SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the fiscal year ended March 31, 2002
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission file number: 0-14656
REPLIGEN CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 04-2729386
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
117 Fourth Avenue, Needham, Massachusetts 02494
(Address of principal executive offices) (Zip Code)
|
Registrant's telephone number, including area code: (781) 449-9560
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 Par Value
(Title of Class)
Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_|.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K |_|
State the aggregate market value of the voting common equity held by non-affiliates of the registrant. The aggregate market value, computed by reference to the closing sale price of such stock quoted on NASDAQ on May 15, 2002 was approximately $67,139,730.
Indicate the number of shares outstanding of each of the registrant's classes of common stock as of May 15, 2002: 26,642,750.
DOCUMENTS INCORPORATED BY REFERENCE
The Company intends to file a definitive proxy statement pursuant to Regulation 14A within 120 days of the end of the fiscal year ended March 31, 2002. Portions of such proxy statement are incorporated by reference in Part III of this Form 10-K.
Item 1. BUSINESS
Statements in this annual report on Form 10-K, as well as oral statements that may be made by Repligen or by officers, directors or employees of Repligen acting on Repligen's behalf, that are not historical facts constitute "forward-looking statements" which are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. The forward-looking statements in the annual report on Form 10-K do not constitute guarantees of future performance. Investors are cautioned that statements which are not strictly historical statements contained in this annual report on Form 10-K, including, without, limitation, current or future financial performance, management's plans and objectives for future operations, clinical trials and results, product plans and performance, management's assessment of market factors, as well as statements regarding the strategy and plans of the company and its strategic partners, constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to be materially different from the historical results or from any results expressed or implied by such forward-looking statements. The Company's future operating results are subject to risks and uncertainties and are dependent upon many factors, including, without limitation, the risks identified under the caption "Certain Factors That May Affect Future Results" and elsewhere in this annual report, as well as in our other Securities and Exchange Commission filings.
The Company
Repligen's goal is to develop innovative therapeutic products for debilitating pediatric diseases. Our therapeutic product candidates are secretin for autism, uridine for mitochondrial disease and CTLA4-Ig for immune disorders. These products are synthetic forms of naturally-occurring substances which may correct improperly regulated biological processes with minimal toxicity or side-effects. Our product candidates have the potential to produce clinical benefits not attainable with any existing drug in diseases for which there are few alternatives.
Our business strategy is to partially fund the development of our proprietary therapeutic products with the profits derived from the sales of our specialty pharmaceutical products: Protein A and SecreFlo(TM). This will enable us to advance our proprietary drug development programs while at the same time minimizing our operating losses.
Repligen was incorporated in March 1981, under the laws of the State of Delaware. Our principal executive offices are at 117 Fourth Avenue, Needham, Massachusetts 02494 and our telephone number is (781) 449-9560.
Secretin for Autism
Autism is a developmental disorder characterized by impaired communication and social interaction as well as repetitive behaviors. The disease is typically diagnosed by the age of three and affects approximately 1 in 300 children in the United States. Secretin is a hormone produced in the small intestine which regulates the function of the pancreas as part of the process of digestion. Anecdotal reports indicated that secretin may have beneficial effects in some autistic children, including improvements in social interaction and communication which are the core symptoms of the disease.
We have completed a FDA-approved Phase 2 clinical trial on a synthetic, human form of secretin in order to evaluate its potential benefits on the social, communicative and behavioral symptoms of autism. This trial was a randomized, double-blind, placebo-controlled study which evaluated 126 autistic children aged three to six at multiple sites in the United States. All of the children had gastrointestinal symptoms and moderate to severe symptoms of autism. Each patient
received three doses of secretin or a placebo at three week intervals. Patients were assessed before the first dose and two weeks after the third dose with several standardized tests to evaluate symptom changes.
Results from the trial demonstrated that three and four year old patients treated with secretin had a statistically significant improvement in social interaction as measured by the Autism Diagnostic Observation Schedule, a standardized clinical assessment. These patients were also observed to have improvements in their expressive vocabulary. In an assessment of overall improvement, Clinical Global Impression of Change, there was significant improvement in the entire secretin treated group versus the placebo group. We also identified two biological parameters which defined a group of patients whose symptoms were highly variable over time. When these patients were removed from the analysis, the beneficial effect of secretin was also observed in two types of evaluations carried out by a trained psychologist and two assessments based on parental data. This trial also evaluated the safety of secretin. There were no serious adverse events in the trial and no clinically significant adverse event trends observed in secretin-treated patients versus patients who received a placebo.
We have initiated two randomized, placebo-controlled, double-blind Phase 3 clinical trials to evaluate the impact of secretin on the social interaction deficits of autism in children 2.7 to 4.9 years of age. Each child will receive six doses of secretin or a placebo over 18 weeks and be evaluated with the social interaction scale of the Autism Diagnostic Observation Schedule and with a Clinical Global Impression of Change.
We have also initiated a research effort to better understand the biology of secretin and its mechanism of action in patients. Initial results in rats indicate that a single intravenous dose of secretin can activate neurons in several brain regions including a region called the amygdala. Literature reports indicate that the amygdala is one of several brain regions affected in patients with autism and that it is an important part of neural circuits which facilitate social interaction. We are currently evaluating the potential activation of the amygdala in humans in a clinical study in which brain activity is monitored with Magnetic Resonance Imaging.
According to recent reports from the Centers for Disease Control and Prevention, approximately 1 in 300 children in the United States is affected by autism. There are currently no FDA-approved drugs for the treatment of autism. Although some existing drugs may reduce certain behavioral symptoms associated with autism such as irritability or hyperactivity, there is no drug therapy which has been demonstrated to improve the social or communicative deficits of autism. It is estimated that the annual cost of care and education required for autism in the United States is greater than $10 billion.
In February 2000, we were issued a U.S. patent for the use of secretin in the treatment of autism which will expire in 2018. In March 2001, we were issued a U.S. patent covering the transdermal delivery of secretin for the treatment of autism, which will expire in 2018. We are currently prosecuting additional patent applications in the United States, Europe and Japan.
Uridine for Mitochondrial Disorders
Mitochondria are small structures present in every cell which serve to produce energy for cellular processes. Defects in the genes which encode mitochondrial proteins are responsible for mitochondrial disease which affects multiple organs and systems, particularly the nervous system, heart, kidney and skeletal muscle. Inborn forms of mitochondrial disease affect 10-20,000 people in the United States and result in multiple symptoms, including seizures, skeletal and heart muscle weakness, kidney failure and neurological and cognitive defects.
It has recently been recognized that a second function of mitochondria is to produce uridine, an essential precursor for the synthesis of RNA and DNA as well as other cellular functions. This discovery led researchers at The University of California, San Diego ("UCSD") to evaluate synthetic uridine as a therapy for mitochondrial disease.
In Phase 1 clinical trials carried out at UCSD, daily oral administration of uridine or an analog of uridine was evaluated in 14 patients. This study indicated that the therapy is well tolerated in patients with mitochondrial disease including a few who have received it for more than two years. Several patients also had marked improvements in their symptoms, including a reduction in the number of seizures, improved muscle strength and improvements in kidney function. A placebo-controlled Phase 2 clinical trial to extend these observations will be initiated during 2002.
Literature reports indicate that there is a subset of patients with autism with evidence of a defect in the regulation of nucleic acid metabolism, a building block for RNA and DNA, who can be identified by testing a sample of urine. A published case report described improvements in one such patient in the symptoms of cognition, speech and motor skills after treatment with uridine. Studies at Repligen have confirmed that some patients with autism have signs of a defect in purine metabolism and we intend to initiate clinical trials of uridine in this patient population.
In December 2000, Repligen exclusively licensed the rights to patent applications from UCSD for the treatment of mitochondrial disease with uridine or analogs of uridine. The Company has also licensed a patent application covering the use of uridine in patients with autism. (For more information on our intellectual property rights to uridine and related compound for the treatment of mitochondrial disease, please see "Legal Proceedings.")
CTLA4-Ig for Immune Disorders
We are also developing a product named "CTLA4-Ig," based on a natural regulator of the immune system. CTLA4-Ig is a protein consisting of a portion of the immune regulator CTLA4 fused to a portion of a human antibody molecule ("Ig"). CTLA4-Ig has been shown in animal models to selectively block unwanted immune responses in organ transplantation and several autoimmune diseases.
We are currently conducting a Phase 2 clinical trial of CTLA4-Ig in patients with refractory immune thrombocytopenic purpura ("ITP"). ITP is an autoimmune disease in which the patient's immune system mounts an attack on their own blood platelets which can result in internal bleeding.
In March 2002, we received a Notice of Allowance from the U.S. Patent and Trademark Office for the specific CTLA4-Ig composition which we are developing. Repligen has also obtained an exclusive license to the patent rights of the University of Michigan which pertain to CTLA4-Ig and is prosecuting patents filed by the University related to therapeutic uses of CTLA4-Ig. We also believe that the University of Michigan and Repligen are entitled to rights to certain U.S. patents on compositions and therapeutic uses of CTLA4 which have been issued to Bristol-Myers Squibb Company. (For more information on our intellectual property rights to CTLA4-Ig, please see "Legal Proceedings.")
Protein A Products for Antibody Manufacturing
Protein A is a naturally occurring protein used in the purification of antibodies. Virtually all therapeutic monoclonal antibodies are manufactured by a process in which an impure mixture containing the desired antibody product is passed over a solid support to which Protein A has
been chemically attached (immobilized). The immobilized Protein A binds the antibody product while other impurities are washed away. The antibody is then recovered from the support in a substantially purified form.
We manufacture and market several products based on recombinant Protein A. Our primary customers incorporate our Protein A products into their proprietary antibody purification systems which they sell directly to the biotechnology and pharmaceutical industry. We also manufacture an immobilized Protein A product which is marketed by Amersham Biosciences ("Amersham"). Substantially all of our product sales for the last three years have been sales of Protein A products.
In the past four years, sales of therapeutic antibody products have increased from $300 million in 1997 to approximately $3.5 billion in 2001. This growth is based on the increasing use of therapeutic antibody products, including Rituxan(R) for lymphoma, Herceptin(TM) for breast cancer, Synagis(TM) for RSV infection, Remicade(TM) for Crohn's disease and arthritis and Enbrel(TM) for arthritis. There are more than 100 additional monoclonal antibodies in various stages of clinical testing which may lead to additional growth of the antibody market and in the demand for Protein A.
We own a U.S. patent covering the protein A gene and the manufacture of recombinant Protein A which expires in 2009.
Secretin Diagnostic Products
In October 1999, we licensed exclusive commercial rights to two diagnostic products based on synthetic forms of porcine (pig-derived) and human secretin from a private company. Both of these products have been evaluated in clinical trials for their safety and efficacy in diagnosing pancreatic function and gastrinoma, a form of cancer. In April 2002, the FDA approved the use of synthetic porcine secretin ("SecreFlo(TM)") to aid in the assessment of pancreatic function and the diagnosis of gastrinoma. The FDA has granted SecreFlo(TM) orphan drug designation, which means that we will have a seven year period of exclusivity to market the product in the U.S. In December of 2001, the FDA issued an "approvable letter" for a synthetic form of human secretin which contained questions concerning the manufacture and quality control of the product. Prior to approval, ChiRhoClin will need to provide additional information to the FDA to satisfy the FDA's concerns. The FDA has granted this product orphan drug status which means we will have a seven year period of exclusivity following final approval to market this product. We intend to market these diagnostic products directly to gastroenterologists in the U.S.
Repligen's Business Strategy
Our primary objective is to develop drugs for pediatric diseases, particularly those which affect development. Our products are based on naturally-occurring peptides, proteins and nucleotides. By harnessing the natural actions of these compounds, it may be possible to modify disease processes with a minimum of toxicity. We intend to maintain the commercial rights to our product candidates through "proof of efficacy" clinical trials. After demonstration of a product candidate's therapeutic potential, we may seek a biotechnology or pharmaceutical partner for further clinical development or commercialization of our product candidates.
We seek to offset some of the expenses associated with product development with profits from the sales of Protein A products and SecreFlo(TM), our secretin diagnostic product. We intend
to seek additional current product opportunities to increase our current product revenues as we increase expenditures on clinical development of our therapeutic products.
Sales and Marketing
We sell our rProtein A products primarily through value-added resellers including Amersham, Applied Biosystems, Inc. and Millipore Corporation, and through distributors in certain foreign markets. For the past three years, sales of our Protein A products comprised all of our product sales revenue. We intend to market SecreFlo(TM) directly to gastroenterologists in the United States.
Customers
Customers for our Protein A products include chromatography companies, diagnostics companies, biopharmaceutical companies and laboratory researchers. During fiscal 2002, customers that accounted for more than 10% of our total revenues were Amersham and Applied Biosystems Inc.
Expected customers for our SecreFlo(TM) product will be gastroenterologists in the United States.
Geographic Reporting
Of the Company's revenue in fiscal 2002, 35% is attributable to U.S. customers and 65% is attributable to foreign customers, of which 85% is attributable to three customers. Of the Company's fiscal 2001 revenue, 56% is attributable to U.S. customers and 44% is attributable to foreign customers, of which 71% is attributable to four customers. Of the Company's fiscal 2000 revenue, 51% is attributable to U.S. customers and 49% is attributable to foreign customers, of which 46% is attributable to three customers.
Employees
As of May 15, 2002, we had 39 employees. Of those employees, 27 were engaged in research, development and manufacturing and 12 in administrative and marketing functions. Doctorates or other advanced degrees are held by 15 of our employees. Each of our employees has signed a confidentiality agreement. None of our employees are covered by collective bargaining agreements.
Patents, Licenses and Proprietary Rights
Our policy is to seek patent protection for our significant proprietary products. We pursue patent protection in the United States and file corresponding patent applications in relevant foreign jurisdictions. We believe that patents are an important element in the protection of our competitive and proprietary position, but other elements, including trade secrets, orphan drug status and know-how, are also important. We own or have exclusive rights to more than 12 U.S. patents and corresponding foreign equivalents. The initial terms of such patents expire at various times between 2002 and 2019. In addition, we have rights to more than 20 U.S. pending patent applications. The invalidation of key patents owned or licensed by us or the failure of patents to issue on pending patent applications could create increased competition, with potential adverse effects on our business prospects. For each of our license agreements where we license the rights to patents or patent applications, the license shall terminate on the day that the last to expire patent under each such license agreement expires.
Secretin for Autism
In March 1999, we acquired the rights to certain patent applications claiming the therapeutic use of secretin to treat autism and other pervasive developmental disorders. In February 2000, we received a U.S. patent covering the use of secretin in the treatment of autism or the symptoms of autism which will expire in 2018. In March 2001 we received a U.S. patent covering the transdermal delivery of secretin for the treatment of autism which will expire in 2018. Additional related patent applications are currently being prosecuted in the United States and key foreign markets.
Uridine for Mitochondrial Disorders
We have licensed two patent applications from the University of California, San Diego ("UCSD") covering novel methods for the treatment of mitochondrial disease and for the treatment of autism in patients with abnormal metabolism of purines. Under the terms of the license agreement, Repligen receives exclusive commercial rights to both inventions and will pay UCSD clinical development milestones and royalties on product sales. One patent application covers the use of analogs of uridine, a naturally occurring component of RNA and DNA, for the treatment of diseases characterized by defects in the function of mitochondria. A second patent application covers the use of uridine and a form of uridine, triacetyl uridine ("TAU"), for the correction of defects in purine metabolism which literature reports indicate produce the symptoms of autism or pervasive developmental disorder. (For more information on our intellectual property rights to uridine and related compound for the treatment of mitochondrial disease, please see "Legal Proceedings.")
CTLA4-Ig for Immune Disorders
In March 2002, we received a Notice of Allowance from the U.S. Patent and Trademark Office for the specific CTLA4-Ig composition which we are developing. We also licensed the rights to certain patent applications from the University of Michigan in 1992. In September 1995, we assigned these patent rights to Genetics Institute, Inc. In January 1996, Genetics Institute, Inc. returned the rights to CTLA4-Ig to us. In November 1999, we executed an agreement with Genetics Institute and the University of Michigan which confirmed the prior transfer of certain CTLA4-Ig related rights from Genetics Institute to the University of Michigan and the exclusive license of those rights to us. We have an unrestricted right to sub-license our CTLA4-Ig rights. (For more information on our intellectual property rights to CTLA4-Ig, please see "Legal Proceedings.")
Protein A for Antibody Manufacturing
We own a U.S. patent covering recombinant Protein A which expires in 2009. We also own rights to modified forms of Protein A which were licensed to Amersham in December 1998 as part of a ten year agreement covering the supply of recombinant Protein A to Amersham.
Secretin Diagnostic Products
In October 1999, we licensed exclusive commercial rights to two diagnostic products based on synthetic forms of porcine (pig-derived) and human secretin from a private company. Both of these products have been evaluated in clinical trials for their safety and efficacy in diagnosing pancreatic function and gastrinoma. In April 2002, the FDA approved the use of synthetic porcine secretin ("SecreFlo(TM)") to aid in the assessment of pancreatic function and the diagnosis of gastrinoma, a form of cancer. The FDA has granted SecreFlo Orphan Drug Designation, which means that we will have a seven year period of exclusivity to market the product. In December of 2001, the FDA issued an "approvable letter" for a synthetic form of human secretin which contained questions concerning the manufacture and quality control of the product. The FDA has granted this product Orphan Drug Status which means we will have a
seven year period of exclusivity following final approval to market this product. We intend to market these diagnostic products directly to gastroenterologists in the U.S.
We also rely upon trade secret protection for our confidential and proprietary information. Our policy is to require each of our employees, consultants, business partners and significant scientific collaborators to execute confidentiality agreements upon the commencement of an employment, consulting or business relationship with us. These agreements generally provide that all confidential information developed or made known to the individual during the course of the individual's relationship with us is to be kept confidential and not disclosed to third parties except in specific circumstances. In the case of employees and consultants, the agreements generally provide that all inventions conceived by the individual in the course of rendering services to Repligen shall be our exclusive property.
Research and Development
For the past three years, we have devoted substantially all of our resources on the research and development of therapeutic product candidates for pediatric developmental disorders and our specialty pharmaceutical products and product candidates discussed herein. We spent $5,361,000 in fiscal 2002, $5,786,000 in fiscal 2001 and $3,754,000 in fiscal 2000 on company-sponsored research and development activities.
Competition
Our Protein A and SecreFlo(TM) products compete on the basis of quality, performance, cost effectiveness, and application suitability with numerous established technologies. Additional products using new technologies which may be competitive with our products may also be introduced. Many of the companies selling or developing competitive products have financial, manufacturing and distribution resources significantly greater than ours.
The field of drug development in which we are involved is characterized by rapid technological change. New developments are expected to continue at a rapid pace in both industry and academia. There are many companies, both public and private, including large pharmaceutical companies, chemical companies and specialized biotechnology companies, engaged in developing products competitive with products that we have under development. Many of these companies have greater capital, human resources, research and development, manufacturing and marketing experience than we do. They may succeed in developing products that are more effective or less costly than any that we may develop. These competitors may also prove to be more successful than we are in production and marketing. In addition, academic, government and industry-based research is intense, resulting in considerable competition in obtaining qualified research personnel, submitting patent filings for protection of intellectual property rights and establishing corporate strategic alliances. We can not be certain that research, discoveries and commercial developments by others will not render any of our programs or potential products noncompetitive.
Manufacturing
We currently rely, and will continue to rely, for at least the next few years, on contract manufacturers to produce synthetic human secretin, uridine for mitochondrial disease and CTLA4-Ig for use in our clinical trials. Our product candidates will need to be manufactured in a facility by processes that comply with the FDA's good manufacturing practices and other similar regulations. It may take a substantial period of time to begin manufacturing our products in compliance with such regulations. If we are unable to establish and maintain relationships with
third parties for manufacturing sufficient quantities of our product candidates and their components that meet our planned time and cost parameters, the development and timing of our clinical trials may be adversely affected. (For more information about our manufacturing facilities, please see "Description of Property.")
Protein A for Antibody Manufacturing
We manufacture Protein A products from recombinant strains of bacteria. We manufacture Protein A for Amersham under a ten year supply agreement which was initiated in December 1998. Certain fermentation and recovery operations are carried out by third parties. The purification, immobilization, packaging and quality control testing of Protein A are conducted at our facilities. We maintain an active quality assurance effort to support the regulatory requirements of our customers. We purchase raw materials from more than one commercially established firm. We believe that our necessary raw materials are currently commercially available in sufficient quantities necessary to meet demand.
SecreFlo(TM) (synthetic porcine secretin)
SecreFlo(TM), our secretin diagnostic product, is purchased from ChiRhoClin, Inc. who contracts with third parties for the synthesis of the drug substance and the drug product.
Therapeutic Product Candidates
We rely upon contractors for both the procurement of raw materials and for manufacturing finished product. We purchase raw materials from more than one commercially established firm. Our necessary raw materials are currently commercially available in quantities far in excess of the scale required to complete all of our future planned Phase II and Phase III clinical trials.
Government Regulation
The development of drug candidates, such as secretin, uridine or CTLA4-Ig are subject to regulation in the United States by the FDA and abroad by foreign equivalents. Product development and approval within the FDA regulatory framework usually takes a significant number of years, involves the expenditure of substantial capital resources and timelines for development are uncertain.
Before clinical testing in the United States of any drug candidate may begin, FDA requirements for preclinical efficacy and safety must be completed. Required toxicity testing typically involves characterization of the drug candidate in several animal species. Safety and efficacy data are submitted to the FDA as part of an Investigational New Drug Application ("IND") and are reviewed by the FDA prior to the commencement of human clinical trials.
Clinical trials involve the administration of the drug to human volunteers or patients under the supervision of a qualified investigator, usually a physician, with an FDA-approved protocol. Human clinical trials are typically conducted in three sequential phases:
o Phase 1 clinical trials represent the initial administration of the investigational drug to a small group of human subjects to test for safety (adverse effects), dose tolerance, absorption, biodistribution, metabolism, excretion and clinical pharmacology and, if possible, to gain early evidence regarding efficacy.
o Phase 2 clinical trials typically involve a small sample of the actual intended patient population and seek to assess the efficacy of the drug for specific targeted indications, to
determine dose tolerance and the optimal dose range, and to gather additional information relating to safety and potential adverse effects.
o Once an investigational drug is found to have some efficacy and an acceptable safety profile in the targeted patient population, Phase 3 clinical trials are initiated to establish further clinical safety and efficacy of the investigational drug in a broader sample of the general patient population at multiple study sites in order to determine the overall risk-benefit ratio of the drug and to provide an adequate basis for product approval. The Phase 3 clinical development program consists of expanded, large-scale studies of patients with the target disease or disorder, to obtain definitive statistical evidence of the efficacy and safety of the proposed product.
All data obtained from a comprehensive development program are submitted in a New Drug Application ("NDA") to the FDA and the corresponding agencies in other countries for review and approval. The NDA includes information pertaining to clinical studies and the manufacture of the new drug. Review of an NDA by the FDA can be a time-consuming process and the FDA may request that we submit additional data or carry out additional studies.
Certain Factors That May Affect Future Results
Additional risks and uncertainties that we are unaware of or that we currently deem immaterial also may become important factors that affect Repligen.
WE MAY BE DEPENDENT ON OUR COLLABORATIVE PARTNERS TO DEVELOP, CONDUCT CLINICAL TRIALS FOR, AND MANUFACTURE, MARKET AND SELL OUR PRINCIPAL PRODUCTS.
We conduct some of our development activities, and may conduct most of our commercialization activities, through collaborations. Our collaborations are heavily dependent on the efforts and activities of our collaborative partners. Our existing and any future collaborations may not be technically or commercially successful.
For example, if any of our collaborative partners were to breach or terminate an agreement with us, reduce its funding or otherwise fail to conduct the collaboration successfully, we may need to devote additional internal resources to the program that is the subject of the collaboration, scale back or terminate the program or seek an alternative partner.
THE MARKET MAY NOT BE RECEPTIVE TO OUR PRODUCTS UPON THEIR INTRODUCTION.
The commercial success of our products that are approved for marketing will depend upon their acceptance by the medical community and third party payors as being clinically useful, cost effective and safe. All of the products that we are developing are based upon new technologies or therapeutic approaches. As a result, it is hard to predict market acceptance of our products.
Other factors that we believe will materially affect market acceptance of our products and services include:
o the timing of receipt of marketing approvals and the countries in which such approvals are obtained;
o the safety, efficacy and ease of administration of our products;
o the success of physician education programs; and
o the availability of government and third party payor reimbursement of our products.
WE COMPETE WITH LARGER, BETTER FINANCED AND MORE MATURE PHARMACEUTICAL AND BIOTECHNOLOGY COMPANIES WHO ARE CAPABLE OF DEVELOPING NEW APPROACHES THAT COULD MAKE OUR PRODUCTS AND TECHNOLOGY OBSOLETE.
The market for therapeutic and specialty pharmaceutical products is intensely competitive, rapidly evolving and subject to rapid technological change. Pharmaceutical and mature biotechnology companies have substantially greater financial, manufacturing, marketing, research and development resources than we have. New approaches to the treatment of our targeted diseases by these competitors may make our products and technologies obsolete or noncompetitive.
WE HAVE INCURRED SUBSTANTIAL LOSSES, WE EXPECT TO CONTINUE TO INCUR LOSSES AND WE WILL NOT BE SUCCESSFUL UNTIL WE REVERSE THIS TREND.
We have incurred losses in each year since our founding in 1981. We expect to continue to incur operating losses for the foreseeable future.
While we generate revenue from product sales, this revenue is not sufficient to cover the costs of our clinical trials and drug development programs. We expect to increase our spending significantly as we continue to expand our research and development programs and commercialization activities. As a result, we will need to generate significant revenues in order to achieve profitability. We cannot be certain whether or when this will occur because of the significant uncertainties that affect our business.
IF WE DO NOT OBTAIN ADDITIONAL CAPITAL FOR OUR DRUG DEVELOPMENT PROGRAMS, WE WILL BE UNABLE TO DEVELOP OR DISCOVER NEW DRUGS.
