SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to ____________________
Commission File Number 0-14656
REPLIGEN CORPORATION
(exact name of registrant as specified in its charter)
Delaware 04-2729386
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
117 Fourth Avenue
Needham, Massachusetts 02494
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 449-9560
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Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of October 31, 1999.
COMMON STOCK, PAR VALUE $.01 PER SHARE 22,320,310
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Class Number of Shares
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REPLIGEN CORPORATION
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Balance Sheets as of September 30, 1999 (Unaudited)
and March 31, 1999 3
Statements of Operations (Unaudited) for the Three and Six
Months Ended September 30, 1999 and 1998 4
Statement of Cash Flows (Unaudited) for the Six Months
Ended September 30, 1999 and 1998 5
Notes to Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities
None
Item 4. Submissions of Matters to a Vote of Security Holders 13
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K 14
Signature 15
Exhibit Index 16
Exhibits 17
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PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
REPLIGEN CORPORATION
BALANCE SHEETS
(Unaudited)
ASSETS SEPTEMBER 30, 1999 MARCH 31, 1999
------------------ --------------
Current assets:
Cash and cash equivalents $ 10,912,517 $ 3,250,751
Accounts receivable 487,522 429,720
Inventories 494,893 630,329
Prepaid expenses and other current assets 310,451 181,617
------------ ------------
Total current assets 12,205,383 4,492,417
Property and equipment, at cost:
Equipment 1,089,331 944,644
Furniture and fixtures 155,890 101,376
Leasehold improvements 469,088 460,319
------------ ------------
1,714,309 1,506,339
Less: accumulated depreciation and amortization 1,019,067 862,934
------------ ------------
695,242 643,405
Other assets, net 81,411 88,472
------------ ------------
$ 12,982,036 $ 5,224,294
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 209,987 $ 268,708
Accrued expenses 308,370 313,926
Unearned income -- 49,969
------------ ------------
Total current liabilities 518,357 632,603
Commitments and contingencies -- --
Stockholders' equity:
Preferred stock, $.01 par value --authorized - 5,000,000
shares --outstanding - none -- --
Common stock, $.01 par value --authorized - 40,000,000 shares
--outstanding - 21,872,085 shares at September 30, 1999
and 18,264,285 shares at March 31, 1999
218,720 182,642
Additional paid-in capital 140,335,872 131,272,607
Accumulated deficit (128,090,913) (126,863,558)
------------ ------------
Total stockholders' equity 12,463,679 4,591,691
------------ ------------
$ 12,982,036 $ 5,224,294
------------ ------------
------------ ------------
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See accompanying notes to financial statements.
REPLIGEN CORPORATION
STATEMENT OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED SEPTEMBER 30, SIX MONTHS ENDED SEPTEMBER 30,
1999 1998 1999 1998
Revenues:
Research and development $ 232,344 $ 470,032 $ 610,847 $ 738,438
Product 578,996 197,010 811,466 426,149
Investment income 156,247 57,491 202,784 119,182
Other 14,438 37,648 45,095 70,836
------------ ------------ ------------ ------------
982,025 762,181 1,670,192 1,354,604
Costs and expenses:
Research and development 733,045 464,955 1,221,248 931,025
Selling, general and administrative 767,214 354,311 1,193,383 711,243
Cost of products sold 286,534 141,991 482,917 254,273
------------ ------------ ------------ ------------
1,786,793 961,258 2,897,548 1,896,541
------------ ------------ ------------ ------------
Net loss $ (804,768) $ (199,077) $ (1,227,356) $ (541,937)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Basic and diluted net loss per share $ (0.04) $ (0.01) $ (0.06) $ (0.03)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Basic and diluted weighted average 21,867,601 18,001,785 20,324,426 18,001,785
common shares outstanding
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
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See accompanying notes to financial statements.
REPLIGEN CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended September 30,
--------------------------------
1999 1998
------ -----
Cash flows from operating activities
Net loss $ (1,227,356) $ (541,937)
Adjustments to reconcile net loss to net cash
used in operating activities -
Depreciation and amortization 156,134 131,586
Non cash charge for warrant issuance 188,265 --
Changes in assets and liabilities -
Accounts receivable (57,802) (247,862)
Inventories 135,436 (56,677)
Prepaid expenses and other current assets (128,834) 79,115
Accounts payable (58,721) 11,202
Accrued expenses (5,556) 111,186
Unearned income (49,969) (33,332)
------------ -------------
Net cash used in operating activities (1,048,403) (546,719)
Cash flows from investing activities
Purchases of property and equipment, at cost (207,970) (78,951)
Changes in other assets 7,061 --
------------ -------------
Net cash used in investing activities (200,909) (78,951)
Cash flows from financing activities:
Net proceeds from the issuance of common stock and warrants,
net of issuance costs 8,911,078 --
------------ -------------
Net cash provided by financing activities 8,911,078 --
------------ -------------
Net increase (decrease) in cash and cash equivalents 7,661,766 (625,670)
Cash and cash equivalents, beginning of period 3,250,751 4,725,544
------------ -------------
Cash and cash equivalents, end of period $ 10,912,517 $ 4,099,874
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See accompanying notes to financial statements.
REPLIGEN CORPORATION
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The financial statements included herein have been prepared by Repligen Corporation (the "Company" or "Repligen"), pursuant to the rules and regulations of the Securities and Exchange Commission for quarterly reports on Form 10-Q and do not include all of the information and footnote disclosures required by generally accepted accounting principles. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Form 10-K for the year ended March 31, 1999.
In the opinion of management, the accompanying unaudited financial statements include all adjustments, consisting of only normal, recurring adjustments, necessary to present fairly, the consolidated financial position, results of operations and cash flows of the Company. The results of operations for the interim periods presented are not necessarily indicative of results to be expected for the entire year.
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
2. NET LOSS PER SHARE
The Company has adopted Statement of Financial Accounting Standards (SFAS) No. 128, EARNINGS PER SHARE, effective December 15, 1998. SFAS No. 128 establishes standards for computing and presenting earnings per share and applies to entities with publicly held common stock or potential common stock. The Company has applied the provisions of SFAS No. 128, retroactively to all periods presented. Basic and diluted net loss per share represents net loss divided by the weighted average number of common shares outstanding during the period. The dilutive effect of the potential common shares consisting of outstanding stock options and warrants is determined using the treasury stock method in accordance with SFAS No. 128. Diluted weighted average shares outstanding at September 30, 1999 and 1998 excluded the potential common shares from warrants and stock options because to do so would be antidilutive for the periods presented. At September 30, 1999, there are 1,332,791 options outstanding with a weighted average exercise price of $1.94 and 3,307,050 warrants outstanding with a weighted average exercise price of $3.18. At September 30, 1998, there are 1,042,000 options outstanding with a weighted average exercise price of $1.34 and 2,832,000 warrants outstanding with a weighted average exercise price of $3.97.
3. CASH AND CASH EQUIVALENTS
The Company considers highly liquid investments purchased with original maturities at the date of acquisition of three months or less to be cash equivalents. Cash equivalents consist of the following at September 30, 1999 and March 31, 1999:
Three Months Ended
September 30,1999 March 31, 1999
(Unaudited)
U.S. Government and Agency securities $ 4,989,877 $ 1,197,624
Commercial paper 3,963,497 1,136,119
Money markets 1,797,830 802,755
Cash 161,313 114,253
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Total cash and cash equivalents $10,912,517 $ 3,250,751
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4. INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or market and consist of the following:
September 30, 1999 March 31,1999
(Unaudited)
Raw materials and work-in-process $371,305 $412,480
Finished goods 123,587 217,849
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Total $494,892 $630,329
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------- -------
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Work in process and finished goods inventories consist of material, labor, outside processing costs and manufacturing overhead.
5. COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted SFAS No. 130 REPORTING COMPREHENSIVE INCOME, effective January 1, 1998. SFAS No. 130 establishes standards for reporting and display of comprehensive income and its components in financial statements. Comprehensive income includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. The comprehensive net loss is the same as net loss for all periods presented.
6. DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND SIGNIFICANT CUSTOMERS
The Company has adopted SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED Information, in the fiscal year ended March 31, 1999. SFAS No. 131 establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information for those segments to be presented in interim financial reports issued to stockholders. SFAS No. 131 also establishes standards for related disclosures about products and services and geographic areas. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions now to allocate resources and assess performance. To date, the Company has viewed its operations and manages its business as principally one operating segment. As a result, the financial information disclosed herein, represents all of the material financial information related to the Company's principal operating segment.
