SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2)
|_| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Section 240.14a-11(c) or Section 240.14a-12
REPLIGEN CLINICAL PARTNERS, L.P.
(Name of Registrant as Specified In Its Charter)
REPLIGEN CLINICAL PARTNERS, L.P.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
Class A Units and Class B Units
(2) Aggregate number of securities to which transaction applies:
712.5 Units of Limited Partnership Interests
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
REPLIGEN CLINICAL PARTNERS, L.P.
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117 Fourth Avenue
Needham, MA 02194
, 2000
Dear Limited Partner:
Enclosed is information concerning a special meeting of limited partners
of Repligen Clinical Partners, L.P. to be held on [ ], 2000. Details of the
time and place of the meeting are set forth in the accompanying Notice of
Special Meeting of Limited Partners.
Repligen Development Corporation, the general partner of Repligen Clinical
Partners, L.P., has approved the proposal described below and recommends that
the limited partners vote in favor of such proposal which it determines to be
in the best interests of the limited partners.
Enclosed is a proxy statement for your approval of a proposal to terminate
Repligen Clinical Partners, L.P. pursuant to the Agreement of Limited
Partnership dated January 9, 1992. Approval of the termination proposal
requires the favorable vote of the holders of at least two-thirds in interest
of the limited partners. Repligen Development Corporation does not expect there
to be any amounts available for distribution to the limited partners upon
termination.
If you have any questions about the enclosed material, please call
Investor Communications Services at (800) 433-8901.
Very truly yours,
<PAGE>
REPLIGEN CLINICAL PARTNERS, L.P.
-----------------------
NOTICE OF SPECIAL MEETING OF LIMITED PARTNERS
A special meeting of limited partners of Repligen Clinical Partners, L.P.
will be held at [ ] at [ ], local , on [ ], 2000
for the following purpose:
To consider and vote upon a proposal to terminate Repligen Clinical
Partners pursuant to Section 9.1 of the Repligen Clinical Partners,
L.P. Agreement of Limited Partnership, dated January 9, 1992, among
Repligen Development Corporation, a Delaware corporation, the Initial
Limited Partner and Additional Limited Partners.
Only holders of record of Repligen Clinical Partners, L.P. limited
partnership interests at the close of business on [ ], 2000 are entitled to
vote at the special meeting or any adjournments or postponements thereof.
Approval of the termination proposal at the special meeting requires the
favorable vote of the holders of at least two-thirds in interest of the limited
partners in person or by proxy at the special meeting.
REPLIGEN DEVELOPMENT CORPORATION
General Partner
[name]
[title]
_________ __, 2000
Please mark, sign, date and return your proxy promptly, whether or not
you plan to attend the special meeting.
THE GENERAL PARTNER HAS DETERMINED THE PROPOSED TERMINATION TO BE IN THE
BEST INTERESTS OF THE PARTNERSHIP AND ITS LIMITED PARTNERS, HAS APPROVED AND
DECLARED ADVISABLE THE TERMINATION AND RECOMMENDS THAT THE LIMITED
PARTNERS VOTE FOR APPROVAL OF THE TERMINATION.
<PAGE>
REPLIGEN CLINICAL PARTNERS, L.P.
-----------------------
PROXY STATEMENT
FOR THE SPECIAL MEETING OF LIMITED PARTNERS
TO BE HELD ON [________], 2000
-----------------------
This proxy statement and the enclosed proxy are being mailed to the
limited partners of Repligen Clinical Partners, L.P., a Delaware limited
partnership, on or about [ ], 2000 by Repligen Development Corporation, a
wholly-owned subsidiary of Repligen Corporation, on behalf of the partnership
to solicit proxies for use at a special meeting to be held on [ ], 2000 at [ ],
local time, at [ ].
The purpose of the special meeting is to consider and vote upon the
proposal to terminate Repligen Partners following the unsuccessful efforts of
Repligen Partners and Repligen Corporation to identify a purchaser for the
assets of Repligen Partners. If the termination is approved and certain other
conditions met, Repligen Partners will be terminated, liquidated and dissolved.
Any liquidating distribution to limited partners will be based on any remaining
cash of Repligen Partners after paying or providing for payment of Repligen
Partners' actual costs incurred and accrued through the effective time of the
termination, including reasonable reserves, in connection with: (i) the proxy
solicitation; and (ii) the winding up of Repligen Partners, including
preparation of the final audit, tax return and K-1s, and all other outstanding
partnership liabilities. As the remaining non-cash assets of Repligen Partners
will be abandoned by the Board of Directors of Repligen Development prior to
the termination, Repligen Development does not expect there to be any amounts
available for distribution to the limited partners. Repligen Development will
not receive any fees from Repligen Partners in connection with the termination
and liquidation.
For a detailed description of the proposed termination, including the
subsequent liquidation, see "Termination and Dissolution of the Partnership".
Repligen Development has determined the proposed termination to be in the
best interests of Repligen Partners and its limited partners, has approved and
declared advisable the termination and recommends that the limited partners
vote for approval of the termination. See "The Proposed
Termination--Recommendation of Repligen Development; Reasons for the Proposed
Termination".
Under the limited partnership agreement dated as of January 9, 1992 among
Repligen Development, the purchasers of Class A units and the purchaser of
Class B units, approval of the termination requires the affirmative vote of the
holders of at least 66 2/3% of the outstanding limited partnership interests
(based on adjusted capital contributions). Accordingly, the termination will
not be approved unless the holders of 66 2/3% of the outstanding limited
partnership interests vote in its favor. Thus, failure to submit a proxy or to
vote in person at the special meeting or abstention by you will have the same
effect as a vote against the termination.
In reviewing this proxy statement, you should carefully consider the
matters described under "Risk Factors" on page [ ].
No person has been authorized to give any information or to make any
representation not contained in this proxy statement, and, if given or made,
such information or representation should not be relied upon as having been
authorized. The delivery of this proxy statement shall not under any
circumstances create any implication that there has been no change in the
affairs of Repligen Partners since the date as of which information is
furnished or the date hereof.
The proposed termination has not been approved or disapproved by the
Securities and Exchange Commission or any state securities commission. Neither
the Securities and Exchange Commission nor any state securities commission has
passed upon the fairness or merits of the proposed transaction nor upon the
<PAGE>
accuracy or adequacy of the information contained in this proxy statement. Any
representation to the contrary is a criminal offense.
The date of this proxy statement is [ ], 2000
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-----------------------
TABLE OF CONTENTS
-----------------------
Page
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AVAILABLE INFORMATION.........................................................1
SUMMARY AND SPECIAL FACTORS...................................................2
The Parties..............................................................2
The Proposed Termination.................................................2
Termination and Dissolution of the Partnership...........................2
Recommendation of Repligen Development; Reasons for the Proposed
Termination............................................................2
Vote Required to Approve the Termination.................................2
Certain Federal Income Tax Considerations................................3
RISK FACTORS..................................................................4
Loss of opportunity to benefit from future events........................4
The possibility that there may be a buyer for the rPF4 technology........4
Conflicts of Interest....................................................4
GENERAL INFORMATION...........................................................5
Purpose of Special Meeting...............................................5
Record Date; Voting; Quorum..............................................5
Solicitation of Proxies..................................................6
No Appraisal Rights......................................................6
Submission of Matters to a Vote of Security Holders......................6
THE PROPOSED TERMINATION......................................................7
The Partnership..........................................................7
Background of the Proposed Termination..................................18
Recommendation of Repligen Development; Reasons for the Proposed
Termination...........................................................19
TERMINATION AND DISSOLUTION OF THE PARTNERSHIP...............................21
General.................................................................21
Certain Federal Income Tax Consequences.................................21
MARKET PRICES OF AND DISTRIBUTIONS ON THE
LIMITED PARTNERSHIP INTERESTS AND RELATED MATTERS.........................23
SELECTED HISTORICAL FINANCIAL INFORMATION....................................24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.......................................25
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...............27
EXPERTS......................................................................28
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..............................28
OTHER MATTERS................................................................28
Annex A -- Financial Statements of Repligen Partners........................A-1
<PAGE>
AVAILABLE INFORMATION
Repligen Partners is subject to the informational requirements of the
Securities and Exchange Act of 1934, as amended, and filed annual reports on
Form 10-K for the fiscal years ended December 31, 1996, 1995 and 1994, and
quarterly reports on Form 10-Q for the fiscal quarters ended (i) March 31,
1995, 1994, 1993 and 1992, (ii) June 30, 1995, 1994, 1993 and 1992 and (iii)
September 30, 1995, 1994, 1993 and 1992 and other information with the SEC. The
foregoing reports and other information filed by Repligen Partners with the SEC
can be inspected and copied at the public reference facilities maintained by
the SEC at Room 1024, 450 Fifth Street, N.W., Washington D.C. 20549 and should
be available at the SEC's Regional Offices in New York (7 World Trade Center,
13th Floor, New York, New York 10048), Los Angeles (Suite 500 East, Tishman
Building, 5757 Wilshire Boulevard, Los Angeles, California 90036) and Chicago
(500 West Madison Avenue, Suite 1400, Chicago, Illinois 60661). Copies of this
material can also be obtained from the Public Reference Section of the SEC at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In light
of the significant reduction in Repligen Partners' capital resources, see "The
Proposed Termination--The Partnership--Subsequent Developments" and "Selected
Financial Information--Management's Discussion and Analysis of Financial
Condition and Results of Operations", and the corresponding need to conserve
Repligen Partners' remaining cash and other liquid assets, on April 29, 1996
the board of directors resolved to partially suspend indefinitely compliance
with such informational requirements due to the costs of legal and accounting
services associated therewith. As a result, Repligen Partners has not filed any
quarterly reports on Form 10-Q or any reports on Form 8-K since 1995. The
financial information contained in this proxy statement, however, includes
substantially all for the information that would have been contained in the
quarterly report for the quarter ended September 30, 1999 had such quarterly
report been filed by Repligen Partners.
