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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission file number: 0-21700
REPLIGEN CLINICAL PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 04-3140576
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
117 Fourth Avenue 02194
Needham, Massachusetts (Zip Code)
(Address of principal executive officers)
Registrant's telephone number, including area code: 617-449-9560
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No .
Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. _X_
State the aggregate market value of Limited Partnership Interests held by
non-affiliates of the registrant: There is no market for either the Units or
the Limited Partnership Interests.
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PART I
ITEM 1: BUSINESS
INTRODUCTION
Repligen Clinical Partners, L.P. (the "Partnership") was formed
in January 1992 under the laws of the State of Delaware. The Agreement of
Limited Partnership, dated as of January 9, 1992 (the "Limited Partnership
Agreement"), was entered into by and among Repligen Development Corporation
(the "General Partner"), a wholly owned subsidiary of Repligen Corporation
("Repligen"), and the purchasers of Class A Units (as defined below)(the
"Class A Limited Partners") and the purchaser of Class B Units (as defined
below)(the "Class B Limited Partner") issued by the Partnership (the Class A
Limited Partners and the Class B Limited Partner are hereinafter collectively
referred to as the "Limited Partners"). On February 28, 1992, the Partnership
completed a private offering (the "Offering") of (i) 900 Class A Units (each a
"Class A Unit"), each Class A Unit consisting of one Class A limited
partnership interest in the Partnership and a warrant (each a "Limited Partner
Warrant" and collectively the "Limited Partner Warrants") to purchase 2,900
shares of Repligen's $0.01 par value per share common stock ("Repligen Common
Stock") and (ii) one Class B Unit (the "Class B Unit") consisting of one Class
B limited partnership interest in the Partnership and a warrant to purchase
5,800 shares of Repligen Common Stock (the "Class B Warrant"). In addition,
Repligen issued a warrant to purchase 13,300 shares of Repligen Common Stock
(the "Fund Warrant") to PaineWebber R&D Partners III, L.P. (the "Fund") in
consideration for the Fund's commitment to purchase 133 Units, and a warrant
to purchase 75,050 shares of Repligen Common Stock (the "Incentive Warrant")
to PaineWebber Incorporated as compensation for the services provided by an
affiliate of PaineWebber Incorporated as Sales Agent in connection with the
Offering. The Limited Partner Warrants, the Class B Warrant and the Fund
Warrant are herein collectively referred to as the "Original Warrants", the
Class A limited partnership interests and the Class B limited partnership
interest are herein collectively referred to as "Limited Partnership
Interests" and the Class A Units and Class B Unit are herein collectively
referred to as "Units." The private placement resulted in net proceeds of
approximately $40,312,500 in cash and non-interest bearing notes receivable
from the Limited Partners (the "Investor Notes"), which were payable in annual
installments through March 15, 1995.
RECENT DEVELOPMENTS
Termination of Research and Marketing Programs
At a regular quarterly meeting of the board of directors (the
"Board of Directors") of the General Partner held on March 8, 1996, the Board
of Directors reviewed the then-current status of the research and development
program (the "Research Program") being conducted by Repligen pursuant to a
Product Development Agreement dated February 28, 1992 between Repligen and the
Partnership (the "Development Agreement"), the prospects for the successful
commercialization of the Background Technology (as defined in the Development
Agreement)(the " rPF4-related technology") and the financial resources
necessary to support such commercialization, as well as the financial
resources available to Repligen and the Partnership. The Board of Directors
and the Repligen representatives present at the meeting agreed that at least
$50 million in additional funds would be required to complete the Research
Program and commence the sale of products derived from the rPF4-related
technology as provided in the Development Agreement (the "Marketing Program").
The Board of Directors noted that the remaining cash resources of the
Partnership at that time totaled approximately $385,000.
The Repligen representatives stated that, given the limited
resources available to Repligen itself, Repligen would no longer be in a
position to contribute the funds necessary toward the continuation of the
Research Program. The Repligen representatives also advised the Board of
Directors that, despite Repligen's continuing efforts to seek funding from
potential third-party collaborators, Repligen could not obtain such funding in
the immediate future.
Pursuant to the terms of the Development Agreement, the Board
of Directors unanimously determined, based on the above factors, that the
continuation of the Research Program and the commencement of the Marketing
Program with Repligen would be economically impracticable and therefore
terminated both in their entirety.
Under the terms of the Development Agreement, upon the
termination of the Research and Marketing Programs (together, the "Programs")
by the Board of Directors, Repligen relinquished its rights to manage the
clinical development of the rPF4-related technology as well as any rights to
exploit or use the rPF4-related technology in the United States, Canada and
Europe (the "Territory") and to receive management fees and the reimbursement
of certain expenses relating to the Research Program and the rPF4-related
technology. Repligen retained responsibility for indefinitely maintaining, at
its own expense, all records, including a library of biological, chemical and
other physical materials, relating to the rPF4-related technology. In
addition, under the terms of the Purchase Agreement, the termination of the
Programs caused Repligen's option to purchase the Limited Partnership
Interests of the Limited Partners to likewise terminate, and set an Interim
License Termination Date to occur eighteen months thereafter, on September 8,
1997. The Board of Directors noted that while the remaining cash available
to the Partnership was insufficient to continue meaningful funding of the
Research Program, it might be sufficient to meet the estimated expenses of
marketing and disposing of the rPF4-related technology to one or more third
parties. The Board then directed the officers of the Partnership to actively
seek a buyer or licensor for the rPF4-related technology.
Subsequent to the March 8, 1996 Board of Directors meeting, the
Repligen-designated members of the Board of Directors resigned, and Repligen
and the Partnership entered into discussions regarding certain proposed
modifications to each party's rights and responsibilities with respect to the
termination of the Programs and efforts to market the rPF4-
related technology to third parties, but did not reach agreement on the
desirability of any modifications to the existing contractual arrangements.
From the beginning of 1996, and in particular following the
termination of the Programs on March 8, 1996, officers of the Partnership have
conducted intensive efforts to sell or license the rPF4-related technology to
a third party or locate a suitable strategic partner to otherwise fund further
development of the rPF4-related technology. Under the terms of the Limited
Partnership Agreement, a transaction constituting a sale, license, assignment
or other transfer of "substantially all assets" of the Partnership, or that
"materially adversely affects" the Limited Partners, would require the prior
consent of the Limited Partners.
DESCRIPTION OF THE BUSINESS OF THE PARTNERSHIP
The principal objectives of the Partnership are to develop and
derive income from the sale or license of recombinant platelet factor-4
("rPF4") for human therapeutic use in the Territory. Platelet factor-4 ("PF4")
is a naturally occurring protein which Repligen has produced using recombinant
DNA technology. From early 1992 to February 1996, the Partnership and Repligen
jointly funded multiple clinical trials conducted by Repligen for rPF4 to
evaluate its use as (i) a cardiac surgical treatment, serving as a
neutralizing agent to reverse the anticoagulant effects of heparin and (ii) a
cancer treatment for certain solid tumor cancers. Pursuant to an agreement
reached with the Board of Directors, Repligen independently financed trials
relating to Kaposi's sarcoma until the termination of the Research Program by
the Board of Directors on March 8, 1996.
Current Status of the rPF4 Development Program
The Research Program was terminated by the Board of Directors
on March 8, 1996. See "Recent Developments - Termination of Research and
Marketing Programs" above. The following table summarizes the status of the
Research Program as of the time of such termination.
<TABLE>
<CAPTION>
Indication/Application Phase Status
---------------------- ----- ------
<S> <C> <C>
General:
Normal Volunteer Phase I Enrollment Complete
Cardiac Surgical:
Heparin Neutralization - Cardiac Catherization Phase II Enrollment Complete
Heparin Neutralization - Cardiac Bypass Surgery Phase I Enrollment Complete
Phase I/II Enrollment Complete
Cancer:
Kaposi's Sarcoma (intralesional) Phase II Closed
Kaposi's Sarcoma (subcutaneous) Phase I/II Closed
Kaposi's Sarcoma (intravenous) Phase I/II Closed
Colon Cancer Phase I Enrollment Complete
Malignant Melanoma/Renal Cell Carcinoma Phase I Enrollment Complete
Glioma (brain cancer) Phase I/II Closed
</TABLE>
Definitions:
"Complete" means full completion of patient treatment and final document
preparation.
"Enrollment Complete" means practical completion of patient treatments;
incomplete reporting; information archived.
"Closed" means the trial was terminated, due to a lack of financial
resources, prior to the completion of planned patient treatments; incomplete
reporting; information archived.
Cardiac Surgical Applications
The General Partner believes that rPF4 may restore natural
coagulation which is disrupted by heparin in anticoagulated patients
undergoing cardiac surgical procedures such as coronary artery bypass graft
(CABG) surgery. Heparin is an anticoagulant used to prevent blood from
clotting during these cardiovascular procedures. In certain acute settings,
the effects of heparin are reversed chemically with the generic drug
protamine, which is widely used but has certain adverse side effects. These
side effects, while usually mild to moderate, are occasionally serious, such
as a loss of blood pressure (systemic hypotension), an increase in lung blood
pressure (pulmonary hypertension) or allergic reactions (anaphylaxis). Over
500,000 patients in the United States undergo open heart surgery and are
treated with protamine each year. The General Partner believes that rPF4 may
reverse the anticoagulant effects of heparin both more quickly than protamine
and without its potential adverse side effects. Repligen has a United States
patent on the use of rPF4 or purified PF4 to neutralize heparin under which,
pursuant to the Development Agreement, it has granted to the Partnership an
irrevocable, exclusive, royalty-free license to certain patent rights and
other technology. See "Certain Contracts--Development Agreement."
At the time of the Offering, preclinical trials conducted in
rats indicated that rPF4 reversed heparin without causing the systemic
hypotension often associated with protamine. Repligen and the Partnership
subsequently conducted further studies in monkeys and baboons which confirmed
that rPF4 reverses heparin and is safe and effective in those animals. Because
a baboon's cardiovascular system closely resembles that of a human, Repligen
was able to conduct in vivo studies of the reversal of heparin in the baboon's
blood following simulated cardiopulmonary bypass that provided further support
that rPF4 would be safe in human bypass operations. Subsequent ex vivo studies
of human blood removed from a cardiopulmonary bypass circuit demonstrated that
rPF4 neutralized heparin effectively following exposure to typical bypass
conditions.
