-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L/h9s8ALDlI6LI39iFYu1RkgLG8fHhKfpOyRHyJYSHlcWMpyLpPem88ayRwW2t+F xzzylesa7X07pUiLBdLamA== 0000950146-96-001052.txt : 19960629 0000950146-96-001052.hdr.sgml : 19960629 ACCESSION NUMBER: 0000950146-96-001052 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960627 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: REPLIGEN CORP CENTRAL INDEX KEY: 0000730272 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 042729386 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-14656 FILM NUMBER: 96586942 BUSINESS ADDRESS: STREET 1: ONE KENDELL SQ STE 700 CITY: CAMBRIDGE STATE: MA ZIP: 02139 BUSINESS PHONE: 6172256000 10-K 1 FORM 10-K =============================================================================== 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, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _____________ Commission file number: 0-21700 REPLIGEN 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 02194 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 617-449-9560 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered ------------------- ----------------------- None None Securities registered pursuant to Section 12(g) of the Act: Common stock, $0.01 per share (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No . Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. State the aggregate market value of the voting stock held by non-affiliates of the registrant. The approximate aggregate market value, computed by reference to the closing sale price of such stock quoted on NASDAQ on June 14, 1996 was approximately $17,552,859. Indicate the number of shares outstanding of each of the registrant's classes of common stock as of June 14, 1996: 15,602,542. =============================================================================== PART I Item 1: BUSINESS Repligen Corporation is a biopharmaceutical company engaged in the research and development of therapeutic products for human health care. During fiscal year 1996 the Company completed a major downsizing and consolidation of its operations, including the termination of certain research programs, in order to stabilize its financial condition and preserve its cash resources. The Company's research and development programs are now primarily focused on the development of new therapies for chronic and acute inflammation and immunosuppression and the development of enabling technologies for discovery of new drugs by rapid screening of combinatorial chemical libraries. As of June 14, 1996, Repligen had approximately 15 employees including five with doctoral degrees. The Company's strategy is to use internal resources for research and preclinical studies and to use pharmaceutical companies or third party contractors to provide manufacturing and clinical development support and for certain administrative functions. Significant expansion of the Company's research or clinical development efforts is dependent on future financing or new partnerships with pharmaceutical companies. Repligen was incorporated in May 1981. The Company's principal executive offices are located at 117 Fourth Avenue, Needham, Massachusetts 02194, and its telephone number is (617) 449-9560. As used herein, "Repligen" or the "Company" refers to Repligen Corporation and its wholly-owned subsidiaries, RGEN Corporation, Amira, Inc., Repligen Development Corporation and Glycan Pharmaceuticals, Inc. Recent Developments Restructuring. During the past year the Company restructured its operations in order to preserve its capital and ensure continued operations. The restructuring included a substantial reduction in its workforce, the termination of several programs and in May 1996 the closing of its Cambridge research and manufacturing facility. The corporate headquarters has been transferred to facilities previously used by the Company for manufacturing in Needham, Massachusetts. In April and May 1996 the Company negotiated settlements with the holders of certain equipment and facility lease agreements which were in default for an aggregate cost of $3,300,000. Subsequently, surplus equipment owned by Repligen was sold for approximately $1,250,000, net of expenses. As a result of the reduction of operating expenses and elimination of debt, the Company believes it has adequate cash reserves at March 31, 1996 to sustain its operations at their current levels for at least the next twenty four months. Acquisition of Glycan Pharmaceuticals, Inc. In March 1996, Repligen acquired Glycan Pharmaceuticals, Inc. ("Glycan"), a private company in Cambridge, Massachusetts founded by three former senior managers of Repligen. Simultaneously with the acquisition, Repligen's senior management resigned or announced their resignations to take place shortly after the acquisition, and Glycan's management assumed senior management positions at the Company. Glycan has focused on the development of enabling technologies for the discovery of new drugs by rapid screening of combinatorial chemical libraries. As a consequence of the Glycan acquisition, Repligen acquired a majority interest in ProsCure, Inc., a subsidiary of Glycan. ProsCure has licensed the rights to certain Glycan discovery technologies and lead compounds for application to the field of cancer. PF4 Program Termination. Since February 1992, Repligen has carried out research and development on recombinant Platelet Factor-4 ("rPF4") on behalf of Repligen Clinical Partners, L.P. (the "Partnership"). The Partnership's funding for the development of rPF4 has been substantially consumed, and the Company believes that significant additional funding will be required to commercialize rPF4. In April 1995, the Company announced the termination of the Product Development Agreement and the Purchase Agreement with the Partnership and stopped development of rPF4. Repligen will assist the Partnership in exploring alternatives to maximize the value of the rPF4 program for the benefit of the Partnership. 2 Repligen's Research and Development Programs The following table lists Repligen's research and development programs, potential therapeutic indications or clinical trial populations and current status, and is qualified in its entirety by reference to the more detailed descriptions elsewhere in this report.
Program Indication/Clinical Trial Status - ------- ------------------------- ------ CD11b Acute Inflammation Healthy volunteers Phase I (completed) Chronic lung inflammation Phase I (completed) Cardiopulmonary bypass surgery Phase I/II (completed) Thorocoabdominal aortic aneurysm Phase I/II (completed) Immune Modulation Transplantation, autoimmune disease Preclinical Chemokine Mutants Myeloprotection Preclinical Glyceptor Antagonists Chronic inflammation, atherogenesis Research
CD11b Program The Company's program for the inhibition of acute inflammation is based on the use of monoclonal antibodies to CD11b, a protein on the surface of certain white blood cells called neutrophils, to inhibit neutrophil-mediated inflammation and tissue damage. Neutrophils are a type of white blood cell which normally protect the body from bacterial infection. Once activated by an infection, neutrophils bind to receptors on the endothelial cells that line the blood vessels and subsequently migrate through the vessel wall to the site of infection where they eliminate the bacteria by producing cytotoxic products. Neutrophils can also cause injury following reperfusion, an event in which blood flow to tissue is interrupted and subsequently restored. Restricted blood flow causes a lack of oxygen for tissue adjacent to the restriction site, and neutrophil activation signals are inappropriately produced. When blood flow is restored, the site is flooded with activated neutrophils capable of damaging healthy tissue, resulting in reperfusion injury. Animal models of reperfusion injury have demonstrated that blocking CD11b with a monoclonal antibody prevents the neutrophils from binding to the blood vessel wall and damaging otherwise healthy tissue. In November 1990, the Company entered into an exclusive, worldwide license agreement with the University of Michigan for two issued U.S. patents and corresponding foreign patent applications covering the use of monoclonal antibodies capable of blocking CD11b to inhibit inflammation. In January 1991, the Company entered into an exclusive, worldwide license agreement with the Fred Hutchinson Cancer Research Center for a hybridoma cell line designated as 60.1 that secretes a monoclonal antibody capable of specifically binding to the CD11b antigen. In September 1991, Kabi Pharmacia AB licensed to the Company on an exclusive basis a U.S. patent relating to the use of anti-CD11b and anti-CD18 antibodies in reperfusion therapy. With the exception of the Fred Hutchinson Cancer Research Center license, these licenses are subject to the payment of royalties by Repligen. In May 1992, the Company entered into a research, collaboration and license agreement with Eli Lilly and Company ("Lilly") pursuant to which the Company and Lilly agreed to develop and market antibody-based anti-inflammatory therapeutics including particular antibodies and antibody fragments that bind to CD11b. In 1993, the Company and Lilly began Phase I clinical testing of its lead product candidate for acute inflammation, a murine monoclonal antibody fragment called m60.1. Initial studies evaluated the safety and pharmacology of m60.1 in patients with chronic lung inflammation and in healthy volunteers. These two studies indicated that m60.1 was well tolerated and had an acceptable half-life in circulation. Following these trials, the Company and Lilly initiated two Phase I/II studies of m60.1 in patients undergoing cardiopulmonary bypass surgery and in patients undergoing scheduled surgery to treat thorocoabdominal aortic aneurysm. The Company has initially targeted the acute inflammatory response associated with these surgical procedures since they most closely resemble the models of reperfusion injury for which antibodies to 3 CD11b have shown efficacy in animal models. Additional potential clinical indications include more complex diseases such as trauma, myocardial infarct (heart attack), adult respiratory distress syndrome or related disorders in which over-activation of the neutrophil may lead to significant morbidity and mortality. In September 1995, Lilly terminated its licensing and collaboration agreement with the Company and the rights to the CD11b program were returned to Repligen. Since September 1995 patient accrual for the cardiopulmonary bypass trial and the thorocoabdominal aortic aneurysm trial has been completed and the data analysis will be completed in 1996. Repligen has also produced a humanized form of this monoclonal antibody called h60.1 which may have a reduced potential for eliciting an antibody response in patients. Preclinical studies completed to date indicate that m60.1 and h60.1 are substantially equivalent in their ability to bind to CD11b and block neutrophil activity in animal models and the Company intends to carry out future