The following table represents the Company's revenue by country:
Three Months Ended Six Months Ended
September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
US 61% 85% 59% 73%
Europe 38% 10% 39% 22%
Other 1% 5% 2% 5%
---- ---- --- ----
Total 100% 100% 100% 100%
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During the three months ended September 30,1999, there were three significant customers which accounted for approximately 12%, 10% and 11% of the Company's revenues or $118,000 $100,000 and $105,300, respectively. The related accounts receivable for these three customers at September 30, 1999 was $62,000, $0 and $47,000, respectively.
7. SALE OF SECURITIES
Pursuant to stock purchase agreements dated April 30, 1999 and May 14, 1999, respectively, Repligen issued in a private placement an aggregate of 3,600,000 shares of Common Stock for an aggregate purchase price of approximately $9 million. Repligen closed the private placement transaction on June 23, 1999. There were no underwriters involved in such private placement transaction. Repligen filed a registration statement with the Securities and Exchange Commission on Form S-3 on June 16, 1999 for the resale of the 3,600,000 shares of Common Stock sold to the parties in the private placement transaction. The Securities and Exchange Commission declared such resale registration statement effective on June 23, 1999.
8. SUBSEQUENT EVENT
In October 1999 the Company licensed commercialization rights to two diagnostic secretin products from ChiRhoClin Inc., a private company. These products have been evaluated in clinical trials for the diagnosis of pancreatic dysfunction and gastrinoma. A New Drug Application was filed with the FDA in May 1999 seeking approval to market synthetic porcine secretin for these applications. ChiRhoClin has also conducted clinical studies for these diagnostic indications with a human form of secretin which it intends to submit to the FDA in 2000. Under terms of the agreement, Repligen paid $1,000,000 upon execution of the agreement and, if the NDAs are approved, the Company will be required to pay future milestones and royalties.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-Looking Statements
Statements in this Quarterly Report on Form 10-Q as well as oral
statements that may be made by the Company or by officers, directors or
employees of the Company acting on the Company's behalf, that are not historical
facts constitute "forward-looking statements" within the meaning of Section 21E
of the Securities Exchange Act of 1934. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors that could cause the
actual results of the Company to be materially different from the historical
results or from any results expressed or implied by such forward-looking
statements. The Company's future operating results are subject to risks and
uncertainties and are dependent upon many factors, including, without
limitation, the Company's ability to (i) meet its working capital and future
liquidity needs, (ii) successfully implement its strategic growth strategies,
(iii) understand, anticipate and respond to rapidly changing technologies and
market trends, (iv) develop, manufacture and deliver high quality,
technologically advanced products on a timely basis to withstand competition
from competitors which may have greater financial, information gathering and
marketing resources than the Company, (v) obtain and protect licensing and
intellectual property rights necessary for the Company's technology and product
development on terms favorable to the Company, (vi) recruit and retain highly
talented professionals in a competitive job market, (vii) realize future
revenues, (viii) maintain a timeline for clinical activity, (ix) obtain
successful results of pending or future clinical trials, (x) continue to
establish collaborative arrangements with third parties, and (xi) compete
against the biotechnology and pharmaceutical industries. Further information on
potential factors that could affect the Company's financial results are included
in filings made by the Company from time to time with the Securities and
Exchange Commission included in the section entitled "Risk Factors" contained in
the Company's Annual Report on Form 10-K for the fiscal year ended March 31,
1999 (File No.000-14656).
OVERVIEW
Repligen develops new drugs for the treatment of autism, organ transplantation and cancer. To expand our drug development program, in March 1999, we acquired the exclusive rights to patent applications for the use of secretin in the treatment of autism. Autism is a developmental disorder characterized by poor communication and social skills, negative behavior, irregular sleep patterns and diminished ability to learn. Secretin is a hormone produced in the small intestine which regulates the function of the pancreas as part of the process of digestion. A form of secretin derived from pigs is approved by the United States Food and Drug Administration for use in diagnosing problems with pancreatic function. Recent anecdotal reports indicate that secretin may have beneficial effects in treating autism, including improvements in sleep, digestive function, speech and social behavior. Following media reports of the potential benefits of secretin, more than 2,000 autistic children have been treated with the pig-derived hormone. We intend to manufacture a human, synthetic form of secretin and evaluate it in FDA approved clinical trials in order to confirm the benefits of secretin in treating autism and to determine the optimal dosing schedule. Currently there are no drugs approved by the FDA for the treatment of autism.
Repligen also is developing a product named "CTLA4-Ig," which has been shown to suppress unwanted immune responses in animal models of organ transplantation and autoimmune diseases, such as lupus or multiple sclerosis, in which the immune system mistakenly attacks the body. Our product candidate is a derivative of a natural protein whose role is to turn-off an immune response. In animal models of organ transplantation and autoimmune diseases, CTLA4-
Ig has been shown to block the rejection of a transplanted organ or the effects of the autoimmune disease. Initial clinical testing of CTLA4-Ig has been carried out in patients receiving a bone marrow transplant, which is a potential cure for several diseases of the immune system, including leukemia, myeloma, lymphoma and sickle cell anemia. Despite the clinical success of bone marrow transplants, a significant number of patients experience a severe and potentially life-threatening complication known as Graft Versus Host Disease, in which the newly transplanted immune system attacks the host (i.e., the patient). In June 1999, investigators from the Dana-Farber Cancer Institute, a research hospital in Boston, reported in the NEW ENGLAND JOURNAL OF MEDICINE that treatment of bone marrow from a family member with CTLA4-Ig prevented Graft Versus Host Disease in eight of eleven transplant patients. Repligen intends to further evaluate CTLA4-Ig in bone marrow transplantation for leukemia in collaboration with the National Cancer Institute.
In October 1999 we licensed commercialization rights to two diagnostic secretin products from ChiRhoClin Inc., a private company. These products have been evaluated in clinical trials for the diagnosis of pancreatic dysfunction and gastrinoma. A New Drug Application was filed with the FDA in May 1999 seeking approval to market synthetic porcine secretin for these applications. ChiRhoClin has also conducted clinical studies for these diagnostic indications with a human form of secretin which it intends to submit to the FDA in 2000.
Repligen develops, manufactures and markets products for the production of therapeutic antibodies. We currently market a line of products for the purification of antibodies based on a naturally occurring protein, Protein A, which can specifically bind to antibodies. In December 1998, Repligen entered into a ten year relationship to supply recombinant Protein A to Amersham Pharmacia Biotech, a leading supplier to the biopharmaceutical market.
RESULTS OF OPERATIONS
REVENUES
Total revenues for the three month period ended September 30, 1999 and 1998 were approximately $982,000 and $762,000, respectively, an increase of approximately $220,000 or 29%. This increase was largely attributable to increased product sales of recombinant Protein A and investment income. Year to date total revenues increased approximately $316,000, or 23%, to $1,670,000 at September 30,1999 from $1,355,000 at September 30,1998.
Research and development revenues for the three month period ended September 30, 1999 and 1998 were approximately $232,000 and $470,000, respectively, a decrease of approximately $238,000 or 51%. The decrease in quarterly revenue was largely attributable to a licensing payment received during the three months ended September 30, 1998. Year to date revenues decreased approximately $128,000 or 17% as a result of the discontinuation of research collaborations on Repligen's drug discovery programs that generated revenue during the six months ended September 30, 1998.
Product revenues for the three month period ended September 30, 1999 and 1998 were approximately $579,000 and $197,000, respectively, an increase of $382,000 or 194%. Year to date revenues increased 90% or approximately $385,000 to $811,000 from $426,000 at September 30, 1999 and 1998, respectively. This increase is attributable to increased sales of Protein A products during such periods.
Investment income for the three month period ended September 30, 1999 and 1998 was approximately $156,000 and $57,000, respectively, an increase of approximately $99,000 or 173%. Year to date revenue increased 71% or approximately $84,000 to $203,000 from $119,000. These increases are largely attributable to higher average funds available for investment arising principally out of the completion of a private placement of common stock to certain investors of $8,900,000 on June 23, 1999.
Other revenues for the three month period ended September 30, 1999 were approximately $15,000, a decrease of $23,000 or 61% from the comparable period ended September 30, 1998. Year to date revenue was $45,000 and $71,000 for the six months ended September 30, 1999 and 1998, respectively. This decrease is primarily due to sales of unused equipment during fiscal year 1999.
