA, and REPLIGEN can make it likely that the
non-conformance of the Articles replaced is due to
BIOTECH's handling of said Articles or other
circumstances outside of REPLIGEN's control, BIOTECH
will pay for the replacement Articles in full.
iii. The quantity of Biotech rPA replaced under the Warranty
in any quarter shall be limited to [*]. The quantity of
New Product replaced under the Warranty in any single
quarter shall be limited to [*]. Replacement of Articles
under the Warranty may be made from security stock
maintained pursuant to this Agreement.
c. The Parties agree that the Warranty with respect to Biotech rPA is
based on good faith estimates of expected minimum stability under
defined storage conditions and that stability tests will be
performed by BIOTECH and REPLIGEN to confirm these estimates. Such
stability tests will be completed no later than December 31, 2000
and will be used by the Parties to establish a Warranty period for
the remaining term of the Agreement, which may be different than 12
months. The Parties agree that there is no reason to differentiate
the Warranty periods for Biotech rPA and New Product.
d. If REPLIGEN has made any replacements of Biotech rPA under the
Warranty according to the provisions of Section 10.b.i. and
stability testing conducted according to Section 10.c. indicates
that the non-conformance leading to such replacement occurred as a
result of instability under controlled storage conditions, BIOTECH
shall immediately reimburse REPLIGEN as if such replacement had been
a new sale of Biotech rPA.
11. TERM AND TERMINATION
a. This Agreement will remain in effect from the date of signing until
December 31, 2008 unless terminated earlier according to the
provisions of this Section 11.
b. Either Party may terminate this Agreement upon the material breach
of the other Party's performance pursuant
30
[*] indicates material which has been omitted and for which confidential
treatment has been requested. All such material has been filed with the
Commission pursuant to rule 24b-2 promulgated under the Securities Exchange Act
of 1934, as amended.
<PAGE>
to either of this Agreement or the Master Agreement, upon 90 days
written notice. The failure to cure such breach to the other Party's
satisfaction within 90 days will result in the immediate termination
of this Agreement.
c. In the event that BIOTECH issues no purchase orders to REPLIGEN for
Biotech rPA in any two consecutive Contract Years, REPLIGEN may
terminate this Agreement.
12. COLLABORATION
a. The Parties agree to cooperate with each other and to act in good
faith in carrying out the purpose and intent of this Agreement.
Toward that end Parties agree to meet twice each year in the first
two Contract Years and thereafter once during each Contract Year to
analyze results achieved and to take joint action to achieve good
results for both. The site for such meetings will alternate between
REPLIGEN's place of business in Needham, MA and BIOTECH's place of
business in Uppsala, Sweden or such other location as may be
mutually agreed by the Parties.
13. INFRINGEMENT
a. REPLIGEN shall indemnify and hold harmless BIOTECH, its associated
companies and its customers from every claim, lawsuit or action
alleging that the use or maintenance of any Article constitutes
infringement of a patent, copyright or other intellectual right
except in the instance where the infringement is a direct
consequence of a method, design or other instruction furnished by
BIOTECH for manufacture of the Article. During the term of this
Agreement, each Party further agrees not to make any claim for
intellectual rights against the other Party or in respect of a
customers' use or maintenance of BIOTECH rPA, BIOTECH IPA, or
REPLIGEN rPA.
b. If a judgment or injunction concerning infringement has been entered
which: 1) prohibits or prevents any further use or maintenance of an
Article by BIOTECH, and 2) is not a direct consequence of a method,
design, or other
31
<PAGE>
instruction furnished by BIOTECH for the manufacture of the Article;
REPLIGEN shall at BIOTECH's request and at its own expense use best
efforts to either:
(i) replace or provide another equivalent Article, the use
of which does not to REPLIGEN's knowledge constitute an
infringement, or
(ii) modify the Article so that it no longer constitutes to
REPLIGEN's knowledge an infringement or violates the
judgment or order, provided that such modification does
not affect the function of the Article or its
compatibility with the end product.
The provisions of this Subsection 13b shall not apply to Articles
which have been modified, adapted or otherwise altered by BIOTECH.
c. If either Party learns that an infringement exists or is possible as
a result of use of an Article, the other Party shall be informed as
soon as possible.
14. PRODUCT LIABILITY
a. With respect to Articles manufactured under this Agreement, REPLIGEN
agrees to carry product liability insurance, for a total coverage of
$2 million dollars, to cover claims which may be made against
BIOTECH and/or REPLIGEN as a result of hazardous defects occurring
in such Articles.
b. Upon request from BIOTECH, REPLIGEN shall produce proof of product
liability insurance coverage. In the event that BIOTECH requests
that REPLIGEN increase its insurance coverage, the Parties will
immediately negotiate an adjustment to the price of the Articles
accordingly.