We need additional long-term financing to develop our drug development programs through the clinical trial process as required by the FDA and our specialty pharmaceutical products business. We also need additional long-term financing to support future operations and capital expenditures, including capital for additional personnel and facilities. If we spend more money than currently expected for our drug development programs and our specialty pharmaceutical products business, we will need to raise additional capital by selling debt or equity securities, by entering into strategic relationships or through other arrangements. We may be unable to raise any additional amounts on reasonable terms when they are needed due to the volatile nature of the biotechnology marketplace. If we are unable to raise this additional capital, we may have to delay or postpone critical clinical studies or abandon other development programs.
IF OUR CLINICAL TRIALS ARE NOT SUCCESSFUL, WE WILL NOT BE ABLE TO DEVELOP AND COMMERCIALIZE ANY RELATED PRODUCTS.
In order to obtain regulatory approvals for the commercial sale of our future products, we and our collaborative partners will be required to complete extensive clinical trials in humans to demonstrate the safety and efficacy of the products. We have limited experience in conducting clinical trials.
The submission of an IND may not result in FDA authorization to commence clinical trials. If clinical trials begin, we or our collaborative partners may not complete testing successfully within any specific time period, if at all, with respect to any of our products. Furthermore, we, our collaborative partners, or the FDA, may suspend clinical trials at any time on various grounds, including a finding that the subjects or patients are being exposed to unacceptable health risks. Clinical trials, if completed, may not show any potential product to be safe or effective. Thus, the FDA and other regulatory authorities may not approve any of our potential products for any indication.
The rate of completion of clinical trials is dependent in part upon the rate of enrollment of patients. Patient enrollment is a function of many factors, including the size of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the study, and the existence of competitive clinical trials. Delays in planned patient enrollment may result in increased costs and program delays.
WE MAY NOT OBTAIN REGULATORY APPROVALS; THE APPROVAL PROCESS IS COSTLY AND LENGTHY.
We must obtain regulatory approval for our ongoing development activities and before marketing or selling any of our future products. We may not receive regulatory approvals to conduct clinical trials of our products or to manufacture or market our products. In addition, regulatory agencies may not grant such approvals on a timely basis or may revoke previously granted approvals.
The process of obtaining FDA and other required regulatory approvals is lengthy and expensive. The time required for FDA and other clearances or approvals is uncertain and typically takes a number of years, depending on the complexity and novelty of the product. Our analysis of data obtained from preclinical and clinical activities is subject to confirmation and interpretation by regulatory authorities, which could delay, limit or prevent regulatory approval. Any delay in obtaining or failure to obtain required clearance or approvals could materially adversely affect our ability to generate revenues from the affected product. We have only limited experience in filing and prosecuting applications necessary to gain regulatory approvals.
We also are subject to numerous foreign regulatory requirements governing the design and conduct of the clinical trials and the manufacturing and marketing of our future products. The approval procedure varies among countries. The time required to obtain foreign approvals often differs from that required to obtain FDA approvals. Moreover, approval by the FDA does not ensure approval by regulatory authorities in other countries.
All of the foregoing regulatory risks also are applicable to development, manufacturing and marketing undertaken by our collaborative partners or other third parties.
EVEN IF WE OBTAIN MARKETING APPROVAL, OUR PRODUCTS WILL BE SUBJECT TO ONGOING REGULATORY REVIEW WHICH WILL BE EXPENSIVE AND MAY EFFECT OUR ABILITY TO SUCCESSFULLY COMMERCIALIZE OUR PRODUCTS.
Even if we receive regulatory approval of a product, such approval may be subject to limitations on the indicated uses for which the product may be marketed, which may limit the size of the market for the product or contain requirements for costly post-marketing follow-up studies. The manufacturer of our products for which we have obtained marketing approval will be subject to continued review and periodic inspections by the FDA and other regulatory authorities. The subsequent discovery of previously unknown problems with the product, clinical trial subjects, or with the manufacturer or facility may result in restrictions on the product or manufacturer, including withdrawal of the product from the market.
If we fail to comply with applicable regulatory requirements, we may be subject to fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions, and criminal prosecution.
IF WE ARE UNABLE TO OBTAIN AND MAINTAIN PATENTS FOR OUR PRODUCTS, WE WILL NOT BE ABLE TO SUCCEED COMMERCIALLY.
We must obtain and maintain patent and trade secret protection for our products and processes in order to protect them from unauthorized use and to produce a financial return consistent with the significant time and expense required to bring our products to market. Our success will depend, in part, on our ability to:
o obtain and maintain patent protection for our products and manufacturing processes;
o preserve our trade secrets; and
o operate without infringing the proprietary rights of third parties.
We can not be sure that any patent applications relating to our products that we will file in the future or that any currently pending applications will issue on a timely basis, if ever. Since patent applications in the United States are maintained in secrecy until patents issue and since publication of discoveries in the scientific or patent literature often lag behind actual discoveries, we cannot be certain that we were the first to make the inventions covered by each of our pending patent applications or that we were the first to file patent applications for such inventions. Even if patents are issued, the degree of protection afforded by such patents will depend upon the:
o scope of the patent claims;
o validity and enforceability of the claims obtained in such patents; and
o our willingness and financial ability to enforce and/or defend them.
The patent position of biotechnology and pharmaceutical firms is often highly uncertain and usually involves complex legal and scientific questions. Moreover, no consistent policy has emerged in the United States and in many other countries regarding the breadth of claims allowed in biotechnology patents. Patents which may be granted to us in certain foreign countries may be subject to opposition proceedings brought by third parties or result in suits by us which may be costly and result in adverse consequences for us.
If our competitors prepare and file patent applications in the United States that claim technology also claimed by us, we may be required to participate in interference proceedings
declared by the U.S. Patent and Trademark Office to determine priority of invention, which would result in substantial costs to us.
In addition, patents blocking our manufacture, use or sale of our products could be issued to third parties in the United States or foreign countries. The issuance of blocking patents or an adverse outcome in an interference or opposition proceeding, could subject us to significant liabilities to third parties and require us to license disputed rights from third parties on unfavorable terms, if at all, or cease using the technology.
WE MAY BECOME INVOLVED IN EXPENSIVE PATENT LITIGATION OR OTHER INTELLECTUAL PROPERTY PROCEEDINGS WHICH COULD RESULT IN LIABILITY FOR DAMAGES OR STOP OUR DEVELOPMENT AND COMMERCIALIZATION EFFORTS.
There has been substantial litigation and other proceedings regarding the complex patent and other intellectual property rights in the pharmaceutical and biotechnology industries. We may become a party to patent litigation or other proceedings regarding intellectual property rights.
Other types of situations in which we may become involved in patent litigation or other intellectual property proceedings include:
o We may initiate litigation or other proceedings against third parties to enforce our patent rights.
o We may initiate litigation or other proceedings against third parties to seek to invalidate the patents held by such third parties or to obtain a judgment that our products or services do not infringe such third parties' patents.
o If our competitors file patent applications that claim technology also claimed by us, we may participate in interference or opposition proceedings to determine the priority of invention.
o If third parties initiate litigation claiming that our processes or products infringe their patent or other intellectual property rights, we will need to defend against such claims.
The cost to us of any patent litigation or other proceeding, even if resolved in our favor, could be substantial. Some of our competitors may be able to sustain the cost of such litigation or proceedings more effectively than we can because of their substantially greater financial resources. If a patent litigation or other intellectual property proceeding is resolved unfavorably to us, we or our collaborative partners may be enjoined from manufacturing or selling our products and services without a license from the other party and be held liable for significant damages. We may not be able to obtain any required license on commercially acceptable terms or at all.
Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. Patent litigation and other proceedings may also absorb significant management time.
WE HAVE LIMITED SALES AND MARKETING EXPERIENCE AND CAPABILITIES.
We have limited sales, marketing and distribution experience and capabilities. We may, in some instances, rely significantly on sales, marketing and distribution arrangements with our collaborative partners and other third parties. In these instances, our future revenues will be materially dependent upon the success of the efforts of these third parties.
If in the future we determine to perform sales, marketing and distribution functions ourselves, we would face a number of additional risks, including:
o we may not be able to attract and build a significant marketing staff or sales force;
o the cost of establishing a marketing staff or sales force may not be justifiable in light of any product revenues; and
o our direct sales and marketing efforts may not be successful.
WE HAVE LIMITED MANUFACTURING CAPABILITIES AND WILL BE DEPENDENT ON THIRD PARTY MANUFACTURERS.
We have limited manufacturing experience and no commercial or pilot scale manufacturing facilities for the production of pharmaceuticals. In order to continue to develop pharmaceutical products, apply for regulatory approvals and, ultimately, commercialize any products, we will need to develop, contract for, or otherwise arrange for the necessary manufacturing capabilities.
We currently rely upon third parties to produce material for preclinical and clinical testing purposes and expect to continue to do so in the future. We also expect to rely upon third parties, including our collaborative partners, to produce materials required for the commercial production of certain of our products if we succeed in obtaining necessary regulatory approvals. We believe that there is no proprietary aspect to the manufacture of our products. We believe our products could be manufactured at other facilities; however, there are a limited number of manufacturers that operate under the FDA's regulations for good manufacturing practices which are capable of manufacturing for us. Timing for the initiation of new manufacturers is uncertain, and, if we are unable to arrange for third party manufacturing of our products, or to do so on commercially reasonable terms, we may not be able to complete development of our products or market them.
We currently rely upon third parties for fermentation and recovery operations relating to our Protein A products. We believe that there is no proprietary aspect to the manufacture of our products. We believe our products could be manufactured at other facilities; however, there are a limited number of manufacturers which are capable of manufacturing for us. Timing for the initiation of new manufacturers is uncertain, and, if we are unable to arrange for third party manufacturing of our products, or to do so on commercially reasonable terms, we may not be able to complete development of our products or market them.
To the extent that we enter into manufacturing arrangements with third parties, we are dependent upon these third parties to perform their obligations in a timely manner. If such third party suppliers fail to perform their obligations, we may be adversely affected in a number of ways, including:
o we may not be able to meet commercial demands for our products;
o we may not be able to initiate or continue clinical trials of products that are under development; and
o we may be delayed in submitting applications for regulatory approvals for our products.
The manufacture of products by us and our collaborative partners and suppliers is subject to regulation by the FDA and comparable agencies in foreign countries. Delay in complying or failure to comply with such manufacturing requirements could materially adversely affect the marketing of our products.
IF WE ARE UNABLE TO CONTINUE TO HIRE AND RETAIN SKILLED TECHNICAL AND SCIENTIFIC PERSONNEL, THEN WE WILL HAVE TROUBLE DEVELOPING PRODUCTS.
Our success depends largely upon the continued service of our management and scientific staff and our ability to attract, retain and motivate highly skilled scientific, management and marketing personnel. Potential employees with an expertise in the field of biochemistry, regulatory affairs and/or clinical development of new drug and biopharmaceutical manufacturing are not generally available in the market and are difficult to attract and retain. We also face significant competition for such personnel from other companies, research and academic institutions, government and other organizations who have superior funding and resources to be able to attract such personnel. The loss of key personnel or our inability to hire and retain personnel who have technical and scientific backgrounds could materially adversely affect our product development efforts and our business.
OUR STOCK PRICE COULD BE VOLATILE, WHICH COULD CAUSE YOU TO LOSE PART OR ALL OF YOUR INVESTMENT.
The market price of our common stock, like that of the common stock of many other development stage biotechnology companies, may be highly volatile. In addition, the stock market has experienced extreme price and volume fluctuations. This volatility has significantly affected the market prices of securities of many biotechnology and pharmaceutical companies for reasons frequently unrelated to or disproportionate to the operating performance of the specific companies. These broad market fluctuations may adversely affect the market price of our common stock.
Item 2. DESCRIPTION OF PROPERTY
In October 2001, we entered into a ten-year lease agreement for new corporate headquarters in Waltham, Massachusetts. The new facility is 25,000 square feet, approximately 10,000 of which will be constructed as manufacturing and laboratory space. We anticipate that this new facility will increase operating efficiencies and increase manufacturing capacity to meet growing demand for our Protein A products, and to better meet corporate goals and objectives. We believe that this new facility will be adequate for our needs now and in the near term. We intend to relocate to these new facilities in the first quarter of fiscal 2003.
Our current executive, office, research and manufacturing facilities are located at 117 Fourth Avenue in Needham, Massachusetts where we occupy approximately 15,000 square feet under six-year sublease which expired on April 30, 2002. We will continue to lease this space on a month-to-month basis until we relocate to our new facility.
Item 3. LEGAL PROCEEDINGS
On June 21, 2001, Pro-Neuron, Inc. filed a complaint (the "Pro-Neuron Complaint") against the Regents of the University of California (the "Regents") and Repligen at the Superior Court of California, County of San Diego seeking to void a License Agreement entered into between Repligen and the University of California, San Diego (UCSD) in December 2000 (the "UCSD License Agreement"). The Pro-Neuron Complaint, among other things, also requests the
court order the Regents assign all rights licensed to Repligen pursuant to the UCSD License Agreement to Pro-Neuron pursuant to the Regent's agreement with Pro-Neuron. The Regents and Repligen believe that the Complaint is without merit and intend to vigorously defend their rights. If Pro-Neuron is successful in this action, our ability to commercialize uridine for mitochondrial disease may be limited.
Repligen and the University of Michigan (the "University") believe that the University is entitled to rights to certain United States patents owned by Bristol-Myers Squibb Company ("BMS"), which patents cover claims for compositions and methods of use for CTLA4-Ig. On August 31, 2000, Repligen and the University filed a complaint against BMS at the United States District Court for the Eastern District of Michigan in Detroit, Michigan seeking correction of inventorship on these patents. A correction of inventorship would result in the University being designated as the assignee or a co-assignee on any corrected BMS patent. Repligen would then have rights to such technology pursuant to a 2000 License Agreement with the University, a 1995 Asset Acquisition Agreement with Genetics Institute and other related agreements. Repligen's failure to obtain shared ownership rights in the BMS patents may restrict Repligen's ability to commercialize CTLA4-Ig. Repligen and the University have also filed patents related to compositions of matter and methods of use of CTLA4-Ig.
From time to time, we may be subject to other legal proceedings and claims in the ordinary course of business. We are not currently aware of any such proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the security holders of the Company through the solicitation of proxies or otherwise, during the last quarter of the fiscal year ended March 31, 2002.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Market Information
Our common stock is traded over-the-counter on the Nasdaq National Market under the symbol "RGEN." The following table sets forth for the periods indicated the high and low bid quotations for the common stock as reported by Nasdaq. These quotations reflect inter-dealer prices, without retail markup, markdown or commission and may not necessarily reflect actual transactions.
Fiscal Year 2002 High Low ---------------- ---- --- Fourth Quarter $4.50 $2.29 Third Quarter 3.13 1.85 Second Quarter 3.04 1.81 First Quarter 3.57 1.28 Fiscal Year 2001 ---------------- Fourth Quarter $5.88 $2.03 Third Quarter 8.69 3.00 Second Quarter 8.88 5.31 First Quarter 9.69 4.00 |
Stockholders and Dividends
As of May 15, 2002 there were approximately 898 stockholders of record of our common stock. We have not paid any dividends since our inception and do not intend to pay any dividends on our common stock in the foreseeable future. We anticipate that we will retain all earnings, if any, to support our operations and our proprietary drug development programs. Any future determination as to the payment of dividends will be at the sole discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements and other factors our board of directors deems relevant.
Securities Authorized for Issuance under Equity Compensation Plans
Equity Compensation Plan Information
Number of securities
remaining available for
Number of securities to be future issuance under equity
issued upon exercise of Weighted-average exercise compensation plans (excluding
outstanding options, warrants price of outstanding options, securities reflected
Plan category and rights warrants and rights in column (a))
------------- ---------- ------------------- --------------
(a) (b) (c)
Equity compensation plans
approval by security holders 1,701,900 $ 2.64 1,538,919
Equity compensation plans not
approved by security holders -- $ --
--------- ------ ---------
Total 1,701,900 $ 2.64 1,538,919
========= ====== =========
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Item 6. SELECTED CONSOLIDATED FINANCIAL DATA
The following selected financial data are derived from, and are qualified in their entirety by reference to, the consolidated financial statements of Repligen as of and for the years ended March 31, 2002, 2001, 2000, 1999 and 1998 which have been audited by Arthur Andersen LLP, independent public accountants. The selected financial data set forth below should be read in conjunction with the consolidated financial statements of Repligen and the related notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this report and our report on Form 10-K for the years ended March 31, 2001, 2000, 1999 and 1998.
Years Ended March 31,
----------------------------------------------------------------
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
(In thousands, except per share amounts)
Operating Statement Data:
Revenue:
Product $ 4,302 $ 2,083 $ 2,041 $ 1,010 $ 1,114
Research and development -- 172 863 1,268 917
-------- -------- -------- -------- --------
Total revenue 4,302 $ 2,255 $ 2,904 $ 2,278 $ 2,031
-------- -------- -------- -------- --------
|
Costs and expenses:
Cost of product sold 1,993 1,400 1,107 689 480
Research and development 5,361 5,786 3,754 2,882 1,420
Selling, general & administrative 2,526 2,402 2,406 1,463 1,152
-------- -------- -------- -------- --------
Total costs and expenses 9,880 9,588 7,267 5,034 3,052
-------- -------- -------- -------- --------
Loss from operations (5,578) (7,333) (4,363) (2,756) (1,021)
-------- -------- -------- -------- --------
Investment income 1,117 2,054 547 212 225
Net loss $ (4,461) $ (5,279) $ (3,816) $ (2,544) $ (796)
======== ======== ======== ======== ========
Net loss per common share $ (0.17) $ (0.20) $ (0.18) $ (0.14) $ (0.05)
======== ======== ======== ======== ========
Weighted average common shares outstanding 26,640 26,548 21,538 18,018 16,502
======== ======== ======== ======== ========
(In thousands)
As of March 31,
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
Balance Sheet Data:
Cash and investments $ 25,250 $ 30,298 $ 34,033 $ 3,263 $ 4,752
Working capital 20,577 24,398 34,473 3,860 5,377
Total assets 29,111 32,148 36,287 5,224 6,513
Accumulated deficit (140,419) (135,959) (130,680) (126,864) (124,320)
Stockholders' equity 26,445 30,891 35,090 4,592 6,124
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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
The following Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. When used in this report, the words "intend," "anticipate," "believe," "estimate," "plan" and "expect" and similar expressions as they relate to us are included to identify forward-looking statements. Repligen's actual results could differ materially from those anticipated in these forward-looking statements and are a result of certain factors, including those set forth under "Certain Factors that May Affect Future Results" and elsewhere in this report.
We are developing innovative therapeutic products for debilitating pediatric diseases. Our therapeutic product candidates are secretin for autism, uridine for mitochondrial disease and CTLA4-Ig for immune disorders. These products are synthetic forms of naturally-occurring substances which may correct improperly regulated biological processes with minimal toxicity or side-effects. Our product candidates have the potential to produce clinical benefits not attainable with any existing drug in diseases for which there are few alternatives.
Autism is a developmental disorder characterized by poor communicative and social skills, repetitive and repetitive behaviors and in some patients, gastrointestinal problems. We have initiated two randomized, placebo-controlled, double-blind Phase 3 clinical trials to evaluate the impact of secretin on the social interaction deficits of autism in children 2.7 to 4.9 years of age. Each child will receive six doses of secretin or a placebo over 18 weeks and be evaluated with the social interaction scale of the Autism Diagnostic Observation Schedule and with a Clinical Global Impression of Change.
In February 2000, we were issued a broad U.S. patent covering the use of secretin in the treatment of autism. We are currently prosecuting additional patent applications in the United
States, Europe and Japan. There are currently no drugs approved by the FDA for the treatment of autism.
In December 2000, the Company licensed from the University of California, San Diego ("UCSD") exclusive rights to a U.S. patent application covering novel methods for the treatment of mitochondrial disease. Mitochondria are small bodies found in every cell, which produce energy for cellular processes. Mitochondrial diseases are characterized by impaired function of many systems and organs, particularly skeletal muscles (weakness, poor motor skills), the nervous system (seizures, poor cognition) and dysfunction of the heart and kidney. Uridine is a naturally occurring substance required by all cells for the synthesis of RNA, DNA and other essential factors. Mitochondria are the only cellular (non-dietary) source of uridine and its synthesis is often impaired in patients with mitochondrial disease. In a Phase 1 study at UCSD, daily administration of uridine or a derivative of uridine was well tolerated by the patients and produced symptom improvements in some patients. We are currently conducting a placebo-controlled Phase 2 clinical trial to extend these observations. (For more information on our intellectual property rights to uridine and related compound for the treatment of mitochondrial disease, please see "Legal Proceedings.")
We are currently conducting a Phase 2 clinical trial of CTLA4-Ig in patients with refractory immune thrombocytopenic purpura ("ITP"). ITP is an autoimmune disease in which the patient's immune system mounts an attack on their own blood platelets which can result in internal bleeding.
In March 2002, we received a Notice of Allowance from the U.S. Patent and Trademark Office for the specific CTLA4-Ig composition which we are developing. Repligen has also obtained an exclusive license to the patent rights of the University of Michigan which pertain to CTLA4-Ig and is prosecuting patents filed by the University related to therapeutic uses of CTLA4-Ig. We also believe that the University of Michigan and Repligen are entitled to rights to certain U.S. patents on compositions and therapeutic uses of CTLA4 which have been issued to Bristol-Myers Squibb Company. (For more information on our intellectual property rights to CTLA4-Ig, please see "Legal Proceedings.")
In October 1999, we licensed exclusive commercial rights to two diagnostic products based on synthetic forms of porcine (pig-derived) and human secretin from a private company. Both of these products have been evaluated in clinical trials for their safety and efficacy in diagnosing pancreatic function and gastrinoma. In April 2002, the FDA approved the use of synthetic porcine secretin ("SecreFlo(TM)") to aid in the assessment of pancreatic function and the diagnosis of gastrinoma, a form of cancer. The FDA has granted SecreFlo(TM) orphan drug designation, which means that we will have a seven year period of exclusivity to market the product in the U.S. In December of 2001, the FDA issued an "approvable letter" for a synthetic form of human secretin which contained questions concerning the manufacture and quality control of the product. Prior to approval, ChiRhoClin will need to provide additional information to the FDA to satisfy the FDA's concerns. The FDA has granted this product orphan drug status which means we will have a seven year period of exclusivity following final approval to market this product. We intend to market these diagnostic products directly to gastroenterologists in the U.S.
We develop, manufacture and market products for the production of therapeutic antibodies. We currently market a line of products for the purification of antibodies based on a naturally occurring protein, Protein A, which can specifically bind to antibodies. Repligen owns composition of matter patents for recombinant Protein A in the United States which expire in 2009. In December 1998, we entered into a ten-year agreement to supply recombinant Protein A to Amersham Pharmacia Biotech, a leading supplier to the biopharmaceutical market.
Recent Accounting Pronouncements
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", which supersedes FASB Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of". This new statement also supersedes certain aspects of APB 30, "Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions", with regard to reporting the effects of a disposal of a segment of a business and will require expected future operating losses from discontinued operations to be reported in discontinued operations in the period incurred (rather than as of the measurement date as presently required by APB 30). In addition, more dispositions may qualify for discontinued operations treatment. The provisions of this statement are required to be applied for fiscal years beginning after December 15, 2001 and interim periods within those fiscal years. The Company does not expect the impact of SFAS No. 144 to have a material impact on the Company's financial position or results of operations.
CRITICAL ACCOUNTING POLICIES
In December 2001, the Securities and Exchange Commission requested that reporting companies discuss their most "critical accounting policies" in management's discussion and analysis of financial condition and results of operations. The SEC indicated that a "critical accounting policy" is one that is important to the portrayal of a company's financial condition and operating results and requires management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
We have identified the policies below as critical to our business operations and the understanding of our results of operations. The impact and any associated risks related to these policies on our business operations is discussed throughout Management's Discussion and Analysis of Financial Condition and Results of Operations where such policies affect our reported and expected financial results. For a detailed discussion on the application of this and other accounting policies, see Note 1 in the Notes to the Consolidated Financial Statements of this annual report on Form 10-K. The Company's preparation of this annual report on Form 10-K requires it to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of its financial statements, and assurance that actual results will not differ from those estimates.
Revenue Recognition
We generate product revenues from the sale of our Protein A products to customers in the pharmaceutical and process chromatography industries. We recognize revenue related to product sales upon shipment of the product to the customer. Licensing and royalties from our licensed technologies are recognized as earned in accordance with Staff Accounting Bulletin (SAB) No. 101,"Revenue Recognition". SAB 101 requires companies to recognize certain upfront nonrefundable fees over the life of the related alliance when such fees are received in conjunction with alliances that have multiple elements.
Clinical Trial Estimates
Our clinical development trials related to our proprietary drug products are primarily performed by outside parties. It is not unusual at the end of each accounting period to estimate both the total cost of the trials and the percent completed as of that accounting date. We then
need to adjust our estimates when final invoices are received. To date, these adjustments have not been material to our financial statements, and we believe that the estimates that we made as of March 31, 2002 are reflective of the actual expenses incurred as of that date. However, readers should be cautioned that the possibility exists that the timing or cost of certain trials might be longer or shorter or cost more or less than we have estimated and that the associated financial adjustments would be reflected in future periods.
Results of Operations
Fiscal Year Ended March 31, 2002 Compared with Fiscal Year Ended March 31, 2001
Revenues
Total revenues for fiscal 2002 were $4,302,000 compared to $2,255,000 in fiscal 2001, an increase of $2,047,000 or 91%. This increase in revenue is a result of increased Protein A sales driven predominantly by the rapid market growth and success of antibody therapeutic drugs.
Product revenues for fiscal 2002 were $4,302,000 compared to $2,083,000 in fiscal 2001, an increase of $2,219,000 or 107%. This increase is due to increased product shipments to Amersham and increased demand from several monoclonal antibody producers during the year.
Research and development revenues for fiscal 2002 were $0 compared to $172,000 in fiscal 2001, a decrease of $172,000 or 100%. During fiscal 2001, we received non-recurring licensing payments from certain intellectual property pertaining to our former programs.