EXPENSES
Total expenses for the three month period ended September 30, 1999 and 1998 increased to approximately $1,787,000 from $961,000, an increase of $826,000 or 86%. For the six months ended September 30, 1999 and 1998, expenses were $2,898,000 and $1,897,000, respectively, an increase of $1,001,000 or 35%.
Research and development expenses for the three month period ended September 30, 1999 and 1998 were approximately $733,000 and $465,000, respectively, an increase of $268,000 or 58%. Year to date expenses were $1,221,000 and $931,000 for the six month period September 30, 1999 and 1998, respectively. These increases reflect costs associated with its drug development programs for secretin and CTLA4-Ig.
Selling, general and administrative expenses for the three months ended September 30, 1999 and 1998 were approximately $767,000 and $354,000, respectively, an increase of $413,000 or 117%. For the six month period ended September 30, 1999 and 1998, respectively, selling, general and administrative expenses were $1,193,000 and $711,000, respectively, an increase of $482,000 or 68%. This increase is attributable to non-recurring expenses associated with a financial advisory agreement with a shareholder, including a non-cash charge for the issuance of warrants exercisable for shares of Common Stock of Repligen pursuant to an agreement signed during the quarter ended September 30, 1999.
Cost of products sold for the three months ended September 30, 1999 and 1998 were approximately $287,000 and $142,000, respectively, an increase of $145,000, or 102%. Year to date costs as of September 30, 1999 and 1998 were $483,000 and $254,000, an increase of $229,000 or 90%. This increase is largely attributable to costs associated with the commencement of its manufacturing contract for AP Biotech. Cost of products sold in the three months ended September 30, 1999 and 1998 were 50% and 72%, respectively, of product revenues and for the six months ended September 30, 1999 and 1998, 60% and 60%, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Repligen's total cash and cash equivalents increased to $10,913,000 at September 30, 1999 from $3,251,000 at March 31, 1999. This increase of $7,662,000 reflects $8,900,000 of proceeds resulting from the sale of Common Stock of Repligen to certain investors through a private placement that closed during June 1999, offset by a net loss from operations incurred during the six month period ended September 30, 1999 of approximately $1,227,000, an increase in accounts receivable of $58,000 and an increase in
accounts payable of $59,000. Working capital increased to $11,762,000 at September 30, 1999 from $3,860,000 at March 31, 1999.
Repligen has entered into agreements with a number of collaborative partners and licensees. Under the terms of these agreements, Repligen may be eligible to receive research support, additional milestones or royalty revenue if these collaborations result in clinical evaluation and commercialization of products developed. The continuation of these collaborations or of receiving any future payments related to these agreements cannot be guaranteed.
While Repligen anticipates that the cost of operations will increase in fiscal 2000 as Repligen expands its investment in proprietary product development, Repligen believes that the private placement financing, yielding an aggregate of $8,900,000 in net proceeds, will provide sufficient funding to satisfy Repligen's working capital and capital expenditure requirements for the next twenty-four months. Should Repligen need to secure additional financing to meet its future liquidity requirements, Repligen may not be able to secure such financing, or obtain such financing on favorable terms because of the volatile nature of the biotechnology market place.
YEAR 2000
Repligen has undertaken an initial review of its information technology computer systems and it believes that the Year 2000 problem does not pose significant operational problems to its information technology systems. The majority of Repligen's software and computer equipment has been purchased within the last five years from third-party vendors who have already provided upgrades intended to bring their products into Year 2000 compliance. Repligen has begun to address the small number of internal systems that are not yet Year 2000 compliant, and expects full compliance by the end of 1999. Repligen currently believes that the costs of addressing these issues should not exceed $50,000 and will not have a material adverse impact on Repligen's financial position.
Repligen has recently interviewed various third parties, including vendors and suppliers of Repligen, to determine their exposure to Year 2000 issues, their anticipated risks and responses to those risks. To date, the third parties that have been contacted have indicated that their hardware or software is or will be Year 2000 compliant in a time frame that meets Repligen's requirements. Even with the vendor compliance however, Repligen intends to continue to assess its exposure to Year 2000 noncompliance on the part of any of its material vendors. Repligen has no control, however, of whether the vendor's systems will be Year 2000 compliant in a time frame satisfactory to Repligen.
Repligen is working to establish a contingency plan in the event Year 2000 compliance cannot be achieved in a timely manner. A contingency plan will be developed immediately upon completion of Repligen's Year 2000 compliance assessment.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
On July 17, 1998, Repligen filed a complaint against Bristol Meyers Squibb ("BMS") at the United States District Court for the District of Massachusetts in Boston, Massachusetts seeking correction of inventorship of certain United States patents which claim compositions and methods of use for CTLA4 as well as unspecified monetary damages. A correction of inventorship would result in the University of Michigan being designated as a co-assignee on any corrected BMS
patent. Repligen would then have rights to such technology pursuant to a 1992 License Agreement with the University of Michigan, a 1995 Asset Acquisition Agreement with Genetics Institute, and other related agreements. On July 13, 1999, the court dismissed the complaint without prejudice citing a lack of legal standing of Repligen to bring such a complaint. We believe that the court's finding on standing was in error. The court did not rule on the validity of Repligen's inventorship claim. Repligen continues to believe that the University of Michigan is a rightful co-assignee of the aforesaid BMS patents and we intend to continue to pursue the correction of inventorship. Repligen's failure to obtain shared ownership rights in the patents may restrict Repligen's ability to commercialize CTLA4-Ig.
Item 2. CHANGES IN SECURITIES
Pursuant to a Financial Advisory Agreement dated as of July 15, 1999 by and between Repligen and Paramount Capital, Inc. ("Paramount"), Repligen engaged Paramount as a non-exclusive financial adviser for an initial period of twelve months from the date thereof. In exchange and as consideration for Paramount's 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 of Repligen (the "Warrants"). 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 to be agreed upon between the parties upon the consummation of certain equity financing transactions as set forth in the Financial Advisory Agreement. Based on certain representations by Paramount, Repligen had a reasonable belief that Paramount (and its designees) were acquiring the Warrants (and the shares issuable upon exercise thereof) for investment and not for distribution and that of the ten designees receiving the Warrants, at least five were "accredited" (as such term is defined under Rule 501 of the Securities Act of 1933). Pursuant thereto, Repligen issued the Warrants to such designees in a private placement transaction exempt from the registration requirements of the Securities Act of 1933 pursuant to Regulation D, Rule 506 of the Securities Act of 1933. There were no underwriters in valued in such private placement transaction. Pursuant to the Financial Advisory Agreement, Repligen granted Paramount "piggy-back" registration rights with respect to the shares of Common Stock issuable upon exercise of the Warrants, and subject to the terms of the Financial Advisory Agreement, has agreed to register for resale the shares of Common Stock issuable upon exercise of the Warrants by May, 2000.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company's Annual Meeting of Stockholders (the "Annual Meeting") was held on September 16, 1999. At the Annual Meeting, the stockholders of the Company considered and acted upon a proposal to: (i) elect five members to the Board of Directors (ii) ratify the selection of Arthur Andersen LLP as the independent auditors of the Company for the fiscal year ending March 31, 1999 and (iii) amend Repligen's Restated Certificate of Incorporation to increase the number of authorized shares of Common Stock, par value $.01 per share, from 30,000,000 shares to 40,000,000 shares.
The Company had 21,868,085 shares of Common Stock of the Company issued and outstanding and entitled to vote as of the close of business on July 23, 1999, the record date established by the Board of Directors for the Annual Meeting. At the Annual Meeting, holders of a total of 17,432,216 shares of Common Stock or approximately 79% of all stockholders entitled to vote were present in person or represented by proxy. The following sets forth the information regarding the results of the voting at the Annual Meeting:
Proposal 1. Election of Directors:
Directors Shares Voting Shares Voting
in Favor Against
-------- -------
Robert J. Hennessey* 17,339,046 93,170
Alexander Rich, M.D.* 17,319,986 112,230
Paul Schimmel, Ph.D.* 17,344,971 87,245
Walter C. Herlihy, Ph.D.* 17,343,171 89,045
G. William Miller* 17,344,971 112,230
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* Incumbent
Proposal 2. Ratification of Selection of Arthur Andersen LLP as independent auditors:
Shares voting in favor: 17,376,364 Shares voting against: 28,307 Abstention: 27,545 |
Proposal 3. Amend the Restated Certificate of Incorporation to increase the number of authorized shares from 30,000,000 shares to 40,000,000 shares:
Shares voting in favor: 17,986,570 Shares voting against: 408,026 Abstention: 37,620 |
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT DESCRIPTION
3.1 Restated Certificate of Incorporation, dated
June 30, 1992 and filed July 13, 1992, as
amended (filed herewith)
3.2 By-laws (filed as Exhibit 3.4 to Repligen
Corporation's Form S-1 Registration Statement
No. 33-3959 and incorporated herein by
reference).