In March 1993, Repligen began a Phase I clinical trial of rPF4
in cardiac catheterization patients to evaluate its safety. The results of the
study were reported at the annual meeting of the American Heart Association in
November 1993 and demonstrated that rPF4 safely reversed the anticoagulant
effects of heparin in this patient population. Results of the study were
published in the journal Circulation in April 1995. In November 1993,
Repligen initiated a double-blind, multi-center Phase II clinical trial to
evaluate the efficacy of rPF4 for the reversal of the anticoagulant effects
of heparin in cardiac catheterization patients in comparison to protamine.
The results of this study were presented at the annual meeting of the
American Heart Association in November 1995. These safety data supported
continued clinical development of rPF4 for use in cardiac bypass surgery.
Repligen also initiated a Phase I/II clinical study for the use of rPF4 in
cardiopulmonary bypass graft surgery patients in May 1994. As of March 31,
1996, the preliminary results of this study confirmed the safety and
efficacy of rPF4 in this patient population. Patient enrollment for this
trial was completed in the first half of 1996.
Cancer Applications
At the time of the Offering, the General Partner believed that
rPF4's ability to inhibit the process of new blood vessel growth
(angiogenesis) represents a novel approach to inhibiting the growth of solid
tumors and that rPF4 may be an effective therapy for a variety of cancers.
Solid tumor development is a complex process that requires the establishment
and expansion of a blood vessel network through angiogenesis. As a tumor grows
beyond microscopic size, passive diffusion from neighboring tissue is no
longer sufficient to meet the nutritional demands of the tumor, and direct
access to capillaries or blood vessels becomes necessary. While the exact
process of angiogenesis is not fully understood, it is believed that new blood
vessels form in response to growth factors that stimulate endothelial cells
(blood vessel lining cells). Angiogenic growth factors are released by
neighboring tissues that need additional blood supply, or by cancer cells.
Once stimulated by these growth factors, the endothelial cells proliferate and
migrate to form the framework for new capillaries and blood vessels. The
inhibition of angiogenesis could be effective in suppressing the growth and
development of solid tumors.
Cancer is treated primarily with surgery, chemotherapy and
radiation therapy. These treatments often fail to prevent disease progression
and spread of cancer and may have serious adverse side effects. By inhibiting
the process of angiogenesis, the General Partner believed that rPF4 offered a
new approach to the treatment of cancer which could be effective in treating a
broad spectrum of cancers, since virtually all tumors require angiogenesis in
order to survive and grow.
In preclinical testing using several animal cancer models,
Repligen has shown that the administration of rPF4 significantly inhibited the
growth of solid tumors by a mechanism that was consistent with its
anti-angiogenic activity. The General Partner believed that rPF4 may be
useful in retarding the progression of Kaposi's sarcoma ("KS"), an AIDS-
associated cancer which produces tumors in the skin and internal organs. In
June 1992, Repligen began Phase I clinical trials of rPF4 for treatment of
skin lesions of KS patients by intralesional injection. No significant adverse
reactions attributable to rPF4 were reported during this safety study and the
results of this study were presented at the conference of the American Society
of Clinical Oncology in May 1993. In July 1993, Repligen began a Phase II
clinical trial of intralesional injection in KS patients. Interim results of
this study were reported at the conference of the American Society of Clinical
Oncology held in May 1994. Evidence of biologic activity, and no significant
adverse reactions to rPF4, were reported. A planned Phase I/II study to
evaluate the subcutaneous administration of rPF4 in KS patients was canceled
because it was duplicative to the aforementioned Phase II study. A Phase I/II
clinical study of systemic (intravenous) administration of rPF4 to KS patients
was initiated in 1994 and enrolled 13 of 18 patients. rPF4 was well tolerated
by the patients and some evidence of biological activity was observed. This
study was closed prior to completion, on November 29, 1995, due to a lack of
financial resources. See "Recent Developments - Termination of Research and
Marketing Programs."
Repligen has conducted several Phase I/II clinical studies of
systemic administration of rPF4 in patients with refractory solid tumors,
including patients with colon carcinoma, renal cell carcinoma and malignant
melanoma. These studies demonstrated that systemic administration of rPF4 was
not associated with clinically significant adverse events. Repligen has been
awarded a United States patent related to the systemic administration of rPF4
to inhibit tumor growth. A Phase I/II clinical study of locally administered
rPF4 in malignant glioma (brain cancer) was initiated in 1994. In this study,
patients with recurrent disease undergo tumor removal and a catheter is
implanted into the site of the tumor bed. rPF4 is then administered directly
into the tumor bed. This study was closed prior to completion on December 28,
1995 due to a lack of financial resources. See "Recent Developments -
Termination of Research and Marketing Programs".
1994 Evaluation; Restructuring of Repligen Warrants
In the spring of 1994, in conjunction with the Board of
Directors' quarterly review of the Research Program, and prior to the due date
of the third installment payment from the Limited Partners under the Investor
Notes, PaineWebber Development Corporation engaged the services of an
independent consultant to evaluate the technical prospects of the rPF4-related
technology. This consultant, Dr. Jordan Gutterman, Professor and Chairman,
Clinical Immunology and Biological Therapy, the University of Texas, M.D.
Anderson Cancer Center, provided a positive review of the potential
effectiveness of rPF4-related technology and endorsed continued development
efforts, but estimated that additional expenditures of approximately $40
million to $50 million might be necessary to produce a commercially viable
version of the rPF4-related technology. These conclusions were reviewed and
confirmed by Dr. Sydney E. Salmon, Regents Professor of Internal Medicine and
Director, Arizona Cancer Center and a member of the Board of Directors.
Based on these reviews as well as on the research and
clinical trials conducted up to that time, Repligen and the Partnership
determined that the rPF4-related technology showed significant prospects
for successful medical applications in the cardiac surgical and cancer
areas. However, in light of the higher-than-estimated costs incurred to
that point in developing the rPF4-related technology and the estimated
additional expenditures required to complete the Research Program, Repligen
and the Partnership concluded that Repligen and the Partnership lacked the
financial resources necessary to accomplish those objectives. Repligen and
the Partnership determined that a suitable external source of funds, most
likely a strategic joint venture partner or licensor, with sufficient
resources to carry out the Research Program and commercialization of rPF4-
related technology was needed. See "Description of the Business of the
Partnership--Repligen Efforts to Locate a Strategic Partner: 1994-1996."
Repligen management felt, however, that the then-existing
royalty commitments to the Partnership were such that a third party might be
unableto realize sufficient return from the commercialization of the
rPF4-related technology and that the royalty arrangements would have to be
restructured in order to attract such a strategic partner or licensor.
Repligen decided to offer what it considered to be attractive financial
concessions relating to the Original Warrants in exchange for the agreement of
the Limited Partners of the Partnership to reduce the royalty rates payable to
the Partnership in the event of successful commercialization of the
rPF4-related technology.
In March 1994, Repligen offered the holders (the
"Warrantholders") of Original Warrants the opportunity to exchange their
Original Warrants for newly issued warrants (the "Exchange Warrants"). Each
holder of an Original Warrant was free to accept or reject the exchange offer.
Warrantholders holding warrants to purchase 2,069,150 shares of Repligen
Common Stock accepted the exchange offer. Warrantholders holding warrants to
purchase 258,100 shares of Repligen Common Stock were ineligible to
participate in this exchange offer due to their failure to make payments on
their Investor Notes. See "Description of the Business of the Partnership -
Limited Partner Defaults." Warrantholders holding warrants to purchase
288,550 shares of Repligen Common Stock who were eligible to participate in
the exchange offer rejected the exchange offer and thus continue to hold
Original Warrants. The exercise price under the Exchange Warrants is $9.00
(reduced from $22.73) per share but will increase to $14.00 per share 90 days
after Repligen notifies the Warrantholders that the closing price of Repligen
Common Stock is equal to or exceeds $18.00 per share for any 20 out of 30
consecutive trading days. The exercise period under the Exchange Warrants
expires on March 31, 2000. Those holders of Original Warrants who accepted
such exchange offer agreed to a reduction in the royalty rate to 9.00% of Net
Revenue from any sales of rPF4 instead of 12.85% of such Net Revenues as
initially provided for in the Purchase Agreement. The exchange offer did not
modify the royalty rates set forth in the Development Agreement, which were
unaffected by the termination of Repligen's Purchase Option. Acceptance of the
exchange offer resulted in pro rata reductions in certain other royalties. No
vote of the Warrantholders or the Limited Partners was required to accept the
exchange offer. Repligen's obligations to pay royalties under the Purchase
Agreement expired upon the termination of Repligen's Purchase Option
thereunder. See "Recent Developments--Termination of Research and
Marketing Programs."
1995 Evaluation; Warrant Modification
In March 1995, in conjunction with the Board of Directors'
quarterly review of the Research Program, and prior to the due date of the
fourth installment payment from the Limited Partners under the Investor
Notes, PaineWebber Development Corporation engaged Dr. Gutterman for a
second time to update and review his evaluation of the rPF4-related
technology. Prior to this review, Repligen had sponsored a study performed
at Thomas Jefferson University in Philadelphia, Pennsylvania to develop a
pharmacoeconomic analysis of the true incidence and costs of protamine-
related adverse events in cardiac surgical applications. Dr. Gutterman's
updated revaluation endorsed continued development efforts and the
pharmacoeconomic study supported the commercial potential of the rPF4-
related technology.
While Repligen was conducting active discussions with several
potential strategic partners, by early 1995, Repligen had not secured an
external source of funds to ensure financing of the remainder of the Research
Program and the subsequent commercialization of the rPF4-related technology.
Repligen management recognized therefore that a number of Limited Partners
might decide not to meet their commitments to fund their fourth and final
installment payment to the Partnership under the terms of the Investor Notes
due on April 19, 1995. Repligen determined that, in light of the uncertainty
surrounding the ability to ultimately secure the funding required to
commercialize the rPF4-related technology, it was advisable to provide
financial incentives to the Limited Partners to meet their payment
commitments.
