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
|X| Filed by the Registrant
|_| Filed by a Party other than the Registrant
Check the appropriate box:
| | Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2)
|X| 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.
117 Fourth Avenue
Needham, MA 02194
February 15, 2000
Dear Limited Partner:
Enclosed is information concerning a special meeting of limited
partners of Repligen Clinical Partners, L.P. to be held on March 16, 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 Communication Services at (800) 742-4744.
Very truly yours,
Repligen Development Corporation
General Partner
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 Repligen Corporation, 117 Fourth Avenue, Needham,
Massachusetts, at 1:00 pm, ET, local time, on March 16, 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 December 31, 1999 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
Theodore E. Maione
President
February 15, 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.
REPLIGEN CLINICAL PARTNERS, L.P.
------------------------
PROXY STATEMENT
FOR THE SPECIAL MEETING OF LIMITED PARTNERS
TO BE HELD ON MARCH 16, 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 February 15, 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
March 16, 2000 at 1:00 pm, ET, local time, at Repligen Corporation, 117
Fourth Avenue, Needham, Massachusetts.
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 4.
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 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 February 15, 2000
------------------------
TABLE OF CONTENTS
------------------------
Page
------
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.....................F-1
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.
1
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.
2
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 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.
3
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.
4
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 March 16,
2000 at 1:00 pm, ET, local time, at Repligen Corporation, 117 Fourth Avenue,
Needham, Massachusetts, and any adjournment or postponement thereof. This
proxy statement is being mailed to the limited partners on or about February
15, 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 December 31, 1999 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 Investor Communication Services, for 30
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.
5
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.
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 Communication 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 Communication 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.
6
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 (781) 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.
7
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
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 December 31, 1999.
<TABLE>
<CAPTION>
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
8
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 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.
9
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 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.
10
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 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
11
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 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
12
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.
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.
13
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 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
14
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 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'
15
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 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
16
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
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.
17
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 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
18
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 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").
19
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
February 14, 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.
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
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
21
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.
22
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 December 31, 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.
23
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 A.
<TABLE>
<CAPTION>
REPLIGEN CLINICAL PARTNERS, L.P.
SELECTED FINANCIAL INFORMATION
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)
======== ======== ======== ========== ========= =========== ===========
<CAPTION>
September 30 December 31,
---------------------------- --------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
------------- ------------- ------------ ------------ ------------ ------------ ------------
<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
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.
25
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".
26
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 December 31, 1999 is as follows:
<TABLE>
<CAPTION>
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 One Class B Limited 100.00%
Partnership Interests Corporation Partnership Interest
1285 Avenue of the Americas
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 December
31, 1999 is as follows:
<TABLE>
<CAPTION>
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
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 Communication 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
Theodore E. Maione
President
February 15, 2000
28
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
<TABLE>
<CAPTION>
REPLIGEN CLINICAL PARTNERS, L.P.
BALANCE SHEETS
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
======== ======== ========
<FN>
See accompanying notes to financial statements.
</TABLE>
F-2
<TABLE>
<CAPTION>
REPLIGEN CLINICAL PARTNERS, L.P.
STATEMENTS OF OPERATIONS
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)
========= ========= ========= =========
<FN>
See accompanying notes to financial statements.
</TABLE>
F-3
<TABLE>
<CAPTION>
REPLIGEN CLINICAL PARTNERS, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
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)
========= ========= ======== =========
<FN>
See accompanying notes to financial statements.
</TABLE>
F-4
<TABLE>
<CAPTION>
REPLIGEN CLINICAL PARTNERS, L.P.
STATEMENTS OF CASH FLOWS
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
====== ========= =========== ==========
<FN>
See accompanying notes to financial statements.
</TABLE>
F-5
REPLIGEN CLINICAL PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
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
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
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
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 Theodore E. Maione 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 March 16, 2000 at 1:00
pm, E.T., local time, at Repligen Corporation, 117 Fourth Avenue, Needham,
Massachusetts, 02194 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 Communication Services, 265 Franklin
Street, 15th 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
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
2
SPECIAL MEETING -- MARCH 16, 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 March 16, 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. Failure to return a proxy card and abstention from voting 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 COMMUNICATION SERVICES
265 Franklin Street
15th Floor
Boston, MA 02110
Call Toll-Free (800) 742-4744
PLEASE SIGN, MARK, DATE AND RETURN YOUR PROXY CARD TODAY.