4.1 * Form of Warrant Agreement (filed herewith)
10.1 ** Financial Advisory Agreement with Paramount
Capital, Inc. (filed herewith)
27.1 Financial Data Schedule (filed herewith)
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* Repligen issued a Common Stock Purchase Warrant to ten designees of Paramount in connection with Paramount's services to Repligen. Each Warrant was identical except for the number of shares of Common Stock issuable upon exercise of such Warrant. ** The Exhibit A to the Financial Advisory Agreement, which is not attached to the Financial Advisory Agreement, is filed by Repligen as Exhibit 4.1 hereunder.
(b) Reports on Form 8-K
The Company filed no current reports on Form 8-K during the quarter covered by the report.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
REPLIGEN CORPORATION
(Registrant)
Date: November 15, 1999 By: /s/ Walter C. Herlihy
---------------------
Chief Executive Officer and President,
Principal Financial and Accounting Officer
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Repligen Corporation
Exhibit Index
EXHIBIT DESCRIPTION
3.1 Restated Certificate of Incorporation, dated
June 30, 1992 and filed July 13, 1992, as
amended (filed herewith)
3.2 By-laws (filed as Exhibit 3.4 to Repligen
Corporation's Form S-1 Registration Statement
No. 33-3959 and incorporated herein by
reference).
4.1 * Form of Warrant Agreement (filed herewith)
10.1 ** Financial Advisory Agreement with Paramount
Capital, Inc. (filed herewith)
27.1 Financial Data Schedule (filed herewith)
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* Repligen issued a Common Stock Purchase Warrant to ten designees of Paramount in connection with Paramount's services to Repligen. Each Warrant was identical except for the number of shares of Common Stock issuable upon exercise of such Warrant. ** The Exhibit A to the Financial Advisory Agreement, which is not attached to the Financial Advisory Agreement, is filed by Repligen as Exhibit 4.1 hereunder.
EXHIBIT 3.1 RESTATED CERTIFICATE OF INCORPORATION
CERTIFICATE OF INCORPORATION
OF
REPLIGEN CORPORATION
Incorporated pursuant to an original Certificate of Incorporation filed with the Secretary of State May 29, 1981
We, the undersigned, for the purpose of restating the Certificate of Incorporation of Repligen Corporation (hereinafter referred to as the "corporation" or the "Company") under the laws of the State of Delaware, hereby certify as follows:
FIRST. The name of the corporation is Repligen Corporation.
SECOND. The address of the registered office of the corporation in the State of Delaware is 32 Loockerman Square, Suite L-100, Dover, Kent County, Delaware, 19901. The name of the registered agent of the corporation at such address is The Prentice-Hall Corporation System, Inc.
THIRD. The purpose of the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware, and specifically, without limiting the generality of the foregoing, to engage in research, development, manufacture and marketing of products produced in part by application of genetic engineering techniques.
FOURTH. The total number of shares of stock which the Company shall have authority to issue is thirty-five million (35,000,000), of which thirty million (30,000,000) shares shall constitute Common Stock ("Common Stock"), each such share having a par value of one cent, and five million (5,000,000) shares shall constitute Preferred Stock ("Preferred Stock"), each such share having a par value of one cent.
The powers, preferences and rights of the Common Stock and the Preferred Stock shall be as set forth below:
PREFERRED STOCK
1. DESIGNATION OF SERIES BY BOARD OF DIRECTORS. The shares of Preferred Stock may be divided by the Board of Directors into and issued in one or more series, and each series shall be designated so as to distinguish the shares thereof from the shares of all other series. All shares of Preferred Stock shall be identical with all other shares of Preferred Stock, except in respect of particulars which may be fixed by the Board of Directors as hereinafter provided pursuant to the authority which is hereby expressly vested in the Board of Directors. Each share of a series shall be identical in all respects with all other shares of such series, except as to the date from which dividends thereon (if any) shall be cumulative on any series as to which dividends are cumulative.
2. TERMS THAT MAY BE SET BY BOARD OF DIRECTORS. Before any shares of Preferred Stock of any series shall be issued, the Board of Directors, pursuant to authority hereby expressly vested in it, shall fix by resolution or resolutions the following provisions in respect of the shares for each such series provided that such provisions are not inconsistent with the provisions of this Article FOURTH applicable to shares of all series of Preferred Stock then outstanding:
(a) The distinctive designations of each such series and the number of shares which shall constitute such series, if any, which number may be increased (except where otherwise provided by the Board of Directors in creating such series) or decreased (but not below the number of shares thereof then outstanding) from time to time by like action of the Board of Directors;
(b) The annual rate or amount of dividends payable on shares of such series, if any, whether such dividends shall be cumulative or non-cumulative, the conditions upon which and/or the dates when such dividends shall be payable and the date from which dividends on cumulative series shall accrue and be cumulative on all shares of such series issued prior to the payment date for the first dividend of such series;
(c) Whether such series shall be redeemable or callable and, if so, the terms and conditions of such redemption or call, including the time or times when and the price or prices at which shares of such series shall be redeemed or called, and including the terms and conditions of any retirement or sinking fund for the purchase or redemption of shares of such series;
(d) The amount payable on shares of such series in the event of liquidation, dissolution or winding up of the affairs of the Company;
(e) Whether such series shall be convertible into or exchangeable for shares of any other class, or any series of the same or any other class and, if so, the terms and conditions thereof, including the date or dates when such shares shall be convertible into or exchangeable for shares of any other class, or any series of the same or any other class, the price or prices or the rate or rates at which shares of such series shall be so convertible or exchangeable, and any adjustments which shall be made, and the circumstances in which any such adjustments shall be made, in such conversion or exchange prices or rates;
(f) Whether such series shall have any voting rights in addition to those prescribed by law and, if so, the terms and conditions of exercise of such voting rights;
(g) The conditions and restrictions, if any, on the payment of dividends or on the making of other distributions on, or the purchase, redemption, or other acquisition by the Company or any subsidiary of, the Common Stock or of any other class (or other series of the same class) ranking junior to the shares of such series as to dividends or upon liquidation, dissolution or winding up;
(h) The conditions and restrictions, if any, on the creation of indebtedness of the Company, or any subsidiary, or on the issue of any additional stock ranking on a parity with or prior to the shares of such series as to dividends or upon liquidation, dissolution or winding up; and
(i) Such other powers, preferences and relative, participating, optional or other special rights, qualifications, limitations or restrictions as shall not be inconsistent with any such resolution or resolutions previously adopted as to shares then still outstanding or with the laws of the State of Delaware.
3. CONSIDERATION FOR ISSUANCE. The authorized but unissued shares of Common Stock and the authorized but unissued shares of Preferred Stock of the Company may be issued for such consideration, having a value, not less than the par value thereof (if any), as is determined from time to time by the Board of Directors.
4. MATTERS PERTAINING TO VOTING.
(a) Except as otherwise determined by the provisions of this Article FOURTH or pursuant to authority of the Board of Directors as hereinbefore provided or by the General Corporation Law of the State of Delaware, all voting rights shall be vested exclusively in the holders of the outstanding shares of Common Stock and each such holder shall be entitled to one (1) vote per share for all purposes for such share of Common Stock held of record by him.
(b) Except as otherwise determined pursuant to authority of the Board of Directors as hereinbefore provided, or by the General Corporation Law of the State of Delaware, the holders of shares of Preferred Stock shall not be entitled to vote for any purpose nor shall they be entitled to notice of meetings of stockholders.
FIFTH. The corporation is to have perpetual existence.
SIXTH. Election of directors need not be by written ballot unless the by-laws of the corporation shall so provide.
SEVENTH. The corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as that
section may be amended and supplemented from time to time, indemnify any and all
persons whom it shall have power to indemnify under that section against any
expenses, liabilities or other matters referred to in or covered by that
section. The indemnification provided for herein shall not be deemed exclusive
of any other rights to which those seeking indemnification may be entitled under
any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in their official capacities and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
EIGHTH. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law of the State of Delaware or (iv) for any transaction from which the director derived an improper personal benefit.