In March 1995, Repligen subsequently offered to modify the
Original Warrants that remained outstanding and the Exchange Warrants. Each
holder of an outstanding Original Warrant or Exchange Warrant who made the
fourth installment payment pursuant to the Investor Notes was free to accept
or reject the proposed modifications. The modifications provided that the
terms of the Original Warrants would be altered so as to be identical to those
of the Exchange Warrants when issued in the 1994 Exchange Offer (an extension
of the exercise period by one year to March 31, 2000 and a per share exercise
price reduced from $22.73 to $9.00, subject to escalation to $14.00 per share
90 days after Repligen notifies holders thereof that the closing price of
Repligen Common Stock is equal to or exceeds $18.00 per share for 20 out of 30
consecutive trading days). The exercise price of the Exchange Warrants for the
first 1,000 shares of Repligen Common Stock was reduced from $9.00 per share
to $2.50 per share, and the exercise price for the remaining 1,900 shares of
Repligen Common Stock exercisable pursuant to the modified Exchange Warrant
was reduced from $9.00 per share to $3.50 per share. The exercise price of the
modified Exchange Warrants would, however, increase to $8.00 per share 90 days
after Repligen notifies holders thereof that the closing price of Repligen
Common Stock is equal to or exceeds $12.00 per share for 20 out of 30
consecutive trading days. Lastly, the offer extended the expiration period for
Exchange Warrants by one year, to March 31, 2001. The proposed modifications
did not include further reductions in any royalty rates payable by Repligen.
The difference in treatment between Original Warrants and Exchange Warrants
was due to the fact that holders of Original Warrants were those
Warrantholders who did not accept the 1994 exchange offer and consequently had
a right to receive higher royalty rates than holders of Exchange Warrants.
As of December 31, 1995, holders of 620 1/2 of the 712
non-defaulted Class A Units, the holder of the Class B Unit and the holder of
the Fund Warrant had accepted the modifications. Accordingly, as of December
31, 1995, there were issued and outstanding Original Warrants to purchase
75,400 shares of Repligen Common Stock, modified Original Warrants to purchase
163,850 shares of Repligen Common Stock, Exchange Warrants to purchase 189,950
shares of Repligen Common Stock and modified Exchange Warrants to purchase
1,654,700 shares of Repligen Common Stock. Following the close of the
Partnership's 1995 fiscal year, the Partnership foreclosed on an additional
defaulted 1/2 Class A Unit, so that as of March 31, 1997, holders of 620 of
the 711 1/2 non-defaulted Class A Units had accepted the modifications, and
there were issued and outstanding Original Warrants to purchase 75,400 shares
of Repligen Common Stock, modified Original Warrants to purchase 163,850
shares of Repligen Common Stock, Exchange Warrants to purchase 189,950 shares
of Repligen Common Stock and modified Exchange Warrants to purchase 1,653,250
shares of Repligen Common Stock.
Limited Partner Defaults
Class A Limited Partners owning in the aggregate 50 Class A
Units, representing approximately 6 % of the total number of Class A Units
then outstanding, failed to make the second installment payment due March 15,
1993 pursuant to their respective Investor Notes. Class A Limited Partners
owning in the aggregate 39 Class A Units, representing approximately 5 % of
the total number of Class A Units then outstanding, failed to make the third
installment payment due March 15, 1994. The Limited Partnership Interests and
Original Warrants of each such defaulted Class A Limited Partner were
foreclosed upon by the Partnership pursuant to the Limited Partnership
Agreement and each such Class A Limited Partner was not eligible to
participate in the1994 exchange offer or the 1995 warrant modification.
Class A Limited Partners owning in the aggregate 99 1/2 Class A
Units, representing approximately 12 % of the total number of Class A Units
then outstanding, failed to make the fourth installment payment due March 15,
1995 pursuant to their respective Investor Notes and the Limited Partnership
Interests and any Original Warrants and Exchange Warrants held by each such
defaulted Class A Limited Partner were foreclosed upon by the Partnership
pursuant to the Limited Partnership Agreement, which resulted in a writeoff of
approximately $1,630,000 of notes receivable by the Partnership for the fiscal
year ended December 31, 1995. As of December 31, 1995, 712 of the original
900 Class A Units were outstanding. Amounts due as of December 31, 1995 under
defaulted non-interest bearing notes receivable from certain limited partners
were approximately $4,000. Following the subsequent foreclosure by the
Partnership of the defaulted 1/2 limited partnership unit relating to such
outstanding defaulted non-interest bearing notes receivable, as of March
31, 1997 711 1/2 of the original 900 Class A Units were outstanding.
Repligen Efforts to Locate a Strategic Partner: 1994-1996
Beginning in 1994, Repligen attempted to identify one or more
strategic partners to fund the further development of the rPF4-related
technology. Discussions were held by Repligen and approximately 63 companies
active in the cardiac surgical and cancer fields regarding a variety of
proposals for comprehensive partnerships as well as more specialized joint
ventures or licensing arrangements covering specific treatments (e.g., ocular
applications), discrete activities (e.g., manufacturing) and specific
territories (e.g., one or more countries).
During 1994, Repligen participated in advanced negotiations
with a major international pharmaceutical company that was interested in an
exclusive license to market the rPF4-related technology in Europe, but the
discussions ultimately failed to move forward due to concerns that the results
of rPF4 were preliminary in nature, that the European market would not support
an expensive cancer treatment and that Repligen's ownership of the commercial
rights to the rPF4-related technology was complicated by the Partnership's
rights thereto.
Beginning in 1994, Repligen took certain actions to bolster its
financial position and explored several possibilities of obtaining additional
financial resources to fund various development and commercialization efforts,
including those relating to the rPF4-related technology.
In order to lower expenses and conserve cash resources,
Repligen underwent two successive downsizings from July 1994 to March 1995
which together with attrition reduced its workforce by approximately 170
employees, or roughly 47 percent, and discontinued or postponed certain
clinical programs. Following the restructurings, the primary focus of Repligen
management centered on the clinical development and commercialization of the
rPF4-related technology as well as other independently funded development
programs.
In the spring of 1995, Repligen entered into merger
negotiations with Medco Research Inc. ("Medco"), a biotechnology company
specializing in diagnostic and therapeutic products in the cardiovascular and
cancer areas. On May 23, 1995, the two companies publicly announced that their
respective boards had approved a letter of intent to enter into a non-cash
merger wherein Medco would issue to holders of Repligen Common Stock between
3.2 million and 3.4 million shares of its common stock with a then-current
market value of approximately $51.5 million. Medco would have added roughly
$40 million in additional cash to the balance sheet of the post-merger entity,
although such additional amounts would have been available to support
pre-existing Medco research, development and commercialization activities as
well as rPF4 development and commercialization activities. On July 11, 1995,
Repligen and Medco announced that they had ended merger negotiations after
failure to agree on the valuation of Repligen Common Stock to be used as the
basis for the proposed merger.
On June 1, 1995, Repligen and Eli Lilly and Company ("Eli
Lilly") announced that they had reached agreement to extend through 1996 a
collaboration and license agreement initiated in May 1992 relating to the
development of monoclonal antibodies designed to fight inflammatory diseases.
However, in early September 1996, Eli Lilly elected to discontinue the
collaboration, citing a reallocation of resources for its research priorities.
In September 1995, Repligen sold its immune modulation program
to Genetics Institute, Inc., while retaining rights to independently
commercialize certain small molecule-based drugs in the same therapeutic area.
In December 1995, Repligen reached an advanced stage of
discussions regarding the rPF4-related technology with another major
international pharmaceutical firm, which ultimately decided not to license the
rPF4-related technology due to the firm's lack of, and costs associated with
establishing, microbial manufacturing capacity.
On December 12, 1995, Repligen and Apotex USA ("Apotex")
announced that they had reached a tentative agreement for the sale of
Repligen's Allegro Biologics division ("Allegro"), consisting of Repligen's
process development and contract manufacturing operations, to Apotex. Under
the terms of the agreement, Apotex was to acquire all of the Allegro assets,
as well as Repligen's Protein A and diagnostic reagents business. In addition,
Allegro and Repligen were to enter into an agreement to develop and produce
pharmaceuticals for Repligen's clinical development programs. On January 19,
1996, Repligen announced that the acquisition negotiations had ended, citing
strategic reasons internal to Apotex.
On February 12, 1996, Repligen and Genzyme Corporation
("Genzyme") announced tentative agreement on the sale of the assets of Allegro
as well as Repligen's Protein A business and certain related assets to
Genzyme. However, on April 9, 1996, Repligen announced that the negotiations
had not resulted in a definitive agreement due to differences between the
parties as to the valuations of the Allegro assets, the Protein A business and
associated fixed assets.
In early 1996, Repligen entered into acquisition negotiations
with Glycan Pharmaceuticals, Inc. ("Glycan"), a biotechnology company focusing
on small molecule therapeutics for inflammatory and proliferative diseases.
Glycan had been founded by three former Repligen scientists. On March 14,
1996, Repligen publicly announced that it had acquired Glycan. Under the
terms of the acquisition agreement, Repligen's existing Chief Executive
Officer, Vice President of Research and Development and Vice President of
Business Development were each succeeded by one of the Glycan founders. The
Glycan acquisition did not, however, result in the introduction of sufficient
additional capital or otherwise increase the financial resources available to
Repligen such that Repligen would be in a position to fund continued
development and subsequent commercialization of the rPF4-related technology.
Certain Contracts
Development Agreement.
In connection with the organization of the Partnership, the
Partnership and Repligen entered into the Development Agreement pursuant to
the terms of which Repligen granted to the Partnership an exclusive,
royalty-free license (the "License") to certain patent rights and other
technology owned or controlled by Repligen relating to the manufacture, use
and sale of rPF4-related products covered by such agreement (the "Products").
The License granted to the Partnership is limited to the rPF4-related
technology (defined in the Development Agreement as the "Background
Technology"), necessary or materially useful for the development and
commercialization of Products for human therapeutic use in the Territory (the
"Field of Activity").