clinical studies with h60.1 following regulatory approval. The Company believes that the clinical data collected to date justify continued development of 60.1, and it intends to seek additional financing or a corporate partner to support the program. Immune Modulation Program Repligen's immune modulation program focuses on the manipulation of costimulatory factors (CD28, B7, CTLA4), molecules on the surface of certain immune system cells, to suppress or activate an immune response. Based on preclinical data, the Company believes that drugs which block the activity of these costimulatory factors could suppress unwanted immune responses following transplantation and could treat autoimmune diseases such as certain forms of multiple sclerosis, rheumatoid arthritis and diabetes. The currently available treatments to prevent transplant rejection are powerful drugs which cause overall immune suppression, leaving recipients dangerously vulnerable to infection. Over the last four years, Repligen secured rights to a series of patent applications covering several costimulatory factors and their methods of use. The Company has produced a soluble form of the factor CTLA4 as a hybrid with an immunoglobulin ("CTLA4-IgG"). The molecule binds to B7 on the surface of certain antigen processing cells and appears to block the activation of T cells which is mediated through the CD28 receptor. CTLA4-IgG has demonstrated activity in several animal models of organ transplant including heart transplant and bone marrow transplant. Activity has also been observed in animal models of multiple sclerosis and autoimmune diabetes. These results support continued development of CTLA4-IgG as a product candidate, and Repligen intends to seek a corporate partner or licensee for this technology. The animal data obtained with CTLA4-IgG validate the importance of CD28 as a modulator of the immune response, and Repligen intends to pursue the discovery of small molecules capable of blocking the activation of CD28 by high throughput screening of libraries of compounds. In September 1995, Repligen assigned its patent rights for these three costimulatory factors to Genetics Institute, Inc. and received a fee of $2,000,000. The Company retained the right to independently use the intellectual property and reagents for the discovery of small molecules which block or activate these costimulatory factors. In January 1996, Genetics Institute returned all the rights to a specific product candidate, CTLA4-IgG. Repligen has the right to sublicense its rights to CTLA4-IgG and the small molecule discovery program and intends to seek licensees or partners to develop this technology. Chemokine Mutants Program Many existing agents for cancer chemotherapy are toxic because they destroy the myeloid progenitor cells which ultimately mature into platelets, red blood cells and certain white blood cells. This can lead to anemia or susceptibility to infection in the patient and limit use of the drug. If an agent were available to temporarily block the maturation and proliferation of the myeloid progenitor cells during chemotherapy thereby protecting them from destruction, it may allow for higher doses of therapy to be used with fewer side effects. 4 The chemokines are a family of closely related proteins that produce a number of important biological effects included mediating inflammatory responses and blocking the proliferation of the myeloid progenitor cells. Repligen has generated modified versions ("mutants") of the proinflammatory chemokine interleukin 8 ("IL-8") which lack the inflammatory neutrophil activating property of the parent molecule, but which retain the ability to suppress the proliferation of the progenitor cells. Certain of the mutant proteins are active in small animals models. These novel molecules may have therapeutic utility in protecting these progenitor cells from the toxic effects of anti-cancer drugs. Patent applications covering the composition of the mutant proteins have been filed in the United States and in foreign countries. The Company will seek a partner to develop its chemokine mutants. Glyceptor Antagonist Program Through the acquisition of Glycan, Repligen acquired a series of high throughput screening assays to facilitate the discovery of new compounds capable of blocking the interaction of certain proteins, including inflammatory factors, with a type of cell surface carbohydrate known as a glycosaminoglycan. The Company believes that such compounds will have anti-inflammatory action. Glycan's research on two specific inflammatory factors is supported by a research contract with Glaxo Wellcome plc., a leading international pharmaceutical company. Glycan has filed a patent application in the U.S. and certain foreign countries. Glycan has also developed a combinatorial chemistry technology which is capable of rapidly producing large libraries of compounds. This technology is capable of efficiently producing compounds which resemble natural peptides ("peptidomimetic"). Unlike natural peptides, however, the Company's peptidomimetic compounds have a wider range of chemical functional groups than are found in the twenty natural amino acids. In addition, the Company believes that the peptidomimetic compounds may be significantly more stable in vivo than natural peptides, a problem that often prevents natural peptides from being suitable drug candidates. The Glycan synthesis technology is based on solution phase synthesis which is accomplished by simple mixing of solutions containing the reactive starting materials, a process which can be automated to construct large libraries very efficiently. Glycan has employed this technology to construct libraries of compounds whose structures are customized to the characteristics of the drug discovery target thereby increasing the probability of finding lead compounds. Repligen intends to further develop this technology and will seek to apply it to additional drug discovery targets through the construction of customized libraries. The Company will also seek to develop or license additional technologies which may improve the efficiency of the drug discovery with high throughput screening. Commercial Products Recombinant Protein A. Protein A is a naturally occurring molecule which has the ability to bind tightly to certain classes of antibodies. The Company has developed and produces recombinant Protein A ("rProtein A") in sufficient quantity and quality to be used in the commercial production of antibodies. The development, manufacture and marketing of rProtein A has been funded and conducted by Repligen without the assistance of a commercial partner. Repligen sells rProtein A directly and through distributors, including Itochu Techno Chemical, Ltd. (Japan), Kem-En-Tec (Denmark), Pelichem A.G. (Switzerland), and Inter Medico (Canada). In August 1991, the United States Patent and Trademark Office (the "PTO") ruled in favor of Repligen in an interference proceeding with Pharmacia AB involving competing patent applications for rProtein A. A cross-licensing agreement between the Company and Pharmacia AB with respect to rProtein A remains in effect. Repligen has now been awarded patents covering rProtein A in the United States, Europe and Canada. In addition, the Company has been awarded patents in the United States covering a modified version of Protein A. 5 Patents, Licenses and Proprietary Rights It is not known how the PTO or a court will resolve issues that may arise relating to the validity, scope and inventorship of patents owned by, or licensed by, the Company. In general, the patent position of biotechnology firms is highly uncertain and involves complex legal, scientific and factual questions. Issues remain as to whether patent applications of the type made by, or licensed by, the Company will ultimately be granted as well as to the ultimate degree of protection or commercial benefit that will be afforded to Repligen by any patents issuing from such applications. There can be no assurance that any patents issued to, or licensed by, the Company will not be infringed or circumvented by others or will provide any commercial benefit to the Company. The Company's products and processes might conflict with patents that have been or may be granted to competitors, universities or others. Issues may arise with respect to claims of others to rights in the Company's patents or patent applications. As the biotechnology industry expands and more patents are issued, the risk increases that the Company's processes and products may give rise to claims that they infringe the patents of others. Such other person could bring legal actions against Repligen or its commercial partners claiming damages and seeking to enjoin them from manufacturing, marketing and clinically testing the affected product or process. If any such action were successful, in addition to any potential liability for damages, Repligen or its commercial partners could be required to obtain a license in order to continue to manufacture or market the affected product or to use the affected process. No assurance can be given that Repligen or its commercial partners could prevail in any such action or that any license required under any such patent would be made available or, if available, would be available on acceptable terms. Repligen expects that there may be significant litigation in the industry regarding patent and other intellectual property rights and that such litigation could consume substantial resources. The Company requires all employees, consultants and commercial partners to agree to keep the Company's proprietary information confidential. There can be no assurance, however, that these agreements will be honored. Competition Repligen is engaged in a business characterized by extensive research efforts, rapid developments and intense competition. Competition can only be expected to increase in the future. Repligen competes with specialized biotechnology companies and large pharmaceutical companies, many of which have more capital, more extensive research and development capabilities and greater marketing and human resources than the Company. There are numerous competitors in the area of anti-inflammatories, immune modulation and the Company's other research programs. At this time, it is impossible to determine which approach, if any, currently being pursued will ultimately become successful, and consequently, any one of Repligen's competitors has the potential to develop a successful approach to inflammation inhibition. However, the Company believes that its multiple approaches to the inhibition of inflammation are unique and prosecutable by patents and may give the Company a potential competitive advantage in this market. Government Regulation The Company's business activities are subject to extensive regulation for safety and efficacy by numerous governmental authorities in the United States and other countries. In the United States, the Company's activities are subject to rigorous regulation by the United States Food and Drug Administration ("FDA"), and other Federal, state and local