Costs and Expenses
Total costs and expenses for fiscal 2002 were $9,880,000 compared to $9,588,000 in fiscal 2001, an increase of $292,000 or 3%.
Research and development expenses for fiscal 2002 were $5,361,000 compared to $5,786,000 in fiscal 2001, a decrease of $425,000 or 7%. This decrease is largely due to decreased clinical trial costs, pharmacology-toxicology testing, and manufacturing costs related to development activities for our CTLA4-Ig for immune disorders and uridine for mitochondrial disease product candidates.
Selling, general and administrative expenses for fiscal 2002 were $2,526,000 compared to $2,402,000 in fiscal 2001, an increase of $124,000 or 5%. This increase was attributable to increases in payroll and related expenses, and litigation expense. These increases were partially offset by a decrease in non-cash charges related to the issuance of warrants that were incurred during fiscal 2001.
Cost of product sold for fiscal 2002 was $1,993,000, compared to $1,400,000 in fiscal 2001, an increase of $593,000 or 42%. This increase is largely attributable to increased Protein A sales and to mix of product sales partially offset by manufacturing efficiencies. Gross margin for our product revenue in fiscal 2002 was 54% of product revenues versus 33% of product revenue for fiscal 2001. This increase is a result of changes in product mix and improvements in manufacturing efficiencies.
Investment income
Investment income for fiscal 2002 was $1,117,000, compared to $2,054,000 in fiscal 2001, a decrease of $937,000 or 46%. This decrease is attributable to lower average funds available for investment and lower interest rates during fiscal 2002 compared to fiscal 2001. We expect interest income to vary based on changes in the amount of funds invested and fluctuation of interest rates. We do, however, expect our cash balance to decline during fiscal 2003 and expect that our interest income will also decrease.
Fiscal Year Ended March 31, 2001 Compared with Fiscal Year Ended March 31, 2000
Revenues
Total revenues for fiscal 2001 were $2,255,000, compared to $2,904,000 in fiscal 2000, a decrease of $649,000 or 22%. This decrease in revenue is a result of the discontinuance of research collaborations and grants programs that occurred during fiscal 2000 as we focused our efforts on our own proprietary drug programs.
Product revenues for fiscal 2001 were $2,083,000, compared to $2,041, 000 in fiscal 2000, an increase of $42,000 or 2%. Product sales under our supply agreement with Amersham increased during fiscal 2001 partially offset by a decrease in sales of our Protein A product as a result of the timing of large production scale orders.
Research and development revenues for fiscal 2001 were $172,000 compared to $863,000 in fiscal 2000, a decrease of $691,000 or 80%. During fiscal 2000, we received non-recurring licensing payments and completed our SBIR grants for NIH and NSF.
Costs and Expenses
Total costs and expenses for fiscal 2001 were $9,588,000 compared to $7,267,000 in fiscal 2001, an increase of $2,321,000 or 32%.
Research and development expenses for fiscal 2001 were $5,786,000 compared to $3,754,000 in fiscal 2000, an increase of $2,032,000 or 54%. This increase is largely due to increased clinical and manufacturing costs related to development activities for secretin, CTLA4-Ig and uridine.
Selling, general and administrative expenses for fiscal 2001 were $2,402,000 compared to $2,406,000 in fiscal 2000, a decrease of $4,000 or 0%. During fiscal 2001 increases in payroll and related expenses, non-cash charges related to the issuance of warrants, and increased shareholder communication expenses were partially offset by an early termination fee received in fiscal 2001 from a tenant and a decrease in financial advisory costs that were incurred during fiscal 2000.
Cost of product sold for fiscal 2001 was $1,400,000, compared to $1,107,000 in fiscal 2000, an increase of $293,000 or 26%. Gross margin for our product revenue in fiscal 2001 was 33% of product revenues versus 46% of product revenues for fiscal 2000. This decrease is a result of increased personnel costs and production costs relating to the Amersham supply agreement.
Investment income
Investment income for fiscal 2001 was $2,054,000, compared to $547,000 in fiscal 2000, an increase of $1,507,000 or 276%. The increase in investment income is due to higher average cash, cash equivalent and marketable securities balances as result of the common stock financings that took place during March 2000.
Liquidity and Capital Resources
We have financed our operations primarily through sales of equity securities and revenues derived from product sales, collaborative research agreements, government grants, and payments received from licensing and royalty agreements.
At March 31, 2002 we had cash, cash equivalents, and marketable securities of $25,250,000, compared to $30,298,000 at March 31, 2001. Our operating activities in 2002 used
cash of approximately $4,461,000, consisting of the net loss from operations for the year and increases in inventory, accounts receivable and prepaid expenses. These cash uses were offset by noncash charges for depreciation and amortization and an increase in accrued expenses and accounts payable. During fiscal 2002, we purchased $86,000 of capital equipment, consisting of laboratory and office equipment.
We have leased, pursuant to a ten-year lease agreement, a new corporate headquarters in Waltham, Massachusetts. We expect to expend approximately $2,000,000 for leasehold improvements for this 25,000 square foot facility. We incurred costs of $1,184,000 associated with our new facility in Waltham during fiscal 2002. We anticipate that this new facility will increase operating efficiencies and manufacturing capacity to meet the growing demand for our Protein A products, and to better meet corporate goals and objectives. We plan to relocate to these new facilities in the first quarter of 2003. In connection with this lease agreement, a letter of credit in the amount of $500,000 was issued to the Company's landlord. The letter of credit is collateralized by a certificate of deposit held by the bank that issued the letter of credit. The certificate of deposit is included in restricted cash in the accompanying balance sheet as of March 31, 2002.
In fiscal 2002, we received proceeds of $14,100 from the exercise of stock options.
We expect to incur significantly higher costs in fiscal 2003 as a result of expanded research and development costs associated with the expansion of activities associated with clinical trials of our proprietary drug candidates and the launch of our diagnostic product, SecreFlo(TM). During April 2002 and as required by the terms of our license agreement with ChiRhoClin, we paid a milestone payment of $1,250,000 in connection with the FDA's approval of SecreFlo, our synthetic porcine secretin product. Also pursuant to such license agreement, we are required to issue to ChiRhoClin approximately, 696,000 shares of our common stock no later than the end of the second quarter of fiscal 2003. We have not granted registration rights to ChiRhoClin with respect to the shares to be issued under the license agreement. In addition, under terms of licensing agreement with ChiRhoClin, if the FDA approves the NDA for human secretin diagnostic, we will be required to pay ChiRhoClin future milestones in cash. We will be required to pay royalties on sales of both synthetic porcine and human products.
We believe that we have sufficient resources to satisfy our working capital and capital expenditure requirements for the next twenty-four months. Should we need to secure additional financing to meet our future liquidity requirements, we may not be able to secure such financing, or obtain such financing on favorable terms because of the volatile nature of the biotechnology marketplace.
At March 31, 2002, we had net operating loss carryforwards of approximately $110,970,000 and research and development credit carryforwards of approximately $7,192,000 to reduce future federal income taxes, if any. The net operating loss and tax credit carryforwards will expire at various dates, beginning in 2003, if not used. Net operating loss carryforwards and available tax credits are subject to review and possible adjustment by the Internal Revenue Service and may be limited in the event of certain changes in the ownership interest of significant stockholders.
We do not currently use derivative financial instruments. We generally place our marketable security investments in high quality credit instruments, as specified in our investment policy guidelines. Our investment policy also limits the amount of credit exposure to any one issue, issuer, and type of investment. We do not expect any material loss from our investment in marketable securities.
We believe that inflation has not had a material effect on our operations.
Item 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
We have investments in commercial paper, U.S. Government and agency securities as well as corporate bonds and other debt securities; as a result, we are exposed to potential loss from market risks that may occur as a result of changes in interest rates and the change in credit quality of the issuer.
We generally place our marketable security investments in high quality credit instruments, as specified in our investment policy guidelines. Our investment policy also limits the amount of credit exposure to any one issue, issuer, and type of investment. We intend to hold these investments to maturity, as the intention is to hold these assets in accordance with our business plans.
Item 8. FINANCIAL STATEMENTS
All financial statements required to be filed hereunder are filed as an exhibit hereto, are listed under item 14 (a) (1) and are incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding our directors and executive officers will be set forth under the captions "Election of Directors," "Occupations of Directors and Executive Officers," "Biographical Information," "Information Regarding the Board of Directors and its Committees" and "Section 16 (a) Beneficial Ownership Reporting Compliance" in our definitive proxy statement for our annual meeting of stockholders to be held on September 12, 2002 which will be filed with the SEC within 120 days of March 31, 2002 and is incorporated herein by reference.
Item 11. EXECUTIVE COMPENSATION
Information required by this Item will be set forth under the captions "Summary of Executive Compensation" and "Compensation of Directors" in our definitive proxy statement for our annual meeting of stockholders to be held on September 12, 2002 which will be filed with the SEC within 120 days of March 31, 2002 and is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by this Item will be set forth under the captions "Principal Holders of Voting Securities" and "Stock Ownership of Executive Officers and Directors" in our definitive proxy statement for our annual meeting of stockholders to be held on September 12, 2002 which
will be filed with the SEC within 120 days of March 31, 2002 and is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by this Item will be set forth under the caption "Certain Relationships and Related Transactions" in our definitive proxy statement for our annual meeting of stockholders to be held on September 12, 2002 which will be filed with the SEC within 120 days of March 31, 2002 and is incorporated herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
The following documents are filed as part of this Annual Report on Form 10-K:
(a) (1) Financial Statements:
The consolidated financial statements required by this item are submitted in a separate section beginning on page F-2 of this Report, as follows:
Page
----
Report of Independent Public Accountants.................................. F-2
Consolidated Balance Sheets as of March 31, 2002 and 2001................. F-3
Consolidated Statements of Operations for the Years Ended
March 31, 2002, 2001, and 2000............................................ F-4
Consolidated Statements of Stockholders' Equity for the Years
Ended March 31, 2002, 2001, and 2000...................................... F-5
Consolidated Statements of Cash Flows for the Years Ended
March 31, 2002, 2001, and 2000............................................ F-6
Notes to Consolidated Financial Statements................................ F-7
(a) (2) Financial Statement Schedules:
None
(a) (3) Exhibits:
The Exhibits which are filed as part of this Annual Report or which are
incorporated by reference are set forth in the Exhibit Index hereto.
|
(b) Reports on Form 8-K:
On April 9, 2002, we filed a current report on Form 8-K reporting that the United States Food and Drug Administration (FDA) has granted approval to market SecreFlo(TM) (synthetic porcine secretin), the first synthetic version of the hormone secretin. SecreFlo(TM) has been approved for stimulation of pancreatic secretions.
EXHIBIT INDEX
Exhibit
Number Document Description
------- --------------------
3.1 Restated Certificate of Incorporation dated June 30, 1992 and
amended September 30, 1999 (filed as Exhibit 4.1 to Repligen
Corporation's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999 and incorporated herein by reference).
3.2 + By-laws
4.1 + Specimen Stock Certificate
4.2 Form of Warrant Agreement (filed as Exhibit 4.1 to Repligen
Corporation's Form 10-Q for the quarter ended September 30, 1999 and
incorporated herein by reference).
4.3 Form of Common Stock Purchase Warrant (filed as Exhibit 4.3 to
Repligen Corporation's Form S-3 Registration Statement No. 333-36280
and incorporated herein by reference).
4.4 Stock Purchase Agreement dated as of March 7, 2000, by and among
Repligen Corporation and the investors listed on Schedule I thereto
(filed as Exhibit 4.1 to Repligen Corporation's Form 8-K filed March
21, 2000 and incorporated herein by reference).
4.5 Common Stock Purchase Warrant dated July 24, 2000 (filed as Exhibit
4.1 to Repligen Corporation's Form 10-Q for the quarter ended
September 30, 2000 and incorporated herein by reference).
4.6 * The 2001 Repligen Corporation Stock Option Plan, adopted by the
Stockholders on September 13, 2001 (filed as Appendix B to Repligen
Corporation's Definitive Proxy Statement on Schedule 14A dated July
19, 2001 and incorporated herein by reference).
4.7 * The Amended 1992 Repligen Corporation Stock Option Plan, as
amended (filed as Exhibit 4.2 to Repligen Corporation's Form 10-Q
for the quarter ended September 30, 2000 and incorporated herein by
reference).
10.1 +* Consulting Agreement, dated October 1, 1981, between Dr. Paul
Schimmel and Repligen Corporation.
10.2 +* Consulting Agreement, dated November 1, 1981, between Dr.
Alexander Rich and Repligen Corporation.
10.3 +* Employment Agreement, dated March 14, 1996, between Repligen
Corporation and Walter C. Herlihy.
10.4 +* Employment Agreement, dated March 14, 1996, between Repligen
Corporation and James R. Rusche.
10.5 +* Employment Agreement, dated March 14, 1996, between Repligen
Corporation and Daniel P. Witt.
|
10.6 + Sublease Agreement dated as of May 1, 1996 between T Cell
Sciences, Inc. and Repligen Corporation.
#10.7 Patent Purchase Agreement dated as of March 9, 1999 among the
Company and Autism Research Institute and Victoria Beck (filed as
Exhibit 2.1 to Repligen Corporation's Form 8-K/A filed June 15, 1999
and incorporated herein by reference).
#10.8 Manufacturing Transfer Agreement dated as of December 31, 1998 among
the Company and Amersham Pharmacia Biotech AB (filed as Exhibit 10.1
to Repligen Corporation's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1998 and incorporated herein by
reference).
#10.9 Supply Agreement dated as of May 26, 1999 by and between Repligen
Corporation and Amersham Pharmacia Biotech AB (filed as Exhibit 10.1
to Repligen Corporation's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999 and incorporated herein by reference).
10.11 Licensing Agreement by and between ChiRhoClin, Inc. and Repligen
Corporation (filed as Exhibit 10.1 to Repligen Corporation's
Quarterly Report on Form 10-Q for the quarter ended December 31,
1999 and incorporated herein by reference).
10.12 Finders Agreement by and between Repligen Corporation and Paramount
Capital, Inc. dated as of March 2, 2000 (filed as Exhibit 4.2 to
Repligen Corporation's Form 8-K filed March 21, 2000 and
incorporated herein by reference).
10.13 Patent Purchase Agreement dated as of May 9, 2000 by and between
Tolerance Therapeutics LLC and Repligen Corporation (filed as
Exhibit 10.1 to Repligen Corporation's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2000 and incorporated herein by
reference).
10.14 License Agreement with University of Michigan (filed as Exhibit 10.1
to Repligen Corporation's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2000 and incorporated herein by
reference).
10.15 Lease Between Repligen Corporation as Tenant and West Seyon LLC as
Landlord, 35 Seyon Street, Waltham, MA (filed as Exhibit 10.1 to
Repligen Corporation's Quarterly Report on Form 10-Q for the quarter
ended December 31, 2001 and incorporated herein by reference).
10.16 + Standard Form of Agreement between Repligen Corporation and Siena
Construction Corporation.
21 + Subsidiaries of Registrant.
23 + Consent of Arthur Andersen LLP.
99.1 + Letter to commission Pursuant to Temporary Note 3T dated May 17,
2002.
-----------
|
# Confidential treatment obtained as to certain portions.
* Management contract or compensatory plan or arrangement
+ Filed herewith.
The exhibits listed above are not contained in the copy of the annual report on Form 10-K distributed to stockholders. Upon the request of any stockholder entitled to vote at the 2002 annual meeting, the Registrant will furnish that person without charge a copy of any exhibits listed above. Requests should be addressed to Repligen Corporation, 117 Fourth Avenue, Needham, MA 02494.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
REPLIGEN CORPORATION
By: /s/ Walter C. Herlihy
---------------------------------------
Walter C. Herlihy
President and Chief Executive Officer
|
(Principal executive, financial and accounting officer)
Date: May 24, 2002
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby makes, constitutes and appoints Walter C. Herlihy with full power to act without the other, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities to sign any or all amendments to this Form 10-K, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents of any of them, or any substitute or substitutes, lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Alexander Rich Co-Chairman of the Board of Directors May 24, 2002
------------------------------------
Alexander Rich, M.D.
/s/ Paul Schimmel Co-Chairman of the Board of Directors May 24, 2002
------------------------------------
Paul Schimmel, Ph.D.
/s/ Walter C. Herlihy President, Chief Executive Officer and May 24, 2002
------------------------------------ Director (Principal executive, financial
Walter C. Herlihy and accounting officer)
/s/ Robert J. Hennessey Director May 24, 2002
------------------------------------
Robert J. Hennessey
/s/ G. William Miller Director May 24, 2002
------------------------------------
G. William Miller
|
INDEX TO FINANCIAL STATEMENTS
Page
----
Report of Independent Public Accountants F-2
Balance Sheets as of March 31, 2002 and 2001 F-3
Statements of Operations for the Years
Ended March 31, 2002, 2001 and 2000 F-4
Statements of Stockholders' Equity for the Years
Ended March 31, 2002, 2001 and 2000 F-5
Statements of Cash Flows for the Years
Ended March 31, 2002, 2001 and 2000 F-6
Notes to Financial Statements F-7
|
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of Repligen Corporation:
We have audited the accompanying balance sheets of Repligen Corporation (a Delaware corporation) as of March 31, 2002 and 2001, and the related statements of operations, stockholders' equity and cash flows for each of the three years in the period ended March 31, 2002. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Repligen Corporation as of March 31, 2002 and 2001, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2002, in conformity with accounting principles generally accepted in the United States.
/s/ ARTHUR ANDERSEN LLP
-----------------------
ARTHUR ANDERSEN LLP
Boston, Massachusetts
May 13, 2002
|
REPLIGEN CORPORATION
BALANCE SHEETS
As of March 31,
2002 2001
--------------------------------
Assets
Current assets:
Cash and cash equivalents $ 8,696,194 $ 16,163,625
Marketable securities 12,143,170 8,142,148
Accounts receivable, less reserves of $25,000 865,861 443,760
Inventories 916,091 634,723
Prepaid expenses and other current assets 622,309 270,252
------------- -------------
Total current assets 23,243,625 25,654,508
------------- -------------
Property, plant and equipment, at cost:
Leasehold improvements 1,657,416 331,501
Equipment 1,169,080 1,103,527
Furniture and fixtures 352,174 473,288
------------- -------------
3,178,670 1,908,316
Less - accumulated depreciation and amortization 1,721,732 1,464,195
------------- -------------
1,456,938 444,121
------------- -------------
Long-term marketable securities 3,910,852 5,992,478
Restricted cash 500,000 --
Other assets, net -- 56,882
------------- -------------
$ 29,111,415 $ 32,147,989
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,407,955 $ 529,914
Accrued expenses 1,258,804 726,910
------------- -------------
Total current liabilities 2,666,759 1,256,824
------------- -------------
Commitments and contingencies (Notes 5, 6, 8 & 9)
Stockholders' equity:
Preferred stock, $0.01 par value, 5,000,000 shares
authorized, no shares issued or outstanding -- --
Common stock, $0.01 par value, 40,000,000 shares
authorized, issued and outstanding, 26,642,750 shares and
26,628,950 shares in 2002 and 2001, respectively 266,427 266,289
Additional paid-in capital 166,597,654 166,583,684
Accumulated deficit (140,419,425) (135,958,808)
------------- -------------
Total stockholders' equity 26,444,656 30,891,165
------------- -------------
$ 29,111,415 $ 32,147,989
============= =============
|
The accompanying notes are an integral part of these financial statements.
REPLIGEN CORPORATION
STATEMENTS OF OPERATIONS
Years Ended March 31,
2002 2001 2000
------------------------------------------------
Revenue:
Product $ 4,301,565 $ 2,083,529 $ 2,040,828
Research and development -- 171,615 863,035
------------ ------------ ------------
Total revenue 4,301,565 2,255,144 2,903,863
------------ ------------ ------------
Costs and expenses:
Cost of product sold 1,992,734 1,399,849 1,106,642
Research and development 5,360,720 5,786,392 3,753,908
Selling, general and administrative 2,525,827 2,401,460 2,406,429
------------ ------------ ------------
Total costs and expenses 9,879,281 9,587,701 7,266,979
------------ ------------ ------------
Loss from operations (5,577,716) (7,332,557) (4,363,116)
------------ ------------ ------------
Investment income 1,117,099 2,053,690 546,733
------------ ------------ ------------
Net loss $ (4,460,617) $ (5,278,867) $ (3,816,383)
============ ============ ============
Basic and diluted net loss per share $ (.17) $ (.20) $ (.18)
============ ============ ============
Basic and diluted weighted average
shares outstanding 26,639,525 26,547,238 21,537,584
============ ============ ============
|
The accompanying notes are an integral part of these financial statements.
REPLIGEN CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
Common Stock
------------------------ Total
Number of $.01 Par Additional Accumulated Stockholders'
Shares Value Paid-in Capital Deficit Equity
----------------------------------------------------------------------------------------------------------------------
Balance, March 31, 1999 18,264,285 $182,642 $131,272,607 ($126,863,558) $ 4,591,691
----------------------------------------------------------------------------------------------------------------------
Issuance of common stock and warrants 6,198,927 61,989 29,772,917 -- 29,834,906
Issuance of warrants for services -- -- 188,265 -- 188,265
Exercise of stock options 64,458 645 147,293 -- 147,938
Exercise of warrants 1,788,309 17,883 4,126,102 -- 4,143,985
Net loss -- -- -- (3,816,383) (3,816,383)
----------------------------------------------------------------------------------------------------------------------
Balance, March 31, 2000 26,315,979 263,159 165,507,184 (130,679,941) 35,090,402
----------------------------------------------------------------------------------------------------------------------
Issuance of common stock for
patent acquisition 30,000 300 183,450 -- 183,750
Issuance of warrants for services -- -- 218,735 -- 218,735
Exercise of stock options 34,200 342 24,354 -- 24,696
Exercise of warrants 248,771 2,488 649,961 -- 652,449
Net loss -- -- -- (5,278,867) (5,278,867)
----------------------------------------------------------------------------------------------------------------------
Balance, March 31, 2001 26,628,950 266,289 166,583,684 (135,958,808) 30,891,165
----------------------------------------------------------------------------------------------------------------------
Exercise of stock options 13,800 138 13,970 -- 14,108
Net loss -- -- -- (4,460,617) (4,460,617)
----------------------------------------------------------------------------------------------------------------------
Balance, March 31, 2002 26,642,750 $266,427 $166,597,654 ($140,419,425) $ 26,444,656
----------------------------------------------------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
REPLIGEN CORPORATION
STATEMENTS OF CASH FLOWS
Years Ended March 31,
2002 2001 2000
------------------------------------------------
Cash flows from operating activities:
Net loss $ (4,460,617) $ (5,278,867) $ (3,816,383)
Adjustments to reconcile net loss to net cash
used in operating activities --
Depreciation and amortization 257,537 276,852 324,409
Issuance of common stock warrants for services -- 218,735 188,265
Noncash expense related to common stock issued for
patent acquisition -- 183,750 --
Changes in assets and liabilities
Accounts receivable (422,101) 404,078 (418,118)
Inventories (281,368) (87,276) 82,882
Prepaid expenses and other current assets (352,057) (28,598) (60,037)
Changes in other assets 56,882 24,500 7,090
Accounts payable 19,306 104,350 156,857
Accrued expenses 428,246 (44,610) 457,594
Unearned income -- -- (49,969)
------------ ------------ ------------
Net cash used in operating activities (4,754,172) (4,227,086) (3,127,410)
------------ ------------ ------------
Cash flows from investing activities:
Purchases of marketable securities (22,801,063) (50,328,259) (8,806,367)
Redemptions of marketable securities 20,881,667 45,000,000 --
Increase in restricted cash (500,000) -- --
Purchases of property, plant and equipment (307,971) (184,721) (217,256)
------------ ------------ ------------
Net cash used in investing activities (2,727,367) (5,512,980) (9,023,623)
------------ ------------ ------------
Cash flows from financing activities:
Exercise of warrants -- 652,449 4,143,984
Exercise of stock options 14,108 24,696 147,938
Issuance of common stock and warrants -- -- 29,834,906
------------ ------------ ------------
Net cash provided by financing activities 14,108 677,145 34,126,828
------------ ------------ ------------
Net (decrease) increase in cash and cash equivalents (7,467,431) (9,062,921) 21,975,795
Cash and cash equivalents, beginning of year 16,163,625 25,226,546 3,250,751
------------ ------------ ------------
Cash and cash equivalents, end of year $ 8,696,194 $ 16,163,625 $ 25,226,546
============ ============ ============
Supplemental disclosure of noncash investing activities:
Noncash purchases of leasehold improvements $ 962,383 $ -- $ --
|
The accompanying notes are an integral part of these financial statements.
REPLIGEN CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. Organization and Nature of Business
Repligen Corporation's ("Repligen" or the "Company") goal is to develop innovative therapeutic products for debilitating pediatric diseases. Our therapeutic product candidates are secretin for autism, uridine for mitochondrial disease and CTLA4-Ig for immune disorders. These products are synthetic forms of naturally-occurring substances which may correct improperly regulated biological processes with minimal toxicity or side-effects. Our product candidates have the potential to produce clinical benefits not attainable with any existing drug in diseases for which there are few alternatives.
Our business strategy is to partially fund the development of our proprietary therapeutic products with the profits derived from the sales of our specialty pharmaceutical products: Protein A and SecreFlo(TM). This will enable us to advance these programs while at the same time increasing our financial stability.
The Company is subject to a number of risks associated with companies in the biotechnology industry. Principal among these are the risks associated with the Company's dependence on collaborative arrangements, development by the Company or its competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with the U.S. Food and Drug Administration and other governmental regulations and approval requirements, as well as the ability to grow the Company's business and obtaining adequate financing to fund this growth.
The accompanying financial statements reflect the application of certain accounting policies described in this note and elsewhere in the accompanying notes to the financial statements.
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Reclassifications
The Company has reclassified certain prior-year information to conform to the current year's presentation.