Until the termination of the Programs by the Board of Directors
on March 8, 1996, the Development Agreement required Repligen, to the extent
permitted by Partnership funds, to use its best efforts to perform the
Research Program and seek to obtain approval from the United States Food and
Drug Administration (the "FDA") for the sale of products that may be developed
utilizing the licensed technology. In addition, Repligen agreed to use its
best efforts to manufacture and market the Products in the Field of Activity
directly or through third parties in the Territory. The Partnership was
required to reimburse Repligen for its research and development expenses on
behalf of the Partnership, plus a management fee of ten percent (10%) of such
expenses. If at any time the Partnership's funds (or any additional funds
provided by Repligen) shall have been expended and no FDA marketing approval
shall have been received for the sale by or on behalf of the Partnership of
any Product in the Field of Activity, the General Partner was to determine the
amount of additional funds required by the Partnership in the upcoming year,
and Repligen would have the right to contribute such funds to the Partnership.
Any such contribution would not result in dilution of the Limited Partners'
interest in the Partnership. Payments by the Partnership were required to be
made at the end of each calendar quarter, except that (i) if such amount
exceeded the amount stated in the budget for such quarter, the Partnership was
only required to pay such excess as was approved by the Board of Directors and
(ii) if such amount exceeded the Partnership's available funds, the
Partnership was not obligated to pay such excess until receipt of additional
funds.
Prior to the end of each quarter of each year, until the
termination of the Programs by the Board of Directors on March 8, 1996, the
General Partner reviewed the progress of the Research Program during the
preceding three-month period to determine whether the continuation of all or
any part thereof was in the best interests of the Limited Partners of the
Partnership. If at any time the Board of Directors were to determine that the
Research Program was infeasible or uneconomic and should be discontinued with
respect to all Products, or if the Board of Directors were to determine not
to contribute the additional funds to the Partnership which were determined by
the General Partner to be required when all Partnership funds had been
expended and no FDA marketing approval had been received for the sale of any
Product in the Field of Activity, the Board of Directors could terminate the
Programs. In the course of the Board of Directors' reviews in the first
quarters of 1994 and 1995, PaineWebber Development Corporation engaged the
services of independent consultants, who provided favorable evaluations of
the technical prospects of the rPF4-related technology. See "Description of
the Business of the Partnership - 1994 Evaluation; Restructuring of Repligen
Warrants" and "- 1995 Evaluation; Warrant Modifications." However, on March 8,
1996, Repligen advised the Partnership that it did not currently have nor did
it anticipate generating funds sufficient in aggregate amount to finance the
remainder of the Research Program and the Marketing Program. As a result, the
Board of Directors terminated the Programs. See "Recent Developments -
Termination of Research and Marketing Programs." The termination of the
Programs provides the Partnership with the right to freely transfer the
License to one or more third parties. Under the terms of the Limited
Partnership Agreement, a transaction constituting a sale, license, assignment
or other transfer of "substantially all assets" of the Partnership, or that
"materially adversely affects" the Limited Partners, would require the prior
consent of the Limited Partners.
Purchase Agreement.
Also in connection with the organization of the Partnership,
Repligen and the Partnership entered into a Purchase Agreement, amended and
restated as of February 28, 1992 (the "Purchase Agreement"), pursuant to which
Repligen agreed to use its best efforts to manufacture Products and to sell
the Products for use in the Field of Activity or, if Repligen determined that
such manufacture and sale was not commercially practicable, to use its best
efforts to license or sell the rPF4-related technology to a third party. Upon
the first marketing approval of rPF4 by the FDA, the Partnership would receive
a payment equal to 20 percent of the aggregate capital contributions of all
Limited Partners, payable at Repligen's option in cash or in Repligen Common
Stock (the "Milestone Payment"). Under the terms of the Purchase Agreement,
and in exchange for the issuance of the Original Warrants, each Limited
Partner granted to Repligen an irrevocable option (the "Purchase Option") to
purchase its interest in the Partnership. The Purchase Option was exercisable
only if all interests were to be purchased and such option was exercisable by
sending a notice to all the Limited Partners on a date during the forty-five
day period commencing on the date which was the earlier of (i) the date which
was the later of the last day of the first month in which the Partnership
received Interim License Payments equal to fifteen percent (15%) of the
Limited Partners' capital contributions (excluding the Milestone Payment) and
the last day of the twenty-fourth month period after the date of the
Partnership's first commercial sale of any Product within the Field of
Activity and (ii) the last day of the forty-eighth month after the date of
such first commercial sale.
The Purchase Option was to terminate upon the occurrence of any
of the following termination events: (i) the bankruptcy of Repligen, (ii) the
cessation of operations by Repligen, (iii) the seizure or attachment of all or
a substantial part of Repligen's assets or (iv) the termination of the
Programs. In addition, the Purchase Option was to terminate upon the earlier
of (i) Repligen's notice to the Partnership and the Limited Partners that it
did not intend to exercise the Purchase Option or (ii) the expiration
unexercised of the Purchase Option. After any such termination, the
Partnership is free to license or sell the rPF4-related technology. On March
8, 1996, the Board of Directors terminated the Programs, which in turn
terminated the Purchase Option. See "Recent Developments - Termination of
Research and Marketing Programs". Accordingly, the rPF4-related technology is
no longer encumbered and may be sold or licensed to third parties by the
Partnership. Under the terms of the Limited Partnership Agreement, a
transaction constituting a sale, license, assignment or other transfer of
"substantially all assets" of the Partnership, or that "materially adversely
affects" the Limited Partners, would require the prior consent of the Limited
Partners.
Patents, Licenses and Proprietary Rights
The General Partner believes that the proprietary protection of
rPF4 has improved since the time of the Offering. At the time of the Offering,
patent applications filed by a subsidiary of Bristol-Myers Squibb Company were
disclosed as having the ability to potentially block the Partnership's ability
to market rPF4. In July 1993, Repligen and Bristol-
Myers Squibb Company entered into an exclusive, worldwide, royalty-free
license agreement covering an issued U.S. patent and pending foreign patent
applications, the effect of which is to prevent Bristol-Myers Squibb Company
from using these patents to block the ability of Repligen to market rPF4 as an
anti-cancer agent or as an agent for heparin neutralization. In April 1993,
the United States Patent and Trademark Office (the "PTO") issued Repligen a
patent covering the use of purified PF4 and rPF4 to neutralize heparin. In
February 1994, the PTO issued Repligen a patent for the systemic
administration of rPF4 to inhibit tumor growth in patients with metastatic
cancer. Patent applications have been filed by Repligen for these uses in
Canada, Europe and Japan and certain other uses of rPF4 in the United States,
Canada, Europe and Japan. The rights that Repligen may possess with respect to
such patents and patent applications insofar as they relate to the technology
inure to the benefit of the Partnership as holder of the License, as well as
to any third-party transferee thereof.
Competition
The General Partner is not aware of any other current efforts
to develop PF4 or rPF4 for therapeutic use. Several competitors in the
pharmaceutical and biopharmaceutical industries have substantial research
programs underway in oncology utilizing a broad spectrum of therapeutic
approaches, including chemotherapy, various recombinant cytokines and
monoclonal antibody-, antisense- and gene therapy-based technologies, any or
all of which may become competitive with the Partnership's products.
The only product approved by the FDA for heparin neutralization
is the generic drug protamine, which is produced and marketed by three
companies. Currently, no substitute compounds are available for post-surgical
reversal of heparin. The General Partner is aware that Research Industries
Corporation is developing a cartridge containing immobilized protamine for
insertion into a cardiovascular bypass circuit, which would compete with
protamine, and had announced that it intended to commence human clinical
trials for this device in mid-1994, but to the best of the General Partner's
knowledge, these trials have not yet begun. Ibex Corporation is developing
heparinase, an enzyme which breaks down heparin, which is currently in Phase
II clinical trials.
Currently, no potent antiangiogenic agents are available for
human therapy. The General Partner is aware that several companies are
seeking to develop other compounds to inhibit angiogenesis, including Takeda
Pharmaceuticals, Inc., which is seeking to develop certain synthetic
fumagillin analogs. Daiichi Pharmaceutical Co., Ltd. is developing DS-4125, a
polysaccharide sulfate compound. Both the Takeda and Daiichi compounds are in
early stage clinical trials. Pharmacia Upjohn appears to have developed
certain steroid-based compounds. Several companies are developing monoclonal
antibody products. Genentech, Inc. is developing an antagonist to vascular
endothelial growth factor ("VEGF"). Other companies are seeking to develop
other types of angiogenesis inhibitors, which are in the very early stages of
development. Lastly, there may be other angiogenesis inhibitors and heparin
neutralizers of which the General Partner is unaware.
Given the current, significant financial constraints faced
by the Partnership, see "Recent Developments - Termination of Research and
Marketing Programs" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations", most if not all of the competitors of
the Partnership have significantly greater financial resources, more
extensive research and development capabilities and greater marketing and
human resources than either Repligen or the Partnership. Some companies
have a competitive advantage over the Partnership because of greater
potential funding for research and development and more established drug
manufacturing capabilities and distribution channels.
Government Regulation
The development and commercialization of the rPF4-related
technology is subject to extensive regulation for safety and efficacy by
numerous governmental authorities in the United States and other countries. In
the United States, the development and commercialization of the rPF4-related
technology is subject to rigorous regulation by the FDA, and other Federal,
state and local agencies governing, among other things, research and
development activities and the testing, manufacturing, safety, effectiveness,
labeling, storage, record keeping, approval, advertising and promotion of the
rPF4-related technology and products derived therefrom. Further, additional
government regulation may be established which could affect regulatory
approval of such products.
The standard process required by the FDA before a
pharmaceutical agent may be marketed as a drug in the United States includes
(i) preclinical laboratory and animal tests, (ii) submission to the FDA of an
Investigational New Drug ("IND") application, which must become effective
before human clinical trials may commence, (iii) adequate and well-controlled
human clinical trials to establish the safety and efficacy of the agent in its
intended indication, (iv) submission to the FDA of a New Drug Application
("NDA") with respect to prospective drugs and a Product License Application
("PLA") with respect to biologics and (v) FDA approval of the NDA or PLA prior
to any commercial sale or shipment of the prospective drug or biologic. In
addition to obtaining FDA approval for each product, each domestic drug
manufacturing establishment must be registered or licensed by the FDA.