The foregoing provisions of this Article EIGHTH shall not eliminate the liability of a director for any act or omission occurring prior to the date on which this Article EIGHTH becomes effective.
If the General Corporation Law of the State of Delaware is amended after approval of this Article EIGHTH by the stockholders to authorize the further elimination or limitation of the liability of directors, then the liability of directors shall be eliminated or limited to the full extent authorized by the General Corporation Law of the State of Delaware, as so amended.
Any repeal or modification of this Article EIGHTH shall not adversely affect any right or protection of a director of the corporation existing at the time of such repeal or modification.
NINTH. The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation
TENTH. This Restated Certificate of Incorporation has been duly adopted by the Board of Directors of the corporation in accordance with the provisions of Section 245 of the Delaware General Corporation Law. This Restated Certificate of Incorporation only restates and integrates, and does not further amend, the provisions of the corporation's Certificate of Incorporation as heretofore amended or supplemented, and there is no discrepancy between those provisions and the provisions of this Restated Certificate of Incorporation.
Signed this 30th day of June, 1992.
/s/ Sandford D. Smith
--------------------------------------
Sandford D. Smith,
Attest: President and Chief Executive Officer
/s/ Ramesh L. Ratan
-------------------------------
Ramesh L. Ratan
Senior Vice President,
Administration, Chief
Financial Officer and Secretary
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CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Repligen Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware ("DGCL"), DOES HEREBY CERTIFY pursuant to Section 242 of the DGCL:
FIRST: That the Board of Directors of Repligen Corporation (the "Corporation"), by unanimous written consent dated June 21, 1999 in accordance with the provisions of Sections 141(f) and 242 of the DGCL, duly and validly adopted the following resolutions:
RESOLVED: To amend, restate or amend and restate the Certificate of
Incorporation to allow the Company the authority to issue
forty-five million (45,000,000) shares of capital stock, of which
forty million (40,000,000) shares shall constitute Common Stock
("Common Stock"), each share having a par value of one cent, and
five million (5,000,000) shares shall constitute Preferred Stock
("Preferred Stock"), each such share having a par value of one
cent.
RESOLVED: That the Board of Directors deems the proposal set forth
immediately above advisable and in the best interest of the
Corporation and its stockholders; and that the approval of such
proposal be recommended to the stockholders for approval at the
Annual Meeting of Stockholders of the Corporation.
RESOLVED: That the officers of the Corporation hereby are and each of them
hereby is authorized to execute all such instruments, make all
such payments and do all such other acts and things as in their
opinion, or in the opinion of any of them, may be necessary or
appropriate in order to carry out the intent and purposes of the
foregoing resolutions.
SECOND: That the stockholders of the Corporation duly adopted such
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resolutions stated immediately above and approved of the amendment to the Certificate of Incorporation of the Corporation by a vote of the stockholders of the Corporation at the Annual Meeting of Stockholders held on September 16, 1999, in accordance with the provisions of Section 242 of the DGCL.
THIRD: That the aforesaid amendment was duly adopted by such written
consent of the Board of Directors of the Corporation and by a vote of the
stockholders of the Corporation in accordance with the applicable provisions of
Section 242 of the DGCL, and the first paragraph of Article Fourth of the
Certificate of Incorporation is hereby deleted in its entirety and replaced in
its entirety to read as follows:
"FOURTH. The total number of shares of stock which the Company shall have authority to issue is forty-five million (45,000,000), of which forty million (40,000,000) shares shall constitute Common Stock ("Common Stock"), each such share having a par value of one cent, and five million (5,000,000) shares shall constitute Preferred Stock ("Preferred Stock"), each such share having a par value of one cent."
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, said Repligen Corporation has caused this certificate to be executed by Walter C. Herlihy, its President and Chief Executive Officer, and attested to by Barbara Burnim-Day, its Director of Finance, on this 17th day of September, 1999.
REPLIGEN CORPORATION
By: /s/ Walter C. Herlihy
-------------------------------------
Walter C. Herlihy
President and Chief Executive Officer
ATTEST:
By: /s/ Barbara Burnim Day
----------------------
Barbara Burnim Day
Director of Finance
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4.1 FORM OF COMMON STOCK PURCHASE WARRANT
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH RESPECT THERETO.
COMMON STOCK PURCHASE WARRANT
REPLIGEN CORPORATION
Void after July 15, 2004
1. ISSUANCE. This Warrant is issued to ________ on this 15th day of July, 1999 (the "Original Issue Date") by RepliGen Corporation, a Delaware corporation (hereinafter with its successors called the "Company"), pursuant to a certain Financial Advisory Agreement dated as of July 15, 1999 by and between Paramount, the Company.
2. PURCHASE PRICE; NUMBER OF SHARES. Subject to the terms and conditions hereinafter set forth, the registered holder of this Warrant (the "Holder"), commencing on the date hereof, is entitled upon surrender of this Warrant with the subscription form annexed hereto duly executed, at the office of the Company, 117 Fourth Avenue, Needham, MA 02494, or such other office as the Company shall notify the Holder of in writing, to purchase from the Company at a price per share of $2.75 (the "Purchase Price"), _____________ fully paid and nonassessable shares of Common Stock, $.01 par value per share, of the Company (the "Common Stock"). Until such time as this Warrant is exercised in full or expires, the Purchase Price and the securities issuable upon exercise of this Warrant are subject to adjustment as hereinafter provided.
3. PAYMENT OF PURCHASE PRICE. The Purchase Price may be paid (i) in
cash or by check, (ii) by the surrender by the Holder to the Company of any
promissory notes or other obligations issued by the Company, with all such notes
and obligations so surrendered being credited against the Purchase Price in an
amount equal to the principal amount thereof plus accrued interest to the date
of surrender, (iii) through delivery by the Holder to the Company of other
securities issued by the Company, with such securities being credited against
the Purchase Price in an amount equal to the fair market value thereof, as
determined in good faith by the Board of Directors of the Company (the "Board"),
or (iv) by any combination of the foregoing. The Board shall promptly respond in
writing to an inquiry by the Holder as to the fair market value of any
securities the Holder may wish to deliver to the Company pursuant to clause
(iii) above.
4. NET ISSUE ELECTION. The Holder may elect to receive, without the payment by the Holder of any additional consideration, shares equal to the value of this Warrant or any portion hereof by the surrender of this Warrant or such portion to the Company, with the net issue election notice annexed hereto duly executed, at the office of the Company. Thereupon, the Company shall issue to the Holder such number of fully paid and nonassessable shares of Common Stock as is computed using the following formula:
X = Y (A-B)
A
where
X = the number of shares to be issued to the Holder pursuant to this Section 4.
Y = the number of shares covered by this Warrant in respect of which the net issue election is made pursuant to this Section 4.
A = the fair market value of one share of Common
Stock, which shall be equal to the average closing price on
the Nasdaq National Market of the Common Stock over the ten
(10) day period prior to the date the net issue election is
made pursuant to this Section 4.
B = the Purchase Price in effect under this Warrant
at the time the net issue election is made pursuant to this
Section 4.
The Board shall promptly respond in writing to an inquiry by the Holder as to the fair market value of one share of Common Stock.
5. PARTIAL EXERCISE. This Warrant may be exercised in part, and the Holder shall be entitled to receive a new warrant, which shall be dated as of the date of this Warrant, covering the number of shares in respect of which this Warrant shall not have been exercised.
6. ISSUANCE DATE. The person or persons in whose name or names any certificate representing shares of Common Stock is issued hereunder shall be deemed to have become the holder of record of the shares represented thereby as at the close of business on the date this Warrant is exercised with respect to such shares, whether or not the transfer books of the Company shall be closed.
7. EXPIRATION DATE. This Warrant shall expire at the close of business on July 15, 2004, and shall be void thereafter.
8. RESERVED SHARES; VALID ISSUANCE. The Company covenants that it will at all times from and after the date hereof reserve and keep available such number of its authorized shares of Common Stock, free from all preemptive or similar rights therein, as will be sufficient to permit the exercise of this Warrant in full. The Company further covenants that such shares as may be issued pursuant to the exercise of this Warrant will, upon issuance, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof other than those caused or suffered by the Holder hereof.
9. DIVIDENDS. If after the Original Issue Date the Company shall subdivide the Common Stock, by split-up or otherwise, or combine the Common Stock, or issue additional shares of Common Stock in payment of a stock dividend on the Common Stock, the number of shares issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend, or proportionately decreased in the case of a combination, and the Purchase Price shall forthwith be proportionately decreased in the case of a subdivision or stock dividend, or proportionately increased in the case of a combination.