<PAGE>
SUMMARY AND SPECIAL FACTORS
The following is a summary of some of the information contained elsewhere
in this proxy statement. This summary is not intended to be complete and is
qualified in its entirety by the more detailed information contained in this
proxy statement. You are urged to read this proxy statement in its entirety and
to consider it with care.
This proxy statement contains forward-looking statements. Such statements
are subject to a number of risks and uncertainties. Actual results in the
future could differ materially from those described in the forward-looking
statements as a result of the factors in this proxy statement generally.
Repligen Partners further cautions you that the discussion of these factors may
not be exhaustive. Repligen Partners undertakes no obligation to publicly
release the result of any revisions to these forward-looking statements that
may be made to reflect any future events or circumstances.
The Parties
Repligen Clinical Partners, L.P., 117 Fourth Avenue, Needham, MA 02194.
Telephone: (800) 742-4744.
Repligen Corporation, 117 Fourth Avenue, Needham, MA 02194. Telephone:
(781) 495-9560.
The Proposed Termination
Pursuant to the terms of the limited partnership agreement, Repligen
Partners proposes to terminate, liquidate and dissolve Repligen Partners.
Termination and Dissolution of the Partnership
If the termination is approved and consummated, Repligen Partners will be
terminated pursuant to the terms of the limited partnership agreement, and will
be liquidated and dissolved. Promptly thereafter, each limited partner will
receive a liquidating distribution based upon any remaining cash of Repligen
Partners after paying or providing for payment of the transaction costs and
other outstanding partnership liabilities. Repligen Development does not expect
there to be any amounts available for distribution to the limited partners. See
"Termination and Dissolution of Repligen Partners". Repligen Development will
not receive any fees from Repligen Partners in connection with the termination.
Recommendation of Repligen Development; Reasons for the Proposed Termination
Repligen Development recommends that the limited partners vote for
approval of the termination. After considering Repligen Partners' financial
condition and prospects, the availability and effect of other alternatives and
the factors discussed below, the board of directors of Repligen Development has
unanimously:
o determined the proposed termination and resulting liquidation to be
in the best interests of Repligen Partners and its limited partners;
o approved and declared advisable the termination, subject to approval
by the limited partners, followed by the liquidation; and
o recommends that the limited partners vote for approval of the
termination.
Vote Required to Approve the Termination
Under the limited partnership agreement, approval of the termination
requires the affirmative vote of the holders of at least 66 2/3% of the
outstanding limited partnership interests (based on adjusted capital
contributions). Accordingly, the termination will not be approved unless the
limited holders of 66 2/3% of the outstanding
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<PAGE>
limited partnership interests vote in its favor. Thus, the failure to submit a
proxy card (or to vote in person at the special meeting) or the abstention from
voting by a limited partner will have the same effect as a vote against the
termination.
Certain Federal Income Tax Considerations
This summary outlines certain Federal income tax principles applicable to
limited partners in connection with the liquidation. This summary deals only
with the treatment of a limited partner who acquired his interest for cash
pursuant to the February 28, 1992 private offering. There are numerous other
Federal income tax principles not discussed herein that may be important to a
limited partner in connection with Repligen Partners. Each limited partner is
urged to consult his own tax advisor concerning his investment in Repligen
Partners and the possible tax consequences of the liquidation.
Each limited partner will recognize a net loss in connection with the
liquidation equal his adjusted basis in his limited partnership interest.
Repligen Partners intends to take the position that it incurs an ordinary
loss in connection with the liquidation, a distributive share of which is
allocated in turn to each limited partner. The Internal Revenue Service,
however, may seek to disallow any such ordinary loss and to characterize each
limited partner's loss as a capital loss, the deductibility of which would be
subject to limitations.
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RISK FACTORS
You should consider the following matters in considering whether to vote
in favor of the termination of Repligen Partners. These matters should be
considered in conjunction with the other information included in this proxy
statement.
Loss of opportunity to benefit from future events
It is possible that the future performance of recombinant platelet factor
- -4, or rPF4, will improve or that a buyer may be prepared to purchase Repligen
Partners or Repligen Partners' assets at some point in the future. It is also
possible that Repligen Corporation may be required to pay Repligen Partners
royalties on competitive products in the future or that the limited partners
might otherwise earn a higher return on their investment if Repligen Partners
remained in existence.
The possibility that there may be a buyer for the rPF4 technology
Although Repligen Development considers its efforts to market Repligen
Partners' assets to have been exhaustive, it is possible that additional
marketing efforts may have resulted in a purchaser for Repligen Partners'
assets being identified. The marketing activities undertaken by Repligen
Development are described below under "The Proposed Termination - Background of
the Proposed Termination".
Conflicts of Interest
The recommendation of Repligen Development could be deemed to involve
certain conflicts of interest between Repligen Development and the limited
partners, as Repligen Development is a wholly-owned subsidiary of Repligen
Corporation. Repligen Corporation may benefit from the termination of Repligen
Partners as its ownership or control of the technology it currently licenses to
Repligen Partners will be unencumbered after the termination. In addition, as a
result of the termination, Repligen Corporation will no longer be required to
pay royalties to Repligen Partners on any competitive products it may develop
in the future.
PaineWebber, an investment bank, marketed the private placement of limited
partnership interests in Repligen Partners and has been involved in the
marketing of similar financing vehicles. In addition to being a limited partner
in Repligen Partners, PaineWebber representatives currently constitute two out
of the three remaining directors on Repligen Development's board of directors.
Theodore Maione, the current President of Repligen Development, is a former
employee of Repligen Corporation and is receiving financial compensation from
PaineWebber to manage the assets, marketing effort and termination and
liquidation activities of Repligen Partners. PaineWebber and Repligen
Development will save approximately $30,000 per annum if Repligen Partners is
terminated.
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GENERAL INFORMATION
This proxy statement and enclosed proxy are being mailed to the limited
partners in connection with the solicitation of proxies by and on behalf of
Repligen Development for use at the special meeting to be held on [ ], 2000
at [time], local time, at [location], and any adjournment or postponement
thereof. This proxy statement is being mailed to the limited partners on or
about [ ], 2000.
Purpose of Special Meeting
The purpose of the special meeting will be to consider and vote upon the
proposal to approve the proposed termination of Repligen Partners and to
transact such other business as may properly come before the special meeting.
Pursuant to the limited partnership agreement dated as of January 9, 1992 among
Repligen Development, the purchasers of Class A units and the purchaser of
Class B units, approval and consummation of the termination would result in the
termination, liquidation and dissolution of Repligen Partners.
Record Date; Voting; Quorum
The board of directors of Repligen Development has fixed the close of
business on [date], 2000 as the record date for the special meeting. Only the
limited partners of record on the record date will be entitled to notice of,
and to vote at, the special meeting. A complete list of such limited partners
will be available at [location], for [number] days before the special meeting.
At the special meeting, each limited partner of record on the record date
is entitled to a weighted vote on the termination of Repligen Partners, based
on the amount of limited partnership interests (based on adjusted capital
contributions) held by such limited partner as of the record date. Pursuant to
the limited partnership agreement, the "adjusted capital contribution" with
respect to any limited partner means the aggregate capital contribution of such
limited partner, already made or to be made to Repligen Partners pursuant to
the limited partnership agreement, less any selling commissions, financial
advisory and marketing fees, warrant valuation fees and other fees paid by
Repligen Partners in any fiscal year in respect of such limited partner, or any
portion of any capital contribution which was distributed to the partners pro
rata by Repligen Partners. As of the record date, 712.5 units of limited
partnership interest were issued and outstanding and held by 884 holders of
record. Limited partnership interests represented by properly executed proxies
will, unless such proxies have been previously revoked, be voted in accordance
with the instructions indicated in such proxies. If no instructions are
indicated, these limited partnership interests will be voted for approval of
the termination of Repligen Partners and in the discretion of the proxy holder
as to other matters, if any, incidental to the conduct of the special meeting.
A limited partner who has given a proxy may revoke it at any time prior to its
exercise by giving written notice thereof to the Secretary of Repligen
Development, by signing and returning a later dated proxy or by voting in
person at the special meeting; however, mere attendance at the special meeting
will not itself have the effect of revoking the proxy.
The affirmative vote of the holders of at least 66 2/3% of limited
partnership interests outstanding (based on adjusted capital contributions) as
of the record date is required for approval of the termination of Repligen
Partners. Accordingly, the termination will not be approved unless the holders
of 66 2/3% of limited partnership interests outstanding as of the record date
vote in favor of the termination. Thus, failure to submit a proxy (or vote in
person at the special meeting) or the abstention from voting by a limited
partner and broker non- votes will have the same effect as a vote against the
termination. PaineWebber Development Corporation, the general partner of
PaineWebber R&D Partners III, L.P., has informed the board of directors of
Repligen Development that it intends to vote the Class B limited partnership
interest held by it as well as the 133 Class A limited partnership interests
held by R&D Partners (approximately 16.40% of the limited partnership interests
outstanding) for approval of the termination of Repligen Partners.
There are no quorum requirements with respect to the special meeting,
however, if the limited partners holding 66 2/3% of the limited partnership
interests outstanding do not submit a proxy or vote in person at the special
meeting, the termination of Repligen Partners cannot be approved.