Revenue Recognition
The Company generates product revenues from the sale of its Protein A products to customers in the pharmaceutical and process chromatography industries. The Company recognizes revenue related to product sales upon shipment of the product to the customer, as long as there is persuasive evidence of an arrangement, the fee is fixed or determinable and collection of the related receivable is probable.
Research and development revenue derived from collaborative arrangements is recognized as earned under cost plus fixed-fee contracts, or on a straight-line basis over development contracts, which approximates when work is performed and costs are incurred. Research and development expenses in the accompanying statements of operations include funded and unfunded expenses. In addition, under certain contracts, the Company recognizes research and development milestones as they are achieved assuming the milestone is deemed to be substantive. Licensing and royalties from the Company's licensed technologies are recognized as earned.
The Company applies Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition." SAB No. 101 requires companies to recognize certain upfront nonrefundable fees and milestone payments over the life of the related alliance when such fees are received in conjunction with alliances that have multiple elements. The adoption of SAB No. 101 had no significant impact on the Company's financial statements.
Comprehensive Income
The Company applies Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income." SFAS No. 130 requires disclosure of all components of comprehensive income on an annual and interim basis. Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from nonowner sources. The Company's comprehensive loss is equal to its reported net loss for all periods presented.
Cash, Cash Equivalents & Marketable Securities
The Company applies SFAS No. 115, "Accounting for Certain Instruments in Debt and Equity Securities." At March 31, 2002, the Company's cash equivalents and marketable securities are classified as held-to-maturity investments as the Company has the positive intent and ability to hold to maturity. As a result, these investments are recorded at amortized cost. Cash equivalents are short-term, highly liquid investments with original maturities of 90 days or less. Marketable securities are investments with original maturities of greater than 90 days. Long-term marketable securities are investment grade securities with maturities of greater than one year. The Company recorded during the years ended March 31, 2002 and 2001 respectively, realized gains of $5,558 and $0 on sales of its marketable securities.
Cash, cash equivalents and marketable securities consist of the following at March 31, 2002 and 2001:
Unrealized Gain (Loss)
Years Ended March 31, Years Ended March 31,
2002 2001 2002 2001
----------- ----------- -------- -------
Cash and cash equivalents
Cash $ 8,696,194 $ 222,766 -- --
Commercial paper and corporate bonds -- 489,719 -- --
U.S. Government and agency securities -- -- -- --
Money market accounts -- 15,451,140 -- --
----------- ----------- -------- -------
Total cash and cash equivalents $ 8,696,194 $16,163,625 $ -- $ --
=========== =========== ======== =======
Marketable securities
U.S. Government and agency securities $ 1,414,994 $ -- $ (774) --
Corporate and other debt securities 10,728,176 8,142,148 $ 51,610 $ 8,823
----------- ----------- -------- -------
(Average of remaining maturity 5 months at
March 31, 2002) $12,143,170 $ 8,142,148 $ 50,836 $ 8,823
=========== =========== ======== =======
(Average of remaining maturity 14.5 months at
March 31, 2002) $ 3,910,852 $ 5,992,478 $ (9,334) $15,510
=========== =========== ======== =======
|
Restricted cash of $500,000 is related to the Company's facility lease obligation (see note 5).
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market. Work-in-process and finished goods inventories consist of material, labor, outside processing costs and manufacturing overhead. Inventories at March 31, 2002 and 2001 consist of the following:
Year Ended March 31,
2002 2001
-------------------------
Raw materials and work-in-process ................. $652,940 $459,288
Finished goods .................................... 263,151 175,435
-------- --------
Total .......................................... $916,091 $634,723
======== ========
|
Depreciation and Amortization
The Company provides for depreciation and amortization by charges to operations in amounts estimated to allocate the cost of fixed assets over their estimated useful lives, on a straight-line basis, as follows:
Description Estimated Useful Life
----------- ---------------------
Leasehold improvements Shorter of term of the lease or estimated
useful life
Equipment 3-5 years
Furniture and fixtures 5-7 years
|
In June 2002, the Company will relocate to its new corporate headquarters in Waltham, Massachusetts at which time approximately $1,184,000 of leasehold improvements will be placed into service and depreciation will commence.
Earnings Per Share
The Company applies SFAS No. 128, "Earnings per Share." SFAS No. 128 establishes standards for computing and presenting earnings per share. Basic net loss per share represents net loss divided by the weighted average number of common shares outstanding during the period. The dilutive effect of potential common shares, consisting of outstanding stock options and warrants, is determined using the treasury stock method in accordance with SFAS No. 128. Diluted weighted average shares outstanding for 2002, 2001 and 2000 do not include the potential common shares from warrants and stock options because to do so would have been antidilutive for the years presented. Accordingly, basic and diluted net loss per share is the same. The number of potential common shares excluded from the calculation of diluted earnings per share during the year ended March 31, 2002, 2001 and 2000 was 2,106,846, 1,904,387 and 2,484,953 shares, respectively.
Fair Value of Financial Instruments
The carrying amounts of the Company's financial instruments which represent cash and cash equivalents, marketable securities, accounts receivable and accounts payable approximate fair value generally due to the short-term nature of these instruments.
Concentrations of Credit Risk and Significant Customers
Financial instruments that subject the Company to significant concentrations of credit risk primarily consist of cash and cash equivalents, marketable securities and accounts receivable. The Company's cash equivalents and marketable securities are invested in financial instruments with high credit ratings. At March 31, 2002, the Company has no off-balance-sheet risks such as those associated with foreign exchange contracts, options contracts or other foreign hedging arrangements.
Concentration of credit risk with respect to accounts receivable is limited to customers to whom the Company makes significant sales. The Company maintains reserves for the potential write-off of accounts receivable. To date, the Company has not written off any significant accounts. To control credit risk, the Company performs regular credit evaluations of its customers' financial conditions and maintains allowances for potential credit losses. The Company does not believe significant risk exists at March 31, 2002.
Revenue from significant customers as a percentage of the Company's total revenue are as follows:
Years Ended March 31,
2002 2001 2000
---------------------
Customer A 56% 42% 14%
Customer B 23% 19% 16%
Customer C 6% 5% 16%
|
Significant accounts receivable balances as a percentage of the Company's total trade accounts receivable balances are as follows:
As of March 31,
2002 2001
---------------------
Customer A 69% 53%
Customer B 24% --
Customer C -- 26%
Customer D -- 10%
|
Segment Reporting
The Company applies SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." SFAS No. 131 establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information for those segments to be presented in interim financial reports issued to stockholders. SFAS No. 131 also establishes standards for related disclosures about products and services and geographic areas. The chief operating decision maker, or decision-making group, in making decisions how to allocate resources and assess performance, identifies operating segments as components of an enterprise about which separate discrete financial information is available for evaluation. To date, the Company has viewed its operations and manages its business as principally one operating segment. As a result, the financial information disclosed herein represents all of the material financial information related to the Company's principal operating segment.
The following table represents the Company's revenue by geographic area:
Year Ended March 31,
2002 2001 2000
--------------------------------------
Europe 63% 42% 45%
United States 35% 56% 51%
Other 2% 2% 4%
---- ---- ----
Total 100% 100% 100%
==== ==== ====
|
As of March 31, 2002 and 2001, all of the Company's assets are located in the United States.
Recent Accounting Pronouncements
In August 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This new statement also supersedes certain aspects of Accounting Principles Board Opinion No. 30 (APB 30), "Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions," with regard to reporting the effects of a disposal of a segment of a business and will require expected future operating losses from discontinued operations to be reported in discontinued operations in the period incurred (rather than as of the measurement date as presently required by APB 30). In addition, more dispositions may qualify for discontinued operations treatment. The provisions of this statement are required to be applied for fiscal years beginning after December 15, 2001 and interim periods within those fiscal years. Management believes that the adoption of SFAS No.144 will not have a significant impact on its financial statements.
3. Income Taxes
The Company accounts for income taxes under SFAS No. 109, "Accounting for Income Taxes." At March 31, 2002, the Company had net operating loss carryforwards for income tax purposes of approximately $114,270,000. The Company also had available tax credit carryforwards of approximately $7,192,000 at March 31, 2002 to reduce future federal income taxes, if any. The net operating loss and tax credit carryforwards will expire at various dates, beginning in 2003. Net operating loss carryforwards and available tax credits are subject to review and possible adjustment by the Internal Revenue Service and may be limited in the event of certain changes in the ownership interest of significant stockholders.
The deferred tax asset consists of the following:
Years Ended March 31,
2002 2001
---------------------------------
Temporary differences ................ $ 5,375,000 $ 6,738,000
Operating loss carryforwards ......... 45,708,000 40,307,000
Tax credit carryforwards ............. 7,192,000 4,476,000
------------ ------------
58,275,000 51,521,000
Valuation allowance .................. (58,275,000) (51,521,000)
------------ ------------
$ -- $ --
============ ============
|
A full valuation allowance has been provided, as it is uncertain if the Company will realize its deferred tax asset.
4. Stockholders' Equity
(a) Common Stock & Warrants
On July 24, 2000, Repligen issued to a third party a warrant to purchase 50,000 shares of common stock at $7.125 per share exercisable through July 2003 in partial consideration for a licensing agreement entered into with such third party. The Company recorded the value of this warrant, as determined using Black-Scholes option pricing model, as research and development expense.
On May 10, 2000, pursuant to a patent purchase agreement, Repligen issued to Tolerance Therapeutics LLC ("Tolerance"), in partial consideration for the assignment by Tolerance to Repligen of a U.S. patent application claiming the use of CTLA4-Ig in treatment of diseases of the immune system, 30,000 shares of Repligen common stock. The Company recorded the value of these shares as research and development expense. During fiscal 2002, the Company elected not to make its final payment and as a result its interest in these assets was returned to Tolerance.
On April 7, 2000, Repligen issued to each of its investor relation firm and public relations firm, in consideration for services, a warrant exercisable through July 2001 to purchase 10,000 shares of common stock of Repligen at $8.56 per share. The Company recorded the value of these warrants, as determined using Black-Scholes option pricing model, as selling, general and administrative expense. These warrants expired unexercised during fiscal 2002.
Also, on April 7, 2000, Repligen issued a warrant to purchase 2,900 shares of common stock at $9.00 per share to an existing shareholder exercisable through July 2000. This warrant expired during fiscal 2001. The Company recorded the value of this warrant, as determined using Black-Scholes option pricing model, as selling, general and administrative expense. These warrants expired unexercised during fiscal 2002.
On March 9, 2000, Repligen sold an aggregate of 2,598,927 shares of common stock to investors at $8.625 per share for an aggregate consideration of $22.4 million in a private placement. Repligen engaged Paramount Capital, Inc. ("Paramount") to act as placement agent for this transaction. For this transaction, Repligen paid Paramount approximately $1.57 million for its services, plus related transactional expenses, and issued to Paramount warrants to purchase up to 129,946 shares of common stock at $9.49 per share.
In July 1999, Repligen engaged Paramount as a nonexclusive financial adviser for an initial period of 12 months from the date thereof. In exchange and as consideration for these financial services, Repligen paid to Paramount $100,000 in cash and issued to Paramount (and its designees) warrants to purchase an aggregate of 100,000 shares of common stock. Each warrant is exercisable at $2.75 per share at any time prior to July 15, 2004. Repligen also agreed to pay Paramount additional fees upon the consummation of certain equity financing transactions. The Company valued these warrants at fair value and recorded an expense of $188,285 during fiscal 2000 relating to this issuance. In March 2000, Repligen terminated the financial advisory agreement with Paramount for an additional payment of $200,000 in cash. All payments were expensed in the accompanying statement of operations as selling, general and administrative expense for the year ended March 31, 2000.
Pursuant to stock purchase agreements dated April 30, 1999 and May 14, 1999, respectively, Repligen issued to certain accredited investors in a private placement an aggregate of 3,600,000 shares of common stock at $2.50 per share for an aggregate purchase price of approximately $9 million, resulting in net proceeds to Repligen of approximately $8.9 million.
In March 1999, the Company acquired all rights to certain patent applications relating to the use of secretin in the treatment of autism. The rights were acquired pursuant to a Patent Purchase Agreement whereby the Company paid $150,000 in cash, issued a warrant to purchase 350,000 shares of common stock with an exercise price of $1.59 per share, and issued 262,500 shares of common stock.
At March 31, 2002, common stock reserved for issuance is as follows:
Reserved for Shares
------------ ------
Incentive and nonqualified stock option plans 3,240,819
Warrants granted in connection with the Patent Purchase Agreement 125,000
Warrants granted in connection with the Licensing Agreement 50,000
Warrants granted for payment of services 229,946
---------
3,645,765
=========
|
(b) Stock Options
The Company's 2001 and 1992 stock option plans authorize the grant of either incentive stock options or nonqualified stock options. Incentive stock options are granted to employees at the fair market value at the date of grant. Nonqualified stock options are granted to employees or nonemployees. The options generally vest over four or five years and expire no more than 10 years from the date of grant. As of March 31, 2002, the Company had 1,538,919 options available for future grant.
A summary of stock option activity under all plans is as follows:
Years Ended March 31,
2002 Weighted 2001 Weighted 2000 Weighted
Range of Average Number Range of Average Number Range of Average
Number of Exercise Price per of Exercise Price per of Exercise Price per
Shares Prices Share Shares Prices Share Shares Prices Share
------ ------ ----- ------ ------ ----- ------ ------ -----
Outstanding
at beginning
of period 1,479,441 $.50-$12.45 $2.64 1,288,041 $.50-$12.45 $1.81 1,289,291 $.50-$12.45 $1.78
Granted 276,900 $2.35-$2.60 2.60 258,400 $4.13-$8.56 6.59 169,908 $2.91-$3.88 2.86
Exercised (13,800) $.50-$1.53 1.01 (34,200) $.50-$1.37 0.72 (64,458) $.79-$2.78 2.30
Forfeited (40,641) $1.03-$7.19 2.62 (32,800) $1.25-$7.17 3.73 (106,700) $1.31-$9.00 1.44
---------- ----- ---------- ------ --------- -----
Outstanding at
end of period 1,701,900 $.50-$12.45 $2.64 1,479,441 $.50-$12.45 $2.64 1,288,041 $.50-$12.45 $1.81
---------- ----- ---------- ------ --------- -----
Exercisable at
end of period 1,115,900 $.50-$12.45 $2.25 894,941 $.50-$12.45 $1.92 694,941 $.50-$12.45 $1.96
========== ===== ========== ====== ========= =====
|
As of March 31, 2002
Options Outstanding Options Exercisable
------------------- -------------------
Weighted Weighted
Average Average Weighted Average
Number Remaining Exercise Price Number Exercise Price
Outstanding Contractual Life Per Share Outstanding Per Share
----------- ---------------- --------- ----------- ---------
$.50-$1.38 384,000 4.45 $1.15 375,600 $1.15
$1.41-$1.63 572,000 5.86 1.43 460,800 1.44
$2.60-$3.00 448,400 7.27 2.68 145,200 2.79
$3.13-$6.56 134,500 7.21 4.48 49,700 4.69
$7.64-$12.45 163,000 6.99 8.81 84,600 9.23
-----------------------------------------------------------------------------------------
1,701,900 6.13 $2.64 1,115,900 $2.25
========= ==== ===== ========= =====
|
The Company accounts for its stock-based compensation under SFAS No. 123 "Accounting for Stock-Based Compensation." The Company continues to apply APB No. 25 for employee stock options awards and elected the disclosure-only alternative for the same under SFAS No. 123.
The Company has computed the pro forma disclosures required under SFAS No. 123 for all stock options granted to employees in 2002, 2001 and 2000 using the Black-Scholes option-pricing model prescribed by SFAS No. 123. The assumptions used and the weighted average information for the years ended March 31, 2002, 2001 and 2000 are as follows:
Years Ended March 31,
2002 2001 2000
-----------------------------------------------
Risk-free interest rates 4.31%-5.06% 5.28%-6.33% 5.08%-6.03%
Expected dividend yield -- -- --
Expected lives 7 years 7 years 7 years
Expected volatility 101% 108% 70%
Weighted average grant date fair value of options
granted during the period $2.21 $5.78 $2.02
Weighted average remaining contractual life of
options outstanding 6.1 years 6.6 years 7.0 years
|
If compensation expense for the Company's stock option plans had been determined consistent with SFAS No. 123, the pro forma net loss and net loss per share would have been as follows:
Years Ended March 31,
Net loss- 2002 2001 2000
------------------------------------------------
As reported ($4,460,617) ($5,278,867) ($3,816,383)
Pro forma ($5,206,414) ($5,681,311) ($4,103,293)
|
Basic and diluted net loss per share-
As reported $ (0.17) $ (0.20) $ (0.18)
Pro forma $ (0.20) $ (0.21) $ (0.19)
5. Commitments
In October 2001, the Company entered into a ten-year lease agreement for a new corporate headquarters in Waltham, Massachusetts. The new facility is 25,000 square feet, approximately 10,000 of which will be constructed as manufacturing and laboratory space. The Company anticipates that this new facility will increase operating efficiencies and increase manufacturing capacity to meet growing demand for Protein A products, and to better meet corporate goals and objectives. The Company plans to relocate to these new facilities in June 2002. In connection with this lease agreement, a letter of credit in the amount of $500,000 was
issued to the Company's landlord. The letter of credit is collateralized by a certificate of deposit held by the bank that issued the letter of credit. The certificate of deposit is included in restricted cash in the accompanying balance sheet as of March 31, 2002.
Obligations under noncancellable operating leases, including the new facility lease discussed above, as of March 31, 2002 are approximately as follows:
Years Ending March 31,
----------------------
2003 $ 316,000
2004 330,000
2005-2007 379,000
2008-2009 404,000
2010-2012 428,000
----------
Total minimum lease payments $1,857,000
==========
|
Rent expense charged to operations under operating leases was approximately $308,000, $377,000, and $296,000 for the years ended March 31, 2002, 2001 and 2000, respectively.
6. Certain Technologies and Product Candidates
In December 2000, the Company purchased from the University of California, San Diego ("UCSD") a right to a U.S. patent application covering novel methods for the treatment of mitochondrial disease. Under terms of the agreement, Repligen received the exclusive right under the license to commercialize products to treat mitochondrial disease and paid UCSD an up-front fee. Repligen will also pay UCSD clinical development milestones and royalties on product sales. The Company has expensed the purchase price as research and development expense as the realizability of the patent is subject to the outcome of additional research and development and the successful prosecution of the patent.
In May 2000, the Company purchased from Tolerance Therapeutics LLC the rights to a U.S. patent application claiming the use of CTLA4-Ig in the treatment of diseases of the immune system. Under terms of the agreement, the Company paid cash and issued stock for the purchase. The Company has expensed the purchase price as research and development expense as the realizability of the patent is subject to the outcome of additional research and development and the successful prosecution of the patent.
In October 1999, the Company acquired the commercial rights to two diagnostic products based on synthetic forms of porcine and human secretin from ChiRhoClin, Inc. a private company. Both of these products have been evaluated in clinical trials for their safety and efficacy in diagnosing pancreatic function and gastrinoma. A New Drug Application ("NDA") for each product has been filed with the United States Food and Drug Administration ("FDA"). In April 2002, the FDA approved the use of synthetic porcine secretin ("SecreFlo(TM)") to aid in the diagnosis of pancreatic function and the diagnosis of gastrinoma, a form of cancer. In December of 2001, the FDA issued an "approvable letter" for a synthetic form of human secretin which contained questions concerning the manufacture and quality control of the product.
Under terms of the licensing agreement, Repligen paid $1,000,000 upon execution of the agreement and the Company will be required to pay future royalties, milestones in cash and to issue common stock. This $1,000,000 payment is included in research and development expense in the accompanying statement of operations for the year ended March 31, 2000.
7. Accrued Expenses
Accrued expenses consist of the following:
Years ended March 31,
2002 2001
---------------------------
Research & development costs $ 771,465 $321,850
Payroll & payroll related costs 337,786 255,811
Professional and consulting costs 78,803 71,795
Other accrued expenses 70,750 77,454
---------- --------
$1,258,804 $726,910
========== ========
|
8. Subsequent Events
In April 2002 the United States Food and Drug Administration granted approval to market SecreFlo(TM) (synthetic porcine secretin), the first synthetic version of the hormone secretin. SecreFlo(TM) has been approved for stimulation of pancreatic secretions. Under terms of its licensing agreement, Repligen paid a milestone payment of $1,250,000 in cash and is required to issue approximately 696,000 shares of unregistered common stock to ChiRhoClin, Inc. in October 2002. The Company expects to record the fair value of these shares, $2,576,025, and the cash of $1,250,000, as a long-term intangible asset. This amount will be amortized to cost of product revenue over the remaining term of the license. In addition, the Company will be required to pay future royalties related to product sales in cash.
9. Legal Proceedings
On June 21, 2001, Pro-Neuron, Inc. filed a complaint (the "Pro-Neuron Complaint") against the Regents of the University of California (the "Regents") and Repligen at the Superior Court of California, County of San Diego seeking to void the License Agreement entered into between Repligen and the University of California, San Diego ("UCSD") in December 2000 (the "UCSD License Agreement"). The Pro-Neuron Complaint, among other things, also requests the court order the Regents assign all rights licensed to Repligen pursuant to the UCSD License Agreement to Pro-Neuron pursuant to the Regent's agreement with Pro-Neuron. UCSD and Repligen believe that the Complaint is without merit and intend to vigorously defend their rights. If Pro-Neuron is successful in this action, Repligen's ability to commercialize uridine for mitochondrial disease may be limited.
Repligen and the University of Michigan (the "University") believe that the University is entitled to rights to certain United States patents owned by Bristol-Myers Squibb Company ("BMS"), which patents cover claims for composition and methods of use for CTLA4. On August 31, 2000, Repligen and the University filed a complaint against BMS at the United States District Court for the Eastern District of Michigan in Detroit, Michigan seeking correction of inventorship on these patents. A correction of inventorship would result in the University being designated as the assignee or a co-assignee on any corrected BMS patent. Repligen would then have rights to such technology pursuant to a 2000 License Agreement with the University, a 1995 Asset Acquisition Agreement with Genetics Institute and other related agreements. Repligen's failure to obtain shared ownership rights in the BMS patents may restrict Repligen's ability to commercialize CTLA4-Ig. Repligen and the University have also filed patents related to compositions of matter and methods of use of CTLA4-Ig.
10. Selected Quarterly Financial Data (Unaudited)
The following table contains Statement of Operations information for each quarter of fiscal 2002 and 2001. The Company believes that the following information reflects all normal
recurring adjustments necessary for a fair presentation of the information for the period presented. The operating results for any quarter are not necessarily indicative of results for any future period.
Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
FY02 FY02 FY02 FY02 FY01 FY01 FY01 FY01
---- ---- ---- ---- ---- ---- ---- ----
Revenue:
Product $ 1,522 $ 1,180 $ 887 $ 713 $ 588 $ 615 $ 324 $ 556
Research and development -- -- -- -- 12 3 127 30
-------- -------- -------- -------- -------- -------- -------- --------
Total revenue 1,522 1,180 887 713 600 618 451 586
-------- -------- -------- -------- -------- -------- -------- --------
Costs and expenses:
Cost of product sold 496 585 555 357 448 393 229 330
Research and development 1,583 1,021 1,330 1,426 1,580 1,781 1,343 1,083
Selling, general and administrative 578 650 681 617 536 566 643 656
-------- -------- -------- -------- -------- -------- -------- --------
Total costs and expenses 2,657 2,256 2,566 2,400 2,564 2,740 2,215 2,069
-------- -------- -------- -------- -------- -------- -------- --------
Loss from operations (1,135) (1,076) (1,679) (1,687) (1,964) (2,122) (1,764) (1,483)
-------- -------- -------- -------- -------- -------- -------- --------
Investment income 212 259 302 344 450 539 552 513
-------- -------- -------- -------- -------- -------- -------- --------
Net loss $ (923) $ (817) $ (1,377) $ (1,343) $ (1,514) $ (1,583) $ (1,212) $ (970)
======== ======== ======== ======== ======== ======== ======== ========
Net loss per common share $ (0.03) $ (0.03) $ (0.05) $ (0.05) $ (0.06) $ (0.06) $ (0.05) $ (0.04)
Weighted average common
shares outstanding 26,643 26,642 26,639 26,633 26,599 26,576 26,560 26,456
======== ======== ======== ======== ======== ======== ======== ========
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11. Valuation and Qualifying Accounts
Balance at Beginning Balance at End of
of Period Additions Deletions Period
--------- --------- --------- ------
Allowance for Doubtful Accounts:
2000 $25,000 -- -- $25,000
2001 $25,000 -- -- $25,000
2002 $25,000 -- -- $25,000
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EXHIBIT 3.2
BY-LAWS OF REPLIGEN CORPORATION
ARTICLE I
STOCKHOLDERS
SECTION 1. Place of Meetings. All meetings of stockholders shall be held at such place within or without the State of Delaware as may be designated from time to time by the Board of Directors or, if not so designated, at the principal office of the corporation.
SECTION 2. Annual Meeting. The annual meeting of stockholders of the election of directors and the transaction of such other business as may properly come before the meeting shall be held at 10 a.m. on the last Thursday in July of each year or on such other date or at such hour as may be specified by resolution of the Board of Directors. If the date of the annual meeting shall fall upon a legal holiday at the place of the meeting, the meeting shall be held at the same hour on the next succeeding business day. If the annual meeting is not held on the date designated therefor, the directors shall cause the meeting to be held as soon thereafter as convenient.
SECTION 3. Special Meetings. Special meetings of the stockholders may be called at any time by the President, the Chairman, or the Board of Directors, or by the Secretary or any other officer upon the written request of one or more stockholders holding of record at least a majority of the outstanding shares of stock of the corporation entitled to vote at such meeting. Such written request shall state the purpose or purposes of the proposed meeting. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting.