10. MERGERS AND RECLASSIFICATIONS. If after the Original Issue Date there shall be any reclassification, capital reorganization or change of the Common Stock (other than as a result of a subdivision, combination or stock dividend provided for in Section 9 hereof), or any consolidation of the Company with, or merger of the Company into, another corporation or other business organization (other than a consolidation or merger in which the Company is the continuing corporation and which does not result in any reclassification or change of the outstanding Common Stock), or any sale or conveyance to another corporation or other business organization of all or substantially all of the assets of the Company, then, as a condition of such reclassification, reorganization, change, consolidation, merger, sale or conveyance, lawful provisions shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the Holder, so that the Holder shall thereafter have the right to purchase, at a total price not to exceed that payable upon the exercise of this Warrant in full, the kind and amount of shares of stock and other securities and property receivable upon such reclassification, reorganization, change, consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock which might have been purchased by the Holder immediately prior to such reclassification, reorganization, change,
consolidation, merger, sale or conveyance, and in any such case appropriate provisions shall be made with respect to the rights and interest of the Holder to the end that the provisions hereof (including without limitation, provisions for the adjustment of the Purchase Price and the number of shares issuable hereunder) shall thereafter be applicable in relation to any shares of stock or other securities and property thereafter deliverable upon exercise hereof.
11. FRACTIONAL SHARES. In no event shall any fractional share of Common Stock be issued upon any exercise of this Warrant. If, upon exercise of this Warrant as an entirety, the Holder would, except as provided in this Section 11, be entitled to receive a fractional share of Common Stock, then the Company shall issue the next higher number of full shares of Common Stock, issuing a full share with respect to such fractional share.
12. CERTIFICATE OF ADJUSTMENT. Whenever the Purchase Price is adjusted, as herein provided, the Company shall promptly deliver to the Holder a certificate of a firm of independent public accountants setting forth the Purchase Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
13. NOTICES OF RECORD DATE, ETC. In the event of:
(a) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right,
(b) any reclassification of the capital stock of the Company, capital reorganization of the Company, consolidation or merger involving the Company, or sale or conveyance of all or substantially all of its assets, or
(c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company, then and in each such event the Company will mail or cause to be mailed to the Holder a notice specifying (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (ii) the date on which any such reclassification, reorganization, consolidation, merger, sale or conveyance, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record in respect of such event are to be determined. Such notice shall be mailed at least twenty (20) days prior to the date specified in such notice on which any such action is to be taken.
14. AMENDMENT. The terms of this Warrant may be amended, modified or waived only with the written consent of the Company and the Holder hereof.
15. WARRANT REGISTER; TRANSFERS, ETC.
A. The Company will maintain a register containing the names and addresses of the registered holders of the Warrant. The Holder may change its address as shown on the warrant register by written notice to the Company requesting such change. Any notice or written communication required or permitted to be given to the Holder may be given by certified mail or delivered to the Holder at its address as shown on the warrant register.
B. Subject to compliance with applicable federal and state securities laws, this Warrant may be transferred by the Holder with respect to any or all of the shares purchasable hereunder. Upon surrender of this Warrant to the Company, together with the assignment hereof properly endorsed, for transfer of this Warrant as an entirety by the Holder, the Company shall issue a new warrant of the same denomination to the assignee. Upon surrender of this Warrant to the Company, together with the assignment hereof properly endorsed, by the Holder for transfer with respect to a portion of the shares of Common Stock purchasable hereunder, the Company shall issue a new warrant to the assignee, in such denomination as shall be requested
by the Holder hereof, and shall issue to such Holder a new warrant covering the number of shares in respect of which this Warrant shall not have been transferred.
C. In case this Warrant shall be mutilated, lost, stolen or destroyed, the Company shall issue a new warrant of like tenor and denomination and deliver the same (i) in exchange and substitution for and upon surrender and cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost, stolen or destroyed, upon receipt of evidence reasonably satisfactory to the Company of the loss, theft or destruction of such Warrant (including a reasonably detailed affidavit with respect to the circumstances of any loss, theft or destruction) and of indemnity reasonably satisfactory to the Company.
16. CERTAIN OBLIGATIONS. This Warrant has been issued subject to certain obligations to register the Common Stock under the Securities Act of 1933, as amended, which obligations are set forth in the Agreement, of even date herewith, between the Company, and Paramount, which are incorporated herein by reference.
17. NO IMPAIRMENT. The Company will not, by amendment of its certificate of incorporation, as amended or through any reclassification, capital reorganization, consolidation, merger, sale or conveyance of assets, dissolution, liquidation, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder.
18. GOVERNING LAW. The provisions and terms of this Warrant shall be governed by and construed in accordance with the internal laws of the Commonwealth of Massachusetts.
19. SUCCESSORS AND ASSIGNS. This Warrant shall be binding upon the Company's successors and assigns and shall inure to the benefit of the Holder's successors, legal representatives and permitted assigns.
20. BUSINESS DAYS. If the last or appointed day for the taking of any action required or the expiration of any right granted herein shall be a Saturday or Sunday or a legal holiday in the Commonwealth of Massachusetts, then such action may be taken or right may be exercised on the next succeeding day which is not a Saturday or Sunday or such a legal holiday.
Dated: July 15, 1999 REPLIGEN CORPORATION
(Corporate Seal) By: /s/ Walter C. Herlihy
-----------------------
Name: Walter Herlihy
Attest: /s/ Barbara Burnim Day Title: President and CEO
-------------------------------
Director of Finance
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Subscription
The undersigned hereby subscribes for __________ shares of Common Stock covered by this Warrant. The certificate(s) for such shares shall be issued in the name of the undersigned or as otherwise indicated below:
Net Issue Election Notice
The undersigned hereby elects under Section 4 to surrender the right to purchase _______ shares of Common Stock pursuant to this Warrant. The certificate(s) for the shares issuable upon such net issue election shall be issued in the name of the undersigned or as otherwise indicated below.
Assignment
the within Warrant, and does hereby irrevocably constitute and appoint _______________________ its attorney to transfer the within Warrant on the books of the within named Company with full power of substitution on the premises.
In the Presence of:
10.1 FINANCIAL ADVISORY AGREEMENT
July 15, 1999
Walter C. Herlihy, Ph.D.
Chief Executive Officer
Repligen Corporation
117 Fourth Avenue
Needham, MA 02494
RE: FINANCIAL ADVISORY AGREEMENT
Dear Sirs:
This is to confirm our agreement that Paramount Capital, Inc., its affiliates, related entities and designees (collectively, "Paramount") have been engaged as a non-exclusive financial advisor of Repligen Corporation (the "Company") for a period of twelve (12) months from the date hereof (the "Term"). During the Term, Paramount will assist the Company in (a) the placement of shares of common stock, $.01 par value per share (the "Common Stock"), of the Company, as such shares may become available for sale (other than an aggregate of 3,600,000 shares of Common Stock being issued and sold pursuant to the Stock Purchase Agreements dated as of April 30, 1999 and May 14, 1999 by and among the Company and the parties thereto (the "Stock Purchase Agreements")) and (b) the acquisition of or the structuring of a business relationship with CRC, Inc., any subsidiary, parent entity or affiliate thereto ("CRC") as set forth below. The terms of our agreement are set forth in more detail below.
Section 1. EXPENSES. The Company shall be responsible for, and shall bear all reasonable expenses relating to this Agreement, including all reasonable expenses incurred by Paramount (including the reasonable fees and expenses of any outside legal counsel employed by Paramount) in connection herewith, such expenses to be paid within fifteen (15) days of receipt by the Company of a bill or bills by Paramount from time to time; PROVIDED THAT in no event shall the Company pay more than an aggregate of $5,000 for such fees or expenses. In the event that the fees and expenses incurred by Paramount exceed $5,000, the Company and Paramount may mutually agree upon additional payment obligations of the parties with respect thereto.
Section 2. TRANSACTION FEES.
(a) Within 30 days of the execution of this Agreement, the Company shall pay each to Paramount a cash fee (a "Cash Fee") equal to $100,000 and shall issue to Paramount warrants, substantially in the form attached hereto as EXHIBIT A (the "Warrants"), to purchase an aggregate of 100,000 shares of Common Stock of the Company at an exercise price equal to $2.75 per share. Such Warrants shall be exercisable at any time until five years from the date of issuance of such Warrants.