Domestic manufacturing establishments are subject to inspections by the FDA
and by other Federal, state and local agencies and must comply with FDA good
manufacturing practices as appropriate for production.
Clinical trials are typically conducted in three sequential
phases, which may overlap. In Phase I, the initial introduction of the agent
to humans, the agent is tested for safety (adverse effects), dosage tolerance
and metabolism. Phase II involves studies in a limited patient population
to (i) assess the effectiveness of the agent for specific targeted
indications, (ii) determine dosage tolerance and optimal dosage and (iii)
identify possible adverse effects and safety risks. When an agent is found to
be effective and to have an acceptable safety profile in Phase II evaluations,
Phase III trials are undertaken to further evaluate clinical efficacy and to
further test for safety within an expanded patient population at
geographically dispersed clinical study sites. There can be no assurance that
Phase I, Phase II or Phase III testing will be completed successfully within
any specified time period, if at all, with respect to any of the Partnership's
products subject to such testing.
The process of completing clinical testing and obtaining FDA
approval for a new human drug or biologic is likely to take a number of years
and require the expenditure of substantial resources. Even after initial FDA
approval has been obtained, further studies may be required to provide
additional data on safety or to gain approval for the use of a product as a
treatment for clinical indications other than those for which the product was
initially tested. Also, the FDA may require post-marketing testing and
surveillance programs to monitor the drug's efficacy and side effects. Results
of these post-marketing programs may prevent or limit the further marketing of
the products.
Human Resources
The Partnership and the General Partner do not have any
full-time employees.
ITEM 2. DESCRIPTION OF PROPERTY
The Partnership does not own or lease any real property. The
Partnership's business had been conducted by Repligen in its administrative,
laboratory and production space at One Kendall Square in Cambridge,
Massachusetts pursuant to the Development Agreement. Effective June 1, 1996,
Repligen relocated its administrative, laboratory and production activities to
117 Fourth Avenue, Needham, Massachusetts.
Under the Development Agreement, Repligen has an indefinite
obligation to store, preserve and maintain all materials, documents and other
records (including certain physical, chemical and biological specimens)
relating to the rPF4-related technology and make same reasonably available to
the Partnership, its representatives and any third-party licensees or
successors in interest thereto. Repligen's ability to comply with these
obligations may be limited by its available financial and other resources.
ITEM 3.LEGAL PROCEEDINGS
None.
ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders of the
Partnership through solicitation of proxies or otherwise, during the last
quarter of the fiscal year ended December 31, 1995.
PART II
ITEM 5. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
No public or other market exists or will develop for the Units
or the Interests. Neither the Units nor the Interests are transferable
without the consent of the General Partner and satisfaction of certain other
conditions contained in Article 8 of the Partnership Agreement.
The following information relates to the ownership of Units and
Interests as of December 31, 1995.
Title of Class Number of Record Holders
-------------- ------------------------
General Partner Interest One
Class A Limited Partnership Units/Interests 887
Class B Limited Partnership Units/Interests One
There have been no distributions to the partners to date.
Distributions in the future, if any, will be made by the Partnership to the
partners as soon as practicable after the end of any fiscal quarter, in
proportion to the partners' respective capital accounts as of the end of such
quarter. Distributable cash, which must be distributed to the partners, is
generally defined as the excess of cash revenues over certain expenditures and
other amounts determined by the General Partner to be necessary for the proper
operation of the Partnership's business. The capital account of each partner
will be increased by such partner's cash contributions (net of selling
commissions, investment banking fees, warrant valuation fees and financial
advisory fees allocated to the partner) to the Partnership decreased by the
amount of any cash distribution and the fair market value of other property
from the Partnership to such partner, and increased or decreased by such
partner's allocation of the net gain or loss of the Partnership for federal
income tax purposes ("Profits" and "Losses", respectively). Partnership
profits and losses are allocated 99% to the Limited Partners (pro rata to
their capital accounts) and 1% to the General Partner.
Neither the General Partner's interest nor, to the best of the
General Partner's knowledge, any Limited Partner's Unit/Interest: (i) is
subject to any outstanding options or warrants to purchase, or securities
convertible into, any equity interest of the Partnership; (ii) could currently
be sold pursuant to Rule 144 under the Securities Act of 1933, as amended, or
is subject to agreement by the Partnership to be registered under the
Securities Act of 1933 for sale by security holders; or (iii) is being, or has
been publicly proposed to be, publicly offered by the registrant.
ITEM 6. SELECTED FINANCIAL DATA
The selected consolidated financial data presented below have
been derived from the Partnership's audited financial statements for each year
in the three year period ended December 31, 1995. The information presented
below should be read in conjunction with Management's Discussion and Analysis
of Financial Condition and Results of Operations and the Consolidated
Financial Statements and related notes set forth in Items 7 and 8 of this
Annual Report on Form 10-K.
REPLIGEN CLINICAL PARTNERS, L.P.
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, 1995 December 31, 1994 December 31, 1993
----------------- ----------------- -----------------
<S> <C> <C> <C>
Operating Statement Data:
Total revenues.............. $ 81,963 $ 28,256 $ 59,404
----------- ------------ ------------
Total expenses.............. 4,460,683 8,392,516 13,910,201
Net loss.................... $(4,378,720) $(8,364,260) $(13,850,797)
=========== =========== ============
</TABLE>
<TABLE>
<CAPTION>
December 31,
-----------------------------------------
1995 1994 1993
---- ----- -----
<S> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents...... $798,352 $53,146 $252,196
Total assets................... 810,313 128,122 391,438
Partners' capital (deficit).... 753,932 (6,658,893) (9,699,640)
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Results of Operations
The Partnership's sole source of revenue for the years ended
December 31, 1995 and 1994 was interest income earned on capital contributions
prior to disbursement for Partnership activities. Interest income for the
year ended December 31, 1995 was $82,000 as compared to $28,000 in the
comparable fiscal 1994 period. The increase in investment income in fiscal
1995 was due to the receipt of the final installments of capital contributions
from the partners and an increase in available funds for investment.
Total research and development expenses for the year ended
December 31, 1995 were $3,788,000 as compared to $7,141,000 in the comparable
fiscal 1994 period. The decrease in research and development expenses
reflects a reduction in the rate of expenditures by Repligen Corporation
(Repligen) under the Development Agreement and an absorption of a portion of
these expenditures by Repligen. Repligen incurred approximately $324,000 and
$1,341,000 of research and development costs related to the Research Program
in the year ended December 31, 1995 and 1994, respectively, which were not
billed to the Partnership and were absorbed by Repligen based on Repligen's
decision to fund a portion of the Research Program out of its cash reserves.
For the year ended December 31, 1995, general and
administrative expenses were $509,000 as compared to $858,000 in the
comparable fiscal 1994 period. The decrease in general and administrative
expenses in the fiscal 1995 period primarily reflects decreased management
fees paid to Repligen under the Development Agreement as a result of the
reduction in the rate of expenditures by Repligen and Repligen's absorption of
certain costs. The Partnership paid Repligen a management fee equal to 10% of
total research and development expenses.
Interest expense for the year ended December 31, 1995 was
$164,000 as compared to $393,000 in the comparable fiscal 1994 period.
Interest expense for 1995 and 1994 represents interest payable on the
$4,620,000 loan from Repligen. Interest expense for 1993 represents interest
payable on the $4,620,000 loan from Repligen, as well as three months of
interest on the present value of a nonrefundable retainer paid in March 1993.
Capital Resources and Liquidity
The Partnership's primary source of funding and capital
resources has been the capital contributions made by the limited partners and
General Partner, which have totaled approximately $40,582,000 since inception.
Of this total, approximately $11,792,000, $11,375,000, $10,354,000 and
$7,061,000 were received during 1995, 1994, 1993 and 1992, respectively.
During 1995 and 1994, the Partnership wrote off approximately $1,637,000 and
$3,325,000 of notes receivable, respectively, relating to limited partnership
units which were foreclosed for failure to pay their installments. As of
March 31 , 1997, 711 1/2 of the original 900 Class A Units were outstanding.
As of December 31, 1995 and 1994, the Partnership owed
Repligen approximately $2,000 and $2,109,000, respectively, for amounts due
under the Development Agreement and interest relating to the note payable. In
addition, as of December 31, 1994, the Partnership owed Repligen a note
payable of $4,620,000 as a result of a loan from Repligen to the
Partnership to fund certain organization and syndication costs. The note
evidencing such loan was secured by a pledge of the notes receivable from
the partners, bearing interest at 8.5% payable annually in arrears. The
note and accrued interest was paid in May 1995 upon receipt of proceeds
from the Investor Notes.
During 1995, 1994, 1993 and 1992, the Partnership made payments
to Repligen of approximately $6,160,000, $11,500,000, $9,243,000 and
$5,345,000, respectively, for research and development activities, management
fees and interest due under the Development Agreement. In 1993, the
Partnership also paid Repligen a one-time nonrefundable fee of $1,750,000 as
reimbursement for research and development related to the technology developed
by Repligen prior to the formation of the Partnership.
Until the termination of the Research Program and the Marketing
Program in March 1996, the primary use of the Partnership's capital resources
had been to fund the Research Program. From its inception to December 31,
1995, the Partnership incurred aggregate expenses of approximately $34,935,000
versus approximately $38,645,000 anticipated at the inception of the
Partnership. The difference is due primarily to a change in the manufacturing
process of rPF4 and the need to conduct multiple clinical trials, offset by
reductions in research and development activities over the 1995 fiscal year
and Repligen's decision to absorb $1,665,000 of research and development costs
related to the Research Program.
The Partnership anticipated that an additional investment of at
least $50,000,000 would be needed to complete the remainder of the Research
Program, to obtain all FDA and other regulatory approvals and to commence
sales of any rPF4-based products. In March 1996, Repligen advised the
Partnership that it did not currently have nor did it anticipate generating
funds sufficient in aggregate amount to finance the remainder of the Research
Program and the Marketing Program. As a result, the Board of Directors of the
General Partner of the Partnership voted to terminate the Research Program and
the Marketing Program. See "Recent Developments - Termination of Research and
Marketing Programs." The Partnership is seeking to sell the related
technology to third parties and believes that if a buyer is not secured by
March 31, 1997, it may have to cease operations.