agencies governing, among other things, research and development activities and the testing, manufacturing, safety, effectiveness, labeling, storage, record keeping, approval, advertising and promotion of the Company's current products and any products which may be developed by the Company and its commercial partners. Further, additional government regulation may be established which could affect regulatory approval of the Company's products. The standard process required by the FDA before a pharmaceutical agent may be marketed in the United States includes (i) preclinical laboratory and animal tests, (ii) adequate and well-controlled human clinical trials to establish the safety and efficacy of the drug in its intended indication, (iii) submission to the 6 FDA of a New Drug Application ("NDA") with respect to drugs and a Product License Application ("PLA") with respect to biologics for approval prior to any commercial sale or shipment of the drug or biologic. Clinical trials are typically conducted in three sequential phases, which may overlap. In Phase I, the initial introduction of the drug to humans, the drug is tested for safety (adverse effects), dosage tolerance, mechanism of action and metabolism. Phase II involves studies in a limited patient population to (i) evaluate the effectiveness of the drug for specific targeted indications, (ii) determine dosage tolerance and optimal dosage and (iii) identify possible adverse effects and safety risks. When a compound is found to be effective and to have an acceptable safety profile in Phase II evaluations, Phase III trials are undertaken to further evaluate clinical effectiveness and to further test for safety within an expanded patient population at geographically dispersed clinical study sites. There can be no assurance that Phase I, Phase II or Phase III testing will be completed successfully within any specified time period, if at all, with respect to any of the Company's products subject to such testing. Repligen will have its product candidates manufactured by third parties who are able to comply with the good manufacturing requirements of the FDA. The process of completing clinical testing and obtaining FDA approval for a new human drug or biologic is likely to take a number of years and require the expenditure of substantial resources. Even after initial FDA approval has been obtained, further studies may be required to provide additional data on safety or to gain approval for the use of a product as a treatment for clinical indications other than those for which the product was initially tested. Also, the FDA may require post-marketing testing and surveillance programs to monitor the drug's efficacy and side effects. Results of these post-marketing programs may prevent or limit the further marketing of the products. There can be no assurance that required regulatory approvals for processes or products containing Company products will be sought or obtained, that significant delays will not be encountered or that substantial expenses will not be incurred. Product Liability The manufacturing, testing and marketing of products entails an inherent risk of product liability. While the Company has taken and will continue to take what it believes are adequate precautions, there can be no assurance that it will avoid significant product liability exposure. The Company maintains limited product liability insurance. There can be no assurance that adequate insurance coverage will be available at acceptable costs, if at all, to cover potential liability claims. An inability to obtain insurance at acceptable costs or to otherwise protect against potential product liability claims could inhibit or prevent the commercialization of products developed by the Company. The obligation to pay any product liability claim or recall could have a material adverse effect on the business or financial condition of the Company. Employees As of June 14, 1996, the Company had 15 employees. Of the 15 employees, 7 were engaged in research and development and 8 in administrative and marketing functions. Doctoral degrees are held by 5 of the Company's employees. Cautionary Statement Regarding Forward-Looking Statements Statements in this Annual Report on Form 10-K under the captions "Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," 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 fact constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. 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. 7 Item 2: DESCRIPTION OF PROPERTY The Company's principal executive offices, primary research and production facilities are located at 117 Fourth Avenue in Needham, Massachusetts. The Company occupies approximately 13,000 square feet of research, manufacturing and office space in Needham under a four year sublease from T Cell Sciences, Inc. In May 1996 the Company's lease at One Kendall Square, Cambridge, Massachusetts expired and the Company terminated all of its operations at this facility. The 10,500 square feet of laboratory space located at 83 Rogers Street, Cambridge, Massachusetts has been subleased by the Company to BIODEVELOPMENT Laboratories, Inc. In conjunction with the acquisition of Glycan, the Company has assumed a lease for approximately 2,000 square feet of office and laboratory space at 100 Inman Street, Cambridge, Massachusetts which terminates on September 30, 1996. Item 3: LEGAL PROCEEDINGS Not applicable. Item 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders of the Company through solicitation of proxies or otherwise, during the last quarter of the fiscal year ended March 31, 1996. EXECUTIVE OFFICERS OF THE REGISTRANT The following table sets forth the names, ages and positions of the executive officers of the Company:
Name Age Positions ---- --- --------- Walter C. Herlihy 44 President, Chief Executive Officer and Director James R. Rusche 42 Vice President, Research and Development Daniel P. Witt 48 Vice President, Business Development Avery W. Catlin* 48 Vice President, Finance and Chief Financial Officer
* In April 1996, Mr. Catlin left the Company to pursue other interests. Walter C. Herlihy, Ph.D. joined the Company in March 1996 as President, Chief Executive Officer and Director in connection with the Company's merger with Glycan Pharmaceuticals, Inc. From 1993 to 1996, Dr. Herlihy was the President and CEO of Glycan. From 1981 to 1993, he held numerous research positions at Repligen, most recently as Senior Vice President, Research and Development. Dr. Herlihy holds an A.B. degree in chemistry from Cornell University and a Ph.D. in chemistry from MIT. James R. Rusche, Ph.D. joined the Company in March 1996 as Vice President, Research and Development in connection with the Company's merger with Glycan Pharmaceuticals, Inc. From 1994 to 1996, Dr. Rusche was a Vice President, Research and Development of Glycan. From 1985 to 1993, he held numerous research positions at Repligen, most recently as Vice President, Discovery Research. Dr. Rusche holds a B.S. degree in microbiology from the University of Wisconsin, LaCrosse and a Ph.D. in immunology from the University of Florida. 8 Daniel P. Witt, Ph.D. joined the Company in March 1996 as Vice President, Business Development in connection with the Company's merger with Glycan Pharmaceuticals, Inc. From 1993 to 1996, Dr. Witt was Vice President, Business Development of Glycan. From 1981 to 1993, he held numerous research positions at Repligen, most recently as Vice President, Technology Acquisition. Dr. Witt holds a B.A. degree in chemistry from Gettysberg College and a Ph.D. in biochemistry from the University of Vermont. Avery W. Catlin left the Company in April 1996 to pursue other interests. Prior to leaving, he was Vice President, Finance, Chief Financial Officer, Secretary and Treasurer of the Company. He joined the Company in June 1992 as Corporate Controller. 9 PART II Item 5: MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS Market Information The Company's Common Stock is traded on the Nasdaq National Market System under the symbol RGEN. The following table sets forth for the periods indicated the high and low sale prices for the Common Stock as reported by NASDAQ. Fiscal 1995: High Low ----------- ---- --- First Quarter $6.00 $3.25 Second Quarter 4.125 2.125 Third Quarter 3.375 1.625 Fourth Quarter 3.125 1.625 Fiscal 1996: ----------- First Quarter $3.00 $1.25 Second Quarter 2.125 1.188 Third Quarter 1.938 0.875 Fourth Quarter 1.688 0.938 On June 14, 1996, the reported closing price of the Common Stock as reported by NASDAQ was $1.125 per share. Stockholders As of June 14, 1996, there were approximately 1,092 stockholders of record of the Company's common stock, excluding stockholders whose shares were held in nominee name. Dividends The Company has not paid any dividends since its inception and does not intend to pay any dividends on its Common Stock in the foreseeable future. 10 Item 6: SELECTED CONSOLIDATED FINANCIAL DATA
Years Ended March 31, ------------------------------------------------------------------ 1996 1995 1994 1993 1992 -------- --------- -------- -------- --------- (In thousands, except per share amounts) Operating Statement Data: Revenues: Research and development $ 7,949 $ 10,988 $ 19,392 $ 21,444 $ 6,658 Product 1,874 3,885 4,947 2,113 1,998 Investment and other 1,036 2,069 2,494 3,765 3,003 --------- --------- -------- -------- -------- 10,859 16,942 26,833 27,322 11,659 --------- --------- -------- -------- -------- Costs and expenses: Research and development 12,314 31,012 35,919 30,705 13,741 Cost of goods sold 1,516 1,535 3,933 1,194 865 Selling, general and administrative 4,925 4,673 6,206 6,710 4,064 Interest 58 372 312 -- -- Restructuring charge 3,567 11,300 -- -- -- Charge for acquired research and development -- -- -- -- 5,764 --------- --------- -------- -------- -------- 22,380 48,892 46,370 38,609 24,434 --------- --------- -------- -------- -------- Net loss $ (11,521) $ (31,950) $(19,537) $(11,287) $(12,775) ========= ========= ========= ========= ========= Net loss per common share $ (0.75) $ (2.08) $ (1.53) $ (0.93) $ (1.14) ========= ========= ======== ======== ======== Weighted average common shares outstanding 15,370 15,356 12,788 12,085 11,218 ========= ========= ======== ======== ========
March 31, ------------------------------------------------------------------ 1996 1995 1994 1993 1992 -------- --------- -------- -------- --------- (In thousands) Balance Sheet Data:1/ Cash and investments2/ $ 7,222 $ 15,302 $ 29,215 $ 40,090 $ 38,685 Working capital 4,154 9,070 32,517 31,026 34,185 Total assets 9,231 31,330 59,611 63,483 54,191 Long-term debt -- -- -- 4,620 -- Accumulated deficit (123,042) (111,520) (79,570) (60,033) (48,745) Stockholders' equity 4,809 15,576 46,737 48,877 50,937