SECTION 4. Notice of Meetings. Except where some other notice is required by law, written notice of each meeting of stockholders, stating the place, date and hour thereof and the purposes for which the meeting is called, shall be given by or under the direction of the Secretary, not less than ten nor more than sixty days before the date fixed for such meeting, to each stockholder entitled to vote at such meeting of record at the close of business on the day fixed by the Board of Directors as a record date for the determination of the stockholders entitled to vote at such meeting or, if not such date has been fixed, of record at the close of business on the day before the day on which notice is given. Notice shall be given personally to each stockholder or left at his or her residence or usual place of business or mailed postage prepaid and addressed to the stockholder at his or her address as it appears upon the records of the corporation. In case of the death, absence, incapacity or refusal of the Secretary, such notice may be given by a person designated either by a Secretary or by the person or persons calling the meeting or by the Board of Directors. A waiver of such notice in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to such notice. Attendance of a person at a meeting of stockholders shall constitute a waiver of notice of such meeting, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice. Notice of any meeting of the stockholders shall be deemed to have been given to any person who may become a stockholder of record
after the mailing of such notice and prior to such meeting. Except as required by statute, notice of any adjourned meeting of the stockholders shall not be required.
SECTION 5. Voting List. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city or other municipality or community where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by an stockholder who is present. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by this section or the books of the corporation, or to vote at any meeting of stockholders.
SECTION 6. Quorum of Stockholders. At any meeting of the stockholders, the holders of a majority in interest of all stock issued and outstanding and entitled to vote upon a question to be considered at the meeting, present in person or represented by proxy, shall constitute a quorum for the consideration of such question, but a smaller group may adjourn any meeting from time to time. When a quorum is present at any meeting, a majority of the stock represented thereat and entitled to vote shall, except where a larger vote is required by law, by the certificate of incorporation, or by these by-laws, decide any question brought before such meeting. Any election by stockholders shall be determined by a plurality of the vote cast by the stockholders entitled to vote at the election.
SECTION 7. Proxies and Voting. Each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock held of record by such stockholder, but no proxy shall be voted on after three years from its date, unless said proxy provides for a longer period. Persons holding stock in a fiduciary capacity shall be entitled to vote the shares so held, and persons whose stock is pledged shall be entitled to vote, unless in the transfer by the pledgor on the books of the corporation the pledgee shall have been expressly empowered to vote thereon, in which case only the pledgee or the pledgee's proxy may represent said stock and vote thereon. Shares of the capital stock of the corporation belonging to the corporation or to another corporation, a majority of whose shares entitled to vote in the election of directors is owned by the corporation, shall not be entitled to vote nor counted for quorum purposes.
SECTION 8. Conduct of Meeting. Meetings of the stockholders shall be presided over by one of the following officers in the order of seniority and in present and acting: the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, the President, a Vice-President, or, if none of the foregoing is in office and present and acting, a chairman to be chosen by the stockholders. The Secretary of the corporation, if present, or an Assistant Secretary, shall act as secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present the chairman of the meeting shall appoint a secretary of the meeting.
SECTION 9. Action Without Meeting. Any action required or permitted to be taken at any annual or special meeting of stockholders of the corporation may be taken without a meeting, without prior notice
and without a vote, if a consent in writing, setting forth the action so taken, is signed by the holders or by proxy for the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote on such action were present and voted. Prompt notice of the taking of corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.
ARTICLE II
DIRECTORS
SECTION 1. General Powers. The business and affairs of the corporation shall be managed by or under the direction of a Board of Directors, who may exercise all of the powers of the corporation which are not by law required to be exercised by the stockholders. In the event of a vacancy in the Board of Directors, the remaining directors, except as otherwise provided by law, may exercise the powers of the full Board until the vacancy is filled.
SECTION 2. Number; Election; Tenure and Qualification. The initial Board of Directors shall consist of three persons and shall be elected by the incorporator. Thereafter, the number of directors which shall constitute the whole Board shall be fixed by resolution of the stockholders, but in no event shall be less than one. Each director shall be elected by the stockholders at the annual meeting and all directors shall hold office until the next annual meeting and until their successors are elected and qualified, or until their earlier death, resignation or removal. The number of directors may be increased or decreased by action of the stockholders. Directors need not be stockholders of the corporation.
SECTION 3. Enlargement of the Board. The number of the Board of Directors may be increased at any time, such increase to be effective immediately, by resolution of the stockholders.
SECTION 4. Vacancies. Any vacancy in the Board of Directors, however occurring, including a vacancy resulting from an enlargement of the Board and an unfilled vacancy resulting from the removal of any director for cause or without cause, may be filled by resolution of the stockholders. A director elected to fill a vacancy shall hold office until the next annual meeting of stockholders and until his or her successor is elected and qualified or until his or her earlier death, resignation, or removal. When one or more directors shall resign from the Board, effective at a future date, the stockholders shall have the power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective. If at any time there are no directors in office, then an election of directors may be held in accordance with the General Corporation Law of the State of Delaware.
SECTION 5. Resignation. Any director may resign at any time upon written notice to the corporation. Such resignation shall take effect at the time specified therein, or if no time is specified, at the time of its receipt by the President or Secretary.
SECTION 6. Removal. Except as may otherwise be provided by the General Corporation Law, any director or the entire Board of Directors may be removed, with or without cause, at an annual meeting or at a special meeting called for that purpose, by the holders of a majority of the shares then entitled to vote at an election of directors. The vacancy or vacancies thus created may be filled by the stockholders at the meeting held for the purpose of removal.
SECTION 7. Committees. The Board of Directors may, by resolution or resolutions passed by a majority of the whole Board of Directors, designate one or more committees, each committee to consist of two or more directors of the corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of such absent or disqualified member.
A majority of all the members of any such committee may fix its rules of procedure, determine its action and fix the time and place, whether within or without the State of Delaware, of its meetings and specify what notice thereof, if any, shall be given, unless the Board of Directors shall otherwise by resolution provide. The Board of Directors shall have the power to change the members of any such committee at any time, to fill vacancies therein and to discharge any such committee, either with or without cause, at any time.
Any such committee, unless otherwise provided in the resolution of the Board of Directors, or in these by-laws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have such power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation, and, unless the resolution or these by-laws expressly so provide, no such committee shall have the power or the authority to declare a dividend or to authorize the issuance of stock.
Each committee shall keep regular minutes of its meetings and make such reports as the Board of Directors may from time to time request.
SECTION 8. Meetings of the Board of Directors. Regular meetings of the Board of Directors may be held without call or formal notice at such places either within or without the State of Delaware and at such times as the Board may by vote form time to time determine. A regular meeting of the Board of Directors may be held without call or formal notice immediately after and at the same place as the annual meeting of the stockholders, or any special meeting of the stockholders at which a Board of Directors is elected.
Special meetings of the Board of Directors may be held at any place either within or without the State of Delaware at any time when called by the Chairman of the Board of Directors, the President, Treasurer, Secretary, or two or more directors. Reasonable notice of the time and place of a special meeting shall be given to each director unless such notice is waived by attendance or by written waiver in the manner provided in these by-laws for waiver of notice of stockholders. No notice of any adjourned meeting of the Board of Directors shall be required. In any case it shall be deemed sufficient notice to a director to
send notice by mail at least seventy-two hours, or by telegram at least forty-eight hours, before the meeting, addressed to such director at his or her usual or last known business or home address.
Directors or members of any committee designated by the directors may participate in a meeting of the Board of Directors or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation by such means shall constitute presence in person at such meeting.
SECTION 9. Quorum and Voting. A majority of the total number of directors shall constitute a quorum, except that when a vacancy or vacancies exist in the Board, a majority of the directors then in office (but not less than one-third of the total number of the directors) shall constitute a quorum, and except that a lesser number of directors consisting of a majority of the directors then in office who are not officers (but not less than one-third of the total number of directors) may constitute a quorum for the purpose of acting on any matter relating to the compensation (including fringe benefits) of an officer of the corporation. A majority of the directors present, whether or not a quorum is present, may adjourn any meeting from time to time. The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors, except where a different vote is required or permitted by law, by the certificate of incorporation, or by these by-laws.
SECTION 10. Compensation. The Board of Directors may fix fees for their services and for their membership on committees, and expenses of attendance may be allowed for attendance at each meeting. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity as an officer, agent or otherwise, and receiving compensation therefor.
SECTION 11. Action Without Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting, and without notice, if a written consent thereto is signed by all members of the Board of Directors, or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board of Directors or such committee.
ARTICLE III
OFFICERS
SECTION 1. Titles. The officers of the corporation shall consist of a President, a Secretary, a Treasurer, and such other officers with such other titles as the Board of Directors shall determine, including without limitation a Chairman of the Board, a Vice-Chairman of the Board, and one or more Vice-Presidents, Assistant Treasurers, or Assistant Secretaries.
SECTION 2. Election and Term of Office. The officers of the corporation shall be elected annually by the Board of Directors at its first meeting following the annual meeting of the stockholders. Each officer shall hold office until his or her successor is elected and qualified, unless a different term is specified in the vote electing such officer, or until his or her earlier death, resignation or removal.
SECTION 3. Qualification. Unless otherwise provided by resolution of the Board of Directors, no officer, other than the Chairman or Vice-Chairman of the Board, need be
a director. No officer need be a stockholder. Any number of offices may be held by the same person, as the directors shall determine, but no person may hold the offices of President and Secretary simultaneously.
SECTION 4. Removal. Any officer may be removed, with or without cause, at any time, by resolution adopted by the Board of Directors.
SECTION 5. Resignation. Any officer may resign by delivering a written resignation to the corporation at its principal office or to the President or Secretary. Such resignation shall be effective upon receipt or at such later time as shall be specified therein.
SECTION 6. Vacancies. The Board of Directors may at any time fill any vacancy occurring in any office for the unexpired portion of the term and may leave unfilled for such period as it may determine any office other than those of President, Treasurer and Secretary.
SECTION 7. Powers and Duties. The officers of the corporation shall have such powers and perform such duties as are specified herein and as may be conferred upon or assigned to them by the Board of Directors, and shall have such additional powers and duties as are incident to their office except to the extent that resolutions of the Board of Directors are inconsistent therewith.
SECTION 8. President and Vice-Presidents. The President shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the Board of Directors unless a Chairman or Vice-Chairman of the Board is elected by the Board, empowered to preside, and present at such meeting, shall have general and active management of the business of the corporation and general supervision of its officers, agents and employees, and shall see that all orders and resolutions of the Board of Directors are carried into effect.
In the absence of the President or in the event of his or her inability or refusal to act, the Vice-President if any (or in the event there be more than one Vice-President, the Vice-Presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. The Board of Directors may assign to any Vice-President the title of Executive Vice-President, Senior Vice-President or any other title selected by the Board of Directors.
SECTION 9. Secretary and Assistant Secretaries. The Secretary shall attend all meetings of the Board of Directors and of the stockholders and record all the proceedings of such meetings in a book to be kept for that purpose, shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, shall maintain a stock ledger and prepare lists of stockholders and their addresses as required and shall have custody of the corporate seal which the Secretary or any Assistant Secretary shall have authority to affix to any instrument requiring it and attest by any of their signatures. The Board of Directors may give general authority to any other officer to affix and attest the seal of the corporation.
The Assistant Secretary if any (or if there be more than one, the Assistant Secretaries in the order determined by the Board of Directors of if there be no such determination, then in the order of their election) shall, in the absence of the Secretary or in the event of the Secretary's inability or refusal to act, perform the duties and exercise the powers of the Secretary.
SECTION 10. Treasurer and Assistant Treasurers. The Treasurer shall have the custody of the corporate funds and securities, shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the corporation as may be ordered by the Board of Directors or the President, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors, at its regular meetings, or whenever they may require it, an account of all transactions and of the financial condition of the corporation.
The Assistant Treasurer if any (or if there be more than one, the Assistant Treasurers in the order determined by the Board of Directors or if there be no such determination, then in the order of their election) shall, in the absence of the Treasurer or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the Treasurer.
SECTION 11. Bonded Officers. The Board of Directors may require any officer to give the corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors upon such terms and conditions as the Board of Directors may specify, including without limitation a bond for the faithful performance of the duties of such officer and for the restoration to the corporation of all property in his or her possession or control belonging to the corporation.
SECTION 12. Salaries. Officers of the corporation shall be entitled to such salaries, compensation or reimbursement as shall be fixed or allowed from time to time by the Board of Directors.
ARTICLE IV
STOCK
SECTION 1. Certificates of Stock. One or more certificates of stock, signed by the Chairman or Vice-Chairman of the Board of Directors or by the President or Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary, shall be issued to each stockholder certifying, in the aggregate, the number of shares owned by the stockholder in the corporation. Any or all signatures on any such certificate may be facsimile. In case any officer who shall have signed or whose facsimile signature shall have been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of issue.
Each certificate for shares of stock which are subject to any restriction on transfer pursuant to the certificate of incorporation, the by-laws, applicable securities laws, or any agreement among any number of shareholders or among such holders and the corporation shall have conspicuously noted on the face or back of the certificate either the full text of the restriction or a statement of the existence of such restriction.
SECTION 2. Transfer of Share of Stock. Subject to the restrictions, if any, stated or noted on the stock certificates, shares of stock may be transferred on the books of the corporation by the surrender to the corporation or its transfer agent of the certificate representing such shares properly endorsed or accompanied by a written assignment or power of attorney properly executed, and with such proof of
authority or the authenticity of signature as the corporation or its transfer agent may reasonably require. The corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect to that stock, regardless of any transfer, pledge or other disposition of that stock, until the shares have been transferred on the books of the corporation in accordance with the requirements of these by-laws.
SECTION 3. Lost Certificates. A new certificate of stock may be issued in the place of any certificate theretofore issued by the corporation and alleged to have been lost, stolen, destroyed, or mutilated, upon such terms in conformity with law as the Board of Directors shall prescribe. The directors may, in their discretion, require the owner of the lost, stolen, destroyed or mutilated certificate, or the owner's legal representatives, to give the corporation a bond, in such sum as they may direct, to indemnify the corporation against any claim that may be made against it on account of the alleged loss, theft, destruction or mutilation of any such certificate, or the issuance of any such new certificate.
SECTION 4. Record Date. The Board of Directors may fix in advance a record date for the determination of the stockholders entitled to notice of or to vote at any meeting of stockholders or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action. Such record date shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other action to which such record date relates.
If no record date is fixed, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day before the day on which notice is given, or, if notice is waived at the close of business on the day before the day on which the meeting is held. The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall be the day on which the first written consent is expressed. The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating to such purpose.
A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
SECTION 5. Fractional Share Interests. The corporation may, but shall not be required to, issue fractions of a share. If the corporation does not issue fractions of a share, it shall (1) arrange for the disposition of fractional interests by those entitled thereto, (2) pay in cash the fair value of fractions are determined, or (3) issue scrip or warrants in registered or bearer form which shall entitle the holder to receive a certificate for a full share upon the surrender of such scrip or warrants aggregating a full share. A certificate for a fractional share shall, but scrip or warrants shall not unless otherwise provided therein, entitle the holder to exercise voting rights, to receive dividends thereon, and to participate in any of the assets of the corporation in the event of liquidation. The Board of Directors may cause scrip or warrants to be issued subject to the conditions that they shall become void if not exchanged for certificates representing full shares before a specified date, or subject to the conditions that the shares for which scrip or warrants are exchangeable may be sold by the corporation and the proceeds thereof
distributed to the holders of scrip or warrants, or subject to any other conditions which the Board of Directors may impose.
SECTION 6. Dividends. Subject to the provisions of the certificate of incorporation, the Board of Directors may, out of funds legally available therefor, at any regular or special meeting, declare dividends upon the common stock of the corporation as and when they deem expedient.
ARTICLE V
INDEMNIFICATION AND INSURANCE
SECTION 1. Indemnification. The corporation shall, to the full extent permitted by the General Corporation Law of the State of Delaware, as amended from time to time, and the certificate of incorporation, indemnify each person whom it may indemnify pursuant thereto.
SECTION 2. Insurance. The corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any capacity or arising out of such person's status as such, whether or not the corporation would have the power to indemnify such person against such liability under the provisions of the General Corporation Law of the State of Delaware.
ARTICLE VI
GENERAL PROVISIONS
SECTION 1. Fiscal Year. Except as otherwise designated from time to time by the Board of Directors, the fiscal year of the corporation shall begin on the first day of April and end on the last day of March.
SECTION 2. Corporate Seal. The corporate seal shall be in such form as shall be approved by the Board of Directors. The Secretary shall be the custodian of the seal. The Board of Directors may authorize a duplicate seal to be kept and used by any other officer.
SECTION 3. Certificate of Incorporation. All references in these by-laws to the certificate of incorporation shall be deemed to refer to the certificate of incorporation of the corporation, as in effect from time to time.
SECTION 4. Execution of Instruments. The President, any Vice-President, or the Treasurer shall have power to execute and deliver on behalf and in the name of the corporation any instrument requiring the signature of an officer of the corporation, including deeds, contracts, mortgages, bonds, notes, debentures, checks, drafts, and other orders for the payment of money. In addition, the Board of Directors may expressly delegate such powers to any other officer or agent of the corporation.
SECTION 5. Voting of Securities. Except as the directors may otherwise designate, the President or Treasurer may waive notice of, and act as, or appoint any person or persons to act as, proxy or attorney-in-fact for this corporation (with or without power of substitution) at any meeting of stockholders or
shareholders of any other corporation or organization the securities of which may be held by this corporation.
SECTION 6. Evidence of Authority. A certificate by the Secretary, or an Assistant Secretary, or a temporary secretary, as to any action taken by the stockholders, directors, a committee or any officer or representative of the corporation shall, as to all persons who rely on the certificate in good faith, be conclusive evidence of that action.
SECTION 7. Transactions with Interested Parties. No contract or transaction between the corporation and one or more of the directors or officers, or between the corporation and any other corporation, partnership, association, or other organization in which one or more of the directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for that reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or a committee of the Board of Directors which authorizes the contract or transaction or solely because the vote of any such director is counted for such purpose, if:
(1) The material facts as to the relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or
(2) The material facts as to the relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote therein, and the contract or transaction is approved by the stockholders; or
(3) The contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified by the Board of Directors, a committee of the Board of Directors, or the stockholders.
Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.
SECTION 8. Books and Records. The books and records of the corporation shall be kept at such places within or without the State of Delaware as the Board of Directors may from time to time determine.
ARTICLE VII
AMENDMENTS
SECTION 1. By the Stockholders. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the affirmative vote of the holders of a majority of the shares of the capital stock of the corporation issued and outstanding and entitled to vote at any regular meeting of stockholders, or at any special meeting of stockholders provided notice of such alteration, amendment, repeal or adoption of new by-laws shall have been stated in the notice of such special meeting.
Exhibit 4.1 RepliGen COMMON STOCK
NUMBER SHARES
-XX- -XXXX-
REPLIGEN CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
See reverse for certain definitions and a
statement as to the rights, preferences,
privileges and restrictions of shares.
THIS CERTIFICATE IS TRANSFERABLE IN BOSTON, MA OR NEW YORK, NY
CUSIP 759916 10 9
THIS CERTIFIES THAT - Specimen - IS THE RECORD HOLDER OF |
- XXXX (XXXX) -
FULLY PAID AND NON ASSESSABLE SHARES OF THE COMMON STOCK, $.01 PAR VALUE, OF
REPLIGEN CORPORATION, transferable on the books of the Corporation in person or by attorney, upon the surrender of this certificate properly endorsed or assigned. This certificate and the shares represented hereby are subject to the laws of the State of Delaware and to the Certificate of Incorporation and By-Laws of the Corporation, as now or hereafter amended. This Certificate is not valid unless countersigned by the Transfer Agent and registered by the Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signature of its duly authorized officers.
DATED: -XXX XX, XXXX-
Secretary President and CEO
[SEAL] Countersigned and Registered:
EquiServe
Transfer Agent and Registrar
By:
Authorized Signature
|
REPLIGEN CORPORATION
The Corporation is authorized to issue Common Stock and Preferred Stock. The Board of Directors of the Corporation has authority to establish the designation of any series of Preferred Stock and to determine or alter the rights, preferences, privileges, and restrictions granted to or imposed upon any unissued shares of Preferred Stock.
A statement of the rights, preferences, privileges, and restrictions granted to or imposed upon the respective classes or series of shares and upon the holders thereof as established, from time to time, by the Certificate of Incorporation of the Corporation and by any certificate of determination, the number of shares constituting each class and series, and the designations thereof, may be obtained by the holder hereof upon request and without charge from the Transfer Agent of the Corporation at its offices in Boston, Los Angeles or New York.
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -- _____ Custodian _____
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
JT TEN - as joint tenants with right of
survivorship and not as tenants in common Act _____________________
(State)
|
Additional abbreviations may also be used though not in the above list.
For Value Received _______________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
Dated ______________________________
Signature(s) Guaranteed: _______________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBILE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND
LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP
IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM),
PURSUANT TO S.E.C RULE 17Ad-15.
THE CORPORATION IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OR SERIES OF STOCK. A COPY OF THE PREFERENCES, POWERS, QUALIFICATIONS AND RIGHTS OF EACH CLASS AND SERIES WILL BE FURNISHED BY THE CORPORATION UPON WRITTEN REQUEST AND WITHOUT CHANGE.
EXHIBIT 10.1
CONSULTING AGREEMENT
This Consulting Agreement is made as of October 1, 1981, between Repligen Corporation (the "Company"), a Delaware corporation having its principal place of business at 50 Staniford Street, Boston, Massachusetts 02114 and Dr. Paul R. Schimmel (the "Consultant") of 44 Sanderson Road, Lexington, Massachusetts 02173.
Consultant is a founding stockholder of the Company and has developed expertise in recombinant DNA technology which he desires to make available to the Company. The Company desires to obtain the benefit of Consultant's expertise in recombinant DNA technology.
NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, Consultant and the Company agree as follows:
1. CONSULTING SERVICES
This Agreement shall have an initial term of five years beginning on October 1, 1981, and continuing until September 30, 1986. Thereafter, this Agreement shall be automatically extended for successive terms of one year each unless written notice that this Agreement shall terminate on the next anniversary date is given by one party to the other at least 90 days before that date.
During the term of this Agreement, the Company agrees to pay Consultant a monthly consulting fee of $2,000 per month through July 1982 and $1,000 per month thereafter, payable on or about the first day of each month, far consulting services to be provided by him under this Agreement. The monthly consulting fee may be increased upon annual review by a majority of the disinterested members of the Board of Directors of the Company.
In addition to the payment of such consulting fees, the Company will reimburse Consultant for all travel and living expenses incurred by him as a result of his performance of consulting services under this Agreement. The Company shall also provide Consultant with an automobile for use on the Company's business and will pay all insurance, maintenance and operating expenses associated therewith.
In consideration of the payment of the monthly consulting fee described above, Consultant agrees to make himself available not less than two days each month to consult with officers and scientists of the Company as requested from time to time by an appropriate official of the Company and at specific dates mutually agreed upon in advance.
Consultant agrees that (i) during the term of this Agreement and (ii) for a period of up to one year immediately following the termination of this Agreement for any reason if, at the option of the Company, it pays Consultant, in a lump sum, an amount equal to 90% of the consulting fees paid to him by the Company for the preceding 12 months, Consultant shall not directly or indirectly, except as a passive investor in publicly held companies and except for investments held at the date hereof, engage in, or own or control any interest in, or act as a director, officer or employee of, or consultant or
scientific advisor to, any firm, corporation or institution directly or indirectly (a) engaged in a business substantially similar to that of the Company or any of its subsidiaries or (b) in competition with the Company or any of its subsidiaries. Consultant further agrees that during the term of this Agreement he will not undertake any new commitments as a director, officer or employee of, or consultant or scientific advisor to, any commercial, for-profit firm, corporation or institution, whether or not engaged in competition with or in a business substantially similar to that of the Company.
Nothing in the preceding paragraph shall prohibit Consultant from being a member of the faculty or staff of a university, college or other educational or non-profit research institution and performing the attendant and customary obligations of such position.
The Company may permit Consultant to engage in the prohibited activities described in this section upon such conditions, if any, as the Company may deem appropriate. Such permission shall be set forth in a written instrument executed by the Company.
2. OWNERSHIP OF INVENTIONS
"Invention" as used in this Agreement means any invention, discovery or innovation with regard to biotechnology, genetic engineering or recombinant DNA technology, whether or not patentable, made, conceived, or first actually reduced to practice by Consultant, solely or jointly with others, in the course of, in connection with, or as a result of, his service as a consultant to the Company, including any art, method, process, machine, manufacture, design or composition of matter, or any improvement thereof, or any variety of plant or microorganism.
Each Invention made, conceived or first actually reduced to practice by Consultant, whether by himself or jointly with others, during the term of this Agreement and each Invention made, conceived or first actually reduced to practice by Consultant, whether by himself or jointly with others, within one year after the termination of this Agreement which relates in any way to work he performed for the Company during the term of this Agreement, shall be promptly disclosed in writing to the President of the Company (or such other officer of the Company as the President may designate). Such report shall be sufficiently complete in technical detail and appropriately illustrated by sketch or diagram to convey to one skilled in the art to which the Invention pertains, a clear understanding of the nature, purpose, operation, and, to the extent known, the physical, chemical, biological or electrical characteristics of the Invention. Each Invention, as herein defined, shall be the sole and exclusive property of the Company.
Consultant agrees to execute an assignment to the Company or its nominee of his entire right, title and interest in and to any Invention, without compensation beyond that provided in this Agreement. Consultant further agrees, upon the request of the Company and at its expense, that he will execute any other instrument and document necessary or desirable in applying for and obtaining patents in the United States and in any foreign country with respect to any Invention. Consultant further agrees, whether or not he is then a consultant of the Company, to cooperate to the extent and in the manner reasonably requested by the Company in the prosecution or defense of any claim involving a patent covering any Invention or any litigation or other claim or proceeding involving any Invention covered by this Agreement, but all expenses thereof shall be paid by the Company.