(b) During the Term, and for a period of 12 months thereafter, the Company shall pay to Paramount a fee in cash and/or equity, in an amount to be agreed upon between the Company and Paramount, as a result of any Investment (as defined below) by an investor deemed to be a Paramount Client (as defined below) hereunder. For the purposes of this Agreement, an "Investment" shall mean any purchase of equity securities of the Company directly from the Company by a Paramount Client (but specifically excluding the purchase of an aggregate of 3,600,000 shares of Common Stock of the Company by those certain parties to the Stock Purchase Agreements) during the Term or during the 12-month period following the expiration of the Term. For purposes of this Agreement, an investor shall be considered a "Paramount Client" only if, during the Term, (i) Paramount has introduced the investor to the Company and has identified in writing such investor to
the Company and (ii) Paramount has had substantive discussions with such investor regarding an Investment. For the avoidance of doubt, at the time of termination of this Agreement, Paramount shall have 30 days following such termination to provide to the Company with a list of all prospective Paramount Clients for whom Paramount would be eligible to receive a fee hereunder for an Investment.
(c) Should the Company enter into an agreement with CRC during the
Term, or during the 12-month period following the expiration of such Term,
pursuant to which the Company consummates a sale, merger, consolidation, tender
offer, business combination, joint venture or partnership, pursuant to which,
the Company or the shareholders of the Company acquire more than 50% of the
outstanding capital stock and voting control of CRC, then the Company shall pay
Paramount a fee equal to five percent (5%) of the aggregate consideration
actually paid (net of the aggregate exercise or conversion price of all
unexercised options, warrants or other convertible securities assumed by the
acquiring company and all related CRC Transaction Fees and expenses) at the
closing (the "CRC Transaction Fee") of such transaction to or by the Company or
its shareholders. The Company shall use reasonable commercial efforts to pay
such CRC Transaction Fee to Paramount at the closing in the form of
consideration and allocation of the types of consideration (i.e., cash or stock)
substantially similar to that paid by or to the Company or the Company's
shareholders; PROVIDED THAT if the form and allocation of the CRC Transaction
Fee payable to Paramount shall, in the Company's determination, cause the
Company or its shareholders adverse tax, accounting, or legal consequences, the
Company shall be permitted to pay the CRC Transaction Fee to Paramount in the
form and allocation which minimizes or removes such adverse tax, accounting or
legal consequences. For purposes of calculating Paramount's CRC Transaction Fee
under this Section 3, aggregate consideration shall include only those payments
made at the closing of such transaction whether in cash, stock or warrants, and
(ii) future milestone payments made to CRC or its employees in connection with
the closing of such transaction. The Cash Fee described in Section 2(a) above
shall be creditable in full against any fee payable pursuant to this Section
2(c).
Section 3. REGISTRATION RIGHTS.
(a) Subject to the terms herein, if at any time the Company shall determine to register for its own account or the account of others under the Securities Act of 1933 (the "Securities Act") any of its equity securities, it shall send to Paramount, as a holder of Registrable Shares (as defined below), written notice of such determination and, if within fifteen (15) days after receipt of such notice, such holder shall so request in writing that the Company include all (but not less than all) of the Registrable Shares, the Company shall include, subject to the terms herein, in such registration statement all (but not less than all) the Registrable Shares such holder requests to be registered. Notwithstanding anything to the contrary herein, if, in connection with any offering involving an underwriting of Common Stock to be issued by the Company, the managing underwriter shall impose a limitation on the number of shares of such Common Stock which may be included in the registration statement because, in its judgment, such limitation is necessary to effect an orderly public distribution, then the Company shall be obligated to include in such registration statement only such limited portion of the Registrable Shares as the managing underwriter, in its own discretion, shall determine. For purposes of this Section 3, the term "Registrable Shares" shall mean the shares of Common Stock issuable upon exercise of a Warrant.
(b) This Section 3 shall not apply to a registration of shares of Common Stock on Form S-8 or Form S-4 or their then equivalents relating to an offering of shares of Common Stock to be issued solely in connection with any acquisition of any entity or business or otherwise issuable in connection with any stock option, stock purchase or employee benefit plan. Further, this Section 3 shall not apply to the registration of shares of Common Stock of the Company issued and sold pursuant to the Stock Purchase Agreements and that certain Patent Purchase Agreement dated as of March 9, 1999 by and among the Company and the parties thereto. This Section 3 shall expressly exclude the registration statements covering the resale of such shares and any and all amendments and/or supplements thereto.
(c) Notwithstanding anything to the contrary herein, if the Company has not filed a registration statement to register the resale of all of the Registrable Shares under Section 3(a) herein by the date nine months from the date hereof, holders of the Registrable Shares constituting all of the Registrable Shares then outstanding may request that the Company file a registration statement on Form S-3 or any successor
thereto for a public offering of all (but not less than all) of the Registrable Shares then held by such requesting holder or holders; PROVIDED THAT the reasonably anticipated aggregate price to the public of such registrable shares would exceed $100,000 and the Company is a registrant entitled to use Form S-3 or any successor thereto to register such shares (the "Registration Request"). Within 30 days of a Registration Request made in accordance with the terms above, the Company shall use its best efforts to register under the Securities Act on Form S-3 or any successor thereto, for public sale in accordance with the method of disposition specified in such notice, the number of Registrable Shares specified in such notice.
(d) In the case of a registration effected under Section 3, the Company shall bear the reasonable costs and expenses of such registration on behalf of Paramount with respect to the resale of its Registrable Shares (except as otherwise prohibited by state securities law or regulation), which shall include the Company's printing, legal and accounting fees and expenses, the Securities and Exchange Commission and National Association of Securities Dealers, Inc. ("NASD") filing fees and "blue sky" fees and expenses; PROVIDED HOWEVER, that the Company shall have no obligation to pay or otherwise bear any portion of the underwriters' commissions or discounts attributable to the Registrable Shares being offered and sold by the holders of Registrable Shares, or the fees and expenses of any counsel engaged by Paramount in connection with the registration of the Registrable Shares.
Section 4. FINANCIAL INFORMATION. The Company shall provide Paramount with all financial and other information reasonably requested by Paramount for the purposes of rendering its services pursuant to this Agreement, and all such information shall be deemed to be "Confidential Information" (as defined herein), subject to the terms of Section 5 herein.
Section 5. CONFIDENTIAL INFORMATION.
(a) Confidential Information shall mean any information disclosed by one party to the other party hereunder (in writing, if marked by the disclosing party as confidential, or verbally, if notified by the disclosing party as confidential), including, without limitation, the terms of this Agreement, all commercially valuable, proprietary or confidential information with respect to the Company's business, products or operations disclosed by the Company to Paramount, which includes financial information, marketing plans, strategies and other valuable business information. Confidential Information shall also include any financial advice provided hereunder by Paramount to the Company. Notwithstanding anything to the contrary in this Section 5, Confidential Information shall not include: (i) information that is in or enters the public domain without breach of this Agreement; (ii) information lawfully received from a third party without restriction on disclosure and without breach of a nondisclosure obligation; (iii) information that is developed independently by a party which party can prove such independent development with written evidence; and (iv) information that is required by judicial or administrative order or by governmental authority to be disclosed, provided that the party from whom disclosure is sought uses reasonable efforts to notify the other of such requirement so that the other may seek to make such disclosure subject to a protective order or confidentiality agreement.
(b) The Company agrees to limit disclosure of the Confidential
Information only to those of its officers, employees, agents, affiliates and
consultants as the Company considers necessary, provided that each such officer,
employee, agent, affiliate or consultant of the Company shall be similarly bound
by the confidentiality obligations contained herein. The Company shall take all
reasonable commercial steps to prevent the disclosure of the Confidential
Information as it would to protect its own confidential or proprietary
information. This obligation shall be binding upon the Company and shall
continue for a period during the term of this Agreement and for a period of five
(5) years thereafter.
(c) Paramount agrees to limit disclosure of the Confidential Information only to those of its officers, employees, agents, affiliates and consultants as Paramount considers necessary to render its services under this Agreement, provided that each such officer, employee, agent, affiliate or consultant of Paramount shall be similarly bound by the confidentiality obligations contained herein. Paramount shall take all reasonable commercial steps to prevent the disclosure of the Confidential Information as it would to protect its own confidential or proprietary information. Paramount understands and agrees that to the extent Paramount receives Confidential Information which is material and non-public relating to the Company, Paramount shall be deemed to be an "insider" for purposes of United States securities laws and shall be prohibited from
selling, purchasing or otherwise trading in the securities of the Company until public disclosure of such material non-public information. Paramount may rely, without independent verification, on the accuracy and completeness of any written information furnished to Paramount by the Company, subject to its obligations under the securities laws and herein. This obligation shall be binding upon Paramount and shall continue for a period during the term of this Agreement and for a period of five (5) years thereafter.