- ---------------- 1/ No dividends were declared or paid during any of the periods presented. 2/ Includes long-term investment securities of $4,591,000 and $7,329,000 in fiscal years 1993 and 1992, respectively. 11 Item 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Repligen is a biopharmaceutical company engaged in the research and development of therapeutic products for human health care. A substantial portion of the Company's revenues and expenses has been associated with research and development activities conducted in collaboration with commercial partners and Repligen Clinical Partners, L.P. (the "Partnership"). In September 1995 and April 1996, respectively, the Company's arrangements with its primary commercial partner, Eli Lilly and Company ("Lilly") and the Partnership were terminated. The Company currently does not have any significant research and development funding arrangements. The Company also devotes significant resources to the research and development of proprietary products. In addition, the Company receives income from its investments and through the sale of products that are manufactured by the Company. The Company has incurred cumulative operating losses since its inception in 1981. As of March 31, 1996, its accumulated deficit was $123,042,000. During fiscal 1996, the Company completed a major downsizing and restructuring of its activities, including the termination of certain research programs, which significantly reduced its cash burn rate. These actions were completed in an effort to stabilize Repligen's financial condition and preserve its cash resources. As a result of the reduction of operating expenses and elimination of debt, the Company believes it has adequate cash reserves at March 31, 1996 to finance its operations at their current levels for at least the next twenty four months. Results of operations Fiscal Year Ended March 31, 1996 Versus Fiscal Year Ended March 31, 1995 Revenues. Total revenues for fiscal 1996 were $10,859,000 as compared to $16,942,000 in fiscal 1995, a decrease of $6,083,000. Research and development revenues for fiscal 1996, totaling $7,949,000, decreased by $3,040,000 or 28% from fiscal 1995 levels. This decrease reflects reduced product development funding from Lilly with respect to the Company's inflammation inhibition (CD11b) program and from the Partnership with respect to rPF4, offset in part by a $2,000,000 fee paid by Genetics Institute, Inc. in September 1995 for the assignment of intellectual property and the transfer of certain reagents associated with the Company's immune modulation technology and a $525,000 license fee paid by Genentech, Inc. in December 1995 for the exclusive sublicense to make and sell antibody fragments, engineered peptides and other small molecules that bind to CD18 and CD11a. The decrease in funding from Lilly in fiscal 1996 was due to the termination of the CD11b program. Lilly terminated its collaboration and licensing agreement with the Company in September 1995, with respect to the joint development of the CD11b program. Under the terms of the agreement, the entire CD11b program, including preclinical and clinical data packages for product candidates m60.1 and h60.1, were returned to the Company. Revenues recognized under the Lilly agreement totaled $2,613,000 in fiscal 1996. The decrease in funding from the Partnership reflects a decrease in billings based on lower levels of research activity and a decrease in the need for process development and manufacturing activity as both products under development had entered Phase I/II clinical trials and is also due to lack of resources of the Partnership, limiting the Partnership's ability to fund the rPF4 program. Research and development revenues recognized under the rPF4 program totaled $2,693,000 in fiscal 1996. Product revenues for fiscal 1996 were $1,874,000 compared to $3,885,000 in fiscal 1995. The decrease of $2,011,000 or 52% was due to a reduction in product sales volume of the Company's rProtein A(TM) and diagnostic reagent products by $590,000, sales of product to Hoffmann-LaRoche and Abbott Laboratories totaling $2,049,000 in fiscal 1995 which were not realized in fiscal 1996, offset in part by the recognition of contract service revenues of $549,000 generated by the Company. Investment income decreased by $687,000 from fiscal 1995 levels due primarily to lower average funds available for investment in fiscal 1996. The Company expects investment income to continue to decrease due to its current cash position. Other revenues for the fiscal 1996 period decreased by $346,000 from fiscal 1995 due primarily to a decrease in management fees received from the Partnership. 12 Expenses. During fiscal 1996, the Company substantially downsized and consolidated its operations in order to stabilize the Company's financial condition and preserve its cash reserves. During the fourth quarter, the Company recorded a charge of $3,567,000 to cover severance costs and related benefits, the settlement of equipment and facility lease obligations and the write-off of certain leasehold improvements and equipment no longer being utilized, reduced in part by cash received from the sale of assets and the reversal of certain accruals no longer required due to the downsizing. The total restructuring charge of $3,567,000 included cash related expenditures of $1,246,000 and a non-cash charge of $2,321,000. The cash related expenditures consisted of $333,000 of severance and related benefits for approximately 20 terminated employees, $1,991,000 of lease settlement payments and $172,000 in legal fees associated with the restructurings, offset by cash of $1,250,000 received from the sale of excess equipment. The non-cash charge related to the writeoff of leasehold improvements and equipment no longer being utilized, offset by the reversal of accruals no longer required. See Note 2 of Notes to Consolidated Financial Statements. Research and development expenses for fiscal 1996, totaling $12,314,000, decreased by $18,698,000, or 60%, from fiscal 1995 levels. The decrease in expenses reflects a reduction in research and development headcount and related expenses, decreased development activities, lower expenditures for clinical trials and the Company's efforts to reduce costs. The Company expects research and development expenses to be significantly reduced in 1997 as compared to 1996 due to the restructuring. Cost of goods sold for fiscal 1996 decreased by $20,000 from the prior fiscal year. Cost of goods sold in fiscal 1996 were 80% of product revenues versus 40% of product revenues for fiscal 1995. The increase in this percentage is the result of a change in product mix between fiscal years and is attributable to lower margins experienced on contract service revenues in fiscal 1996 and the writeoff of products no longer being sold. Selling, general and administrative expenses for fiscal 1996, totaling $4,925,000, increased $251,000 from fiscal 1995 due primarily to increases in legal expenses and employee retention costs offset in part by a decrease in administrative personnel and related expenses as part of the Company's cost reduction efforts. The Company expects administrative expenses to be significantly reduced in 1997 as compared to 1996 due to the restructuring. Interest expense for fiscal 1996 reflects interest incurred by the Company through May 1995 when its term loan with a bank was paid in full and the decrease from the comparable fiscal 1995 period reflects a full twelve months of interest incurred in fiscal 1995. Fiscal Year Ended March 31, 1995 Versus Fiscal Year Ended March 31, 1994 Revenues. Total revenues for fiscal 1995 were $16,942,000 as compared to $26,833,000 in fiscal 1994, a decrease of $9,891,000. Research and development revenues for fiscal 1995 decreased by $8,403,000 or 43% from fiscal 1994 levels. This decrease reflects reduced product development funding from Lilly with respect to the Company's CD11b program and from the Partnership with respect to rPF4. The decrease in funding from Lilly in fiscal 1995 was caused by a decrease in the need for process development, preclinical research and manufacturing activity as the product under development had entered phase I/II trials. Revenues recognized under the Lilly agreement totaled $6,262,000 in fiscal 1995. The decrease in funding from the Partnership reflects a decrease in billings based on lower levels of research activity and the decision of Repligen management to fund a greater portion of the program out of its own cash reserves in order to preserve the funds available of the Partnership. Research and development revenues recognized under the rPF4 program totaled $4,352,000 in fiscal 1995. In fiscal 1995, Repligen financed approximately $1,641,000 of the program with its own funds through absorption of such expenditures. Product revenues for fiscal 1995 were $3,885,000 compared to $4,947,000 in fiscal 1994. The decrease of $1,062,000 or 21% was due to reductions in product sales volume and contract manufacturing revenues resulting from a supply arrangement obtained as part of the Company's acquisition of certain assets from Abbott Biotech, Inc. in May 1992. 13 Investment income increased by $44,000 from fiscal 1994 levels due to higher interest rates, offset in part by lower average funds available for investment in fiscal 1995. Other revenues for fiscal 1995 decreased by $469,000 from fiscal 1994 due primarily to a decrease in management fees received from the Partnership. Expenses. During fiscal 1995, the Company substantially restructured its operations in an effort to reduce its rate of expenditures and preserve its available cash and investment balances. In the second quarter, the Company recorded a charge of $975,000 to cover severance costs and related benefits, as well as certain rental losses associated with the sublease of certain facilities. During the fourth quarter of fiscal 1995, the Company recorded a charge of $10,325,000 to cover severance costs and related benefits, rental losses associated with the sublease of certain facilities, the write-off of certain leasehold improvements, equipment and intangible assets which were no longer utilized and to reserve for future operating lease payments for equipment which was also no longer utilized. The restructurings were done in order to reorganize certain business operations and the Company's senior management team to focus on the clinical development of certain lead product candidates. The total restructuring charge of $11,300,000 included cash related expenditures of $6,545,000 and a non-cash charge of $4,755,000. The cash related expenditures consist of $2,035,000 of severance and related benefits for approximately 140 terminated employees, $3,250,000 of future operating lease payments for assets no longer being utilized, $940,000 of rental losses associated with the sublease of surplus lab and office space, and $320,000 of contract termination fees. Approximately $1,076,000 of these expenses were paid during fiscal 1995 with the majority of the balance paid during fiscal 1996. The non-cash charge related to leasehold improvements, equipment and other intangibles no longer being utilized. See Note 2 of Notes to Consolidated Financial Statements. Research and development expenses for fiscal 1995 decreased by $4,907,000, or 14%, from fiscal 1994 levels. The decrease in expenses reflects