Since March 1996, the Partnership has been in discussions with
various third parties with respect to a possible sale of, or a potential joint
venture or license relating to, the rPF4-related technology. Under the terms
of the Limited Partnership Agreement, a transaction constituting a sale,
license, assignment or other transfer of "substantially all assets" of the
Partnership, or that "materially adversely affects" the Limited Partners,
would require the prior consent of the Limited Partners.
ITEM 8. FINANCIAL STATEMENTS
Report of Independent Public Accountants
To Repligen Clinical Partners, L.P.:
We have audited the accompanying balance sheets of Repligen Clinical Partners,
L.P. (a Delaware limited partnership) as of December 31, 1995 and 1994, and
the related statements of operations, changes in partners' capital (deficit),
and cash flows for the years ended December 31, 1995, 1994 and 1993. These
financial statements are the responsibility of the General Partner. 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 Clinical Partners,
L.P. as of December 31, 1995 and 1994 and the results of its operations and
its cash flows for the years ended December 31, 1995, 1994 and 1993 in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the
Partnership will continue as a going concern. As discussed in Note 2 to the
financial statements, the Board of Directors of the General Partner of the
Partnership have voted to terminate the Research Program and Marketing Program
as the Partnership, without additional financing, would not have sufficient
funding to complete the Research Program. As a result, the Partnership is
seeking to sell the related technology to third parties and believes that if a
buyer is not secured by March 31, 1997, it may have to cease operations.
These matters are further discussed in Note 2. The accompanying financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.
Boston, Massachusetts, Arthur Andersen, LLP
January 31, 1996, except with respect to the matters discussed
in Notes 1, 2, 5 and 6 as to which the date is January 28, 1997.
REPLIGEN CLINICAL PARTNERS, L.P.
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
----------------- -----------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.................................. $798,352 $53,146
Interest receivable........................................ 1,250 ---
Other Assets:
Organization costs, less amortization of $246,351 and
$182,085 at December 31, 1995 and 1994, 10,711 74,976
respectively.....................................................
-------- --------
Total Assets............................................... $810,313 $128,122
======== ========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Current Liabilities:
Accounts payable and accrued expenses...................... $54,455 $57,829
Amounts due to Repligen Corporation........................ 1,926 2,109,186
Note payable to Repligen Corporation....................... --- 4,620,000
-------- --------
Total current liabilities.................................. 56,381 6,787,015
Partners' Capital (Deficit), net:
Limited partners........................................... 663,024 6,635,244
General partner............................................ 95,057 138,844
-------- --------
758,081 6,774,088
Less: Notes receivable from partners....................... (4,149) (13,432,981)
-------- --------
753,932 (6,658,893)
-------- --------
Total Liabilities and Partners' Capital (Deficit).......... $810,313 $128,122
======== ========
</TABLE>
See accompanying notes to financial statements.
REPLIGEN CLINICAL PARTNERS, L.P.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, 1995 December 31, 1994 December 31, 1993
----------------- ----------------- -----------------
<S> <C> <C> <C>
Revenues:
Interest income................ $ 81,963 $ 28,256 $ 59,404
Expenses:
Research and development....... 3,788,326 7,141,368 12,083,677
General and administrative..... 508,733 858,448 1,425,108
Interest....................... 163,625 392,700 401,416
---------- ----------- ------------
Total Expenses................. 4,460,684 8,392,516 13,910,201
---------- ----------- ------------
Net loss............................. $(4,378,721) $(8,364,260) $(13,850,797)
=========== =========== ============
</TABLE>
See accompanying notes to financial statements.
REPLIGEN CLINICAL PARTNERS, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
<TABLE>
<CAPTION>
Notes
Limited General Receivalbe
Partners Partner from Partners Total
-------- ------- ------------- -----
<S> <C> <C> <C> <C>
Balance, December 31, 1992........... 31,953,004 360,995 (38,487,323) (6,173,324)
Partner contributions................ --- --- 10,354,481 10,354,481
Net loss............................. (13,712,289) (138,508) --- (13,850,797)
----------- -------- ---------- -----------
Balance, December 31, 1993........... 18,240,715 222,487 (28,132,842) (9,669,640)
Partner contributions................ --- --- 11,375,007 11,375,007
Write-off of foreclosed units........ (3,324,854) --- 3,324,854 ---
Net loss............................. (8,280,617) (83,643) --- (8,364,260)
----------- -------- ---------- -----------
Balance, December 31, 1994........... 6,635,244 138,844 (13,432,981) (6,658,893)
Partner contributions................ --- --- 11,791,546 11,791,546
Write-off of foreclosed units........ (1,637,286) --- 1,637,286 ---
Net loss............................. (4,334,934) (43,787) --- (4,378,721)
----------- -------- ---------- -----------
Balance, December 31, 1995 $ 663,024 $ 95,057 $ (4,149) $ 753,932
=========== ======== ============ ===========
</TABLE>
See accompanying notes to financial statements.
REPLIGEN CLINICAL PARTNERS, L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, 1995 December 31, 1994 December 31, 1994
----------------- ----------------- -----------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss......................................... $ (4,378,721) $ (8,364,260) $(13,850,797)
Adjustments to reconcile net loss to net cash used
in operating activities -
Amortization..................................... 64,265 64,266 64,265
Changes in assets and liabilities -
Interest receivable.............................. (1,250) --- 4,001
Accounts payable and accrued expenses............ (3,374) (434) 22,809
Amounts due to Repligen Coporation............... (6,727,260) (3,273,629) 2,708,318
----------- ----------- -----------
Net cash used in operating activities............ (11,046,340) (11,574,057) (11,051,404)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from notes receivable from partners..... 11,791,546 11,375,007 10,354,481
----------- ----------- -----------
Net cash provided by financing activities........ 11,791,546 11,375,007 10,354,481
----------- ----------- -----------
Increase (decrease) in cash and cash equivalents....... 745,206 (199,050) (696,923)
Cash and cash equivalents, beginning of period......... 53,146 252,196 949,119
----------- ----------- -----------
Cash and cash equivalents, end of period............... $ 798,352 $ 53,146 $ 252,196
=========== =========== ===========
Supplemental disclosure of cash paid for interest...... $ 163,625 $ 392,700 $ 458,410
=========== =========== ===========
Supplemental schedule of non-cash transactions:
Write-off of notes receivable from partners for
foreclosed units...................................... $ 1,637,286 $ 3,324,854 $ ---
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
REPLIGEN CLINICAL PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
1. Organization
Repligen Clinical Partners, L.P. (the Partnership) is a Delaware Limited
Partnership that was organized on January 9, 1992, and was formed to fund the
further development of Repligen Corporation's (Repligen) recombinant platelet
factor-4 (rPF4) protein. The Partnership is managed by its general partner,
Repligen Development Corporation. In connection with the formation of the
Partnership, Repligen granted to the Partnership an exclusive license to all
technology and know-how related to the manufacture, use and sale of rPF4 in
the United States, Canada and Europe.
On February 28, 1992, the Partnership completed a private placement of (i) 900
Class A units, each unit (a Class A Unit) consisting of one Class A limited
partnership interest in the Partnership and a warrant to purchase 2,900 shares
of Repligen Common Stock, and (ii) one Class B unit (the Class B Unit)
consisting of one Class B limited partnership interest in the Partnership and
a warrant to purchase 5,800 shares of Repligen Common Stock. In addition,
Repligen issued warrants to the sales agent of the private placement and an
affiliate of the agent to purchase 75,050 shares and 13,300 shares,
respectively, of Repligen Common Stock. The private placement resulted in net
proceeds of approximately $40,312,000 in cash and non-interest bearing notes
receivable from partners, of which approximately $35,346,000 has been paid by
the Partners, approximately $4,962,000 has been written off due to defaulted
units and approximately $4,000 remains outstanding as of December 31, 1995.
In March 1996, Repligen advised the Partnership that it did not currently have
nor did it anticipate generating funds sufficient in aggregate amount to
finance the remainder of the Research Program and the Marketing Program. The
Partnership has incurred significant operating losses since inception and the
Board of Directors of the General Partner of the Partnership determined that,
without additional financing from Repligen or one or more third parties, the
Partnership would not have sufficient funding to complete the Research
Program. As a result, the Board of Directors of the General Partner of the
Partnership voted to terminate the Research Program and the Marketing Program,
and directed that the General Partner market the rPF4-related technology to
prospective third-party purchasers, licensors, or joint-venture partners.
2. Business Operations
The Partnership is currently devoting substantially all of its efforts toward
marketing the rPF4 technology to prospective third-party purchasers, licensors
or joint-venture partners. The success of such efforts is therefore subject
to a number of risks relating to the potential commercial value of the rPF4
technology as well as to the nature and extent of the market for such
technology. Such risks include, among other things, competition from
substitute products as well as the possible lack of necessary financial
resources or technical capabilities of prospective purchasers, licensors or
joint venture partners. The success of such efforts is also subject to risks
relating to the limited remaining financial resources of the Partnership.
Until the termination of the Research Program and the Marketing Program, the
primary use of the Partnership's financial resources had been to fund research
and development performed by Repligen under the Partnership's agreement with
Repligen and to develop products and receive marketing approval for the sale
of such products. Since such termination, the primary use of the Partnership's
remaining capital resources has been to market the rPF4 technology to
prospective third-party purchasers, licensors or joint-venture partners.
Although the Partnership's working capital and capital requirements may
change, the General Partner believes that the Partnership will have sufficient
funds for these activities until approximately March 1997. It is expected
that the additional funds necessary to complete clinical trials, obtain FDA or
other regulatory approvals and begin commercialization of rPF4 for any
indication will have to be provided by third parties. Under the terms of the
Limited Partnership Agreement, any such transaction constituting a sale,
license, assignment or other transfer of "substantially all assets" of the
Partnership, or that "materially adversely affects" the Limited Partners,
would require the prior consent of the Limited Partners. There can be no
assurance any purchase, license or joint venture arrangements will be
reached with any such third parties on acceptable terms or on a timely
basis, if at all. If no such arrangements are reached by approximately
March 31, 1997, the Partnership will be forced to significantly curtail its
operations and may be forced to cease operations.