3. CONFIDENTIAL INFORMATION
"Confidential Information," as used in this Agreement, means information of the Company which is proprietary or confidential to it and includes proprietary or confidential information as to any Invention, formula, apparatus, equipment, trade secrets, research, report, technical data, as well as costs, users or purchasers of the Company's services, research or products, or other proprietary or confidential matters possessed, owned or used by the Company that may be communicated to, acquired by, or learned of by Consultant in the course of, in connection with, or as a result of, his consulting with the Company. Confidential Information does not include (i) information which is or later becomes publicly known under circumstances involving no breach of this Agreement; (ii) information already known to Consultant (other than by previous disclosure to him by the Company or through services performed by him for the Company) as evidenced by his written records at the time of its receipt from the Company; and (iii) information lawfully and in good faith made available to Consultant without restriction on disclosure by a third party; provided, however, that Confidential Information disclosed to Consultant by the Company shall not be deemed to be available to the public or in his prior possession merely because it is embraced by more general information available to the public or in his prior possession.
Consultant agrees that he will not (except as required in the course of consulting with the Company), both during the term of this Agreement and thereafter, communicate or divulge to, or use for his own benefit or the benefit of any other person, firm or organization, any Confidential Information.
Records, files, memoranda, reports, price lists, customer lists, drawings, plans, sketches and documents and the like, relating to the business of the Company, which Consultant shall use or prepare or come into contact with in the course of, in connection with or as a result of, consulting with the Company, shall remain the Company's sole and exclusive property and shall be subject to the obligations of this Section 3.
The obligations assumed by Consultant under this Section 3 are subject to the understanding that Consultant is a member of the faculty of the Massachusetts Institute of Technology ("MIT") and that, as such, he must fulfill certain obligations to MIT, including, among other things, teaching, directing laboratory operations and publishing. As a member of the faculty of MIT, Consultant is also responsible for ensuring that any consulting agreement he enters into is not in conflict with the patent and copyright policy of MIT or in conflict with other MIT commitments. In the event of any conflict between this Agreement and the conditions of Consultant's appointment to the faculty of MIT, the latter will prevail.
Publications by Consultant in academic or other journals, magazines or the like are covered by the restrictions imposed by this Section 3 to the following extent:
Consultant agrees to submit each proposed publication which contains information regarding Inventions to the President of the Company (or such other officer or consultant to the Company as the President may designate) for advance review to determine whether or not such publication contains Confidential Information. Consultant may proceed with publication unless he is notified within fourteen days of such submission by the Company that such publication contains Confidential Information which the Company desires to keep confidential, which notice shall specify with particularity such Confidential Information. Consultant may thereafter proceed with publication only if he is able to delete the
Confidential Information specified by the Company. Consultant may publish the results of his and his laboratory's research which does not contain information regarding Inventions without advance review by the Company.
4. MISCELLANEOUS
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall be deemed to be one and the same instrument.
All notices, requests, demands and other communications to be given pursuant to this Agreement shall be in writing and shall be deemed to have been duly given if delivered by hand or mailed by registered or certified mail, return receipt requested, postage prepaid, as follows:
If to the Company, to:
Repligen Corporation
50 Staniford Street
Boston, Massachusetts 02114
Attention: President
If to Consultant, to:
Dr. Paul R. Schimmel
44 Sanderson Road
Lexington, Massachusetts 02173
or such other address as either party hereto shall have designated by notice in writing to the other party.
At any time this Agreement may be amended, supplemented or otherwise modified, but only by an instrument in writing signed by the parties hereto.
Consultant is an independent contractor under this Agreement. He is not an employee of the Company and will not be entitled to participate in, or receive any benefit or right as an employee under any employee benefit and welfare plan, including, without limitation, employee insurance, pension, savings and security plans, as a result of his entering into this Agreement.
This Agreement and the legal relations among the parties hereto shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts.
In case any provision hereof shall, for any reason, be held to be invalid or unenforceable in any respect, such invalidity or unenforceability shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid or unenforceable provision had not been included herein. If any provision hereof shall, for any reason, be held by a court to be excessively broad as to duration, geographical scope, activity or subject, it shall be construed by limiting and reducing it to make it enforceable to the extent compatible with applicable law as then in effect.
This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors, assigns and personal representatives.
Neither this Agreement nor any rights hereunder shall be assignable by any party hereto without the prior written consents of the other parties.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Agreement as of the date first above written.
REPLIGEN CORPORATION
/s/ William M. Jackson ---------------------- /s/ Paul R. Schimmel -------------------- Dr. Paul Schimmel |
EXHIBIT 10.2
CONSULTING AGREEMENT
This Consulting Agreement is made as of November 1, 1981, between Repligen Corporation (the "Company"), a Delaware corporation having its principal place of business at 50 Staniford Street, Boston, Massachusetts 02114 and Dr. Alexander Rich (the "Consultant") of 2 Walnut Avenue, Cambridge, Massachusetts 02140.
Consultant is a founding stockholder of the Company and has developed expertise in recombinant DNA technology which he desires to make available to the Company. The Company desires to obtain the benefit of Consultant's expertise in recombinant DNA technology.
NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, Consultant and the Company agree as follows:
1. CONSULTING SERVICES
This Agreement shall have an initial term of five years beginning on November 1, 1981, and continuing until October 31, 1986. Thereafter, this Agreement shall be automatically extended for successive terms of one year each unless written notice that this Agreement shall terminate on the next anniversary date is given by one party to the other at least 90 days before that date.
During the term of this Agreement, the Company agrees to pay Consultant a monthly consulting fee of $2,000 per month through July 1982 and $1,000 per month thereafter, payable on or about the first day of each month, for consulting services to be provided by him under this Agreement. The monthly consulting fee may be increased upon annual review by a majority of the disinterested members of the Board of Directors of the Company.
In addition to the payment of such consulting fees, the Company will reimburse Consultant for all travel and living expenses incurred by him as a result of his performance of consulting services under this Agreement. The Company shall also provide Consultant with an automobile for use on the Company's business and will pay all insurance, maintenance and operating expenses associated therewith.
In consideration of the payment of the monthly consulting fee described above, Consultant agrees to make himself available not less than two days each month to consult with officers and scientists of the Company as requested from time to time by an appropriate official of the Company and at specific dates mutually agreed upon in advance.
Consultant agrees that (i) during the term of this Agreement and (ii) for a period of up to one year immediately following the termination of this Agreement for any reason if, at the option of the Company, it pays Consultant, in a lump sum, an amount equal to 90% of the consulting fees paid to him by the Company for the preceding 12 months, Consultant shall not directly or indirectly, except as a passive investor in publicly held companies and except for investments held at the date hereof, engage in, or own or control any interest in, or act as a director, officer or employee of, or consultant or
scientific advisor to, any firm, corporation or institution directly or indirectly (a) engaged in a business substantially similar to that of the Company or any of its subsidiaries or (b) in competition with the Company or any of its subsidiaries. Consultant further agrees that during the term of this Agreement he will not undertake any new commitments as a director, officer or employee of, or consultant or scientific advisor to, any commercial, for-profit firm, corporation or institution, whether or not engaged in competition with or in a business substantially similar to that of the Company.
Nothing in the preceding paragraph shall prohibit Consultant from being a member of the faculty or staff of a university, college or other educational or non-profit research institution and performing the attendant and customary obligations of such position.
The Company may permit Consultant to engage in the prohibited activities described in this section upon such conditions, if any, as the Company may deem appropriate. Such permission shall be set forth in a written instrument executed by the Company.
2. OWNERSHIP OF INVENTIONS
"Invention" as used in this Agreement means any invention, discovery or innovation with regard to biotechnology, genetic engineering or recombinant DNA technology, whether or not patentable, made, conceived, or first actually reduced to practice by Consultant, solely or jointly with others, in the course of, in connection with, or as a result of, his service as a consultant to the Company, including any art, method, process, machine, manufacture, design or composition of matter, or any improvement thereof, or any variety of plant or microorganism.
Each Invention made, conceived or first actually reduced to practice by Consultant, whether by himself or jointly with others, during the term of this Agreement and each Invention made, conceived or first actually reduced to practice by Consultant, whether by himself or jointly with others, within one year after the termination of this Agreement which relates in any way to work he performed for the Company during the term of this Agreement, shall be promptly disclosed in writing to the President of the Company (or such other officer of the Company as the President may designate). Such report shall be sufficiently complete in technical detail and appropriately illustrated by sketch or diagram to convey to one skilled in the art to which the Invention pertains, a clear understanding of the nature, purpose, operation, and, to the extent known, the physical, chemical, biological or electrical characteristics of the Invention.
Each Invention, as herein defined, shall be the sole and exclusive property of the Company. Consultant agrees to execute an assignment to the Company or its nominee of his entire right, title and interest in and to any Invention, without compensation beyond that provided in this Agreement. Consultant further agrees, upon the request of the Company and at its expense, that he will execute any other instrument and document necessary or desirable in applying for and obtaining patents in the United States and in any foreign country with respect to any Invention. Consultant further agrees, whether or not he is then a consultant of the Company, to cooperate to the extent and in the manner reasonably requested by the Company in the prosecution or defense of any claim involving a patent covering any Invention or any litigation or other claim or proceeding involving any Invention covered by this Agreement, but all expenses thereof shall be paid by the Company.
3. CONFIDENTIAL INFORMATION
"Confidential Information," as used in this Agreement, means information of the Company which is proprietary or confidential to it and includes proprietary or confidential information as to any Invention, formula, apparatus, equipment, trade secrets, research, report, technical data, as well as costs, users or purchasers of the Company's services, research or products, or other proprietary or confidential matters possessed, owned or used by the Company that may be communicated to, acquired by, or learned of by Consultant in the course of, in connection with, or as a result of, his consulting with the Company. Confidential Information does not include (i) information which is or later becomes publicly known under circumstances involving no breach of this Agreement; (ii) information already known to Consultant (other than by previous disclosure to him by the Company or through services performed by him for the Company) as evidenced by his written records at the time of its receipt from the Company; and (iii) information lawfully and in good faith made available to Consultant without restriction on disclosure by a third party; provided, however, that Confidential Information disclosed to Consultant by the Company shall not be deemed to be available to the public or in his prior possession merely because it is embraced by more general information available to the public or in his prior possession.
Consultant agrees that he will not (except as required in the course of consulting with the Company), both during the term of this Agreement and thereafter, communicate or divulge to, or use for his own benefit or the benefit of any other person, firm or organization, any Confidential Information.
Records, files, memoranda, reports, price lists, customer lists, drawings, plans, sketches and documents and the like, relating to the business of the Company, which Consultant shall use or prepare or come into contact with in the course of, in connection with, or as a result of, consulting with the Company, shall remain the Company's sole and exclusive property and shall be subject to the obligations of this Section 3.
The obligations assumed by Consultant under this Section 3 are subject to the understanding that Consultant is a member of the faculty of the Massachusetts Institute of Technology ("MIT") and that, as such, he must fulfill certain obligations to MIT, including, among other things, teaching, directing laboratory operations and publishing. As a member of the faculty of MIT, Consultant is also responsible for ensuring that any consulting agreement he enters into is not in conflict with the patent and copyright policy of MIT or in conflict with other MIT commitments. In the event of any conflict between this Agreement and the conditions of Consultant's appointment to the faculty of MIT, the latter will prevail.
Publications by Consultant in academic or other journals, magazines or the like are covered by the restrictions imposed by this Section 3 to the following extent: Consultant agrees to submit each proposed publication which contains information regarding Inventions to the President of the Company (or such other officer or consultant to the Company as the President may designate) for advance review to determine whether or not such publication contains Confidential Information. Consultant may proceed with publication unless he is notified within fourteen days of such submission by the Company that such publication contains Confidential Information which the Company desires to keep confidential, which notice shall specify with particularity such Confidential Information. Consultant may thereafter proceed with publication only if he is able to delete the Confidential Information specified by the
Company. Consultant may publish the results of his and his laboratory's research which does not contain information regarding Inventions without advance review by the Company.
4. MISCELLANEOUS
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall be deemed to be one and the same instrument.
All notices, requests, demands and other communications to be given pursuant to this Agreement shall be in writing and shall be deemed to have been duly given if delivered by hand or mailed by registered or certified mail, return receipt requested, postage prepaid, as follows:
If to the Company, to:
Repligen Corporation
50 Staniford Street
Boston, Massachusetts 02114
Attention: President
If to Consultant, to:
Dr. Alexander Rich
2 Walnut Avenue
Cambridge, Massachusetts 02140
or such other address as either party hereto shall have designated by notice in writing to the other party.
At any time this Agreement may be amended, supplemented or otherwise modified, but only by an instrument in writing signed by the parties hereto.
Consultant is an independent contractor under this Agreement. He is not an employee of the Company and will not be entitled to participate in, or receive any benefit or right as an employee under any employee benefit and welfare plan, including, without limitation, employee insurance, pension, savings and security plans, as a result of his entering into this Agreement.
This Agreement and the legal relations among the parties hereto shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts.
In case any provision hereof shall, for any reason, be held to be invalid or unenforceable in any respect, such invalidity or unenforceability shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid or unenforceable provision had not been included herein. If any provision hereof shall, for any reason, be held by a court to be excessively broad as to duration, geographical scope, activity or subject, it shall be construed by limiting and reducing it to make it enforceable to the extent compatible with applicable law as then in effect.
This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors, assigns and personal representatives.
Neither this Agreement nor any rights hereunder shall be assignable by any party hereto without the prior written consents of the other parties.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Agreement as of the date first above written.
REPLIGEN CORPORATION
/s/ William M. Jackson ---------------------- /s/ Alexander Rich ---------------------- Dr. Alexander Rich |
EXHIBIT 10.3
Repligen Corporation
One Kendall Square
Building 700
Cambridge, Massachusetts 02139
(617) 225-6000
Walter C. Herlihy, Jr.
11 Brookhead Avenue
Beverly, MA 01915
Dear Mr. Herlihy:
This is to confirm that you will be appointed President, Chief Executive Officer, and Director of Repligen Corporation effective 14 March, 1996.
Our understanding of the terms of your employment are as follows:
1. You will receive a base annual salary of $160,000. Bonuses, based upon performance, may be given in the discretion of the Board of Directors.
2. You will be awarded options for 100,000 shares of common stock of Repligen Corporation which will vest evenly over a five-year period and which will be governed by Repligen's stock option plans. Notwithstanding the foregoing, 50% of any unvested options shall vest immediately upon notice of termination of your employment or a change in control of the Corporation.
3. You are entitled to all health, medical and life insurance benefits that are provided, from time to time, by Repligen Corporation.
4. Your employment at Repligen may terminate, with or without cause, upon 30 days' prior written notice from the Board of Directors or from you. If your employment is terminated, you will be entitled to severance remuneration of base salary at the rate then in effect, payable monthly in arrears, until you find employment, but for no longer than 8 months.
5. You agree to execute standard noncompetition and nondisclosure agreements as soon as possible.
We look forward to an exciting collaboration between you, the Board of Directors, and all the employees at Repligen.
Could you kindly indicate your agreement to the above by signing in the space provided below and returning one copy to me.
REPLIGEN CORPORATION:
By:/s/ Paul Schimmel Name: Paul Shimmel Title: Co-Chairman Date: March 13, 1996 |
I AGREE TO THE ABOVE:
/s/ Walter Herlihy DATED: March 14, 1996 |
EXHIBIT 10.4
Repligen Corporation
One Kendall Square
Building 700
Cambridge, Massachusetts 02139
(617) 225-6000
James Robert Rusche
18 Brigham Road
Framingham, MA 01701
Dear Mr. Rusche:
This is to confirm that you will be appointed Vice President, Research and Development of Repligen Corporation effective 14 March, 1996.
Our understanding of the terms of your employment are as follows:
1. You will receive a base annual salary of $115,000. Bonuses, based upon performance, may be given in the discretion of the Board of Directors.
2. You will be awarded options for 60,000 shares of common stock of Repligen Corporation which will vest evenly over a five-year period and which will be governed by Repligen's stock option plans. Notwithstanding the foregoing, 50% of any unvested options shall vest immediately upon notice of termination of your employment or a change in control of the Corporation.
3. You are entitled to all health, medical and life insurance benefits that are provided, from time to time, by Repligen Corporation.
4. Your employment at Repligen may terminate, with or without cause, upon 30 days' prior written notice from the Board of Directors or from you. If your employment is terminated, you will be entitled to severance remuneration of base salary at the rate then in effect, payable monthly in arrears, until you find employment, but for no longer than 6 months.
5. You agree to execute standard noncompetition and nondisclosure agreements as soon as possible.
We look forward to an exciting collaboration between you, the Board of Directors, and all the employees at Repligen.
Could you kindly indicate your agreement to the above by signing in the space provided below and returning one copy to me.
REPLIGEN CORPORATION:
By:/s/ Paul Schimmel Name: Paul Shimmel Title: Co-Chairman Date: March 13, 1996 |
I AGREE TO THE ABOVE:
/s/ James Rusche DATED: March 13, 1996 |
EXHIBIT 10.5
Repligen Corporation
One Kendall Square
Building 700
Cambridge, Massachusetts 02139
(617) 225-6000
Mr. Daniel Parker Witt
288 Essex Street
Hamilton, MA 01982
Dear Mr. Witt:
This is to confirm that you will be appointed Vice President, Business Development of Repligen Corporation effective 14 March, 1996.
Our understanding of the terms of your employment are as follows:
1. You will receive a base annual salary of $115,000. Bonuses, based upon performance, may be given in the discretion of the Board of Directors.
2. You will be awarded options for 60,000 shares of common stock of Repligen Corporation which will vest evenly over a five-year period and which will be governed by Repligen's stock option plans. Notwithstanding the foregoing, 50% of any unvested options shall vest immediately upon notice of termination of your employment or a change in control of the Corporation.
3. You are entitled to all health, medical and life insurance benefits that are provided, from time to time, by Repligen Corporation.
4. Your employment at Repligen may terminate, with or without cause, upon 30 days' prior written notice from the Board of Directors or from you. If your employment is terminated, you will be entitled to severance remuneration of base salary at the rate then in effect, payable monthly in arrears, until you find employment, but for no longer than 6 months.
5. You agree to execute standard noncompetition and nondisclosure agreements as soon as possible.
We look forward to an exciting collaboration between you, the Board of Directors, and all the employees at Repligen.
Could you kindly indicate your agreement to the above by signing in the space provided below and returning one copy to me.
REPLIGEN CORPORATION:
By:/s/ Paul Schimmel Name: Paul Shimmel Title: Co-Chairman Date: March 13, 1996 |
I AGREE TO THE ABOVE:
/s/ Daniel P. Witt DATED: March 13, 1996 |
EXHIBIT 10.6
SUBLEASE AGREEMENT
This Sublease Agreement is made as of May 1, 1996 and is by and between TCell Sciences, Inc., a Delaware corporation with a principal address at 115-119 Fourth Avenue, Needham, Massachusetts ("Sublessor"), and Repligen Corporation, a Delaware corporation with a principal address at 117 Fourth Avenue, Needham, Massachusetts ("Sublessee").
Reference is made to the following facts:
A. As of May 1, 1996, Fourth Avenue Ventures Limited Partnership (the "Landlord") entered into a lease with Sublessor (the "Overlease") a true and correct copy of which is attached hereto as Exhibit A, for certain office and laboratory space (the "Main Premises") within the building located at 115-119 Fourth Avenue, Needham, Massachusetts, as more specifically described in the Overlease (the "Building")
B. Subject to the terms and conditions of this Sublease Agreement, Sublessor has agreed to sublease to Sublessee a portion of the Premises hereinafter referred to as the "Subleased Premises." The Subleased Premises shall consist of certain space to be used exclusively by Sublessee, which space is shown on Exhibit B attached hereto and incorporated herein. For the purposes of determining Sublessee's Annual Fixed Rent and Sublessee's proportionate share of taxes, utilities and operating expenses, the square footage of the Subleased Premises is approximately 13,000 rentable square feet.
C. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Overlease.
AGREEMENTS:
In consideration of the mutual covenants herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Sublessor and Sublessee hereby agree as follows:
1. Premises. Sublessor hereby leases to Sublessee, and Subleases hereby leases from Sublessor, the Subleased Premises for all Permitted Uses described in the Overlease, provided that such use is permitted by law or pursuant to a special permit duly issued by the Town of Needham and in full force and effect. The Subleased Premises consist of approximately 13,000 rentable square feet as shown on Exhibit B attached hereto and incorporated herein by this reference. Sublessee shall have, as appurtenant to the Subleased Premises, rights to use, in common with others entitled thereto: (i) common lobbies, hallways, ramps, stairways, freight elevators, shipping/receiving areas, and other common areas of the Building, if any; (ii) the common walkways and driveways necessary for access to the Building; (iii) the common hallways, emergency exits, stairways and elevators within the Main Premises necessary for access to the Subleased Premises, all as shown on Exhibit B, (iv) the HVAC systems and common utility equipment, pipes, ducts, conduits, wires and appurtenant equipment serving the Subleased Premises and (v) on a nonexclusive basis, twenty five (25) parking spaces.
a. Sublessor shall deliver the Subleased Premises to Sublessee on May 1, 1996 (the "Commencement Date") in such condition as exists as of the date of this Sublease, free of all occupants other than Sublessee.
2. Term. To have and to hold for a term of four (4) years, commencing on May 1, 1996 and terminating on April 30, 2000 unless sooner terminated as herein provided (the "Term").
Provided that Sublessor has not exercised its option to terminate the Overlease on April 30, 2000, as provided in the Overlease, Sublessee shall have the right to extend the term of this Sublease for two years, such that the Sublease will expire on April 30, 2002. In order to exercise this option, Sublessee must provide Sublessor with written notice of its exercise no later than nine (9) months prior to the expiration of this Sublease.
Provided that Sublessee has exercised its extension option and is not then in
default hereunder beyond the expiration of any applicable cure period, Sublessee
shall have the right to terminate this Sublease at any time after May 1, 2000
upon the following terms and conditions: Sublessee must deliver to Sublessor a
notice of its intent to terminate this Sublease at least nine (9) months prior
to the proposed termination date. Such notice of termination may be given no
earlier than May 1, 2000, and, to be effective, such notice of termination must
be accompanied by a payment of $100,000.00 in good and immediately available
funds, and upon Sublessor's receipt of such notice and the $100,000.00 payment,
the termination date of this Sublease shall be changed to the date that is nine
(9) months after the date of such notice.
Effective on May 1, 2001, the termination payment for any notice of termination given on or after May 1, 2001, will be reduced to $50,000.00, provided that the Sublessee otherwise complies with all provisions of the previous paragraph.
3. Fixed Rent. Sublessee covenants and agrees to pay to Sublessor without setoff or deduction, rent (the "Fixed Rent") in equal monthly installments in advance on the first day of each month of the Term at Sublessor's address shown herein or at such place as Sublessor shall from time to time designate in writing as follows:
Lease Year Monthly Fixed Rent
---------- ------------------
May 1, 1996-June 30, 1997 $ 9,208.33
July 1, 1997-April 30, 2000 $11,136.66
|
a. If the Sublessee extends the Term as provided in Section 2 hereof, from May 1, 2000 and continuing to April 30, 2002, Sublessee will pay monthly rent of Eleven Thousand One Hundred Thirty Six Dollars and 66/100 ($11,136.66).
b. If the Term includes a partial calendar month at its beginning or end, the monthly installment of Rent for such partial month shall be prorated at the rate of 1/30 of the monthly installment for each day in such partial month within the Term and shall be payable in advance on the first day of such partial month occurring within the Term.
4. Additional Rent. Sublessee covenants and agrees to pay monthly to Sublessor as additional rent, upon payment of monthly installments of Fixed Rent, Sublessee's proportionate share of all Operating Expenses and utilities due from Sublessor to Landlord or any public utility under Sections 5 and 7 of the Overlease on account of the Subleased Premises. Sublessee's proportionate share is defined herein as 24%.
5. Additional Sublessor Covenants. Sublessor hereby covenants:
a. To pay all rents as they come due; subject to the provisions of Section 6(b) below, to repair and maintain in good working order the Subleased Premises, including the HVAC and utility systems exclusively serving the Main Premises and the Subleased Premises and to timely perform all of its other obligations under the Overlease; and to promptly provide Sublessee with copies of all notices it receives under the Overlease which relate to the Subleased Premises.
b. Sublessor further agrees to indemnify and hold Sublessee harmless from any and all damages, costs, losses and the like suffered by Sublessee as a result of a breach by Sublessor of any of its obligations arising under or pursuant to the Overlease, said indemnification to include, without limitation, reasonable attorney's fees, unless such breach was caused by a default of Sublessee hereunder.
c. That Sublessee, upon paying the rent and performing the covenants of this Sublease Agreement, shall peacefully and quietly have, hold and enjoy the Subleased Premises and all rights granted to Sublessee in this Sublease Agreement throughout the Term.
d. To diligently pursue enforcement of Landlord's obligations under the Overlease if failure to perform such obligations materially, adversely affects Sublessee's use or occupancy of the Subleased Premises. In no event shall Sublessee have an independent right to enforce the Landlord's obligations under the Overlease, nor shall Sublessee be subrogated to the rights of Sublessor to enforce the Landlord's obligations under the Overlease.
e. For so long as Sublessee is not in default hereunder beyond applicable cure periods, to provide Sublessee with support services, in addition to those provided to the Main Premises by Landlord pursuant to the provisions of the Overlease, for Sublessee's operations in the Subleased Premises. Sublessee shall pay Sublessee's proportionate share of the cost for such support services as additional rent upon payment of installments of Fixed Rent. Sublessee and Sublessor will negotiate a mutually satisfactory services agreement for the provision of such services to Sublessee by Sublessor.
f. To obtain and maintain all facility-based (as opposed to use or operator based) local, state and federal permits and approvals necessary to operate the Main Premises and the Subleased Premises for all Permitted Uses.
g. To indemnify, defend and hold Sublessee harmless from and against any claim arising from Sublessor's use of the Main Premises; or the conduct of its business or from any activity, work or thing done, permitted or suffered by Sublessor on or about the Main Premises, or arising from any breach of Sublessor's obligations hereunder, and from any claim for injury or damage to any person or property while on or about the Sublessor's Premises; except for any claim arising solely as a result of the negligence or willful misconduct of Sublessee or Sublessee's employees or agents. This indemnification
shall specifically include indemnification under the provisions of Section 13.2 of the Overlease with respect to any Hazardous Substance on the Subleased Premises.
h. To promptly report to Sublessee any incidents in which its employees, agents or contractors report an illness or other adverse health effects attributable to the Subleased Premises, the Building or any of the equipment, fixtures or furnishings therein.