decreased development activities, lower expenditures for clinical trials and the Company's efforts to reduce costs and to focus its resources on the clinical development of its two lead product candidates. Cost of goods sold for fiscal 1995 decreased by $2,398,000 from the prior fiscal year due primarily to decreased contract manufacturing revenues in fiscal 1995. Cost of goods sold in fiscal 1995 were 40% of product revenues versus 79% of product revenues for fiscal 1994. The decrease in this percentage is the result of a change in product mix between fiscal years and is attributable to higher margins experienced on contract manufactured products shipped in fiscal 1995 which had been partly reserved in fiscal 1994 due to uncertainty in future shipments. Selling, general and administrative expenses for fiscal 1995 decreased $1,533,000 from fiscal 1994 due primarily to decreases in administrative personnel and related expenses as part of the Company's cost reduction efforts. Interest expense for fiscal 1995 reflects interest incurred by the Company on its term loan with a bank and the increase from the comparable fiscal 1994 period reflects increased interest rates. Capital Resources and Liquidity The Company's total cash, cash equivalents and marketable securities decreased to $7,222,000 at March 31, 1996 from $15,302,000 at March 31, 1995. This decrease is due in part to net losses during the period of $11,522,000, reductions in payables and accruals of $6,664,000 and the payment of a term loan payable to a bank of $4,620,000, offset primarily from noncash related charges of $3,759,000 for depreciation and amortization and restructuring related charges, reductions in receivables and the collection of amounts due from the Partnership totaling $6,806,000, a reduction in prepaid expenses of $851,000 and a reduction in other assets of $1,400,000. Working capital decreased to $4,153,563 at March 31, 1996 from $9,070,000 at March 31, 1995. The Company has funded operations primarily with cash derived from sales of its equity securities, research and development contracts, product sales, investment income, proceeds from a term loan with a bank, the sale of the Company's share of a joint venture and leasing of certain equipment. In May 1992, the Company entered into a research and development agreement with Lilly which provided $2,613,000, $6,262,000 and 14 $7,790,000 in research funding in fiscal 1996, 1995 and 1994, respectively. In September 1995, Lilly terminated its collaboration and licensing agreement with the Company with respect to the joint development of the CD11b Program and the rights to the Program were returned to Repligen. The Company has received research and development funding from the Partnership pursuant to the Product Development Agreement. The Company recognized $2,693,000, $4,352,000 and $10,762,000 of such funding as revenue in fiscal 1996, 1995 and 1994, respectively. In April 1996, the Company announced the termination of the Product Development Agreement and the Purchase Agreement with the Partnership. Under the terms of the various agreements between the parties, the rights to the rPF4 technologies remain with the Partnership. In September 1995, Genetics Institute, Inc. paid a $2,000,000 fee for the assignment of intellectual property and the transfer of certain reagents associated with the Company's immune modulation technology. Genetics Institute has exclusive rights to commercialize any protein-based drugs that originate from this technology with the exception of CTLA4-IgG, for which the Company retains its rights, and to develop small molecule drugs based on this technology. The Company retained the rights to independently commercialize small molecule-based drugs in the therapeutic area. In December 1995, Genentech, Inc. paid a $525,000 license fee for the exclusive sublicense to make, use and sell antibody fragments, engineered polypeptides and other small molecules that bind to CD18 and CD11a. At March 31, 1996, the Company was in default under a facility lease and three equipment lease agreements. Subsequent to year end, under the terms of negotiated settlement arrangements, the Company paid approximately $300,000 and $3,000,000 in settlement fees to the facility landlord and equipment lessors, respectively. The settlement fees with respect to the operating equipment lease agreements represent discounted remaining lease obligations and the purchase price of certain leased equipment from the equipment lessors. In May 1996, a substantial amount of this equipment originally on lease as well as certain surplus Company owned equipment was sold at pubic auction for approximately $1,250,000, net of selling expenses. The obligation for the settlement payments to the lessors and landlord, net of funds received from the sale of equipment, has been reflected in the restructuring accrual at March 31, 1996. In March 1993, the Company entered into an unsecured term loan agreement with a bank whereby the bank loaned the Company $4,620,000 at such bank's base rate plus one-half of one percent. The loan matured in March 1995 and was subsequently paid in full. Capital expenditures for fiscal 1996 and 1995 were $643,000 and $556,000, respectively. The capital expenditures in fiscal 1996 and 1995 primarily reflect the purchase of research, development and manufacturing equipment. 15 Item 8: FINANCIAL STATEMENTS REPLIGEN CORPORATION INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Public Accountants 17 Consolidated Financial Statements: Consolidated Balance Sheets at March 31, 1996 and 1995 18 Consolidated Statements of Operations for Years Ended March 31, 1996, 1995 and 1994 19 Consolidated Statements of Stockholders' Equity for Years Ended March 31, 1996, 1995 and 1994 20 Consolidated Statements of Cash Flows for Years Ended March 31, 1996, 1995 and 1994 21 Notes to Consolidated Financial Statements 22 16 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Repligen Corporation: We have audited the accompanying consolidated balance sheets of Repligen Corporation (a Delaware corporation) and subsidiaries as of March 31, 1996 and 1995, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended March 31, 1996. 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 generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Repligen Corporation and subsidiaries as of March 31, 1996 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 1996, in conformity with generally accepted accounting principles. /s/ ARTHUR ANDERSEN LLP ARTHUR ANDERSEN LLP Boston, Massachusetts May 8, 1996 (except with respect to the matters discussed in Notes 2 and 10 as to which the date is May 30, 1996) 17 REPLIGEN CORPORATION CONSOLIDATED BALANCE SHEETS
March 31, ----------------------------------- 1996 1995 ----------- ----------- ASSETS Current assets: Cash and cash equivalents $6,944,140 $ 13,821,387 Marketable securities 278,115 1,480,712 Accounts receivable, less reserves of $152,000 and $300,000, respectively 421,254 1,686,902 Amounts due from affiliate 42,284 962,361 Inventories 701,224 1,213,379 Note receivable from affiliate -- 4,620,000 Prepaid expenses and other current assets 188,554 1,039,197 ----------- ------------ Total current assets 8,575,571 24,823,938 Property, plant and equipment, at cost: Equipment 688,091 7,625,094 Furniture and fixtures 20,422 869,590 Leasehold improvements 2,000 11,801,854 ----------- ------------ 710,513 20,296,538 Less -- accumulated depreciation and amortization 176,946 15,312,326 ----------- ------------ 533,567 4,984,212 Restricted cash -- 1,000,000 Other assets, net 121,389 521,803 ----------- ------------ $ 9,230,527 $ 31,329,953 =========== ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 546,129 $ 1,221,277 Accrued expenses and other 3,720,881 9,709,292 Unearned income 154,998 203,000 Term loan payable to a bank -- 4,620,000 ----------- ------------ Total current liabilities 4,422,008 15,753,569 Commitments and contingencies (Notes 2, 10 and 12) Stockholders' equity: Preferred stock, $.01 par value -- authorized -- 5,000,000 shares -- outstanding -- none -- -- Common stock, $.01 par value -- authorized -- 30,000,000 shares -- outstanding -- 15,602,542 shares and 15,357,030 shares at March 31, 1996 and 1995, respectively 156,025 153,570 Additional paid-in capital 127,694,145 126,942,925 Accumulated deficit (123,041,651) (111,520,111) ------------ ----------- Total stockholders' equity 4,808,519 15,576,384 ------------ ----------- $ 9,230,527 $31,329,953 ============ ===========
The accompanying notes are an integral part of these consolidated financial statements. 18 REPLIGEN CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended March 31, ---------------------------------------------- 1996 1995 1994 ------------ ----------- ----------- Revenues: Research and development $5,424,304 $10,988,567 $19,391,977 Sale of intellectual property rights 2,525,000 -- -- Product 1,873,687 3,884,642 4,946,893 Investment income 737,536 1,424,558 1,380,672 Other 298,350 644,548 1,113,152 ------------ ------------ ------------ 10,858,877 16,942,315 26,832,694 ------------ ------------ ------------ Costs and expenses: Research and development 12,314,385 31,011,893 35,918,605 Selling, general and administrative 4,925,345 4,673,580 6,206,511 Cost of goods sold 1,515,637 1,535,026 3,932,732 Interest 58,050 372,133 312,007 Restructuring charge 3,567,000 11,300,000 -- ------------ ------------ ------------ 22,380,417 48,892,632 46,369,855 ------------ ------------ ------------ Net loss $(11,521,540) $(31,950,317) $(19,537,161) ============ ============ ============ Net loss per common share $ (0.75) $ (2.08) $ (1.53) ========= ========= ======== Weighted average common shares outstanding 15,370,252 15,356,136 12,788,406 ============ ============ ============
The accompanying notes are an integral part of these consolidated financial statements. 19 REPLIGEN CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Common Stock ------------------------ Number of Additional Accumulated Shares Par Value Paid-in Capital Deficit ---------- --------- --------------- -------------- Balance, March 31, 1993 12,400,075 $124,001 $108,785,421 $(60,032,633) Net loss -- -- -- (19,537,161) Exercise of stock options 27,600 276 138,714 -- Sale of common stock, net of issuance costs of $302,034 and underwriters' commissions 2,875,000 28,750 15,884,216 -- Issuance of warrants in connection with Repligen Clinical Partners, L.P. -- -- 1,345,136 -- ---------- -------- ------------ ------------- Balance, March 31, 1994 15,302,675 153,027 126,153,487 (79,569,794) Net loss -- -- -- (31,950,317) Contribution of common stock to ESOP 54,355 543 373,140 -- Issuance of warrants in connection with Repligen Clinical Partners, L.P., net of exchange warrants costs of $733,613 -- -- 416,298 -- ---------- -------- ------------ ------------- Balance, March 31, 1995 15,357,030 153,570 126,942,925 (111,520,111) Net loss -- -- -- (11,521,540) Issuance of common stock in connection with the acquisition of Glycan Pharmaceutical, Inc. 243,600 2,436 332,514 -- Exercise of stock options 1,912 19 2,978 -- Issuance of warrants in connection with Repligen Clinical Partners, L.P. -- -- 415,728 -- ---------- -------- ------------ ------------- Balance, March 31, 1996 15,602,542 $156,025 $127,694,145 $(123,041,651) =========== ======== ============ =============