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Solicitation of Proxies
Proxies are being solicited by and on behalf of Repligen Partners. All
expenses in connection with the solicitation of the proxies of the limited
partners, including the cost of preparing and mailing this proxy statement will
be borne by Repligen Partners. In addition to solicitation by use of the mails,
proxies may be solicited by directors, officers and employees of Repligen
Partners in person or by telephone, telegram or other means of communication.
Such directors, officers and employees will not be additionally compensated,
but may be reimbursed for reasonable out-of-pocket expenses in connection with
such solicitation. Repligen Partners has retained PaineWebber and Investor
Communications Services, an affiliate of PaineWebber, to aid in the
solicitation of proxies. It is estimated that there will be no fee for
PaineWebber and that the fee for Investor Communications Services will not
exceed $15,000, plus its out-of-pocket costs and expenses. Arrangements will be
made with custodians, nominees and fiduciaries for forwarding of proxy
solicitation materials to limited partners, and Repligen Partners may reimburse
such custodians, nominees and fiduciaries for reasonable expenses incurred in
connection therewith.
No Appraisal Rights
There are no appraisal or dissenters' rights applicable in connection with
the proposed termination of Repligen Partners. Accordingly, any limited
partners who do not vote in favor of the termination will not be entitled to
exercise any appraisal or dissenters' rights in connection with the
termination.
Submission of Matters to a Vote of Security Holders
Except for the matters to which this proxy statement relates, no matters
were submitted to a vote of security holders of Repligen Partners through
solicitation of proxies or otherwise, from the date of organization of Repligen
Partners in January 1992 through the date of this proxy statement.
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THE PROPOSED TERMINATION
The Partnership
Organization of the Partnership
Repligen Partners was formed in January 1992 under the laws of the State
of Delaware. The limited partnership agreement was entered into by and among
Repligen Development, the purchasers of Class A units and the purchasers of
Class B units. On February 28, 1992, Repligen Partners completed a private
offering of (i) 900 Class A units, each unit consisting of one Class A limited
partnership interest in Repligen Partners and a warrant to purchase 2,900
shares of Repligen Corporation's $0.01 par value per share common stock and
(ii) one Class B unit consisting of one Class B limited partnership interest in
Repligen Partners and a warrant to purchase 5,800 shares of Repligen
Corporation's common stock. In addition, Repligen issued a warrant to purchase
13,300 shares of Repligen Corporation's common stock to PaineWebber R&D
Partners III, L.P. and a warrant to purchase 75,050 shares of Repligen
Corporation's common stock to PaineWebber Incorporated. The private placement
resulted in net proceeds of approximately $40,312,500 in cash and non-interest
bearing notes receivable from the limited partners, which were payable in
annual installments through March 15, 1995.
The principal executive offices of Repligen Partners are located at the
offices of Repligen Corporation, 117 Fourth Avenue, Needham, Massachusetts
02194, telephone number (617) 449-9560.
Current Status of the Partnership
Based on the March 1996 decision of the board of directors of Repligen
Development to terminate the research and marketing programs, Repligen
Development assumed responsibility from Repligen Corporation to market the
assets of Repligen Partners without obligation to provide for any royalties or
compensation to Repligen Corporation. Despite the substantial clinical and
development progress of the recombinant platelet factor -4, or rPF4, program,
and the flexibility that Repligen Development has offered in the marketing
effort, it has not been possible to secure a new party to continue the
development of the rPF4-technology. While several third parties have reviewed
the technology, none have made a formal offer for its acquisition.
Upon the termination of the research and marketing programs, Repligen
Development introduced the rPF4- technology for possible acquisition to
numerous pharmaceutical and biotechnology companies and continued the
presentation of the technology to interested parties who had already initiated
preliminary review. The initial contact and presentation phase occurred
primarily during 1996 and 1997. During 1998 and 1999, Repligen Development
continued to market the rPF4-technology to a limited number of parties who
pursued an advanced stage of confidential review. No prospective purchaser,
however, formally offered to acquire the technology.
Recently, Repligen Development was engaged in discussions with a party
interested in acquiring the technology as the foundation for a new company.
After approximately one year of information exchange and discussion, the
prospective purchaser declined to pursue formal contract discussions and in
June 1999 discontinued their efforts to establish a new company to develop the
technology. Subsequent to this event, Repligen Development notified the
companies that had engaged in recent confidential review of the assets, that
the rPF4-technology was available for acquisition on flexible terms. None of
the companies contacted during 1999 have presented an offer to acquire the
technology package. Based on these extensive efforts to market the
rPF4-technology, Repligen Development has concluded that it will not be
possible to sell the assets of Repligen Partners to a third party.
Original Purpose of the Partnership
The principal objectives of Repligen Partners were to develop and derive
income from the sale or license of rPF4 for human therapeutic use in the United
States, Canada and Europe. Platelet factor-4, or PF4, is a naturally occurring
protein which Repligen has produced using recombinant DNA technology. From
early 1992 to February 1996, Repligen Partners and Repligen Corporation jointly
funded multiple clinical trials conducted by Repligen
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Corporation 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 Corporation
independently funded clinical trials relating to Kaposi's Sarcoma until the
termination of the rPF4 research and development program by the board of
directors on March 8, 1996.
Subsequent Developments
Termination of the rPF4 Development Program. The research program was
terminated by the board of directors of Repligen Development on March 8, 1996.
See "--Termination of Research and Marketing Programs". The following table
summarizes the status of the research program as of [_____________, 1999].
<TABLE>
Indication/Application Phase Status
- ------------------------------------------------------------- ----------------------- -----------------------
<S> <C> <C>
General:
Normal Volunteer Phase I Complete
Cardiac Surgical:
Heparin Neutralization - Cardiac Catheterization Phase II Complete
Heparin Neutralization - Cardiac Bypass Surgery Phase I 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. Repligen Development 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, or 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. Repligen Development believes that rPF4 may reverse the
anticoagulant effects of heparin both more quickly than protamine and without
its potential adverse side effects. Repligen Corporation has a United States
patent on the use of rPF4 or purified PF4 to neutralize heparin under which,
pursuant to the product development agreement dated February 28, 1992 between
Repligen
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Corporation and Repligen Partners, it has granted to Repligen Partners an
irrevocable, exclusive, royalty-free license to certain patent rights and other
technology. See "--Certain Contracts--Development Agreement".
At the time of the offering of the units, preclinical trials conducted in
rats indicated that rPF4 reversed heparin without causing the systemic
hypotension often associated with protamine. Repligen Corporation and Repligen
Partners 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 Corporation was able to conduct 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 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 Corporation 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 and published in the journal Circulation in
November 1996. 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. Patient enrollment for this trial was completed in the
first half of 1996. As of March 31, 1998, the preliminary results of this study
confirmed the safety and efficacy of rPF4 in this patient population.
Cancer Applications. At the time of the offering of the units, Repligen
Development believed that rPF4's ability to inhibit the process of new blood
vessel growth, or angiogenesis, represented 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, or 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 surgeries, 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, Repligen Development believed that rPF4 offered an 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
Corporation 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. Repligen Development believes that rPF4 may be useful
in retarding the progression of Kaposi's sarcoma, or 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
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biologic activity, and no significant adverse reactions to rPF4, were reported.
A Phase I/II clinical study of systemic 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 "--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 "--Termination of Research and
Marketing Programs".
1994 Evaluation; Restructuring of Repligen Warrants. In the spring of
1994, in conjunction with Repligen Development's 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 non-interest bearing
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 of
Repligen Development.
Based on these reviews as well as on the research and clinical trials
conducted up to that time, Repligen and Repligen Partners 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 Repligen Partners concluded that
Repligen Corporation and Repligen Partners lacked the financial resources
necessary to accomplish those objectives. Repligen Corporation and Repligen
Partners 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 "--Repligen Efforts to Locate a Strategic Partner: 1994-1996".
Repligen Corporation management felt, however, that the then-existing
royalty commitments to Repligen Partners were such that a third party might be
unable to 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.
In March 1994, Repligen offered the holders of Warrants, other than the
warrants issued to PaineWebber Incorporated, the opportunity to exchange their
warrants for newly issued warrants. Each holder of an these warrants was free
to accept or reject the exchange offer. Warrantholders holding warrants to
purchase 2,069,150 shares of Repligen Corporation's common stock accepted the
exchange offer. Warrantholders holding warrants to purchase 258,100 shares of
Repligen's common stock were ineligible to participate in this exchange offer
due to their failure to make payments on their non-interest bearing notes. See
"--Limited Partner Defaults". Warrantholders holding warrants to purchase
288,550 shares of Repligen Corporation's common stock who were eligible to
participate in the exchange offer rejected the exchange offer and thus continue
to hold the warrants.
The exercise price under the warrants offered for exchange is $9.00
(reduced from $22.73) per share but will increase to $14.00 per share 90 days
after Repligen Corporation notifies the warrantholders that the closing price
of
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Repligen Corporation's 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
warrants offered for exchange expires on March 31, 2000. Those holders of
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 product 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
Corporation's purchase option. See "--Termination of Research and Marketing
Programs".
1995 Evaluation; Warrant Modification. In March 1995, in conjunction with
Repligen Development's 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 non-interest bearing 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
Corporation 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 evaluation endorsed continued development
efforts and the pharmacoeconomic study supported the commercial potential of
the rPF4-related technology.