3. Summary of Significant Accounting Policies
(a) Basis of Presentation
The Partnership prepares its financial statements on the accrual basis of
accounting. The financial statements include only those assets, liabilities,
revenues and expenses which relate to the business of the Partnership.
Research and development costs were expensed as incurred under the agreements
with Repligen.
(b) Cash and Cash Equivalents
Cash equivalents are short-term, highly liquid investments with original
maturities of less than three months at the time of acquisition. Cash
equivalents at December 31, 1995 consisted of a money market instrument of
$750,000.
(c) Organization Costs
Costs incurred in connection with the organization of the Partnership are
capitalized and are being amortized on a straight-line basis over 48 months.
(d) Income Taxes
The Partnership does not provide for federal or state income taxes, because no
income taxes are payable by the Partnership. Partners are liable for income
taxes on their share of the Partnership' taxable income, if any.
4. Note Payable to Repligen Corporation
In 1992, Repligen loaned the Partnership $4,620,000 to fund certain
organization and syndication costs. The note evidencing such loan was secured
by a pledge of the notes receivable from partners, bearing interest at 8.5%
payable annually in arrears. The note and accrued interest was paid in May
1995 upon the receipt of proceeds from the Investor Notes.
5. Partners' Capital (Deficit)
(a) Partner Contributions:
In connection with the sale of the partnership units discussed in Note 1, each
limited partner agreed to make future annual installments evidenced by
non-interest bearing notes to the Partnership, commencing on March 15, 1993.
The total amount due on March 15, 1995, March 15, 1994 and March 15, 1993, was
$13,433,000, $12,580,000 and $11,006,000, respectively. During 1995 and 1994,
the Partnership wrote off approximately $1,637,000 and $3,325,000,
respectively, of notes receivable relating to limited partnership units which
were foreclosed for failure to pay either the second, third or fourth
installments. As of December 31, 1995, 712 of the original 900 Class A Units
were outstanding. Amounts due as of December 31, 1995 under defaulted
non-interest bearing notes receivable from certain limited partners were
approximately $4,000. Following the subsequent foreclosure by the Partnership
of the defaulted 1/2 limited partnership unit relating to such outstanding
defaulted non-interest bearing notes receivable, as of March 31, 1997 711 1/2
of the original 900 Class A Units were outstanding.
(b) Syndication Costs:
Syndication costs, including commissions and fees, represent costs incurred in
raising capital for the Partnership and have been reflected as a reduction to
Partners' capital.
(c) Partnership Allocation and Distribution:
Profits or losses for each fiscal year of the partnership are allocated 1% to
the General Partner and 99% to the limited partners until each Class A limited
partner has received distributions equal to its capital contribution, as
defined. Profits or losses allocated to the limited partners are allocated
pro rata in accordance with their adjusted capital contributions, as defined.
Upon each Class A limited partner receiving distributions equal to their
capital contributions, the General Partner will be entitled to 1% of the
profits or losses, and the limited partners will be entitled to 99% of the
profits or losses. The allocation to the limited partners shall be allocated
among the limited partners as follows: 5% to the Class B limited partner and
95% among the Class A limited partners pro rata in accordance with their
adjusted capital contributions, as defined.
Losses in excess of the limited partners' capital contribution obligations are
allocated to the General Partner.
6. Related Party Transactions
Under the Development Agreement (the "Development Agreement") with Repligen,
the Partnership reimbursed Repligen for research and development costs
incurred under the Development Agreement, plus paid a management fee equal to
10% of such costs. The Partnership also paid, in February 1993, a one-time
nonrefundable fee of $1,750,000 as reimbursement for research and development
related to the licensed technology performed by Repligen prior to the
formation of the Partnership. During 1995, the Partnership incurred research
and development expenses of approximately $3,763,000 and general and
administrative expenses of approximately $376,000 related to the management
fee due under the Development Agreement. Approximately $2,000 of these
amounts has been included in amounts due to Repligen Corporation in the
accompanying 1995 balance sheet. Repligen incurred in 1995 and 1994
approximately $324,000 and $1,341,000, respectively, of research and
development costs related to the rPF4 program, which were not billed to the
Partnership and were absorbed by Repligen based on their decision to fund a
greater portion of the program out of their cash reserves. Included in the
accompanying statements of operations for 1994 and 1993 are research and
development expenses of approximately $7,122,000 and $12,060,000,
respectively, recognized pursuant to the Development Agreement, and general
and administrative expenses of approximately $712,000 and $1,206,000,
respectively, relating to the management fee.
Prior to the end of each quarter of each year, the General Partner of the
Partnership reviewed the progress of the Partnership's Research Program and
Marketing Program during the preceding three-month period to determine whether
the continuation of all or any part thereof was in the best interest of the
limited partners of the Partnership. If, at any time, the Board of Directors
of the General Partner determined that the Research Program and Marketing
Program were infeasible or uneconomic and should be discontinued or otherwise
determined that the Research Program and Marketing Program should be
discontinued, or if the Board of Directors of the General Partner determined
not to contribute the additional funds to the Partnership which were
determined to be required when all Partnership funds had been expended and no
FDA marketing approval had been received for any product developed by the
Partnership, the Research Program and the Marketing Program under the
Development Agreement would terminate.
In the course of the Board of Directors' reviews of the Research Program in
the first quarters of 1994 and 1995, and prior to the due dates of the third
and fourth installment payments, respectively, from the Limited Partners under
the Investor Notes, PaineWebber Development Corporation engaged the services
of independent consultants, who provided favorable evaluations of the
technical prospects of the rPF4-related technology. In March 1996, Repligen
advised the Partnership that it did not currently have nor did it anticipate
generating funds sufficient in aggregate amount to finance the remainder of
the Research Program and the Marketing Program. The Board of Directors of the
General Partner of the Partnership determined that, without additional
financing from Repligen or one or more third parties, the Partnership would
not have sufficient funding to complete the Research Program. As a result, the
Board of Directors of the General Partner of the Partnership voted to
terminate the Research Program and the Marketing Program in March 1996, and
directed that the General Partner market the rPF4 technology to prospective
third-party purchasers, licensors, or joint-venture partners.
In connection with the initial capitalization of the Partnership, Repligen
issued warrants to purchase Repligen Common Stock 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 December
31, 1995, holders of 620 1/2 of the 712 non-defaulted Class A Units, the
holder of the Class B Unit and the holder of the Fund Warrant had accepted the
modifications. Accordingly, as of December 31, 1995, there were issued and
outstanding Original Warrants to purchase 75,400 shares of Repligen Common
Stock, modified Original Warrants to purchase 163,850 shares of Repligen
Common Stock, Exchange Warrants to purchase 189,950 shares of Repligen Common
Stock and modified Exchange Warrants to purchase 1,654,700 shares of Repligen
Common Stock. Following the close of the Partnership's 1995 fiscal year, the
Partnership foreclosed on an additional defaulted 1/2 Class A Unit, so that
as of March 31, 1997, holders of 620 of the 711 1/2 non-defaulted Class A
Units had accepted the modifications, and there were issued and outstanding
Original Warrants to purchase 75,400 shares of Repligen Common Stock, modified
Original Warrants to purchase 163,850 shares of Repligen Common Stock,
Exchange Warrants to purchase 189,950 shares of Repligen Common Stock and
modified Exchange Warrants to purchase 1,653,250 shares of Repligen Common
Stock.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL PARTNER OF THE
REGISTRANT
<TABLE>
<CAPTION>
Name Age Position Position Held Since
- ---- --- -------- -------------------
<S> <C> <C> <C>
Sandford D. Smith+ 48 President and Director 1992
Leslie Hudson, Ph.D.+ 49 Director 1995
Joan L. Strauss+ 40 Director 1995
Sydney E. Salmon, M.D. 59 Director 1992
Stephen W. Webster 35 Director 1994
Elise Wang+ 36 Director 1993
Peter N. Reikes* 36 Director 1996
Avery W. Catlin+ 47 Vice President, Secretary, Treasurer 1995
Theodore E. Maione, Ph.D.* 40 President, Secretary, Treasurer 1996
</TABLE>
*Appointed subsequent to the Partnership's year end.
+Resigned subsequent to the Partnership's year end.
Sandford D. Smith joined Repligen in October 1986 as President, Chief
Executive Officer and Director. Previously, Mr. Smith was employed by
Bristol-Myers Company from 1977 to 1986 in various executive positions.
During his last two years at Bristol-Myers, he served as Vice President of
Corporate Development and Planning for the United States Pharmaceutical and
Nutritional Group of Bristol-Myers Company. From 1981 to 1985, Mr. Smith
served in various general management capacities of Bristol-Myers subsidiaries
in Japan, Korea and Indonesia, and previously was Director of Operations for
Canada and the Asian division of Bristol-Myers International Group. He joined
Bristol-Myers in 1977 as Director of International Finance in the Corporate
Finance Group. Prior to joining Bristol-Myers, Mr. Smith held the position of
Group Vice President in the Multinational Banking Group of Manufacturers
Hanover Trust Company where he was responsible for global account management
for the healthcare and pharmaceutical banking sectors. Mr. Smith serves on
the boards of several private healthcare companies. Subsequent to the
Partnership's year end, Mr. Smith left Repligen to pursue other interests and
resigned as President and Director of the Partnership.
Dr. Leslie Hudson joined Repligen in December 1994 as Executive Vice President
and Chief Operating Officer. Prior to joining Repligen, he was Vice President
for Discovery Research and Director of the Cancer and Hyperproliferative
Disease Therapeutics Area at Glaxo Research Institute, Research Triangle Park,
North Carolina. Previously, he held posts as Director of the Division of
Cellular and Molecular Sciences at Glaxo Research and Development Ltd., in the
United Kingdom. Subsequent to the Partnership's year end, Dr. Hudson left
Repligen to pursue other interests and resigned as a Director of the
Partnership.