The accompanying notes are an integral part of these consolidated financial statements. 20 REPLIGEN CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended March 31, ------------------------------------------------- 1996 1995 1994 ------------- ------------ ------------- Cash flows from operating activities: Net loss $(11,521,540) $(31,950,317) $(19,537,161) Adjustments to reconcile net loss to net cash used in operating activities -- Depreciation and amortization 1,438,356 2,602,182 2,362,587 Contribution of common stock to ESOP -- 373,683 -- Equity in net loss of an affiliate 20,504 65,766 138,709 Research and development charge associated with the acquisition of Glycan Pharmaceuticals, Inc. 333,811 -- -- Restructuring charge associated with the write-off of leasehold improvements, equipment and other intangibles 2,321,000 4,754,593 -- Changes in assets and liabilities, net of acquisition of Glycan Pharmaceuticals, Inc. Accounts receivable 1,279,915 939,146 (1,510,362) Amounts due from affiliates 920,077 4,955,143 (4,845,753) Inventories 512,155 96,956 601,088 Prepaid expenses and other current assets 866,212 663,413 (286,918) Accounts payable (678,022) (804,581) (2,024,345) Accrued expenses and other (4,592,680) 4,483,274 745,825 Unearned income (203,000) (799,740) (453,432) ------------ ------------ ------------ Net cash used in operating activities (9,303,212) (14,620,482) (24,809,762) ------------ ------------ ------------ Cash flows from investing activities: Decrease in marketable securities 1,202,597 79,680 3,382,349 Decrease in investment securities -- -- 4,591,063 Acquisition of Glycan Pharmaceuticals, Inc. (144,836) -- -- Purchases of property, plant and equipment, net (463,378) (556,174) (3,804,404) Decrease in restricted cash 1,000,000 -- -- Proceeds from a note receivable from affiliate 4,620,000 -- -- Decrease (increase) in other assets 412,857 484,091 (199,633) ------------ ------------ ------------ Net cash provided by investing activities 6,627,240 7,597 3,969,375 ------------ ------------ ------------ Cash flows from financing activities: Proceeds from sales of common stock and issuance of warrants, net of issuance costs and commissions 418,725 416,298 16,812,092 Payment of term loan to a bank (4,620,000) -- -- Proceeds from leasing transactions -- 362,913 1,126,951 ------------ ------------ ----------- Net cash (used in) provided by financing activities (4,201,275) 779,211 17,939,043 ------------ ------------ ----------- Net decrease in cash and cash equivalents (6,877,247) (13,833,674) (2,901,344) Cash and cash equivalents, beginning of year 13,821,387 27,655,061 30,556,405 ------------- ------------ ------------ Cash and cash equivalents, end of year $ 6,944,140 $ 13,821,387 $ 27,655,061 ============ ============ ============ Supplemental disclosure of cash flow information: Cash paid for interest $ 58,050 $ 372,133 $ 312,007 ============ ============ ============
The accompanying notes are an integral part of these consolidated financial statements. 21 REPLIGEN CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Operations Repligen Corporation (the "Company") is a biopharmaceutical company engaged in the research and development of therapeutic products for human health care. The Company's research and development programs are primarily focused on the development of new therapies for chronic and acute inflammation and immunosuppression and the development of enabling technologies for discovery of new drugs by rapid screening of combinatorial chemical libraries. The Company has incurred significant operating losses since inception and has undergone significant restructuring of its operations in fiscal 1996 and 1995 (see Note 2). During fiscal 1996, the Company completed a major downsizing and consolidation of its activities, including the termination of certain research programs, in an effort to stabilize its financial condition and to preserve its cash resources. The Company has completed the restructurings and has consolidated its 15 employees into a new facility. On March 14, 1996, the Company issued 243,600 shares of its common stock for all of the common stock of Glycan Pharmaceuticals, Inc. ("Glycan"). The acquisition was accounted for as a purchase, with the excess of the purchase price and acquisition costs over the fair value of the assets acquired charged to operations of approximately $334,000 as the cost of acquired research and development. The Company acquired assets having a fair value of approximately $296,000, consisting primarily of cash and equipment, and assumed liabilities of approximately $295,000. Results of operations for Glycan are included in the consolidated financial statements of the Company subsequent to March 14, 1996. Unaudited pro forma information with respect to Glycan's pre-acquisition operating results has not been presented as it is not material. 2. Restructuring of Operations During fiscal 1996, the Company completed a major downsizing and consolidation of its operations in an effort to stabilize its financial condition and preserve its cash resources. The restructuring included a substantial reduction in the Company's work force, the termination of several research programs and the closing of its Cambridge research and manufacturing facility. During the fourth quarter of fiscal 1996, the Company recorded a charge of $3,567,000 to cover severance costs and related benefits, the settlement of operating equipment lease and facility lease obligations, the write-off of certain leasehold improvements and equipment no longer being utilized, reduced in part by cash received from the sale of assets and the reversal of certain accruals no longer required. From October 1992 through March 1995, the Company entered into three operating equipment lease arrangements involving the sale and leaseback of certain equipment at its Cambridge and Needham facilities. At March 31, 1996, the Company was in default under a facility lease and these operating equipment leases. Subsequent to year end, under the terms of negotiated settlement arrangements, the Company paid approximately $300,000 and $3,000,000 in settlement fees to the facility landlord and equipment lessors, respectively. The settlement fees with respect to the operating equipment lease agreements represent discounted remaining lease obligations and the purchase price of certain leased equipment from the equipment lessors. In May 1996, a substantial amount of this equipment originally on lease as well as certain surplus Company owned equipment was sold at public auction for approximately $1,250,000, net of selling expenses. The obligation for the settlement payments to the lessors and the landlord, net of funds received from the sale of equipment, has been reflected in the restructuring accrual at March 31, 1996. During fiscal 1995, the Company also substantially restructured its operations in an effort to reduce its rate of expenditures and preserve its available cash and investment balances. In the second quarter of fiscal 1995, the Company recorded a charge of $975,000 to cover severance costs and related benefits, as well as certain rental losses associated with the sublease of certain facilities. During the fourth quarter of fiscal 1995, 22 the Company recorded a charge of $10,325,000 to cover severance costs and related benefits, certain rental losses associated with the sublease of certain facilities, the write-off of certain leasehold improvements, equipment and other intangible assets that were no longer utilized and to reserve for future operating lease payments for equipment that was longer utilized. The restructurings in fiscal 1995 were done in order to reorganize certain business operations and the senior management team to focus on the clinical development of certain lead product candidates. The details of the total restructuring charges for both fiscal years are as follows:
Amounts (in 000s) 1996 1995 - ----------------- ----- ------- Severance and related benefits for terminated employees $ 333 $ 2,035 Reserve for future operating lease payments for assets no longer being utilized 1,991 3,250 Reserve for rental losses associated with the sublease of surplus lab and office space -- 940 Contract termination fees -- 320 Legal fees 172 -- Less -- cash received from the sale of surplus equipment (1,250) -- ------ ------- Cash related expenditures 1,246 6,545 Write-off of leasehold improvements, equipment and other intangibles no longer being utilized 3,854 4,755 Less -- reversal of accruals no longer required due to changes in operations (1,533) -- ------ ------- Non-cash related expenditures 2,321 4,755 ------ ------- $3,567 $11,300 ====== =======
The accrued restructuring activity for fiscal 1996 is as follows: Balance, beginning of year $5,490,000 $ -- Payments (4,321,000) (1,076,000) Provision 2,496,000 6,545,000 Write-off of leasehold improvements, equipment and other intangibles no longer being utilized, net of auction proceeds (2,604,000) -- Less -- reversal of accruals no longer required due to changes in operations 1,533,000 -- ---------- ----------- Balance, end of year $2,594,000 $ 5,467,000 ========== ===========