6. Additional Sublessee Covenants. Sublessee hereby covenants:
a. To comply with all the terms and provisions of the Overlease applicable to the Subleased Premises except those terms that apply to the payment of Fixed Rent and additional rent, and except Sections 9.15, 15.2, and 15.3 of the Overlease, and to do nothing which will subject the Overlease to termination by Landlord under the provisions of the Overlease.
b. To maintain the Subleased Premises in the same condition as they are at the commencement of the Term, reasonable wear and tear, damage by fire and other casualty and eminent domain excepted. In the event that Sublessee defaults in its obligations under this paragraph (b), Sublessor may, after at least ten (10) days prior notice to Sublessee (except in an emergency, when no notice will be required) cure such default, in which event Sublessee shall reimburse Sublessor for any costs incurred by Sublessor to cure such default.
c. To remove all of Sublessee's personal property, business equipment, goods and effects from the Subleased Premises at the earlier expiration or termination of this Sublease Agreement and to deliver to Sublessor the Subleased Premises in the same condition as they were at the commencement of the Term, or as they were put in during the Term, reasonable wear and tear, damage by fire or other casualty or eminent domain excepted. In the event of Sublessee's failure to remove any of Sublessee's property from the Subleased Premises, Sublessor is hereby authorized, without liability to Sublessee for loss or damage thereto, and at the sole risk of Sublessee to remove and store any of such property at Sublessee's expense, or to retain the same under Sublessor's control or to sell at public or private sale, upon at least ten (10) days notice, any or all of the property not so removed and to apply the net proceeds of such sale to the payment of any sums due hereunder, or to destroy such property. Any remaining balance will be paid to Sublessee.
d. In addition to the indemnification and obligations set forth in Section 13.2 of the Overlease (which apply to the Subleased Premises), to indemnity, defend and hold the Sublessor harmless from and against any claim arising from Sublessee's use of the Subleased Premises or the conduct of its business or from any activity, work or thing done, permitted or suffered by Sublessee on or about the Subleased Premises, or arising from any breach of Sublessee's obligations hereunder, and from any claim for injury or damage to any person or property while on or about the Subleased Premises, except for any claim arising solely as a result of the negligence or willful misconduct of Sublessor or Sublessor's employees or agents. This indemnification shall specifically include indemnification under the provisions of Section 13.2 of the Overlease with respect to any Hazardous Substance on the Subleased Premises.
e. To maintain comprehensive general liability insurance in amounts which shall, at the beginning of the Term, be not less than those limits set forth in Section 6 of the Overlease, and from time to time during the Term, in such additional amounts which are customarily carried in the Greater Boston area on
property similar to the Building and used for similar purposes; Sublessee shall also maintain all-risk property insurance for Sublessee's property. Prior to the commencement of the Term, Sublessee shall deliver to Sublessor certificates of all required insurance coverage naming Sublessor, Landlord and Landlord's Mortgagee as additional insureds.
f. To obtain and maintain all local, state and federal permits and approvals necessary solely for the conduct of Sublessee's business in the Subleased Premises.
g. To comply with all applicable local, state and federal laws and cooperate with Sublessor's health and safety regulations applicable to the Subleased Premises.
h. To use the Subleased Premises only for the Permitted Uses set forth in the Overlease, in compliance with applicable law, provided that if Sublessee's production of any biological products shall result in a material increase in the utility usage of the Subleased Premises, or if Sublessor's production of any biological products shall result in a material increase in the utility usage of the Main Premises, the parties hereto shall mutually agree upon an adjustment in Sublessee's proportionate share of the cost of utilities to be paid by Sublessee to Sublessor in accordance with the provisions of Paragraph 4 hereof. Subject to the foregoing, Sublessor and Sublessee also agree that Sublessee shall have the right to conduct animal research in the Subleased Premises, provided that (1) Sublessee obtains all necessary federal, state and local approvals for such use prior to commencement of such use, and (2) Sublessee and Sublessor mutually agree upon the location of the room(s) in which the animals will be housed, Sublessee's procedures for maintaining and operating such room and the animals contained in such room. Sublessor shall thereafter have the right to monitor Sublessee's compliance with all necessary permits for maintaining such use. Sublessor's consent to the location of such animal room and Sublessee's procedures for maintaining and operating such room will not be unreasonably withheld, conditioned or delayed.
i. To appoint a representative or representatives to serve on the relevant health and safety committees for the Building, and to provide Sublessor with copies of all safety committee minutes, and to promptly notify Sublessor of any safety concerns of Sublessee that arise out of such committee meetings, or otherwise.
j. To regularly perform janitorial services and extermination services, as necessary, to the Subleased Premises.
k. To, in accordance with a separate agreement with Landlord, construct $250,000.00 of improvements to the Subleased Premises, which improvements will remain part of the Subleased Premises on the expiration of the Term, and may not be removed by Sublessee, unless such removal is required by Sublessor at the time Sublessor approves the construction of such improvements. Sublessor shall have the right to consent to the construction of such improvements, and in obtaining such consent Sublessor and Sublessee shall follow the procedures set forth in Section 10.b of a certain Settlement, Escrow and Security Agreement of even date between Sublessee and Landlord, and Section 10.b of such Agreement is incorporated herein by reference. Sublessor has consented to the schematic showing some of the planned improvements that is attached hereto as Exhibit C, and will not unreasonably withhold its consent to the remainder of the improvements planned by Sublessee.
l. To be responsible for compliance with the provisions of the Americans with Disabilities Act with respect to the Subleased Premises and all improvements to be constructed in the Subleased Premises.
7. Condition and Alterations. By its execution hereto, Sublessee acknowledges that:
a. Sublessee has inspected the Subleased Premises and accepts the same "AS IS." Sublessor shall have no obligation or duty to Sublessee regarding the preparation of the Subleased Premises for occupancy of Sublessee.
b. Other than the improvements to be constructed by Sublessee in accordance with
Section 6(k) hereof, in the event Sublessee desires to make alterations or
improvements to the Subleased Premises, Sublessee shall obtain the prior written
consent of both Sublessor and Landlord prior to conducting any such alterations
or improvements, and the approval process shall be as outlined in Section 9.4 of
the Overlease.
8. Fire, Casualty and Eminent Domain. In the event the Subleased Premises, or a portion thereof, are rendered substantially unsuitable for their intended use by fire or other casualty or are taken by eminent domain, a just and proportionate abatement of rent shall be made to the extent Sublessor is entitled to an abatement of rent under the Overlease. Sublessee hereby releases and assigns to Sublessor all of Sublessee's right, title and interest in and to any and all damages or injury to the Subleased Premises for any taking by eminent domain or by reason of anything lawfully done in pursuance of public authority. Sublessee further covenants to deliver such further assignment and assurances thereof as Sublessor may from time to time request, hereby irrevocably designating and appointing Sublessor as its attorney-in-fact to execute anal deliver in Sublessee's name and behalf all such further assignments thereof.
9. Common Space. Sublessor and Sublessee shall share use of the common areas marked on Exhibit B, the common loading and receiving areas, and the common hallways. Sublessor shall maintain such areas, as provided in the Overlease, and Sublessee shall pay Sublessor for such maintenance as provided in the services agreement to be signed by Sublessor and Sublessee.
10. Access to Subleased Premises. Sublessee shall, promptly after execution of this Sublease, and no later than ninety (90) days after execution of this Sublease, install at Sublessee's sole cost, a new front entry for the Subleased Premises in the location shown on Exhibit B, and to construct all walls necessary to physically separate the Subleased Premises from the Main Premises. Such entry and walls shall be constructed to the satisfaction of both Sublessor and Landlord. In addition, Sublessee shall have access to the Main Premises to remove its equipment from the Main Premises, as provided in a Settlement, Escrow and Security Agreement between Landlord and Sublessee of even date, such access to terminate on June 15, 1996; or to construct the improvements to be constructed in accordance with Section 6(k) hereof, if such access is necessary. All such access shall be upon prior notice to Sublessor, shall be at Sublessee's sole risk, notwithstanding any provision to the contrary herein, shall not unreasonably interfere with the Sublessor's operation of its business, and Sublessee indemnifies Sublessor from all claims, loss or damage related to such access, and Sublessee agrees not to store any equipment in any conference room of Sublessor or other location, during any such period of access.
11. Estoppel Certificate. Sublessee agrees, from time to time, upon not less than ten (10) days' prior written request by either Sublessor or Landlord, to execute, acknowledge and deliver to Sublessor a
statement in writing, addressed to such party as either Sublessor or Landlord shall designate in its notice to Sublessee, certifying that this Sublease Agreement is unmodified and in full force and effect and that Sublessee has no defenses, offsets or counterclaims against its obligations to pay the Fixed Rent and additional rent and to perform its other covenants under this Sublease Agreement (or if there have been any modifications that the same is in full force and effect as modified and stating the modifications and, if there are any defenses, offsets, counterclaims or defaults, setting them forth in reasonable detail), the dates to which the Fixed Rent and additional rent have been paid, a statement that Sublessor is not in default hereunder (or if in default, the nature of such default, in reasonable detail and any additional information reasonably requested by either Sublessor or Landlord. Any such statement delivered pursuant to this Section 12 may be relied upon by any prospective purchaser or mortgagee of the Subleased Premises.
12. Sublease Subordinate. This Sublease Agreement shall be subject and subordinate to any mortgage now or hereafter placed on the Main Premises, or any portion or portions thereof or interest therein. This Section 13 shall be self-operative and no further instrument of subordination shall be required.
13. Waiver of Subrogation. Any insurance carried by either party with respect to the Main Premises (or any portion thereof and property therein or occurrence thereon) shall, if it can be so written without additional premium, or with an additional premium which the other party agrees to pay, include a clause or endorsement denying to the insurer rights of subrogation against the other party to the extent rights have been waived by the insured prior to occurrence of injury or loss. Each party, notwithstanding any provisions of this Lease to the contrary, hereby waives any rights or recovery against the other for injury or loss due to hazards covered by insurance containing such clause or endorsement to the extent of the indemnification received thereunder.
14. Access. Upon reasonable advance notice and at reasonable times, subject to Sublessee's security practices and in such manner as to minimize interruption of Sublessee's business operations, except in cases of emergency, in which case no such notice shall be required, Sublessor or its representative may enter to view the Subleased Premises to assure compliance with the terms of this Sublease Agreement and for purposes of carrying out its maintenance and repair obligations hereunder.
15. Assignment and Subletting. Sublessee shall not assign or Sublease the Subleased Premises or any portion thereof, without the prior written consent of Sublessor and Landlord, which consent may be withheld in the sole discretion of either Sublessor or Landlord. Provided, however, that Sublessee may sublet a portion of the Subleased Premises to Union Biometrica, Inc., upon prior written notice to Sublessor and Landlord of such sublet no consent of either Landlord or Sublessor shall be require, provided that such Sublease shall state that it shall be wholly subject and subordinate to the terms of the Overlease and this Sublease. Any such Sublease shall provide that it will terminate immediately upon any default, beyond applicable cure periods, of Sublessee or Sublessor under the Sublease and Lease, respectively.
16. Relationship between Sublessor and Sublessee. The parties hereto agree that the relationship between Sublessor and Sublessee hereunder shall, except as otherwise provided herein, be governed by the provisions of the Overlease as if they were Landlord and Tenant under the Overlease.
17. Notices. All notices required or permitted hereunder shall be in writing and shall be deemed duly served if and when delivered by hand, by overnight courier (nationally recognized) or mailed by registered, or certified mail, postage prepaid, return receipt requested, and addressed;
If to Sublessor:
T Cell Sciences, Inc.
115 Fourth Avenue
Dedham, MA 02192
Attention: General Counsel
with copies to:
Robert Orsi, Esq.
Tarlow, Breed, Hart, Murphy & Rodgers, P.C.
21 Custom House Street
Boston, MA 02110
If to Sublessee:
Repligen Corporation
117 Fourth Avenue
Needham, MA 02192
Attention: Walter Herlihy
with copies to:
Testa, Hurwitz & Thibeault, L.L.P.
125 High Street
Boston, MA 02110
ATTN: Real Estate Department
Any of the persons named in this Section 17 may change the address for notices by written notice sent to each of the other persons at the addresses as set forth herein.
18.Severability. If any provision of this Sublease Agreement shall to any extent be determined by any court of competent jurisdiction to be invalid or unenforceable for any reason. the parties agree to amend this Sublease Agreement so as to effectuate the original intent of Sublessor and Sublessee.
19.Entire Agreement. Except for the services agreement to be executed between the parties, this Sublease Agreement is the entire agreement between the parties relating to the sublease or the Subleased Premises. This Sublease Agreement may not be amended, altered or modified except by instrument in writing and executed by Sublessor and Sublessee.
21.Governing Law. This Sublease Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts.
22.Bind and Inure. This Sublease Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
23.Defined Terms. All capitalized terms not otherwise defined herein shall have the meaning scribed thereto in the Overlease.
24.Brokerage. Each of Sublessor and Sublessee represents and warrants that it has not had any dealings with any realtors, brokers or agents in connection with the negotiation of this Sublease. Each party shall defend, hold harmless and indemnify the other and Landlord from and against any claims, liabilities, losses or expenses, including reasonable attorneys fees, incurred by the other or Landlord in connection with any breach of the foregoing representation and warranty by such party.
25.Notwithstanding any contrary provision of this Sublease, in any instance where a specific cure period is granted to Sublessor, as Tenant under the Lease, before Sublessor is considered to be in default under the Lease, the Sublessee, as tenant under this Sublease, shall be deemed to have the same cure period, less three days, before Sublessee is considered in default beyond applicable cure periods under this Sublease, except in the event of a failure in the performance of any of Sublessee's obligations to pay any sum payable under this Sublease, as to which the cure period shall be three days following receipt of written notice of such default from Sublessor..
26.Sublessor's Representations and Warranties. Sublessor warrants and represents that:
(i) The copy of the Overlease attached to this Sublease as Exhibit A is a complete and accurate copy of the Overlease, which is in effect and has not been amended;
(ii) To the best of Sublessor's knowledge, Landlord is not in default under the Overlease, nor has any event occurred which, after any applicable notice and/or the expiration of any grace period, shall constitute a default by Landlord under the Overlease; (iii) To the best of Sublessor's knowledge, Sublessor is not in default under the Overlease, nor has any event occurred which, after any applicable notice and/or the expiration of any grace period, shall constitute a default by Sublessor under the Overlease;
(iii) To the best of Sublessor's knowledge, Sublessor is not in default under the Overlease, nor has any event occurred which, after any applicable notice and/or the expiration of any grace period, shall constitute a default by Sublessor under the Overlease;
(iv) All rent, additional rent and other charges due under the Overlease have been paid as required through May 31, 1996;
(v) The Overlease is in full force and effect;
(vi) Landlord has represented to Sublessor that the Overlease has not been encumbered by any prior transfer, assignment or encumbrance other than a mortgage to Baybank, and to Metpath; and (vii) Sublessor has full and lawful authority to enter into this Sublease, subject only to Landlord's consent.
c. Notwithstanding the foregoing, as between Sublessor and Sublessee, the terms and conditions hereof shall be controlling whenever the terms and conditions of the Overlease are contradictory to or inconsistent with the terms and conditions hereof. Sublessor shall, upon written request by Sublessee, at Sublessee's cost use diligent efforts to obtain from Landlord all permissions, consents, approvals and documents needed by Sublessee to perform any act permitted by this Sublease by reason of the incorporation by reference of the terms, covenants and conditions of the Overlease, but Sublessee shall bear any monetary costs associated with obtaining such consents.
EXECUTED under seal as of the date first hereinabove set forth.
Sublessor:
T CELL SCIENCES, INC.
/s/ Alan W. Tuck By: Alan W. Tuck, President Sublessee: |
REPLIGEN CORPORATION
/s/ Avery W. Catlin By: Avery W. Catlin, Vice President, Finance |
EXHIBIT 10.16
THE AMERICAN INSTITUTE OF ARCHITECHTS
AIA Document A111
Standard Form of Agreement Between Owner and Contractor
where the basis of payment is the
COST OF THE WORK PLUS A FEE
with or without a Guaranteed Maximum Price
1987 EDITION
THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES; CONSULTATION WITH AN ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION.
The 1987 Edition of AIA Document A201, General Conditions of the Contract for Construction, is adopted in this document by reference. Do not use with other general conditions unless this document is modified.
This document has been approved and endorsed by The Associated General Contractors of America.
AGREEMENT
made as of the Thirty-first day of January, in the year of Two Thousand
Two
BETWEEN the Owner: RepliGen Corporation
(Name and address) 117 Fourth Avenue
Needham, MA 02494
and the Contractor: Siena Construction Corporation
(Name and address) 17 Tudor Street
Cambridge, MA 02139
the Project is: RepliGen
(Name and address) 41 Seyon Street; Building 1
Waltham, MA
the Architect is: Olson Lewis & Dioli Architects
(Name and address) 17 Elm Street
Manchester-By-The-Sea, MA 01944
|
The Owner and Contractor agree as set forth below.
Copyright 1920, 1925, 1951, 1958, 1961, 1963, 1967, 1974, 1978, (C)1987 by The American Institute of Architects, 1735 New York Avenue, N.W., Washington, D.C. 20006. Reproduction of the material herein or substantial quotation of its provisions without written permission of the AIA violates the copyright laws of the United States and will be subject to legal prosecution.
ARTICLE 1
THE CONTRACT DOCUMENTS
1.1 The Contract Documents consist of this Agreement, Conditions of the Contract (General, Supplementary and other Conditions), Drawings, Specifications, Addenda issued prior to execution of this Agreement, other documents listed in this Agreement and Modifications issued after execution of this Agreement; these form the Contract, and are as fully a part of the Contract as if attached to this Agreement or repeated herein. The Contract represents the entire and integrated agreement between the parties hereto and supersedes prior negotiations, representations or agreements, either written or oral. An enumeration of the Contract Documents, other than Modifications, appears in Article 16. If anything in the other Contract Documents is inconsistent with this Agreement, this Agreement shall govern.
ARTICLE 2
THE WORK OF THIS CONTRACT
2.1 The Contractor shall execute the entire Work described in the Contact Documents, except to the extent specifically indicated in the Contract Documents to be the responsibility of others, or as follows:
The Work of this Contract work is work only within the demising walls of Repligen or as otherwise noted on Contract Documents.
The Work of this Contract includes "Design/Build" responsibility for Plumbing, Fire Protection, HVAC and Electrical Systems. The basis for design of these systems will be from information provided by Repligen Corporation.
ARTICLE 3
RELATIONSHIP OF THE PARTIES
3.1 The Contractor accepts the relationship of trust and confidence established by this Agreement and covenants with the Owner to cooperate with the Architect and utilize the Contractor's best skill, efforts and judgment in furthering the interests of the Owner; to furnish efficient business administration and supervision; to make best efforts to furnish at all times an adequate supply of workers and materials; and to perform the Work in the best way and most expeditious and economical manner consistent with the interests of the Owner. The Owner agrees to exercise best efforts to enable the Contractor to perform the Work in the best way and most expeditious manner by furnishing and approving in a timely way information required by the Contractor and making payments to the Contractor in accordance with requirements of the Contract Documents.
ARTICLE 4
DATE OF COMMENCEMENT AND SUBSTANTIAL COMPLETION
4.1 The date of commencement is the date from which the Contract Time of Subparagraph 4.2 is measured; it shall be the date of this Agreement, as first written above, unless a different date is stated below or provision is made for the date to be fixed in a notice to proceed issued by the Owner.
(Insert the date of commencement, if it differs from the date of this Agreement or, if applicable, state that the date will be fixed in a notice to proceed.)
Unless the date of commencement is established by a notice to proceed issued by the Owner, the Contractor shall notify the Owner in writing not less than five days before commencing the Work to permit the timely filing of mortgages, mechanic's liens and other security interests.
4.2 The Contractor shall achieve Substantial Completion of the entire Work not later than
(Insert the calendar date or number op calendar days after the date of commencement. Also insert any requirements for earlier Substantial Completion of certain portions of the Work, if not stated elsewhere in the Contract Documents.)
April 30, 2002,
, subject to adjustments of this Contract Time as provided in the Contract Documents.
(insert provisions, if any, for liquidated damages relating to failure to complete on time.)
ARTICLE 5
CONTRACT SUM
5.1 The Owner shall pay the Contractor in current funds for the Contractor's performance of the Contract the Contract Sum consisting of the Cost of the Work as defined in Article 7 and the Contractor's Fee determined as follows:
(Stale a lump sum, percentage of Cost of the Work or other provisions for determining the Contractor's Fee and explain how the Contractor's Fee is to be adjusted for changes in the Work.) Contractor's Fee shall be 3% of the total direct costs.
5.2 GUARANTEEING MAXIMUM PRICE (IF APPLICABLE)
5.2.1 The sum of the Cost of the Work and the Contractor's Fee is guaranteed by the Contractor not to exceed
One Million, nine hundred twenty four thousand Dollars ($1,924,000)
subject to additions and deductions by Change Order as provided in the Contract Documents. Such maximum sum is referred to in the Contract Documents as the Guaranteed Maximum Price. Costs which would cause the Guaranteed Maximum Price to be exceeded shall be paid by the Contractor without reimbursement by the Owner.
(Insert specific provisions if the Contractor is to participate in any savings.)
All savings shall be returned to RepliGen Corporation.
Fixed General Conditions shall be $163,000.00.
5.2.2 The Guaranteed Maximum Price is based upon the following alternates, if any, which are described in the Contract Documents and are hereby accepted by the Owner:
(State the numbers or other identification of accepted alternates, but only if a Guaranteed Maximum Price is inserted in Subparagraph 5.2.1. If decisions on other alternates are to be made by the Owner subsequent to the execution of this Agreement, attach a schedule of such other alternates showing the amount for each and the date until which that amount is valid.)
See Attached Exhibit C
5.2.3 The amounts agreed to for unit prices, if any, are as follows: (State unit prices only if a Guaranteed maximum Price is inserted in Subparagraph 5.2.1.)
N/A
ARTICLE 6
CHANGES IN THE WORK
6.1 CONTRACTS WITH A GUARANTEED MAXIMUM PRICE
6.1.1 Adjustments to the Guaranteed Maximum Price on account of changes in the Work may be determined by any of the methods listed in Subparagraph 7.3.3 of the General Conditions.
6.1.2 In calculating adjustments to subcontracts (except those awarded with the Owner's prior consent on the basis of cost plus a fee), the terms "cost" and "fee" as used in Clause 7.3.3.3 of the General Conditions and the terms "costs" and "a reasonable allowance for overhead and profit" as used in Subparagraph 7.3.6 of the General Conditions shall have the meanings assigned to them in the General Conditions and shall not be modified by Articles 5, 7 and 8 of this Agreement. Adjustments to subcontracts awarded with the Owner's prior consent on the basis of cost plus a fee shall be calculated in accordance with the terms of those subcontracts.
6.1.3 In calculating adjustments to this Contract, the terms "cost" and "costs" as used in the above-referenced provisions of the General Conditions shall mean the Cost of the Work as defined in Article 7 of this Agreement and the terms "fee" and "a reasonable allowance for overhead and profit" shall mean the Contractor's Fee as defined in Paragraph 5.1 of this Agreement.
6.2 CONTRACTS WITHOUT A GUARANTEED MAXIMUM PRICE
6.2.1 Increased costs for the items set forth in Article 7 which result from changes in the Work shall become part of the Cost of the Work, and the Contractor's Fee shall be adjusted as provided in Paragraph 5.1.
6.3 ALL CONTRACTS
6.3.1 If no specific provision is made in Paragraph 5.1 for adjustment of the Contractor's Fee in the case of changes in the Work, or if the extent of such changes is such, in the aggregate, that application of the adjustment provisions of Paragraph 5.1 will cause substantial inequity to the Owner or Contractor, the Contractor's Fee shall be equitably adjusted on the basis of the Fee established for the original Work.
ARTICLE 7
COSTS TO BE REIMBURSED
7.1 The term Cost of the Work shall mean costs necessarily incurred by the Contractor in the proper performance of the Work. Such costs shall be at rates not higher than the standard paid at the place of the Project except with prior consent of the Owner. The Cost of the Work shall include only the items set forth in this Article 7.
7.1.1 LABOR COSTS
7.1.1.1 Wages per Siena Construction Standard Reimbursable Rates attached as Exhibit 'A' of construction workers directly employed by the Contractor to perform the construction of the Work at the site or, with the Owner's agreement, at off-site workshops.
7.1.1.2 Wages per Siena Construction Standard Reimbursable Rates attached as Exhibit 'A' or salaries of the Contractor's supervisory and administrative personnel when stationed at the site with the Owner's agreement.
(If it is intended that the wages or salaries of certain personnel stationed at the Contractor's principal or other offices shall be included in the Cost of the Work, identify in Article 14 the personnel to be included and whether for all or only part of their time.)
7.1.1.3 Wages and salaries per Siena Construction Standard Reimbursable Rates attached as Exhibit `A" the Contractor's supervisory or administrative personnel engaged, at factories, workshops or on the road,
in expediting the production or transportation of materials or equipment required for the Work, but only for that portion of their time required for the Work.
7.1.1.4 Costs paid or incurred by the Contractor for taxes, insurance, contributions, assessments and benefits required by law or collective bargaining agreements and, for personnel not covered by such agreements, customary benefits such as sick leave, medical and health benefits, holidays, vacations and pensions, provided such costs are based on wages and salaries included in the Cost of the Work under Clauses 7.1.1.1 through 7.1.1.3. per Siena Construction Standard Reimbursable Rates attached as Exhibit 'A'
7.1.2 SUBCONTRACT COSTS
Payments made by the Contractor to Subcontractors in accordance with the requirements of the subcontracts.
7.1.3 COSTS OF MATERIALS AND EQUIPMENT INCORPORATED IN THE COMPLETED CONSTRUCTION
7.1.3.1 Costs, including transportation, of materials and equipment incorporated or to be incorporated in the completed construction.