Section 6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless Paramount and its respective partners, shareholders, directors, officers, agents, advisors, representatives, employees, counsel and controlling persons within the meaning of the Securities Act (a "Paramount Indemnified Party") against any and all losses, liabilities, claims, damages and expenses whatsoever (and all actions in respect thereof), and to promptly reimburse any such Paramount Indemnified Party for the reasonable legal fees and related expenses as incurred (including, but not limited to the costs of giving testimony or furnishing documents in response to a document request, a subpoena or otherwise, the costs of investigating, preparing, pursuing or defending any such action or claim whether or not pending or threatened and whether or not any Paramount Indemnified Party is a party thereto), insofar as such losses, liabilities, claims, damages or expenses arise out of, relate to, are in incurred in connection with or are in any way a result of or relate to this Agreement or the matters contemplated by this Agreement; PROVIDED HOWEVER that the Company shall not be liable to a Paramount Indemnified Party hereunder to the extent that any loss, claim, damage, liability or expense is found in final judgement by a court or arbitrator to have resulted from a Paramount Indemnified Party's fraud, bad faith or gross negligence; and PROVIDED FURTHER that in no event shall the Company's liability under this Section 6 exceed the aggregate amount of fees paid by the Company to Paramount hereunder.
(b) Paramount agrees to indemnify and hold harmless the Company and its respective partners, shareholders, directors, officers, agents, advisors, representatives, employees, counsel and controlling persons within the meaning of the Securities Act (a "Company Indemnified Party") against any and all losses, liabilities, claims, damages and expenses whatsoever (and all actions in respect thereof), and to promptly reimburse any such Company Indemnified Party for reasonable legal fees and related expenses as incurred (including, but not limited to the costs of giving testimony or furnishing documents in response to a document request, a subpoena or otherwise, the costs of investigating, preparing, pursuing or defending any such action or claim whether or not pending or threatened and whether or not any Paramount Indemnified Party is a party thereto), insofar as such losses, liabilities, claims, damages or expenses arise out of, relate to, are in incurred in connection with or are in any way a result of or relate to Paramount's fraud, bad faith or gross negligence in the performance of the services pursuant to this Agreement; PROVIDED HOWEVER that Paramount shall not be liable hereunder to the extent that any loss, claim, damage, liability or expense is found in final judgement by a court or arbitrator to have resulted from a Company Indemnified Party's fraud, bad faith or gross negligence.
(c) The indemnification provisions of this Section 6 shall be the sole
and exclusive remedies of the parties hereto with respect to any claims arising
hereunder by one party against the other party hereunder, except that any claim
by one party against the other party under this Agreement for an intentional and
material breach of Section 5 hereunder or a claim based on fraud, bad faith or
gross negligence shall not be limited to the remedies and limitations of this
Section 6.
Section 7. TERMINATION; SURVIVAL. The Company shall be entitled to terminate this Agreement at any time by providing 10 days' notice to Paramount. The provisions of Sections 1, 2, 3, 5, 6, 8, 9, 10, 11, 12 and 13 shall survive termination of this Agreement. Paramount shall be entitled to the reimbursement of reasonable expenses incurred by Paramount as a result of services rendered prior to the date of the termination.
Section 8. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts without regard to principles of conflicts of law.
Section 9. NON-COMPETE.
(a) Paramount shall not be in any way precluded from (i) entering into similar agreements with companies which engage in similar business activities or lines of business as the Company or developing or marketing any products, services or technologies that do or may in the future compete, directly or indirectly, with those of the Company, (ii) investing or owning any interest publicly or privately in, or developing a business relationship with, any corporation, partnership or other person or entity engaged in the same or similar activities or lines or business as, or otherwise in competition with, the Company or (iii) doing business with any client, collaborator, licensor, consultant, vendor or customer of the Company. Paramount and any of its officers, directors, employees or former employees and affiliates shall not have any obligation, or be liable, to the Company solely on account of the conduct described in the preceding sentence. The Company recognizes that Paramount is not obligated to present any opportunities for an investment, sale, acquisition, strategic alliance or any other opportunities to the Company and nothing in this Agreement shall be construed to limit Paramount's ability to introduce investment, sale, acquisition, strategic alliance or any other opportunities to any other company. In the event that Paramount and/or any officer, director, employee or former employee or affiliate thereof acquires knowledge of a potential transaction, agreement, arrangement or other matter which may be a corporate opportunity for both Paramount and the Company, neither Paramount nor any of its officers, directors, employees or former employees or affiliates shall have any duty to communicate or offer such corporate opportunity to the Company and neither Paramount nor any of its officers, directors, employees or former employees or affiliates shall be liable to the Company for breach of any fiduciary or other duty, as a stockholder or otherwise, solely by reason of the fact that Paramount or any of its officers, directors, employees or former employees or affiliates pursue or acquire such corporate opportunity for Paramount, direct such corporate opportunity to another person or entity or communicate or fail to communicate such corporate opportunity or entity to the Company. Nothing in this Section 9 shall relieve Paramount of its obligations hereunder, including Section 5 hereunder.
(b) Notwithstanding anything to the contrary herein, unless the Company consents in writing, at no time during the Term or at any time with 12 months after the Term shall Paramount be engaged by any entity, other than the Company, in order to provide advisory services or any other types of services in connection with structuring of any type of business relationship or transaction involving CRC (including, without limitation, the sale or merger of CRC or the sale of equity or other securities of any kind in CRC).
Section 10. ANNOUNCEMENT OF TRANSACTION. Except as otherwise required by law, neither party shall make any public announcement regarding any of the transactions contemplated in this Agreement without obtaining the prior written consent of the other party, which consent shall not be unreasonably withheld.
Section 11. WRITING REQUIRED TO WAIVE, AMEND OR MODIFY. No waiver, amendment or other modification of this Agreement shall be effective unless in writing and signed by each party hereto.
Section 12. PARTIES. This Agreement incorporates the entire understanding of the parties with respect to this engagement of Paramount by the Company, and supersedes all previous agreements regarding such engagement, should they exist.
Section 13. NOTICES. All communications hereunder shall be in writing and shall be deemed given, if delivered in person, by telecopy or mail to: (a) the Company, 117 Fourth Avenue, Needham, MA 02494, Attention: Walter C. Herlihy (Telecopy: (781) 453-0048) and (b) to Paramount, at its offices at 787 Seventh Avenue, New York, NY 10019, Attention: David M. Tanen (Telecopy: (212) 554-4355).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Please confirm that the foregoing is in accordance with your understanding by signing and returning to us the enclosed duplicate of this letter.
Sincerely yours,
PARAMOUNT CAPITAL, INC.
By: /s/ Peter M. Kash ------------------------ Senior Managing Director |
Confirmed as of the date hereof:
REPLIGEN CORPORATION
By: /s/ Walter C. Herlihy
------------------------
Chief Executive Officer
|
| ARTICLE 5 |
| This schedule contains financial information extracted from the financial statements for Repligen Corporation and is qualified in its entirety by reference to such financial statements. |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 6 MOS |
| FISCAL YEAR END | MAR 31 2000 |
| PERIOD END | SEP 30 1999 |
| CASH | 10,913 |
| SECURITIES | 0 |
| RECEIVABLES | 513 |
| ALLOWANCES | (25) |
| INVENTORY | 495 |
| CURRENT ASSETS | 12,205 |
| PP&E | 1,714 |
| DEPRECIATION | (1,019) |
| TOTAL ASSETS | 12,982 |
| CURRENT LIABILITIES | 518 |
| BONDS | 0 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| COMMON | 219 |
| OTHER SE | 12,245 |
| TOTAL LIABILITY AND EQUITY | 12,982 |
| SALES | 811 |
| TOTAL REVENUES | 1,670 |
| CGS | 483 |
| TOTAL COSTS | 2,898 |
| OTHER EXPENSES | 0 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 0 |
| INCOME PRETAX | 0 |
| INCOME TAX | 0 |
| INCOME CONTINUING | 0 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | (1,228) |
| EPS BASIC | (.06) |
| EPS DILUTED | (.06) |