3. Significant Accounting Policies The accompanying consolidated financial statements reflect the application of certain accounting policies described in this note and elsewhere in the accompanying notes to consolidated financial statements. 0 Use of Estimates in the Preparation of Financial Statements 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 23 reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. Revenue Recognition Substantially all of the Company's research and development revenues are derived from collaborative arrangements. Research and development revenue is recognized as earned under cost plus fixed-fee contracts, or on a straight-line basis over the development contract, which approximates when work is performed and costs are incurred. In addition, under certain contracts, the Company recognizes research and development revenues as milestones are achieved. Unearned income represents amounts received prior to recognition of revenue. Research and development expenses in the accompanying consolidated statements of operations include funded and unfunded expenses. See Note 12 for a discussion of research and development agreements. During 1996, the Company recognized $2 million of revenue related to the sale of patent rights of its immune modulation technology and $525,000 for the sale of certain sublicenses related to CD18 and CD11a rights as part of the restructuring of operations. The Company recognizes revenue related to product sales upon shipment of the product. Other revenue includes the management fee received from Repligen Clinical Partners, L.P. The management fee revenue is recognized as earned (see Note 12). 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 Life - ----------- ---- Equipment 5 years Furniture and fixtures 5-7 years Leasehold improvements Shorter of term of the lease or estimated useful life Marketable Securities The Company adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS No. 115"), effective March 31, 1994. Under SFAS No. 115, securities that the Company has the positive intent and ability to hold to maturity are classified as "held-to-maturity." These securities include cash, cash equivalents and corporate bonds with maturities of less than one year. The held-to-maturity securities are reported at amortized cost, which approximates fair market value at March 31, 1996 and 1995. Securities purchased to be held for indefinite periods of time, and not intended at the time of purchase to be held until maturity, are classified as "available-for-sale" securities. These securities consist of collateralized mortgage obligations with average maturities in excess of 10 years. The Company also carries these investments at amortized cost, which approximates fair market value at March 31, 1996 and 1995. The estimated fair market value of marketable securities is based primarily on market quotations. Net Loss Per Common Share Primary net loss per common share has been computed by dividing net loss by the weighted average number of shares outstanding during the period. Common stock equivalents have not been included for any 24 period, as the amounts would be antidilutive. Fully diluted net loss per common share has not been presented for any period, as the amounts would not differ from primary net loss per common share. Post-retirement Benefits The Company has no obligation for post-retirement benefits. Financial Instruments SFAS No. 107, "Disclosure About Fair Value of Financial Instruments", requires disclosure about fair value of financial instruments. Financial instruments consist of cash equivalents, marketable securities and accounts receivable. The estimated fair value of these financial instruments approximates their carrying value. 4. Cash Equivalents and Marketable Securities The Company considers all highly liquid investments with original maturities of three months or less at the time of acquisition to be cash equivalents. Included in cash equivalents at March 31, 1996 are approximately $5,498,000 of money market funds and $1,300,000 of commercial paper. Cash equivalents at March 31, 1995 include $10,821,000 of money market funds and $3,000,000 of bank time deposits. Investments with a maturity period of greater than three months are classified as marketable securities and consist of approximately $278,000 of collateralized mortgage obligations at March 31, 1996 and $984,000 of corporate bonds and $497,000 of collateralized mortgage obligations at March 31, 1995. 5. Inventories Inventories are stated at the lower of cost (first-in, first-out) or market and consist of the following: March 31, ----------------------- 1996 1995 -------- ---------- Raw materials and work-in-process $ 1,955 $ 240,044 Finished goods 699,269 973,335 -------- ---------- Total $701,224 $1,213,379 ======== ========== Work-in-process and finished goods inventories consist of material, labor and manufacturing overhead. 6. Accrued Expenses and Other Accrued expenses and other consisted of the following: March 31, ----------------------- 1996 1995 -------- ---------- Restructuring charges $ 2,594,478 $ 5,468,656 Payroll and payroll-related costs 78,958 1,709,831 Professional and consulting fees 677,818 1,607,047 Other accrued expenses 369,627 923,758 ----------- ------------ Total $ 3,720,881 $ 9,709,292 =========== ============ 25 7. Income Taxes The Company accounts for income taxes under SFAS No. 109, "Accounting for Income Taxes." At March 31, 1996, the Company had net operating loss carryforwards for income tax purposes of approximately $83,700,000. The Company also had available tax credit carryforwards of approximately $4,846,000 at March 31, 1996 to reduce future federal income taxes, if any. 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 net operating loss carryforwards and tax credit carryforwards expire approximately as follows: Net Operating Tax Credit Expiration Date Loss Carryforwards Carryforwards - --------------- ------------------ ------------- 1997 $ 200,000 $ 17,000 1998 300,000 11,000 1999 400,000 32,000 2000 1,000,000 104,000 2001 1,300,000 109,000 2002-2011 80,500,000 4,573,000 ----------- ---------- Total $83,700,000 $4,846,000 =========== ========== The components of the deferred tax amounts, carryforwards and the valuation allowance are approximately as follows: March 31, ----------------------- 1996 1995 -------- ---------- Temporary differences $ 6,000,000 $10,100,000 Operating loss carryforwards 33,500,000 28,800,000 Tax credit carryforwards 4,900,000 4,900,000 ----------- ------------ 44,400,000 43,800,000 Valuation allowance (44,400,000) (43,800,000) ----------- ------------ $ -- $ -- =========== ============ A valuation allowance has been provided, as it is uncertain if the Company will realize the deferred tax asset. The increase in the valuation allowance during the year ended March 31, 1996 was primarily the result of the current year operations. 8. Term Loan In March 1993, the Company entered into an unsecured term loan agreement with a bank whereby the bank loaned the Company $4,620,000. The loan was paid in full in May 1995. 9. Common Stock At March 31, 1996, common stock reserved for issuance was as follows: Reserved for Shares ------------ --------- Incentive and nonqualified stock option plans 3,356,351 Warrants granted in connection with the Repligen Clinical Partners, L.P. offering (see Note 12) 2,158,950 Warrants assumed in connection with the Glycan acquisition 21,000 --------- 5,536,301 ========= 26 10. Commitments In May 1996, the Company terminated its leases at its former corporate headquarters in Cambridge, Massachusetts and moved its primary operations to a 13,000 square foot facility in Needham, Massachusetts, which it leases under a four year sublease agreement with T Cell Sciences, Inc. In connection with the acquisition of Glycan, the Company assumed a lease for approximately 2,000 square feet of laboratory space at 100 Inman Street, Cambridge, Massachusetts, which terminates September 30, 1996. Obligations under these noncancellable operating leases as of March 31, 1996, exclusive of those accrued as part of the restructuring charge discussed in Note 2, are approximately as follows: Year ending March 31, 1997 $532,000 1998 110,000 1999 110,000 2000 110,000 2001 9,000 -------- Total minimum lease payments $871,000 ======== Rent expense charged to operations under operating leases was approximately $2,932,000, $5,926,000 and $6,091,000 for the years ended March 31, 1996, 1995 and 1994, respectively. 11. Employee Stock Ownership and Stock Option Plans The Company maintains a qualified employee stock ownership plan ("ESOP") with a plan year ending on December 31. Under the plan, contributions by the Company may be in the form of cash, capital stock or other property and are allocated to eligible employees based on each participant's relative compensation. Individual benefits vest at a rate of 20% each year after one year of service. For the plan year ended December 31, 1993, the Company contributed, in April 1994, approximately $374,000 in shares of its common stock, as valued on the date of contribution. The Company elected not to make contributions for the December 31, 1994 and 1995 plan years. At March 31, 1996, no amount has been accrued for the December 31, 1996 plan year contribution. During fiscal 1993, the Company adopted the 1992 Repligen Corporation Stock Option Plan (the "1992 Plan"). The 1992 Plan authorizes the grant of either incentive stock options or nonqualified stock options to employees for the purchase of the Company's common stock at a price not less than the fair market value at the date of grant and also allows for the grant of nonqualified stock options to other participants. The 1992 Plan allows for the grant of up to 2,000,000 shares of the Company's common stock plus any shares previously authorized but unused under the Company's previous plans. The options generally vest over five years and expire no more than 10 years from the date of grant. At March 31, 1996, the Company had 2,403,305 options available for grant under the 1992 Plan. Options previously issued and outstanding under the 1982 Incentive Stock Option and 1987 Non-Statutory Stock Option plans generally vest over a five-year period. 27 A summary of stock option activity under all plans is as follows:
Years Ended March 31, ------------------------------------------------------------------------------------ 1996 1995 1994 ---- ---- ---- Option Option Option No. of Price No. of Price No. of Price Shares Per Share Shares Per Share Shares Per Share ---------- ----------- ----------- ----------- --------- ------------- Outstanding at beginning of period 1,291,730 $0.05-19.25 2,045,905 $0.05-19.25 1,971,191 $0.05-19.25 Granted 454,550 1.25-2.44 1,524,056 2.06-5.25 382,775 6.43-8.47 Exercised (1,912) 1.57 -- -- (27,600) 0.79-8.00 Forfeited (791,322) 1.50-19.25 (2,278,231) 2.59-19.25 (280,461) 1.90-19.25 --------- ---------- ----------- ---------- --------- ---------- Outstanding at end of period 953,046 $0.05-19.25 1,291,730 $0.05-19.25 2,045,905 $0.05-19.25 ======= =========== ========= =========== ========= =========== Exercisable at end of period 343,129 $0.05-19.25 137,395 $0.05-19.25 891,383 $0.05-19.25 ======= =========== ========= =========== ========= ===========