15. GROUNDS FOR EXEMPTION
a. The following circumstances constitute grounds for exemption insofar
as they render compliance with the Agreement impossible or unduly
onerous (Force Majeure):
32
<PAGE>
Labor dispute and every other circumstance over which the Parties
have no control, such as fire, war, mobilization or unforeseen
callup to military service of comparable extent, requisition,
confiscation, currency restrictions, revolts and riots, scarcity of
means of transportation, general scarcity of goods and limited
availability of motive power, as well as deficiencies and delays in
delivery of goods from subcontractors caused by such exempting
circumstances.
b. It is incumbent upon a Party who wishes to cite Force Majeure to
inform the other Party without delay when the relevant circumstances
have arisen and when they have ceased to prevail.
c. If compliance with the Agreement is delayed for more than six (6)
months by Force Majeure as specified in Subsection 15a above, either
Party shall be entitled to terminate the Agreement by giving thirty
days prior written notice to the other Party.
16. GENERAL
a. This Agreement is not assignable by either Party absent the other
Party's written consent. If REPLIGEN is purchased by a third party
which is a competitor of BIOTECH, BIOTECH has the right to approve
the transfer of the Agreement. For purposes hereof, the term
"purchase" shall mean i) a sale of all or substantially all of the
assets of REPLIGEN or ii) the merger and consolidation of REPLIGEN
with or into another corporation such that the stockholders of
REPLIGEN immediately following such transaction hold, directly or
indirectly, less than 50% of the voting securities of the
corporation surviving such transaction.
b. Any and all information disclosed by one Party to the other under
this Agreement shall be handled in accordance with the terms and
conditions of the Confidentiality Agreement and consequently be
treated as confidential - as agreed therein - for the duration of
the Agreement and for a period of five (5) years thereafter.
33
<PAGE>
c. Any changes or amendments to this Agreement shall be in writing and
made by mutual agreement of the Parties.
d. REPLIGEN will not sell or transfer Biotech rPA to any party other
than BIOTECH, except with BIOTECH's consent.
e. During the term of the Agreement, BIOTECH will supply REPLIGEN with
any and all requested quantities of chromatography media which are
marketed and sold by BIOTECH and required by REPLIGEN in the
manufacture of Biotech rPA at a [*] discount to the then current
list price.
f. Sepharose 4FF which is used specifically in the manufacture of New
Product for BIOTECH under this Agreement will be provided to
REPLIGEN at no cost. At the time of signing of this Agreement,
BIOTECH will repurchase from REPLIGEN up to 100 liters of Sepharose
4FF at the invoice price paid by REPLIGEN, said Sepharose 4FF to be
used solely for the manufacture of New Product.
g. This Agreement is subject to and shall be construed and enforced in
accordance with the laws of the State of New York. Any disputes
arising hereunder shall be resolved with reference to the English
language version of this Agreement regardless of any translations
made for the convenience of the Parties. All disputes between the
Parties shall be resolved by binding arbitration in accordance with
the rules and regulations of the American Arbitration Association in
the city of New York, NY. Notwithstanding anything herein to the
contrary, the Parties acknowledge and agree that each shall have the
right to obtain equitable relief against the other provided that
each Party hereby agrees to submit to the jurisdiction of the courts
of the State of New York or the federal courts of the United States
located in New York and that the venue for all such proceedings
shall lie in the State of New York.
IN WITNESS WHEREOF, the Parties hereto have hereunto set their hands and seals
and duly executed this Agreement the day and year first written above.
FOR REPLIGEN CORPORATION FOR AMERSHAM PHARMACIA
BIOTECH AB
/s/ Daniel P. Witt /s/ Arne Forsell
34
[*] indicates material which has been omitted and for which confidential
treatment has been requested. All such material has been filed with the
Commission pursuant to rule 24b-2 promulgated under the Securities Exchange Act
of 1934, as amended.
<PAGE>
/s/ Daniel P. Witt /s/ Arne Forsell
- --------------------------------------------------------------------------------
Name Name
VP, Business Development President
- --------------------------------------------------------------------------------
Title Title
May 26, 1999 June 27,1999
- --------------------------------------------------------------------------------
Date Date
35
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<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS FOR REPLIGEN CORPORATION AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-30-1999
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<ALLOWANCES> (25)
<INVENTORY> 582
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<PP&E> 1,576
<DEPRECIATION> (936)
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<BONDS> 0
0
0
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</TABLE>