While Repligen Corporation was conducting active discussions with several
potential strategic partners, by early 1995, Repligen Corporation 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 Corporation 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 Repligen Partners under the terms of
the 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 Corporation offered to modify the warrants that
remained outstanding and the warrants offered for exchange. Each holder of an
outstanding warrant or warrant offered for exchange who made the fourth
installment payment pursuant to the non-interest bearing notes was free to
accept or reject the proposed modifications. The modifications provided that
the terms of the warrants would be altered so as to be identical to those of
the warrants offered for exchange when issued in the exchange offer in 1994 (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 Corporation notifies holders thereof that the
closing price of Repligen Corporation's common stock is equal to or exceeds
$18.00 per share for 20 out of 30 consecutive trading days). The exercise price
of the warrants offered for exchange for the first 1,000 shares of Repligen
Corporation's 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 Corporation's
common stock exercisable pursuant to the modified warrant offered for exchange
was reduced from $9.00 per share to $3.50 per share. The exercise price of the
modified warrants offered for exchange would, however, increase to $8.00 per
share 90 days after Repligen Corporation's notifies holders thereof that the
closing price of its 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 warrants offered for exchange by one year, to March 31,
2001. The proposed modifications did not include further reductions in any
royalty rates payable by Repligen Corporation. The difference in treatment
between warrants and warrants offered for exchange was due to the fact that
holders of 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 warrants offered for exchange.
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 R&D Partners, as holder of its
warrant, had accepted the modifications. Accordingly, as of December 31, 1995,
there were issued and outstanding warrants, other than the warrant issued to
PaineWebber Incorporated to purchase 75,400 shares of Repligen Corporation's
common stock, modified warrants to purchase 163,850 shares of Repligen
Corporation's common stock, warrants offered for exchange to purchase 189,950
shares of Repligen
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Corporation's common stock and modified warrants offered for exchange to
purchase 1,654,700 shares of Repligen's common stock. Following the close of
Repligen Partners' 1995 fiscal year, Repligen Partners foreclosed on an
additional defaulted 1/2 Class A unit, so that as of September 30, 1998,
holders of 620 of the 711 1/2 non- defaulted Class A units had accepted the
modifications, and there were issued and outstanding warrants to purchase
75,400 shares of Repligen Corporation's common stock, modified warrants to
purchase 163,850 shares of Repligen Corporation's common stock, warrants
offered for exchange to purchase 189,950 shares of Repligen Corporation's
common stock and modified warrants offered for exchange to purchase 1,653,250
shares of Repligen Corporation's 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 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 warrants of
each such defaulted Class A limited partner were foreclosed upon by Repligen
Partners pursuant to the limited partnership agreement and each such Class A
limited partner was not eligible to participate in the 1994 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 notes and the limited partnership interests and
any warrants and warrants offered for exchange held by each such defaulted
Class A limited partner were foreclosed upon by Repligen Partners pursuant to
the limited partnership agreement, which resulted in a writeoff of
approximately $1,630,000 of notes receivable by Repligen Partners 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
Repligen Partners of the defaulted 1/2 limited partnership unit relating to
such outstanding defaulted non-interest bearing notes receivable, as of
September 30, 1998 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 Corporation attempted to identify one or more strategic partners
to fund the further development of the rPF4-related technology. Discussions
were held by Repligen Corporation 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 several
territories.
During 1994, Repligen Corporation 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 Corporation's ownership of the
commercial rights to the rPF4-related technology was complicated by Repligen
Partners' 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
Corporation 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.
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In the spring of 1995, Repligen Corporation entered into merger
negotiations with Medco Research Inc., 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 Corporation's 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 Corporation and Medco announced that they had ended merger
negotiations after failure to agree on the valuation of Repligen Corporation's
common stock to be used as the basis for the proposed merger.
On June 1, 1995, Repligen Corporation and Eli Lilly and Company 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 Corporation 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 Corporation 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 Corporation and Apotex USA announced that
they had reached a tentative agreement for the sale of Repligen Corporation's
Allegro Biologics division, consisting of its 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 Corporation's
Protein A and diagnostic reagents business. In addition, Allegro and Repligen
Corporation were to enter into an agreement to develop and produce
pharmaceuticals for Repligen Corporation's clinical development programs. On
January 19, 1996, Repligen Corporation announced that the acquisition
negotiations had ended, citing strategic reasons internal to Apotex.
On February 12, 1996, Repligen Corporation and Genzyme Corporation
announced tentative agreement on the sale of the assets of Allegro as well as
Repligen Corporation's Protein A business and certain related assets to
Genzyme. However, on April 9, 1996, Repligen Corporation 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 Corporation entered into acquisition negotiations
with Glycan Pharmaceuticals, Inc., 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
Corporation publicly announced that it had acquired Glycan. Under the terms of
the asset purchase agreement, Repligen Corporation'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 Corporation such that it would be in a position to fund continued
development and subsequent commercialization of the rPF4-related technology.
Termination of Research and Marketing Programs
At a regular quarterly meeting of the board of directors of Repligen
Development held on March 8, 1996, the board of directors reviewed the
then-current status of the research and development program being conducted by
Repligen Corporation pursuant to the product development agreement, the
prospects for the successful
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commercialization of the background technology and the financial resources
necessary to support such commercialization, as well as the financial resources
available to Repligen Corporation and Repligen Partners. The board of directors
of Repligen Development and the Repligen Corporation 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 product development
agreement. The board of directors noted that the remaining cash resources of
Repligen Partners at that time totaled approximately $385,000.
The Repligen Corporation representatives stated that, given the limited
resources available to it, Repligen Corporation would no longer be in a
position to contribute the funds necessary to continue the research program.
The Repligen Corporation representatives also advised the board of directors of
Repligen Development that, despite its continuing efforts to seek funding from
potential third-party collaborators, it could not obtain such funding in the
immediate future.
Pursuant to the terms of the product development agreement, the board of
directors of Repligen Development unanimously determined, based on the above
factors, that the continuation of the research program and the commencement of
the marketing program with Repligen Corporation would be economically
impracticable and therefore terminated both in their entirety.
Under the terms of the product development agreement, upon the termination
of the research and marketing programs by the board of directors of Repligen
Development, Repligen Corporation 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 and to receive management fees and the reimbursement of certain expenses
relating to the research program and the rPF4-related technology. Repligen
Corporation 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 research and
marketing programs caused Repligen Corporation'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, 1998. The board of directors of Repligen Development noted that
while the remaining cash available to Repligen Partners 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 Repligen Partners 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 of Repligen Development
resigned, and Repligen Corporation and Repligen Partners entered into
discussions regarding certain proposed modifications to each party's rights and
responsibilities with respect to the termination of the research and marketing
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 research and marketing programs on March 8, 1996, officers of Repligen
Partners 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.
Certain Contracts
Product Development Agreement. In connection with the organization of
Repligen Partners, Repligen Partners and Repligen Corporation entered into the
product development agreement pursuant to the terms of which Repligen
Corporation granted to Repligen Partners an exclusive, royalty-free license to
certain patent rights and other technology owned or controlled by Repligen
Corporation relating to the manufacture, use and sale of rPF4-related products
covered by such agreement. The license granted to Repligen Partners is limited
to the rPF4-related
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technology, necessary or materially useful for the development and
commercialization of products for human therapeutic use in the United States,
Canada and Europe.
Until the termination of the research and marketing programs by the board
of directors of Repligen Development on March 8, 1996, the product development
agreement required Repligen Corporation, 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 for the
sale of products that may be developed utilizing the licensed technology. In
addition, Repligen Corporation agreed to use its best efforts to manufacture
and market the products in the United States, Canada and Europe directly or
through third parties in those places. Repligen Partners was required to
reimburse Repligen Corporation for its research and development expenses on
behalf of Repligen Partners, plus a management fee of ten percent (10%) of such
expenses. If at any time Repligen Partners' funds (or any additional funds
provided by Repligen Corporation) shall have been expended and no FDA marketing
approval shall have been received for the sale by or on behalf of Repligen
Partners of any product in the United States, Canada and Europe, Repligen
Development was to determine the amount of additional funds required by
Repligen Partners in the upcoming year, and Repligen Corporation would have the
right to contribute such funds to Repligen Partners. Any such contribution
would not result in dilution of the limited partners' interest in Repligen
Partners. Payments by Repligen Partners 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, Repligen Partners was only required to
pay such excess as was approved by the board of directors and (ii) if such
amount exceeded Repligen Partners' available funds, Repligen Partners was not
obligated to pay such excess until receipt of additional funds.
The product development agreement also requires Repligen Corporation to
pay to Repligen Partners royalties equal to 6% of revenues on sales of any
competitive products in the United States, Canada and Europe. These payments
continue to be payable until March 8, 2001, the fifth anniversary of the
termination of the purchase option granted under the purchase agreement
discussed below. There are currently no such competitive products, although we
cannot assure you that there will not be any such competitive products in the
future.
Prior to the end of each quarter of each year, until the termination of
the research and marketing programs by the board of directors on March 8, 1996,
Repligen Development 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 Repligen
Partners. 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 Repligen Partners which were determined by
Repligen Development 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 United States, Canada and Europe, the board of directors could
terminate the research and marketing 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 "--1994 Evaluation; Restructuring of Repligen Warrants" and
"--1995 Evaluation; Warrant Modifications". However, on March 8, 1996, Repligen
Corporation advised Repligen Partners 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 "--Termination of Research and
Marketing Programs". The termination of the programs provides Repligen Partners
with the right to freely transfer the license to one or more third parties.