Joan L. Strauss joined Repligen in November 1991 as Manager, Business
Development. She is currently Vice President, Business Development.
Previously, Ms. Strauss was employed by Genetics Institute, Inc. from 1987 to
1991 as Project Manager and Business Development Manager. Subsequent to the
Partnership's year end, Ms. Strauss left Repligen to pursue other interests
and resigned as a Director of the Partnership.
Dr. Sydney E. Salmon currently serves as Professor of Medicine and Director,
Arizona Cancer Center at the University of Arizona College of Medicine. Dr.
Salmon has been employed by the University of Arizona College of Medicine
since 1972.
Peter N. Reikes joined PaineWebber Incorporated in 1985 and is currently a
Managing Director in the Investment Banking Division covering the health care
industry.
Stephen W. Webster joined PaineWebber Incorporated in 1987 and is currently
First Vice President in the Investment Banking Division covering the health
care industry.
Elise J. Wang joined PaineWebber Incorporated in September 1987 and is
currently Vice President, Research covering the health care industry.
Subsequent to the Partnership's year end, Ms. Wang resigned as a Director of
the Partnership.
Dr. Theodore E. Maione joined Repligen in May 1985. He is currently Vice
President, Research. Previously, Dr. Maione served as Vice President,
Biochemistry from January 1994 to July 1994, as Senior Director, Protein
Therapeutics from January 1993 to January 1994, as Director, Protein
Therapeutics from January 1992 to January 1993, and as Principal Investigator
prior to 1992.
ITEM 11. EXECUTIVE COMPENSATION
The General Partner receives no compensation for performing its duties under
the Partnership Agreement. It will receive only its pro rata share of
Partnership distributions and distributions upon the liquidation of the
Partnership and reimbursement for its expenditures for the payment of properly
incurred Partnership obligations. The General Partner has the right to enter
into contracts with the Partnership. See the Partnership Agreement referenced
hereto as Exhibit 3.1. No director or officer of the General Partner receives
compensation from the Partnership.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding security ownership of all persons known to the
Partnership to be the beneficial owners of
<TABLE>
<CAPTION>
Name and Address of Amount and Name of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class
- -------------- ------------------- -------------------- ---------
<S> <C> <C> <C>
Repligen Development Corporation One General Partner
General Partner Interest 117 Fourth Avenue Interest 100.00%
Needham, Massachusetts 02194
Class A Limited PaineWebber R&D Partners III, L.P. 133 Class A Limited
Partnership Interests 1285 Avenue of the Americas Partnership Interests 16.40%
New York, New York 10019
PaineWebber Development
Class B Limited Corporation One Class B Limited 100.00%
Partnership Interests 1285 Avenue of the Americas Partnership Interest
New York, New York 10019
</TABLE>
Exclusive management and control of the Partnership's business is vested in
Repligen Development Corporation, the General Partner of the Partnership.
Information regarding security ownership of the directors, all directors
and officers as a group, and the General Partner as of December 31, 1995 is
as follows:
<TABLE>
<CAPTION>
Name and Address of Amount and Name of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class
- -------------- -------------------- -------------------- --------
<S> <C> <C> <C>
Sandford D. Smith
Class A Limited Repligen Corporation One Class A Limited Less than
Partnership Interests 117 Fourth Avenue Partnership Interest 1%
Needham, Massachusetts 02194
Class A Limited Sydney E. Salmon One-Half Class A Less than
Partnership Interests 2121 Camino El Ganado Limited Partnership 1%
Tucson, Arizona Interest
Theodore E. Maione One-Half Class A
Class A Limited Repligen Corporation Limited Partnership Less than
Partnership Interests 117 Fourth Avenue Interest 1%
Needham, Massachusetts 02194
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Until January and March 1996, respectively, Dr. Hudson and Mr. Smith were
officers of Repligen. During 1992, the Partnership entered into certain
agreements with Repligen, the summarized contents of which are set forth in
Item 1, "Business". During 1993, the Partnership made payments totaling
approximately $10,993,000 to Repligen and incurred charges of $12,060,000 for
research and development activities performed by Repligen and $1,206,000 for
management fees under the Development Agreement. During 1994, the Partnership
made payments totaling approximately $11,500,000 to Repligen and incurred
charges of approximately $7,122,000 for research and development expense and
$712,000 for management fees under the Development Agreement. During 1995,
the Partnership made payments totaling approximately $6,160,000 to Repligen
and incurred charges of approximately $3,763,000 for research and development
expense and $376,000 for management fees under the Development Agreement. In
connection with the Offering, Repligen loaned to the Partnership $4,620,000 to
fund certain organization and syndication costs. The note evidencing such
loan was secured by a pledge of the Investor Notes, bearing interest at 8.5%
payable annually in arrears The note and accrued interest was paid in May
1995. See Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations".
Mr. Reikes, Ms. Wang and Mr. Webster are officers of PaineWebber Incorporated.
Subsequent to the Partnership's year end, Ms. Wang resigned as a Director of
the Partnership. Pursuant to an agreement among Repligen Development
Corporation, the Partnership and an affiliate of PaineWebber Incorporated (the
"Sales Agent"), Units were offered and sold on a "best efforts" basis
exclusively through the Sales Agent. In consideration, the Sales Agent
received from the Partnership selling commissions of six percent (6%) of the
gross proceeds received by the Partnership and a Financial Advisory and
Marketing Fee of three percent (3%) of the gross proceeds received by the
Partnership, with certain exceptions and a warrant valuation fee equal to one
percent (1%) of the gross proceeds received by the Partnership. As a
consequence, the Partnership paid to the Sales Agent $2,251,500 for selling
commissions, $1,150,500 in financial advisory and marketing fees and $383,500
with respect to warrant valuation fees. In addition, the Partnership paid the
Sales Agent approximately $685,000 as reimbursement for the Sales Agent's
expenses related to its sales of Units. The Partnership paid no selling
commissions or financial advisory and marketing fees on the purchase by the
Fund of Units. PaineWebber R&D Partners, L.P. received, in consideration of
its commitment to purchase 133 Units, an additional warrant to purchase 13,300
shares of Repligen stock. In addition, Repligen issued the Incentive Warrant
to PaineWebber Incorporated as compensation for the services provided by an
affiliate of PaineWebber Incorporated as Sales Agent in connection with the
Offering. . In connection with the 1994 exchange offer, PaineWebber
Incorporated has agreed to act as the Information Agent and provide a
valuation of the Exchange Warrants for a flat fee of $250,000 payable by
Repligen.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
Item 14(a) The following documents are filed as part of this Annual Report on
Form 10-K.
14(a)(1) Financial Statements:
Included in Part II of this Annual Report on Form 10-K.
Financial statement schedules have not been included because
they are not applicable or the information is included in
financial statements or notes thereto.
14(a)(3) Exhibits.
The following is a list of exhibits filed as part of this Annual
Report on Form 10-K.
+3.1 Agreement of Limited Partnership, dated as of January 9, 1992,
among Repligen Development Corporation, a Delaware corporation
and those persons admitted to the Partnership as Additional
Limited Partners (filed as Exhibit 3.1 to Repligen Clinical
Partners, L.P.'s General Form for Registration of Securities on
Form 10 and incorporated by reference herein).
+9.1 Voting Agreement, dated as of February 2, 1992, between Repligen
Corporation and PaineWebber R&D Partners III, L.P. (filed as
Exhibit 9.1 to Repligen Clinical Partners, L.P.'s General Form
for Registration of Securities on Form 10 and incorporated by
reference herein).
+10.1 Amended and Restated Sales Agency Agreement, dated as of February
14, 1992, among Repligen Clinical Partners, L.P., Repligen
Corporation and PaineWebber Development Corporation (filed as
Exhibit 10.1 to Repligen Clinical Partners, L.P.'s General Form
for Registration of Securities on Form 10 and incorporated by
reference herein).
+10.2 Product Development Agreement, dated as of February 2, 1992,
between Repligen Corporation and Repligen Clinical Partners,
L.P. (filed as Exhibit 10.2 to Repligen Clinical Partners,
L.P.'s General Form for Registration of Securities on Form 10
and incorporated by reference herein).
+10.3 Purchase Agreement, dated as of February 2, 1992, between Repligen
Corporation and each of the Limited Partners of Repligen Clinical
Partners, L.P. (filed as Exhibit 10.3 to Repligen Clinical
Partners, L.P.'s General Form for Registration of Securities on
Form 10 and incorporated by reference herein).
+10.4 Amendment No. 1 to the Product Development Agreement, Purchase
Agreement and Schedules I and II thereto, dated as of February 14,
1992, among Repligen Corporation, Repligen Clinical Partners, L.P.
and each of the limited partners of the Partnership (filed as
Exhibit 10.4 to Repligen Clinical Partners, L.P.'s General Form
for Registration of Securities on Form 10 and incorporated by
reference herein).
Item 14(b) Reports on Form 8-K
No current reports on Form 8-K were filed by the Partnership during the last
quarter of the period covered by this report.
+Previously filed.
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
REPLIGEN CLINICAL PARTNERS, L.P.
By: REPLIGEN DEVELOPMENT CORPORATION
General Partner
By: /s/ Theodore E. Maione
-------------------------------------------------------------
Theodore E. Maione, Ph.D., President, Secretary and Treasurer
Date: March 31, 1997
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
hereby makes, constitutes and appoints Theodore E. Maione, Ph.D., his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities to sign any or all amendments to this report and to file the same
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorney-in-fact
and agent full power and authority to do and perform each and every act and
thing requisite and necessary to be done in connection therewith, as fully to
all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent, or any substitute or
substitutes, lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Peter N. Reikes Director March 31, 1997
- ------------------------
Peter N. Reikes
/s/ Sydney S. Salmon Director March 31, 1997
- ------------------------
Sydney S. Salmon, Ph.D.
/s/ Stephen W. Webster Director March 31, 1997
- ------------------------
Stephen W. Webster
/s/ Theodore E. Maione President, Secretary and Treasurer March 31, 1997
- ------------------------ (Principal Financial and
Theodore E. Maione, Ph.D. Accounting Officer)
</TABLE>