7.1.3.2 Costs of materials described in the preceding Clause 7.1.3.1 in excess of those actually installed but required to provide reasonable allowance for waste and for spoilage. Unused excess materials, if any, shall be handed over to the Owner at the completion of the Work or, at the Owner's option, shall be sold by the Contractor; amounts realized, if any, from such sales shall be credited to the Owner as a deduction from the Cost of the Work.
7.1.4 COSTS OF OTHER MATERIALS AND EQUIPMENT, TEMPORARY FACILITIES AND RELATED ITEMS
7.1.4.1 Costs, including transportation, installation, maintenance, dismantling and removal of materials, supplies, temporary facilities, machinery, equipment, and hand tools not customarily owned by the construction workers, which are provided by the Contractor at the site and fully consumed in the performance of the Work; and cost less salvage value on such items if not fully consumed, whether sold to others or retained by the Contractor. Cost for items previously used by the Contractor shall mean fair market value.
7.1.4.2 Rental charges for temporary facilities, machinery, equipment, and hand tolls not customarily owned by the construction workers, which are provided by the Contractor at the site, whether rented from the Contractor or others, and costs of transportation, installation, minor repairs and replacements, dismantling and removal thereof. Rates and quantities of equipment rented shall be subject to the Owner's prior approval.
7.1.4.3 Costs of removal of debris from the site.
7.1.4.4 Costs of telegrams and long-distance telephone calls, postage and parcel delivery charges, telephone service at the site and reasonable petty cash expenses of the site office.
7.1.4.5 That portion of the reasonable travel and subsistence expenses of the Contractor's personnel incurred while traveling in discharge of duties connected with the Work.
7.1.5 MISCELLANEOUS COSTS
7.1.5.1 That portion directly attributable to this Contact of premiums for insurance and bonds.
7.1.5.2 Sales, use or similar taxes imposed by a governmental authority which are related to the Work and for which the Contractor is liable.
7.1.5.3 Fees and assessments for the building permit and for other permits, licenses and inspections for which the Contractor is required by the Contract Documents to pay.
7.1.5.4 Fees of testing laboratories for tests required by the Contract Documents, except those related to defective or nonconforming Work for which reimbursement is excluded by Subparagraph 13.5.3 of the General Conditions or other provisions of the Contract Documents and which do not fall within the scope of Subparagraphs 7.2.2 through 7.2.4 below.
7.1.5.5 Royalties and license fees paid for the use of a particular design, process or product required by the Contract Documents; the cost of defending suits or claims for infringement of patent rights arising from such requirement by the Contract Documents; payments made in accordance with legal judgments against the Contractor resulting from such suits or claims and payments of settlements made with the Owner's consent; provided, however, that such costs of legal defenses, judgment and settlements shall not be included in the calculation of the Contractor's Fee or of a Guaranteed Maximum Price, if any, and provided that such royalties, fees and costs are not excluded by the last sentence of Subparagraph 3.17.1 of the General Conditions or other provisions of the Contract Documents.
7.1.5.6 Deposits lost for causes other than the Contractor's fault or negligence.
7.1.6 OTHER COSTS
7.1.6.1 Other costs incurred in the performance of the Work if and to the extent approved in advance in writing by the Owner.
7.2 EMERGENCIES: REPAIRS TO DAMAGED, DEFECTIVE OR NONCONFORMING WORK The Cost of the Work shall also include costs described in Paragraph 7.1 which are incurred by the Contractor:
7.2.1 In taking action to prevent threatened damage, injury or loss in case of an emergency affecting the safety of persons and property, as provided in Paragraph 10.3 of the General Conditions.
7.2.2 In repairing or correcting Work danged or improperly executed by construction workers in the employ of the Contractor, provided such damage or improper execution did not result from the fault or negligence of the Contractor or the Contractor's foremen, engineers or superintendents, of other supervisory, administrative or managerial personnel of the Contractor.
7.2.3 In repairing damaged Work other than that described in Subparagraph 7.2.2, provided such damage did not result from the fault or negligence of the Contractor or the Contractor's personnel, and only to the extent that the cost of such repairs is not recoverable by the Contractor from others and the Contractor is not compensated therefore by insurance or otherwise.
7.2.4 In correcting defective or nonconforming Work performed or supplied by a Subcontractor or material supplier and not corrected by them, provided such defective or nonconforming Work did nor result from the fault or neglect of the Contractor or the Contractor's personnel adequately to supervise and direct the Work of the Subcontractor or material supplier, and only to the extent that the cost of correcting the defective or nonconforming Work is not recoverable by the Contractor from the Subcontractor or material supplier.
ARTICLE 8
COSTS NOT TO BE REIMBURSED
8.1 The Cost of the Work shall not include:
8.1.1 Salaries and other compensation of the Contractor's personnel stationed at the Contractor's principal office or offices other than the site office, except as specifically provided in Clauses 7.1.1.2 and 7.1.1.3 or as may be provided in Article 14.
8.1.2 Expenses of the Contractor's principal office and offices other than the site office.
8.1.3 Overhead and general expenses, except as may be expressly included in Article 7.
8.1.4 The Contractor's capital expenses, including interest on the Contractor's capital employed for the Work.
8.1.5 Rental costs of machinery and equipment, except as specifically provided in Clause 7.1.4.2.
8.1.6 Except as provided in Subparagraphs 7.2.2 through 7.2.4 and Paragraph 13.5 of this Agreement, costs due to the fault or negligence of the Contractor, Subcontractors, anyone directly or indirectly employed by any of them, or for whose acts any of them may be liable, including but not limited to costs for the correction of damaged, defective or nonconforming Work, disposal and replacement of materials
and equipment incorrectly ordered or supplied, and making good damage to property not forming part of the Work.
8.1.7 Any cost not specifically and expressly described in Article 7.
8.1.8 Costs which would cause the Guaranteed Maximum Price, if any, to be exceeded.
ARTICLE 9
DISCOUNTS, REBATES AND REFUNDS
9.1 Cash discounts obtained on payments made by the Contractor shall accrue to the Owner if (1) before making the payment, the Contractor included them in an Application for Payment and received payment therefore from the Owner, or (2) the Owner has deposited funds with the Contractor with which to make payments; otherwise, cash discounts shall accrue to the Contractor. Trade discounts, rebates, refunds and amounts received from sales of surplus materials and equipment shall accrue to the Owner, and the Contractor shall make provisions so that they can be secured.
9.2 Amounts which accrue to the Owner in accordance with the provisions of Paragraph 9.1 shall be credited to the Owner as a deduction from the Cost of the Work
ARTICLE 10
SUBCONTRACTS AN0 OTHER AGREEMENTS
10.1 Those portions of the Work that the Contractor does not customarily perform with the Contractor's own personnel shall be performed under subcontracts or by other appropriate agreements with the Contractor. The Contractor shall obtain bids from subcontractors and from suppliers of materials or equipment fabricated especially for the Work and shall deliver such bids to the Architect. The Owner will then determine, with the advice of the Contractor and subject to the reasonable objection of the Architect, which bids will be accepted. The Owner may designate specific persons or entities from whom the Contractor shall obtain bids; however, if a Guaranteed Maximum Price has been established, the Owner may not prohibit the Contractor from obtaining bids from others. The Contractor shall not be required to contract with anyone to whom the Contractor has reasonable objection.
10.2 If a Guaranteed Maximum Price has been established and a bidder among those whose bids are delivered by the Contractor to the Architect (1) is recommended to the Owner by the Contractor, (2) is qualified to perform that portion of the Work; and (3) has submitted a bid which conforms to the requirements of the Contract Documents without reservations or exceptions, but the Owner requires that another bid be accepted; then the Contractor may require that a Change Order be issued to adjust the Guaranteed Maximum Price by the difference between the bid of the person or entity recommended to the Owner by the Contractor and the amount of the subcontract or other agreement actually signed with the person or entity designated by the Owner.
10.3 Subcontracts or other agreements shall conform to the payment provisions of Paragraphs 12.7 and 12.8, and shall not be awarded on the basis of cost plus a fee without the prior consent of the Owner.
ARTICLE 11
ACCOUNTING RECORDS
11.1 The Contractor shall keep full and detailed accounts and exercise such controls as may be necessary for proper financial management under this Contract; the accounting and control systems shall be satisfactory to the Owner. The Owner and the Owner's accountants shall be afforded access to the Contractor's records, books, correspondence, instructions, drawings, receipts, subcontracts, purchase orders, vouchers, memoranda and other data relating to this Contract, and the Contractor shall preserve these for a period of three years after final payment, or for such longer period as may be required by law.
ARTICLE 12
PROGRESS PAYMENTS
12.1 Based upon Applications for Payment submitted to the Architect by the Contractor and Certificates for Payment issued by the Architect, the Owner shall make progress payments on account of the Contract Sum to the Contractor as provided below and elsewhere in the Contract Documents.
12.2 The period covered by each Application for Payment shall be one calendar month ending on the last day of the month, or as follows:
12.3 Provided an Application for Payment is approved by the Architect not later than the Fifth day of the month, the Owner shall make payment to the Contractor no later than 30 days. If an Application for Payment is approved by the Architect after the application date fixed above, payment shall be made by the Owner not later than 30 days after the Architect receives the Application for Payment. Approval shall not be unreasonably withheld.
12.4 With each Application for Payment the Contractor shall submit payrolls, petty cash accounts, receipted invoices or invoices with check vouchers attached, and any other evidence required by the Owner or Architect to demonstrate that cash disbursements already made by the Contractor on account of the Cost of the Work equal or exceed (1) progress payments already received by the Contractor; less (2) that portion of those payments attributable to the Contractor's Fee; plus (3) payrolls for the period covered by the present Application for Payment; plus (4) retainage provided in Subparagraph 12.5.4, if any, applicable to prior progress payments.
12.5 CONTRACTS WITH A GUARANTEED MAXIMUM PRICE
12.5.1 Each Application for Payment shall be based upon the most recent schedule of values submitted by the Contractor in accordance with the Contract Documents. The schedule of values shall allocate the entire Guaranteed Maximum Price among the various portions of the Work, except that the Contractor's Fee shall be shown as a single separate item. The schedule of values shall be prepared in such form and
supported by such data to substantiate its accuracy as the Architect may require. This schedule, unless objected to by the Architect, shall be used as a basis for reviewing the Contractor's Applications for Payment.
12.5.2 Applications for Payment shall show the percentage completion of each portion of the Work as of the end of the period covered by the Application for Payment. The percentage completion shall be the lesser of (1) the percentage of that portion of the Work which has actually been completed or (2) the percentage obtained by dividing (a) the expense which has actually been incurred by the Contractor on account of that portion of the Work for which the Contractor has made or intends to make actual payment prior to the next Application for Payment by (b) the share of the Guaranteed Maximum Price allocated to that portion of the Work in the schedule of values.
12.5.3 Subject to other provisions of the Contract Documents, the amount of each progress payment shall be reputed as follows:
12.5.3.1 Take that portion of the Guaranteed Maximum Price properly allocable to completed Work as determined by multiplying the percentage completion of each portion of the Work by the share of the Guaranteed Maximum Price allocated to that portion of the Work in the schedule of values. Pending final determination of cost to the Owner of changes in the Work, amounts not in dispute may be included as provided in Subparagraph 7.3.7 of the General Conditions, even though the Guaranteed Maximum Price has not yet been adjusted by Change Order.
12.5.3.2 Add that portion of the Guaranteed Maximum Price properly allocable to materials and equipment delivered and suitably stored at the site for subsequent incorporation in the Work or, if approved in advance by the Owner, suitably stored off the site at a location agreed upon in writing.
12.5.3.3 Add the Contractor's Fee, less retainage of ten percent (10%). The Contractor's Fee shall be computed upon the Cost of the Work described in the two preceding Clauses at the rate stated in Paragraph 5.1 or, if the Contractor's Fee is stated as a fixed sum in that Paragraph, shall be an amount which bears the same ratio to that fixed-sum Fee as the Cost of the Work in the two preceding Clauses bears to a reasonable estimate of the probable Cost of the Work upon its completion.
12.5.3.4 Subtract the aggregate of previous payments made by the Owner.
l2.5.3.5 Subtract the shortfall, if any, indicated by the Contractor in the documentation required by Paragraph 12.4 to substantiate prior Applications for Payment, or resulting from errors subsequently discovered by the Owner's accountants in such documentation.
12.5.3.6 Subtract amounts, if any, for which the Architect has withheld or nullified a Certificate for Payment as provided in Paragraph 9.5 of the General Conditions.
12.5.4 Additional retainage, if any, shall be as follows:
(If it is intended to retain, additional amounts from progress payments to the Contractor beyond (1) the retainage from the Contractor's Fee provided in Clause 12.5.3.3, (2) the retainage from Subcontractors provided in paragraph 12.7 below, and (3) the retainage, if any, provided by other provisions of the Contract, insert provision for such additional retainage here. Such provision, if made, should also describe any arrangement for limiting or reducing the amount retained after the Work reaches a certain state of completion.
There shall be no retainage on materials purchased by Siena Construction Corporation. Retainage of subcontractors who have completed their work and their punch list work shall be reduced to O% thirty (30) days after completion of the Work. After Substantial Completion retainage shall be reduced to reflect the value of the punchlist work outstanding but in no event shal1 the retainage be less than $10,000. Upon completion of the punchlist RepliGen will make final payment.
12.6 CONTRACTS WITHOUT A GUARANTEED MAXIMUM PRICE
Intentionally Deleted
12.7 Except with the Owner's prior approval, payments to Subcontractors included in the Contractor's Applications for Payment shall not exceed an amount for each Subcontractor calculated as follows:
12.7.1 Take that portion of the Subcontract Sum properly allocable to complete4 Work as determined by multiplying the percentage completion of each portion of the Subcontractor's Work by the share of the total Subcontract Sum allocated to that portion in the Subcontractor's schedule of values, less retainage of ten percent (10%). Pending final determination of amounts to be paid to the Subcontractor for changes in the Work, amounts not in dispute may be included as provided in Subparagraph 7.3.7 of the General Conditions even though the Subcontract Sum has not yet been adjusted by Change Order.
12.7.2 Add that portion of the Subcontract Sum properly allocable to materials and equipment delivered and suitably stored at the site for subsequent incorporation in the Work or, if approved in advance by the Owner, suitably motored off the site at a location agreed upon in writing, less retainage of 10 percent (10%).
12.7.3 Subtract the aggregate of previous payments made by the Contractor to the Subcontractor.
12.7.4 Subtract amounts, if any, for which the Architect has withheld or nullified a Certificate for Payment by the Owner to the Con-tractor for reasons which are the fault of the Subcontractor.
12.7.5 Add, upon Substantial Completion of the entire Work of the Contractor, a sum sufficient to increase the total payments to the Subcontractor to percent () of the Subcontract Sum, less amounts, if any, for incomplete. Work and unsettled claims; and, if final completion of the entire Work is thereafter materially delayed through no fault of the Subcontractor, add any additional amounts payable on account of Work of the Subcontractor in accordance with Subparagraph 9.10.3 of the General Conditions.
(If it is intended, prior to Substantial Completion of the entire Work of the Contractor, to reduce or limit the retainage from Subcontractors resulting from the percentages inserted in Subparagraphs 12.7. I and 12.7.2 above, and this is not explained elsewhere in the Contract Documents, insert here provisions for such reduction or limitation.)
The Subcontract Sum is the total amount stipulated in the subcontract to be paid by the Contractor to the Subcontractor for the Subcontractor's performance of the subcontract.
12.8 Except with the Owner's prior approval, the Contractor shall nor make advance payments to suppliers for materials or equipment which have not been delivered and stored at the site.
12 9 In taking action on the Contractor's Applications for Payment, the Architect shall be entitled to rely on the accuracy and completeness of the information furnished by the Contractor and shall not be deemed to represent that the Architect has made a detailed examination, audit or arithmetic verification of the documentation submitted in accordance with Paragraph 12.4 or other supporting data; that the Architect has made exhaustive or continuous on-site inspections or that the Architect has made examinations to ascertain how or for what purposes the Contractor has used amounts previously paid on account of the Contract. Such examinations, audits and verifications, if required by the Owner, will be performed by the Owner's accountants acting in the sole interest of the Owner.
ARTICLE 13
FINAL PAYMENT
13.1 Final payment shall be made by the Owner to the Contractor when (1) the Contract has been fully performed by the Contractor except for the Contractor's responsibility to correct defective or nonconforming Work, as provided in Subparagraph 12.2.2 of the General Conditions, and to satisfy other requirements, if any, which necessarily survive final payment; (2) a final Application for
payment and a final accounting for the Cost of the Work have been submitted by the Contractor and reviewed by the Owner's accountants; and (3) a final Certificate for Payment has then been issued by the Architect; such final payment shall be made by the Owner not more than 30 days after the issuance of the Architect's final Certificate for Payment, or as follows:
13.2 The amount of the final payment shall be calculated as follows:
13.2.1 Take the sum of the Cost of the Work substantiated by the Contractor's final accounting and the Contractor's Fee; but nor more than the Guaranteed Maximum Price, if any.
13.2.2 Subtract amounts, if any, for which the Architect withholds, in whole or in part, a final Certificate for Payment as provided in Subparagraph 9.5.1 of the General Conditions or other provisions of the Contract Documents.
13.2.3 Subtract the aggregate of previous payments made by the Owner. If the aggregate of previous payments made by the Owner exceeds the amount due the Contractor, the Contractor shall reimburse the difference to the Owner.
13.3 The Owner's accountants will review and report in writing on the Contractor's final accounting within 30 days after delivery of the final accounting to the Architect by the Contractor. Based upon such Cost of the Work as the Owner's accountants report to be substantiated by the Contractor's final accounting, and provided the other conditions of Paragraph 13.1 have been met, the Architect will, within seven days after receipt of the written report of the Owner's accountants, either issue to the Owner a final Certificate for Payment with a copy to the Contractor, or notify the Contractor and Owner in writing of the Architect's reasons for withholding a certificate as provided in Subparagraph 9.5.1 of the General Conditions. The time periods stated in this Paragraph 13.3 supersede those stated in Subparagraph 9.4.1 of the General Conditions.
13.4 If the Owner's accountants report the Cost of the Work as substantiated by the Contractor's final accounting to be less than claimed by the Contractor, the Contractor shall be entitled to demand arbitration of the disputed amount without a further decision of the Architect. Such demand for arbitration shall be made by the Contractor within 30 days after the Contractor's receipt of a copy of the Architect's final Certificate for Payment; failure to demand arbitration within this 30-day period shall result in the substantiated amount reported by the Owner's accountants becoming binding on the Contractor. Pending a final resolution by arbitration, the Owner shall pay the Contractor the amount certified in the Architect's final Certificate for Payment.
13.5 If, subsequent to final payment and at the Owner's request, the Contractor incurs costs described in Article 7 and not excluded by Article 8 to correct defective or nonconforming Work, the Owner shall reimburse the Contractor such costs and the Contractor's Fee applicable thereto on the same basis as if such costs had been incurred prior to final payment, but not in excess of the Guaranteed Maximum Price, if any. If the Contractor has participated in savings as provided in Paragraph 5.2, the amount of such savings shall be recalculated and appropriate credit given to the Owner in determining the net amount to be paid by the Owner to the Contractor.
ARTICLE 14
MISCELLANEOUS PROVISIONS
14.1 Where reference is made in this Agreement to a provision of the General Conditions or another Contract Document, the reference refers to that provision as amended or supplemented by other provisions of the Contract Documents.
14.2 Payments due and unpaid under the Contract shall bear interest from the date payment is due at the rate stated below, or in the absence thereof, at the legal rate prevailing from time to time at the place where the Project is located.
(Insert rate of interest agreed upon, if any.)
(Usury laws and requirements under the Federal Truth in Lending Act, similar state and local consumer credit laws and other regulations at the Owner's and Contractor's principal places of business, the location of the project and elsewhere may affect the validity of this provision. Legal advice should be obtained with respect to deletions or modifications, and also regarding requirements such as written disclosures or waivers.)
14.3 Other provisions:
1) NDC Development Associates, Repligen Corporation, and West Seyon, LLC are to be named as additional insureds on Certificates of Insurance.
2) Payment and Performance Bonds are not required.
3) Partial Lien Waivers are to he provided by Contractor and Subcontractors monthly.
4) Final Lien Releases to be provided upon completion.
ARTICLE 15
TERMINATION OR SUSPENSION
15.1 The Contract may be terminated by the Contractor as provided in Article 14 of the General Conditions; however, the amount to be paid to the Contractor under Subparagraph 14.1.2 of the General Conditions shall not exceed the amount the Contractor would be entitled to receive under Paragraph 15.3 below, except that the Contractor's Fee shall be calculated as if the Work had been fully completed by the Contractor, including a reasonable estimate of the Cost of the Work for Work not actually completed
15.2 If a Guaranteed Maximum Price is established in Article 5, the Contract may be terminated by the Owner for cause as provided in Article 14 of the General Conditions; however, the amount, if any, to be paid to the Contractor under Subparagraph 14.2.4 of the General Conditions shall not cause the Guaranteed Maximum Price to be exceeded, nor shall it exceed the amount the Contractor would be entitled to receive under Paragraph 15.3 below.
15.3 If no Guaranteed Maximum Price is established in Article 5, the Contract may be terminated by the Owner for cause as provided in Article 14 of the General Conditions; however, the Owner shall then pay the Contractor an amount calculated as follows:
15.3 1 Take the Cost of the Work incurred by the Contractor to the date of termination.
15.3.2 Add the Contractor's Fee computed upon the Cost of the Work to the date of termination at the rate stated in Paragraph 5.1 or, if the Contractor's Fee is stated as a fixed sum in that Paragraph, an amount which bears the same ratio to that fixed-sum Fee as the Cost of the Work at the time of termination bears to a reasonable estimate of the probable Cost of the Work upon its completion.
15.3.3 Subtract the aggregate of previous payments made by the Owner.
The Owner shall also pay the Contractor fair compensation, either by purchase or rental at the election of the Owner, for any equipment owned by the Contractor which the Owner elects to retain and which is not otherwise included in the Cost of the Work under Subparagraph 15.3. 1. To the extent that the Owner elects to take legal assignment of subcontracts and purchase orders (including rental agreements), the Contractor shall, as a condition of receiving the payments referred to in this Article 15, execute and deliver all such papers and take all such steps, including the legal assignment of such subcontracts and other contractual rights of the Contractor, as the Owner may require for the purpose of fully vesting in the Owner the rights and benefits of the Contractor under such subcontracts or purchase orders.
15.4 The Work may be suspended by the Owner as provided in article 14 of the General Conditions; in such case, the Guaranteed Maximum Price, if any, shall be increased as provided in Subparagraph 14.3.2 of the General Conditions except that the term "cost of performance of the Contract" in that Subparagraph shall be understood to mean the Cost of the Work and the term "profit" shall be understood to mean the Contractor's Fee as described in Paragraphs 5.1 and 6.3 of this Agreement.
ARTICLE 16
ENUMERATION OF CONTRACT DOCUMEMTS
16 1 The Contract Documents, except for Modifications issued after execution of this Agreement, are enumerated as follows:
16.1.1 The Agreement is this executed Standard Form of Agreement Between Owner and Contractor, AIA Document Al l 1, 1987 Edition
16.1.2 The General Conditions are the General Conditions of the Contract for Construction, AIA Document A201, 1987 Edition.
16.1.3 The Supplementary and other Conditions of the Contract are those contained in the Project Manual dated
, and are as follows:
Document Title Pages
None
16.1.4 The Specifications are those continued in the Project Manual dated as in Paragraph 16.1.3, and are as follows:
(Either list CPS Specifications here or refer to an exhibit attached to this Agreement.)
Section Title Pages
None
16.1.5 The Drawings are as follows, and are dated unless a different date is shown below:
(Either list the Drawings here or refer to an exhibit attached to this Agreement.)
Number Title Date
See attached 2/13/02 Drawing List - Exhibit 'B'
16.1.6 The Addenda, if any, are as follows:
Number Date Pages
Portions of Addenda relating to bidding requirements are not part of the Contract Documents unless the bidding requirements are also enumerated in this Article 16.
16.1.7 Other Documents, if any, forming part of the Contract Documents are as follows: List here any additional documents which are intended to form part of the Contract Documents. The General Conditions provide that bidding requirements such as advertisement or invitation to bid, Instructions to Bidders, sample forms and the Contractor's bid are not part of the Contract Documents unless enumerated in this Agreements. They should be listed here only if intended to be part of the Contract Documents.)
Equipment Matrix dated February 7, 2002
Exhibit D - Add/Alternate List
This Agreement is entered into as of the day and year first written above and is executed in at least three original copies of which one is to be delivered to the Contractor, one to the Architect for use in the administration of the Contract, and the remainder to the Owner. OWNER RepliGen Corporation CONTRACTOR Siena Construction Corporation
/S/ Walter Herlihy /s/ Michael S. Barr (Signature) (Signature) Walter Herlihy, President, CEO Michael S. Barr, Sr. Proj. Mgr (Printed name and title (Printed name and title) |
Exhibit 21
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to incorporation by reference in this Form 10-K of our report dated May 13, 2002 included in Registration Statement Nos. 33-62796, 333-30383, 333-57951, 333-76005, 333-79611, 333-95641, 333-31728, 333-35056 and 333-36280.
/S/ Arthur Andersen LLP ----------------------- ARTHUR ANDERSEN LLP Boston, Massachusetts May 20, 2002 |
Letter to Commission Pursuant to Temporary Note 3T
EXHIBIT 99.1
May 20, 2002
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0408
Ladies and Gentlemen:
Pursuant to Temporary Note 3T to Article 3 of Regulation S-X, Repligen Corporation has obtained a letter of representation from Arthur Andersen LLP ("Andersen") stating that the March 31, 2002 audit was subject to their quality control system for the U.S. accounting and auditing practice to provide reasonable assurance that the engagement was conducted in compliance with professional standards, that there was appropriate continuity of Andersen personnel working on the audit and availability of national office consultation. Availability of personnel at foreign affiliates of Andersen is not relevant to this audit.
Very truly yours,
Repligen Corporation
/s/ Walter Herlihy Walter Herlihy Chief Financial Officer |