Purchase Agreement. Also in connection with the organization of Repligen
Partners, Repligen Corporation and Repligen Partners entered into a purchase
agreement, amended and restated as of February 28, 1992, pursuant to which
Repligen Corporation agreed to use its best efforts to manufacture products and
to sell the products for use in the territories or, if Repligen Corporation
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, Repligen Partners
would receive a payment equal to 20 percent of the aggregate capital
contributions of all limited partners, payable at Repligen Corporation's option
in cash or in Repligen Corporation's common stock. Under the terms of the
purchase agreement, and in exchange for the issuance
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of the warrants, each limited partner granted to Repligen Corporation an
irrevocable option to purchase its interest in Repligen Partners. This 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 Repligen Partners received interim license payments equal to fifteen
percent (15%) of the limited partners' capital contributions and the last day
of the twenty-fourth month period after the date of Repligen Partners' first
commercial sale of any product within the specified territories 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 Corporation, (ii)
the cessation of operations by Repligen Corporation, (iii) the seizure or
attachment of all or a substantial part of Repligen Corporation's assets or
(iv) the termination of the research and marketing programs. In addition, the
purchase option was to terminate upon the earlier of (i) Repligen's notice to
Repligen Partners 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, Repligen Partners is free to license or sell the
rPF4- related technology. On March 8, 1996, the board of directors of Repligen
Development terminated the research and marketing programs, which in turn
terminated the purchase option. See "--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 Repligen Partners.
Patents, Licenses and Proprietary Rights
Repligen Development believes that the proprietary protection of rPF4 has
improved since the time of the offering of the units. 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 Repligen
Partners' ability to market rPF4. In July 1993, Repligen Corporation 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 Corporation 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 issued Repligen
Corporation a patent covering the use of purified PF4 and rPF4 to neutralize
heparin. In February 1994, the Office issued Repligen Corporation a patent for
the systemic administration of rPF4 to inhibit tumor growth in patients with
metastatic cancer. Patent applications have been filed by Repligen Corporation
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
Corporation may possess with respect to such patents and patent applications
within the territory specified in the limited partnership agreement, insofar as
they relate to the technology inure to the benefit of Repligen Partners as
holder of the license, as well as to any third-party transferee of the license.
Competition
Repligen Development 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 Repligen Partners' 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, other than experimental agents, no substitute compounds are
available for post-surgical reversal of heparin. Repligen Development is aware
of three companies with products in development as of May 1999 for heparin
reversal applications. Ibex Technologies, Inc. is developing heparinase, an
enzyme that breaks down heparin, which has completed Phase II clinical trials.
The company reported the initiation of pivotal Phase III studies, which were
suspended during the Summer of 1999 pending the acquisition of additional
funding to continue product development. Commonwealth Biotechnologies, Inc. is
developing a heparin binding
16
<PAGE>
polypeptide, and Gem Pharmaceuticals is developing recombinant lactoferrin as a
heparin reversal agent. To the best of Repligen Development's knowledge,
heparin reversal clinical trials have not yet begun with these latter two
agents. A heparin binding cartridge previously considered for cardiac bypass
applications by Research Industries Corporation is not believed to have
advanced in development to human clinical studies.
Currently, except for experimental agents, no specific antiangiogenic
agents have been approved for human therapy. It is clear, however, that many
companies are currently seeking to develop other compounds to inhibit
angiogenesis. Of companies developing protein-based angiogenesis inhibitors,
Entremed Corporation has received substantial recent attention concerning the
development of two agents: endostatin and angiostatin, that were discovered
after the formation of the limited partnership. No direct comparative tests
have been conducted between these newer agents and rPF4, and the relative value
of the agents can not be clearly established. The perception that the newer
compounds may have greater therapeutic effect than rPF4, however, has probably
negatively affected the ability to secure a new partner or purchaser for the
assets of Repligen Partners. Antibody-based therapeutic agents and small
molecule angiogenesis inhibitors are also under development at numerous
biotechnology and pharmaceutical companies, and new approaches for inhibiting
angiogenesis have been emerging with increasing frequency as basic research in
this field has expanded over the last five years. The general increase in
competition, the emergence of new angiostatic mechanisms, and the perception
that certain agents may possess special advantages have significantly
confounded the efforts to acquire a corporate partner or secure independent
funding to continue the rPF4 development program. It is also likely that there
are companies developing angiogenesis inhibitors and heparin neutralizing
agents of which Repligen development is unaware.
Given the current, significant financial constraints faced by Repligen
Partners, see "--Termination of Research and Marketing Programs" and "Selected
Financial Information--Management's Discussion and Analysis of Financial
Condition and Results of Operations", most if not all of the competitors of
Repligen Partners have significantly greater financial resources, more
extensive research and development capabilities and greater marketing and human
resources than either Repligen or Repligen Partners. Some companies have a
competitive advantage over Repligen Partners 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,
such as a new drug or biologic, may be marketed in the United States includes
(i) preclinical laboratory and animal tests, (ii) submission to the FDA of an
Investigational New Drug, or 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 marketing application such
as a New Drug Application, or NDA, or a Biologics License Application, or BLA,
and (v) FDA approval of the NDA or BLA prior to any commercial sale or shipment
of the prospective new product. In addition to obtaining FDA approval for each
product, each of its domestic and foreign manufacturing establishments must
comply with the FDA's current good manufacturing practices as appropriate for
production. Domestic and foreign manufacturing establishments are subject to
inspections by the FDA and by regulatory authorities in other countries.
Clinical trials are typically conducted in three sequential phases, which
may overlap. In Phase I, the initial introduction of the agent to humans, the
new drug or biologic is tested for safety, dosage tolerance and metabolism.
Phase II involves studies in a limited patient population to (i) assess the
preliminary effectiveness of the agent for
17
<PAGE>
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 establish statistical
evidence of 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 Repligen Partners' 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
Repligen Partners and Repligen Development do not have any full-time
employees.
Description of Property
Repligen Partners does not own or lease any real property. Repligen
Partners' business had been conducted by Repligen Corporation in its
administrative, laboratory and production space at One Kendall Square in
Cambridge, Massachusetts pursuant to the product development agreement.
Effective June 1, 1996, Repligen Corporation relocated its administrative,
laboratory and production activities to 117 Fourth Avenue, Needham,
Massachusetts.
Under the product development agreement, Repligen Corporation 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 Repligen Partners, 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.
Legal Proceedings
Repligen Partners is not aware of any material pending legal proceedings
to which Repligen Partners is a party or of which any of its property is the
subject.
Background of the Proposed Termination
Repligen Partners was formed to develop rPF4 for acute use as a heparin
reversal agent in cardiac surgical applications and for repeat administration
as a cancer therapy due to its ability to inhibit angiogenesis. Repligen
Partners' funds were expected to be adequate to complete Phase I and II studies
for heparin reversal and exploratory Phase I/II studies for cancer
applications, with additional funding for Phase III development expected to be
obtained from other private, public or corporate sources.
Repligen Partners successfully completed studies that demonstrated the
efficacy of rPF4 for neutralization of heparin in two patient populations:
cardiac catheterization and cardiac bypass surgery. Preliminary effective doses
were established for each application and initiation of Phase III studies to
definitively establish the appropriate dose and build a comprehensive safety
profile were considered warranted. During the course of the development
activities increasing attention to healthcare reform and cost control increased
the need to build a comprehensive pharmacoeconomic rationale supporting the
development of rPF4 which consumed a larger than anticipated portion of
partnership resources and time. Furthermore, the development of a high
productivity and cost-effective method to manufacture the protein consistent
with a pharmacoeconomic rationale required greater than expected effort and
affected time lines and development strategies for the development of the
agent. Although Repligen Partners
18
<PAGE>
believed that a strong rationale based on pharmacoeconomic principals was built
with early studies, it was recognized that definitive demonstration of
cost/benefit relationship would require comprehensive evaluation in later Phase
III or IV studies which reduced the ability of Repligen Partners to market the
rPF4-technology.
Multiple Phase I/II studies of rPF4 in late-stage cancer patients were
conducted that demonstrated that the agent was generally well tolerated when
administered by a variety of routes at the doses tested. Due to productivity
limitations of early manufacturing processes and higher prioritization of
development of the heparin reversal application, dose levels in cancer studies
were often limited by the amount of available material. Although dose limiting
toxicities were not encountered during the cancer studies which were completed,
definitive demonstration of therapeutic activity could not be established,
requiring the pursuit of additional exploratory studies at higher doses,
alternative schedules, and/or in other patient populations. Although Repligen
Partners believes that the results of the early cancer studies are consistent
with expectations for an agent with angiostatic properties such as rPF4, the
lack of clear therapeutic efficacy and lack of understanding of its mechanism
of activity further reduced the ability of Repligen Partners to market the
rPF4-technology.
During the development of rPF4, Repligen Corporation, on behalf of
Repligen Partners, explored numerous opportunities to partner the
rPF4-technology with pharmaceutical and biotechnology companies with an
interest in either, or preferably both, of the applications of the agent.
Several of the discussions progressed to advanced stages of due diligence but
did not result in formal offers to develop the technology. In addition to the
issues cited above the lack of success of the partnering efforts was often
attributed to the uncertainties concerning the cost of further development and
the level of royalties and milestone payments that would be due to limited
partners. In parallel to these partnering efforts Repligen Corporation was
experiencing financial difficulties, failed to complete a merger, and executed
several rounds of restructuring (See: "Repligen Efforts to Locate a Strategic
Partner: 1994-1996"). Throughout this time public financial markets were not
considered to be a viable option to fund the continued rPF4 development
efforts. Ultimately, the board of directors of Repligen Development terminated
the research and marketing programs (See: "Recent Developments - Termination of
Research and Marketing Programs").
From 1996 until the present, Repligen Development has acted independently
of Repligen Corporation to market the rPF4 technology. During 1996 and 1997
Repligen Development introduced the rPF4-technology for possible acquisition to
numerous pharmaceutical and biotechnology companies and continued the
presentation of the partnership technology to interested parties who had
already initiated preliminary review. Furthermore, during 1998 and 1999
Repligen Development continued to market the rPF4-technology to a limited
number of parties who pursued an advanced stage of confidential review and
suggested that a restructuring of Repligen Partners could be considered. During
that effort no prospective purchaser formally offered to acquire the technology
due to reasons similar to those described above. Based on the lack of current
active interest in acquiring the technology and the previous experiences in the
marketing effort, Repligen Development does not believe that the expense of
further marketing of the technology is warranted.
The limited partnership agreement provides that Repligen Partners shall
continue in effect until December 31, 2020, unless sooner terminated pursuant
to the terms of such agreement.
Recommendation of Repligen Development; Reasons for the Proposed Termination
At a meeting of the board of directors of Repligen Development held on
[ ], 2000, the board of directors unanimously adopted resolutions (i)
expressing the board's belief that the termination is in the best interests of
Repligen Partners and its limited partners, (ii) approving and declaring
advisable the proposed termination, subject to approval by the limited partners
and (iii) recommending that the limited partners vote for approval of the
termination. Repligen Development has made this determination based on its
assessment of (i) Repligen Partners' financial condition and prospects and (ii)
the availability, feasibility and effect on the limited partners of
alternatives to the termination. In assessing Repligen Partners' financial
condition, prospects and remaining assets, Repligen Development considered the
following factors:
1. The absence of a buyer for the rPF4 technology.
19
<PAGE>
2. The failure of the rPF4 technology to achieve marketing approval.
3. The possible tax benefit to limited partners of abandoning the non-cash
assets of Repligen Partners.
4. If Repligen Partners is not terminated, limited partners may share in
royalties paid to by Repligen on sales of competing products, if any, through
March 8, 2001.
5. If Repligen Partners is not terminated, there is a possibility that a
buyer for its assets will be identified.
Thus, the general partner recommends that the limited partners vote for
approval of the termination.
20
<PAGE>
TERMINATION AND DISSOLUTION OF THE PARTNERSHIP
General
Approval and consummation of the termination by holders of at least 66 2/3%
of the limited partnership interests outstanding as of the record date will
also liquidate Repligen Partners under the terms of the limited partnership
agreement. Upon termination of Repligen Partners, the affairs of Repligen
Partners will be wound up and all of its debts and liabilities will be
discharged in the order of priority as provided by law.
The winding up of the affairs of Repligen Partners will be conducted
exclusively by Repligen Development (or if at such time there shall be no
Repligen Development, then by such person as may be appointed by the vote of
66 2/3% in interest (based on adjusted capital contributions) of the limited
partners). Repligen Development (or such appointee), in carrying out such
winding up and distribution, will have full power and authority to sell all or
any of Repligen Partners' assets or to distribute the same in kind to the
limited partners. Any assets distributed in kind will be subject to all
operating agreements or other agreements relating thereto which survive the
termination of Repligen Partners.
The remaining non-cash assets of Repligen Partners consist of a license to
certain patent rights and other technology owned or controlled by Repligen
Corporation, a portfolio of trade secrets and proprietary information relating
to rPF4, and approximately 20 grams of residual vialed rPF4 and production cell
banks. As these remaining non-cash assets will be abandoned by the Board of
Directors of Repligen Development prior to the termination, Repligen
Development estimates that no amounts will be available for distribution to
limited partners on termination and liquidation. In addition, Repligen
Partners' exclusive, royalty-free license to certain rPF4 technology owned or
controlled by Repligen Corporation will no longer be enforceable after the
termination, and Repligen Corporation's ownership or control of such technology
will be unencumbered.
Upon the consummation of the liquidation, Repligen Partners will file a
certificate of cancellation with the Secretary of State of the State of
Delaware in accordance with Section 17-203 of the Delaware Revised Uniform
Limited Partnership Act. After the filing of the certificate of cancellation,
Repligen Partners will no longer be authorized to undertake partnership actions
other than those necessary for winding-up its affairs.
Various laws for the protection of creditors may apply to the liquidation.
In this regard, it should be noted that if a court were to find that Repligen
Partners failed to provide sufficient funds for the liabilities of Repligen
Partners, or that the liquidating distribution to the partners, if any,
rendered Repligen Partners insolvent, the liquidating distributions to the
partners may be deemed to be "fraudulent conveyances" or impermissible
dividends or distributions under applicable law, and therefore may be subject
to claims of certain creditors of Repligen Partners, if such creditors have not
been paid. In the event that such a claim is asserted after the liquidation,
there is a risk that persons who were Partners on the distribution record date
will be ordered by a court to turn over to Repligen Partners' creditors all or
a portion of the liquidating distributions they received from Repligen
Partners.
Certain Federal Income Tax Consequences
This summary outlines certain Federal income tax principles applicable to
limited partners in connection with the liquidation. This summary deals only
with the treatment of a limited partner who acquired his interest for cash
pursuant to the February 28, 1992 private offering. There are numerous other
Federal income tax principles not discussed herein that may be important to a
limited partner in connection with Repligen Partners. Each limited partner is
urged to consult his own tax advisor concerning his investment in Repligen
Partners and the possible tax consequences of the liquidation.
Each limited partner will recognize a net loss in connection with the
liquidation equal his adjusted basis in his limited partnership interest.
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<PAGE>
Repligen Partners intends to take the position that it incurs an ordinary
loss in connection with the liquidation, a distributive share of which is
allocated in turn to each limited partner. The Internal Revenue Service,
however, may seek to disallow any such ordinary loss and to characterize each
limited partner's loss as a capital loss, the deductibility of which would be
subject to limitations.
22
<PAGE>
MARKET PRICES OF AND DISTRIBUTIONS ON THE
LIMITED PARTNERSHIP INTERESTS AND RELATED MATTERS
No public or other market exists or will develop for the units or the
limited partnership interests. Neither the units nor the limited partnership
interests are transferable without the consent of Repligen Development and
satisfaction of certain other conditions contained in Article 8 of the limited
partnership agreement.
The following information relates to the ownership of units and interests
as of ____________, 1999.
Title of Class Number of Record Holders
- --------------------------------------------- ----------------------------------
Repligen Development Interest 1
Class A Units/Limited Partnership Interests 711.5
Class B Units/Limited Partnership Interests 1
There have been no distributions to the partners to date. Distributions in
the future, if any, will be made by Repligen Partners 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 Repligen Development to be necessary for the proper
operation of Repligen Partners' 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 Repligen Partners decreased by the
amount of any cash distribution and the fair market value of other property
from Repligen Partners to such partner, and increased or decreased by such
partner's allocation of the net gain or loss of Repligen Partners 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 Repligen Development.
Following the termination on March 8, 1996 of Repligen's option to
purchase the limited partnership interests pursuant to the purchase agreement,
neither Repligen Development's interest nor, to the best of Repligen
Development's knowledge, any limited partner's unit/limited partnership
interest: (i) is subject to any outstanding options or warrants to purchase, or
securities convertible into, any equity interest of Repligen Partners; (ii)
could currently be sold pursuant to Rule 144 under the Securities Act of 1933,
as amended, or is subject to agreement by Repligen Partners 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 Repligen
Partners.
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<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION
The selected consolidated financial information presented below has been
derived from Repligen Partners' audited financial statements for each year in
the five year period ended December 31, 1998 and unaudited financial statements
for the nine month periods ended September 30, 1999 and September 30, 1998. The
information presented below should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations set
forth below and the Consolidated Financial Statements and related notes set
forth in Financial Statements of Repligen Partners attached hereto as Annex F.
REPLIGEN CLINICAL PARTNERS, L.P.
SELECTED FINANCIAL INFORMATION
<TABLE>
Nine Months Ended Year Ended
----------------------------- -------------------------------------------------------------------------
September 30, September 30, December 31, December 31, December 31, December 31, December 31,
1999 1998 1998 1997 1996 1995 1994
------------- ------------- ------------ ------------ ------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Statement Data:
Total revenues......... $ -- $ -- $ -- $ 1,509 $ 14,425 $ 81,963 $ 28,256
Research and
development....... -- -- -- 8,513 422,296 3,788,326 7,141,368
General and
administrative.... 262 15,036 62,446 98,174 236,798 508,733 858,448
Total expenses......... 262 15,036 62,446 106,687 659,094 4,460,683 8,392,516
------- -------- -------- --------- --------- ----------- -----------
Net Loss............... $ (262) $(15,036) $(62,446) $(105,178) $(644,669) $(4,378,720) $(8,364,260)
======= ======== ======== ========= ========= =========== ===========
September 30, December 31,
----------------------------- -------------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
------------- ------------- ------------ ------------ ------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents......... $ -- $ 672 $ 324 $ 34,044 $ 183,051 $ 798,352 $ 53,146
Total assets........... -- $ 672 324 34,044 183,051 810,313 128,122
Partners' capital
(deficit)............ $(58,623) $(10,951) (58,361) 4,085 113,412 753,932 (6,658,893)
</TABLE>
24
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Repligen Partners received no revenue for the nine month period ended
September 30, 1999 or for the year ending December 31, 1998. Repligen Partners'
sole source of revenue for the years ended December 31, 1997 and 1996 was
interest income earned on capital contributions prior to disbursements for
partnership activities. Interest income for the year ended December 31, 1997
was $1,509 compared to $14,425 in the comparable fiscal 1996 period. The
decrease in investment income in fiscal 1997 and 1998 was due to the decrease
in available funds for investment as the effort to market the partnership
assets proceeded during the course of the years.
Repligen Partners incurred no research and development expenses for the
nine month period ended September 30, 1999 and 1998. Total research and
development expenses for the year ended December 31, 1997 were $8,513 as
compared to $422,296 in the comparable fiscal 1996 period. The decrease in
research and development expenses reflects a significant reduction in research,
development and clinical trial expenditures incurred under the product
development agreement with Repligen Corporation, in particular as a result of
the termination of the research program and marketing program by the board of
directors of Repligen Development on March 8, 1996. Expenses largely consisted
of costs incurred in connection with the orderly close-out of rPF4-related
clinical activities in compliance with FDA regulations and in a manner
considered appropriate for the preservation of partnership assets for potential
future sale or transfer.
For the nine month period ended September 30, 1999 general and
administrative expenses were $262 as compared to $15,036 for the nine month
period ended September 30, 1998. General and administrative expenses were
$62,446, $98,174 and $236,798 for the years ended December 31, 1998, 1997, and
1996 respectively. The decrease in general and administrative expenses
primarily reflects the decrease in direct personnel associated with the
rPF4-related technology marketing activities described under "The Proposed
Termination--Subsequent Developments--Repligen Efforts to Locate a Strategic
Partner: 1994-1996", and the reduced administrative expenses paid to Repligen
Corporation due to the termination of the research program. Repligen Partners
paid Repligen Corporation a management fee equal to 10% of total expenses
incurred on behalf of Repligen Partners.
Capital Resources and Liquidity
Repligen Partners' primary source of funding and capital resources has
been the capital contributions made by the limited partners and Repligen
Development, 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 1996, 1995
and 1994, Repligen Partners wrote off approximately $4,000, $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
September 30, 1999, 711 1/2 of the original 900 Class A Units were outstanding.
As of September 30, 1999 and December 31, 1998, Repligen Partners did not
owe any amounts to Repligen Corporation. As of December 31, 1997, Repligen
Partners owed Repligen Corporation $500 for management fees associated with the
coordination of partnership matters. As of December 31, 1996 and 1995, Repligen
Partners owed Repligen Corporation approximately $2,200 and $2,000,
respectively, for amounts due under the product development agreement, interest
relating to the note payable and unreimbursed expenses incurred on behalf of
Repligen Partners. In addition, as of December 31, 1994, Repligen Partners owed
Repligen Corporation a note payable of $4,620,000 as a result of a loan from
Repligen Corporation to Repligen Partners to fund some organization and
syndication costs. The note evidencing this 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 non-interest bearing notes receivable from the limited
partners.
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<PAGE>
During 1998 and 1997 Repligen Partners made payments to Repligen
Corporation of $1,917 and $99,904, respectively, for reimbursement of direct
expenses and management fees associated with the coordination of partnership
activities. During 1996, 1995 and 1994, Repligen Partners made payments to
Repligen Corporation of approximately $603,000, $6,160,000 and $11,500,000,
respectively, for research and development activities, management fees,
interest due under the Development Agreement and direct expenses incurred on
behalf of Repligen Partners.
Until the termination of the research program and the marketing program in
March 1996, the primary use of Repligen Partners' capital resources had been to
fund the research program. From its inception to December 31, 1998, Repligen
Partners incurred aggregate expenses of approximately $35,713,000 versus
approximately $38,645,000 anticipated at the inception of Repligen Partners.
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 and 1996 fiscal years and
Repligen Corporation's decision to absorb $1,665,000 of research and
development costs related to the research program, which was impacted in part
by Repligen Partners' inability to collect all partner's contributions.
In March, 1996, Repligen Partners 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 Corporation
advised Repligen Partners 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 Repligen Development voted to terminate the research program and the
marketing program. See "The Proposed Termination--The Partnership--Subsequent
Developments--Termination of Research and Marketing Programs".
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding security ownership of all persons known to Repligen
Partners to be the beneficial owners of more than 5% of any class of Repligen
Partners' securities as of [________], 1999 is as follows:
<TABLE>
Amount and Name of Percent
Title of Class Name and Address of Beneficial Owner Beneficial Ownership of Class
- -------------- ------------------------------------ -------------------- --------
<S> <C> <C> <C>
General Partner Interest Repligen Development Corporation One Repligen 100.00%
117 Fourth Avenue Development Interest
Needham, Massachusetts 02194
Class A Limited PaineWebber R&D Partners III, L.P. 133 Class A Limited 16.40%
Partnership Interests 1285 Avenue of the Americas Partnership Interests
New York, New York 10019
Class B Limited PaineWebber Development 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 Repligen Partners' business is vested
in Repligen Development Corporation, the general partner of Repligen Partners.
Information regarding security ownership of the directors, all directors and
officers as a group, and Repligen Development as of [________], 1999 is as
follows:
<TABLE>
Amount and Name of Percent
Title of Class Name and Address of Beneficial Owner Beneficial Ownership of Class
- -------------- ------------------------------------ -------------------- --------
<S> <C> <C> <C>
Class A Limited Dr. Sydney E. Salmon (deceased) One Class A Limited Less than
Partnership Interests 2121 Camino El Ganado Partnership Interest 1%
Tucson, Arizona
Class A Limited Theodore E. Maione One-Half Class A Less than
Partnership Interests 117 Fourth Avenue Limited Partnership 1%
Needham, MA 02194 Interest
</TABLE>
27
<PAGE>
EXPERTS
The financial statements of Repligen Partners as of December 31, 1998 and
1997 and for the three years in the period ended December 31, 1998 included in
this Proxy Statement have been audited by Arthur Andersen LLP, independent
accountants, as indicated in their reports, with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K for the year ended December 31, 1996 filed
with the SEC by Repligen Partners pursuant to the Exchange Act is incorporated
by reference in this proxy statement.
All documents and reports filed by Repligen Partners pursuant to Section
13(a) or 15(d) of the Exchange Act subsequent to the date of this proxy
statement and prior to the special meeting shall be deemed to be incorporated
by reference in this proxy statement and to be a part hereof from the date of
filing of such documents or reports. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this proxy statement to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this proxy statement.
This proxy statement incorporates documents by reference which are not
presented herein or delivered herewith. A copy of any or all documents
incorporated by reference herein (other than exhibits thereto which are not
specifically incorporated by reference herein) will be provided without charge
to each person to whom this Proxy Statement is delivered upon oral or written
request within one business day of receipt of such request to Investor
Communications Services, 265 Franklin Street, Boston, MA 02110, (800) 742-4744.
OTHER MATTERS
Repligen Development does not intend to bring before the special meeting
any business other than as set forth in this proxy statement, and has not been
informed that any other business is to be presented at the special meeting.
However, if any matters other than those referred to above should properly come
before the meeting, it is the intention of the person(s) named in the enclosed
proxy to vote such proxy in accordance with his/their best judgment.
-----------------------
YOUR VOTE IS VERY IMPORTANT. Please sign and return promptly the enclosed
proxy in the envelope provided. The signing of a proxy will not prevent your
attending the special meeting and voting in person.
REPLIGEN DEVELOPMENT CORPORATION
Repligen Development
By
[Name]
[Title]
[ ], 2000
28
<PAGE>
ANNEX A
FINANCIAL STATEMENTS OF THE PARTNERSHIP
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, 1998 and
1997, and the related statements of operations, changes in partners' capital
(deficit), and cash flows for each of the three years in the period ended
December 31, 1998. 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, 1998 and 1997 and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1998,
in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the
Partnership will continue as a going concern. During 1996 through 1999 the
General Partner was marketing the rPF4-technology for sale to potential third
parties. The Company has been unable to secure a third party buyer.
Accordingly, the General Partner intends to seek the vote of the Limited
Partners to approve the termination of the Limited Partnership. These matters
are further discussed in Note 2 to the financial statements. The accompanying
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Boston, Massachusetts, ARTHUR ANDERSEN LLP
October 19, 1999
F-1
<PAGE>
REPLIGEN CLINICAL PARTNERS, L.P.
BALANCE SHEETS
<TABLE>
September 30, December 31, December 31,
1999 1998 1997
------------- ------------ ------------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents............................. $ -- $ 324 $ 34,044
---------- ---------- ----------
Total Assets..................................... $ -- $ 324 $ 34,044
========== ========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Current Liabilities:
Accounts payable and accrued expenses................. $ 58,623 $ 58,685 $ 29,459
Amounts due to Repligen Corporation................... -- -- 500
---------- ---------- ----------
Total current liabilities........................ 58,623 $ 58,685 $ 29,959
Partners' Capital (Deficit), net:
Limited partners...................................... (58,623) (58,361) --
General partner....................................... -- -- 4,085
---------- ---------- ----------
(58,623) (58,361) 4,085
---------- ---------- ----------
Total Liabilities and Partners' Capital (Deficit).. $ -- $ 324 $ 34,044
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
F-2
<PAGE>
REPLIGEN CLINICAL PARTNERS, L.P.
STATEMENTS OF OPERATIONS
<TABLE>
Nine Months
Ended Year Ended Year Ended Year Ended
September 30, December 31, December 31, December 31,
1998 1998 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Interest income.................................. $ -- $ -- $ 1,509 $ 14,425
----------- ----------- ----------- -----------
Expenses:
Research and development......................... -- -- 8,513 422,296
General and administrative....................... 262 62,446 98,174 236,798
Total Expenses................................ 262 62,446 106,687 659,094
----------- ----------- ----------- -----------
Net loss............................................ $ (262) $ (62,446) $ (105,178) $ (644,669)
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
REPLIGEN CLINICAL PARTNERS, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
<TABLE>
Notes
Limited General Receivable
Partners Partner from Partners Total
-------- ------- ------------- -----
<S> <C> <C> <C> <C>
Balance, December 31, 1995...................... $663,024 $ 95,057 $ (4,149) $ 753,932
Write-off of foreclosed units................... (4,149) -- 4,149 0
Net loss........................................ (638,223) (6,446) -- (644,669)
-------- ------ --------- --------
Balance, December 31, 1996...................... 20,652 88,611 -- 109,263
Net loss........................................ (20,652) (84,526) -- (105,178)
-------- ------ --------- --------
Balance, December 31, 1997...................... -- 4,085 -- 4,085
Net loss........................................ (58,361) (4,085) -- (62,446)
-------- ------ --------- --------
Balance, December 31, 1998 $(58,361) -- -- (58,361)
Net loss, nine months ended
September 30, 1999........................... (262) -- -- (262)
-------- ------ --------- --------
Balance, September 30, 1999..................... $(58,623) $ -- $ -- $ (58,623)
======== ======== ========= =========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
REPLIGEN CLINICAL PARTNERS, L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
For Nine Months Ended
September 30, For the Years Ended December 31,
---------------------- --------------------------------
1999 1998 1997 1996
---------------------- -------- -------- --------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss..................................... $ (262) $(62,446) $(105,178) $(644,669)
----------- -------- --------- ---------
Adjustments to reconcile net loss to net cash
used in operating activities -
Amortization ............................. -- -- -- 10,711
Changes in assets and liabilities -
Interest receivable..................... -- -- 26 1,224
Accounts payable and accrued expenses... (62) 29,226 (42,190) 17,194
Amounts due to Repligen Corporation..... -- (500) (1,639) 213
----------- -------- --------- ---------
Net cash used in operating activities (324) (33,720) (148,981) (615,327)
----------- -------- --------- ---------
Decrease in cash and cash
equivalents.......................... (324) (33,720) (148,981) (615,327)
Cash and cash equivalent, beginning of period... 324 34,044 183,025 798,352
----------- -------- --------- ---------
Cash and cash equivalents, end of period........ $ -- $ 324 $ 34,044 $ 183,025
=========== ======== ========= =========
Supplemental disclosure of cash flow
information -
Write-off notes receivable from partners for
foreclosed units $ -- $ -- $ -- $ 4,149
=========== ======== ========= =========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
REPLIGEN CLINICAL PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
(to be updated by AA)
1. Organization
Repligen Clinical Partners, L.P. (Repligen Partners) 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. Repligen Partners is managed by its general partner,
Repligen Development Corporation. In connection with the formation of Repligen
Partners, Repligen granted to Repligen Partners 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, Repligen Partners 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 Repligen Partners 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 Repligen
Partners 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 and approximately $4,966,000 has been written off due to defaulted
units.
In March 1996, Repligen advised Repligen Partners 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. Repligen Partners has incurred significant operating losses since
inception and the Board of Directors of Repligen Development of Repligen
Partners determined that, without additional financing from Repligen or one or
more third parties, Repligen Partners would not have sufficient funding to
complete the Research Program and Marketing Program. As a result, the Board of
Directors of Repligen Development of Repligen Partners voted to terminate the
Research Program and the Marketing Program, and directed that Repligen
Development market the rPF4-related technology to prospective third-party
purchasers, licensors, or joint-venture partners.
During 1996 and 1997, the Partnership introduced the rPF4-technology for
possible acquisition to numerous pharmaceutical and biotechnology companies and
continued the presentation of the Partnership's technology to interested
parties who had already initiated preliminary review. Furthermore, during 1998
and 1999, the Partnership continued to market the rPF4-technology to a limited
number of parties who were in an advanced stage of review. In the absence of a
decision to acquire the Partnership's assets by one of the parties that has
completed an advanced review, the General Partner intends to seek the vote of
the Limited Partners to approve the termination of the Limited Partnership.
2. Business Operations
The Partnership is no longer devoting its efforts toward marketing the
rPF4 technology to prospective third-party purchasers, licensors or
joint-venture partners. The Partnership has limited its recent efforts to
marketing the rPF4-technology to a few prospective third-party purchasers who
engaged in an advanced review. The General Partner intends to terminate the
Limited Partnership by seeking a vote of the Limited Partners. At December 31,
1998, the Partnership has negative net worth and no financial resources. A
Limited Partner has agreed to make an additional capital contribution to pay
all outstanding liabilities of the Partnership at December 31, 1998.
F-6
<PAGE>
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 Repligen Partners.
Research and development costs were expended 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.
(c) Income Taxes
The Partnership does not provide for federal or state income taxes,
because no income taxes are payable by Repligen Partners. Partners are liable
for income taxes on their share of Repligen Partners' taxable income, if any.
(d) Management Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the periods
presented. Actual results could differ from those estimates.
(e) Concentrations of Credit Risk
Financial instruments that subject the Company to significant
concentrations of credit risk consist primarily of cash and cash equivalents.
The Company's cash equivalents are invested in financial instruments with high
credit ratings.
(f) Fair Value of Financial Instruments
The carrying amounts of the Company's cash equivalents approximate fair
value due to the short-term nature of these instruments.
4. 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 annual installments evidenced by
non-interest bearing notes to Repligen Partners, commencing on March 15, 1993.
The Partnership has written off all notes receivable relating to the limited
partnership units which were foreclosed for failure to pay either the second,
third or fourth installments. As of December 31, 1998 and 1997, 711 1/2 of the
original 900 Class A Units were outstanding.
(b) Partnership Allocation and Distribution:
Profits or losses for each fiscal year of the partnership are allocated 1%
to Repligen Development 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.
F-7
<PAGE>
Upon each Class A limited partner receiving distributions equal to their
capital contributions, Repligen Development 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. At December 31, 1998, the losses
in-excess of capital contributions has been allocated to the limited partner
who has committed to funding such losses.
5. Related Party Transactions
Under the Development Agreement (the "Development Agreement") with
Repligen, Repligen Partners reimbursed Repligen for research and development
costs incurred under the Development Agreement, plus paid a management fee
equal to 10% of such costs. During 1998, 1997 and 1996 Repligen Partners
incurred research and development expenses of approximately $0, $9,000 and
$422,000, respectively and general and administrative expenses of approximately
$62,000, $98,000 and $237,000, respectively related to the management fee due
under the Development Agreement. Approximately $500 of these amounts has been
included in amounts due to Repligen Corporation in the accompanying 1997
balance sheet.
In connection with the initial capitalization of Repligen Partners,
Repligen issued warrants to purchase Repligen Common Stock to the limited
partners of Repligen Partners (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 Repligen
Partners was free to accept or reject such modifications. As of December 31,
1996, 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.
F-8
<PAGE>
PROXY PROXY
REPLIGEN CLINICAL PARTNERS, L.P.
SPECIAL MEETING OF LIMITED PARTNERS
THIS PROXY IS SOLICITED ON BEHALF OF
REPLIGEN CLINICAL PARTNERS, L.P. BY
REPLIGEN DEVELOPMENT CORPORATION,
THE GENERAL PARTNER
The undersigned hereby appoints [ ] or his designee with full power of
substitution, the attorney and the proxy of the undersigned, to represent and
to vote, as designated below, all units of limited partnership interest
("Limited Partnership Interest") of Repligen Clinical Partners, L.P., a
Delaware limited partnership (the "Partnership"), that the undersigned is
entitled to vote if personally present at the Special Meeting of Limited
Partners of Repligen Partners to be held on[ ], 2000 at [time], local time, at
[location] and at any adjournment(s) or postponement(s) thereof. This proxy
revokes all prior proxies given by the undersigned.
The proposals to authorize are:
1. Approval of the termination of Repligen Partners.
For Against Abstain
--- ------- -------
2. In his discretion, the proxy is authorized to vote upon such other
business as may properly come before the Special Meeting or any adjournment or
postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED LIMITED PARTNER. THE GENERAL PARTNER RECOMMENDS A VOTE FOR
PROPOSALS 1 & 2. IF NO DIRECTION IS MADE ON THIS CARD, THE PROXY WILL BE VOTED
"FOR" PROPOSALS 1 & 2.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROPERLY USING THE ENCLOSED
PRE-PAID ENVELOPE OR DELIVER TO: Investor Communications Services, 265 Franklin
Street, 16th Floor, Boston, MA 02110. If you have any questions, please call
(800) 742-4744. Facsimile copies of the front and reverse sides of this Proxy,
properly completed and duly executed, will be accepted at (617) 439-8955.
Dated: [ ]
-------------------------------------
Signature
-------------------------------------
Signature (if held jointly)
-------------------------------------
Title
Please sign exactly as name appears
hereon. When Limited Partnership
Interests are held by joint tenants,
both should sign. When signing as an
attorney, as executor, administrator,
trustee or guardian, please give full
title as such. If a corporation, please
sign in name by President or other
<PAGE>
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
2
<PAGE>
SPECIAL MEETING -- DECEMBER [__], 2000
YOUR VOTE IS EXTREMELY IMPORTANT
Regardless of the number of Limited Partnership Interests of Repligen
Clinical Partners, L.P. you own, please vote by taking these simple steps:
1. Please SIGN, MARK, DATE, and MAIL the enclosed proxy card in the enclosed,
postage-paid envelope (or by facsimile) as soon as possible before the
special meeting on [ ], 2000.
2. You may also transmit your proxy by facsimile to (617) 439-8955. When
voting your proxy by facsimile, both sides of the proxy card must be
transmitted.
3. If you wish to vote "FOR" the Termination, you must submit the enclosed
proxy card.
4. If your Limited Partnership Interests are held for you in "street name" by
a bank or broker, the bank or broker may not give your proxy without your
instruction. Please call your bank or broker and instruct your
representative to vote "FOR" the Termination. Failure to return a proxy
card, abstention from voting and broker non-votes are the equivalent of a
vote "AGAINST" the Termination.
5. If you have any questions or require any additional information concerning
this Proxy Statement please contact:
INVESTOR COMMUNICATIONS SERVICES
265 Franklin Street
16th Floor
Boston, MA 02110
Call Toll-Free (800) 742-4744
PLEASE SIGN, MARK, DATE AND RETURN YOUR PROXY CARD TODAY.
3