In August 1994, the Board of Directors authorized the issuance of new stock options to employees who voluntarily terminated their existing outstanding stock options. New options were issued which covered either 72.5% or 85% of the original amount of those previously outstanding options priced above market value for an aggregate 872,721 new options granted. Such new options were granted at an exercise price of $2.75 per share and vest over a three year period. In connection with the acquisition of Glycan, the Company granted to the three officers of Glycan options to purchase an aggregate 220,000 shares of the Company's common stock at $1.25 (the fair market value at that date). 12. Research and Development Agreements and Significant Customers Revenues received from related parties and other significant customers are approximately as follows: Years Ended March 31, ---------------------------------------- 1996 1995 1994 ---------- ---------- ----------- Eli Lilly and Company $2,613,000 $6,262,000 $ 7,790,000 Repligen Clinical Partners, L.P. 2,693,000 4,902,000 11,973,000 Hoffmann-LaRoche, Inc. -- 1,300,000 3,034,000 Genetics Institute, Inc. 2,000,000 -- -- Eli Lilly and Company In May 1992, the Company entered into a Research, Collaboration and License Agreement with Eli Lilly and Company ("Lilly"), whereby the Company granted Lilly an exclusive license to make, use and sell products utilizing antibodies, antibody fragments and engineered polypeptides that bind to CD11b (the "Products"). Under the terms of the agreement, Lilly paid the Company $3,250,000 for past research and development and $500,000 for the grant of the license, both of which are included in research and development revenues for the year ended March 31, 1993. In addition, the Company recognized revenues of approximately $2,613,000, $6,262,000 and $7,790,000 for research and development performed in fiscal 1996, 1995 and 1994, respectively. In September 1995, Lilly terminated its collaboration and licensing agreement with the Company with respect to the joint development of the CD11b Program and the rights to the Program were returned to Repligen. 28 Repligen Clinical Partners, L.P. In February 1992, Repligen Clinical Partners, L.P. (the "Partnership") completed a private placement of 900 limited partnership units, with net proceeds of approximately $40,300,000 in cash and notes receivable, to be received by the Partnership over a three-year period. In connection with the formation of the Partnership, the Company granted to the Partnership an exclusive license to all technology and know-how related to the manufacture, use and sale of recombinant platelet factor-4 ("rPF4") in the United States, Canada and Europe. A wholly owned subsidiary of the Company is the General Partner of the Partnership. In April 1996, the Company terminated its arrangements with the Partnership regarding the development and marketing of the rPF4 program. Under the terms of the various agreements between the parties, the rights to the rPF4 technologies remain with the Partnership. The Company will assist the Partnership in exploring alternatives to maximize the value of the rPF4 program for the benefit of the Partnership. The Partnership's primary source of funding and capital resources has been the capital contributions made by the Limited Partners and General Partner, which totaled approximately $40,582,000 through March 31, 1996. During fiscal 1996 and 1995, the Partnership wrote off approximately $1,637,000 and $3,325,000, respectively, of notes receivable relating to limited partnership units which were foreclosed on for failure to pay their installments. As of March 31, 1996 and 1995, the Partnership owed the Company approximately $42,000 and $962,000, respectively, for amounts due under the Product Development Agreement and interest relating to the note payable. In addition, at March 31, 1995, the Partnership owed Repligen a note payable of $4,620,000 which was the result of a loan from the Company to the Partnership to fund certain organization and syndication costs. In May 1995, the note payable and related interest due was paid in full by the Partnership. The Company has received research and development funding from the Partnership pursuant to the Product Development Agreement. The Company recognized $2,693,000, $4,352,000 and $10,762,000 of such funding as revenue in fiscal 1996, 1995 and 1994, respectively. During fiscal 1995, the Company incurred an additional $1,641,000 of research and development costs which could have been charged to the Partnership, but which was absorbed by the Company in an effort to preserve the funds of the Partnership. Included in other revenues for the years ended March 31, 1996, 1995 and 1994 are approximately $311,000, $550,000 and $1,211,000, respectively, representing the 10% management fee under the Product Development Agreement. Profits and losses are allocated 1% to the General Partner and 99% to the Limited Partners. The Company accounts for its investment on the equity method and has recorded losses of approximately $21,000, $66,000 and $139,000 as its share of the losses from the Partnership in the accompanying consolidated statements of operations for the years ended March 31, 1996, 1995 and 1994, respectively. In connection with the initial capitalization of the Partnership, the Company issued warrants to purchase common stock of Repligen to the limited partners of the Partnership (the "Original Warrants"). In June 1994, the Company completed an exchange pursuant to which a majority of the holders of the Original Warrants exchanged their Original Warrants for new warrants (the "Exchange Warrants"). Subsequently, in March 1995, the Company offered to modify a majority of the remaining Original Warrants and the Exchange Warrants. Each warrant holder of an outstanding warrant who was not then in default of its obligations to the Partnership was free to accept or reject such modifications. As of March 31, 1996, 623 1/2 of the 712 nondefaulted limited partnership units had accepted the modifications. Accordingly, as of that date, there were issued and outstanding Original Warrants to purchase 75,400 shares of the Company's common stock, modified Original Warrants to purchase 163,850 shares of the Company's common stock, Exchange Warrants to purchase 197,200 shares of the Company's common stock and modified Exchange Warrants to purchase 1,722,500 shares of the Company's common stock. 29 Item 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III Item 10-13: INFORMATION WITH RESPECT TO DIRECTORS AND EXECUTIVE OFFICERS The information required for Part III of this Annual Report on Form 10-K is hereby incorporated by reference from the Company's definitive proxy statement relating to the annual meeting of stockholders of the Company scheduled to be held on September 10, 1996, which statement is to be filed with the Securities and Exchange Commission. Such information will be contained in the sections of such proxy statement captioned "Election of Directors", "Information with Respect to the Board of Directors and Committees", "Stock Ownership of Principal Stockholders and Management", "Summary of Executive Compensation" and "Compensation Committee Report to Stockholders." Information regarding executive officers of the Company is also furnished in Part I of this Annual Report on Form 10-K, "Executive Officers of the Registrant." See Cross Reference Sheet for Part III. 30 PART IV Item 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K Item 14(a) The following documents are filed as part of this Annual Report on Form 10-K: Item 14(a)(1) Financial Statements: See "Index to Consolidated Financial Statement" in Item 8. Item 14(a)(2) Financial Statement Schedules: 1. Schedule II - Valuation and Qualifying Accounts Other financial statement schedules have not been included because they are not applicable or the information is included in financial statements or notes thereto. Item 14(a)(3) Exhibits. The following is a list of exhibits filed as part of this Annual Report on Form 10-K: 3. Articles of Incorporation and By-laws 3.1 -- Restated Certificate of Incorporation, dated June 30, 1992 and filed July 13, 1992 (filed as Exhibit 4.12 to Repligen Corporation's Annual Report on Form 10-K for the year ended March 31, 1993 and incorporated herein by reference). 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. Instruments Defining the Rights of Security Holders 4.2 -- Specimen Stock Certificate (filed as Exhibit 4.2 to Repligen Corporation's Form S-1 Registration Statement No. 33-3959 and incorporated herein by reference). 4.8 -- Form of Limited Partner Warrant, dated as of February 28, 1992 (filed as Exhibit 4.9 to Repligen Corporation's Annual Report on Form 10-K for the year ended March 31, 1992 and incorporated herein by reference). 4.9 -- Form of Class B Limited Partner Warrant, dated as of February 28, 1992 (filed as Exhibit 4.10 to Repligen Corporation's Annual Report on Form 10-K for the year ended March 31, 1992 and incorporated herein by reference). 4.10 -- Form of Incentive Warrant, dated as of February 28, 1992 (filed as Exhibit 4.11 to Repligen Corporation's Annual Report on Form 10-K for the year ended March 31, 1992 and incorporated herein by reference). 4.11 -- Form of Fund Warrant, dated as of February 28, 1992 (filed as Exhibit 4.12 to Repligen Corporation's Annual Report on Form 10-K for the year ended March 31, 1992 and incorporated herein by reference). 4.12 -- The 1992 Repligen Corporation Stock Option Plan (filed as Exhibit 4.12 to Repligen Corporation's Annual Report on Form 10-K for the year ended March 31, 1993 and incorporated herein by reference). 31 10. Material Contracts 10.1 -- License Agreement, dated December 2, 1980, between the Trustees of Leland Stanford Junior University and Repligen Corporation (filed as Exhibit 10.1 to Repligen Corporation's Form S-1 Registration Statement No. 33-3959 and incorporated herein by reference). 10.5 -- Consulting Agreement, dated October 1, 1981, between Dr. Paul Schimmel and Repligen Corporation (filed as Exhibit 10.14 to Repligen Corporation's Form S-1 Registration Statement No. 33-3959 and incorporated herein by reference). 10.6 -- Consulting Agreement, dated November 1, 1981, between Dr. Alexander Rich and Repligen Corporation (filed as Exhibit 10.15 to Repligen Corporation's Form S-1 Registration Statement No. 33-3959 and incorporated herein by reference). 10.17 -- Employment Agreement, dated August 28, 1986, between Sandford D. Smith and Repligen Corporation (filed as Exhibit 10.26 to Repligen Corporation's Annual Report on Form 10-K for the year ended March 31, 1990 and incorporated herein by reference). 10.18 -- License Agreement, dated November 14, 1990, between the Regents of the University of Michigan and Repligen Corporation (filed as Exhibit 10.27 to Repligen Corporation's Annual Report on Form 10-K for the year ended March 31, 1991 and incorporated herein by reference). 10.19 -- Agreement and Plan of Merger, dated as of September 30, 1991, by and among Repligen Corporation, AI Acquisition Corp. and Amira, Inc. (filed as Exhibit 2.1 to Repligen Corporation's Form 8-K filed December 3, 1991 and incorporated herein by reference). 10.20 -- Amendment No. 1 to Agreement and Plan of Merger, dated as of October 29, 1991, by and among Repligen Corporation, AI Acquisition Corp. and Amira, Inc. (filed as Exhibit 2.2 to Repligen Corporation's Form 8-K filed December 3, 1991 and incorporated herein by reference). 10.22 -- Product Development Agreement, dated as of February 2, 1992, between Repligen Corporation and Repligen Clinical Partners, L.P. (filed as Exhibit 10.29 to Repligen Corporation's Annual Report on Form 10-K for the year ended March 31, 1992 and incorporated herein by reference). 10.23 -- Purchase Agreement, dated February 2, 1992, between Repligen Corporation and each of the Limited Partners from time to time of Repligen Clinical Partners, L.P. (filed as Exhibit 10.30 to Repligen Corporation's Annual Report on Form 10-K for the year ended March 31, 1992 and incorporated herein by reference). 10.30 -- License Agreement, dated as of September 1, 1991, by and between Repligen Corporation and Kabi Pharmacia AB (filed as Exhibit 10.37 to Repligen Corporation's Annual Report on Form 10-K for the year ended March 31, 1992 and incorporated herein by reference). 10.37 -- Building Lease, dated July 10, 1992, between Trustees of the Cambridge East Trust and Amira, Inc., relating to 79 and 83 Rogers Street, Cambridge, Massachusetts (filed as Exhibit 10.37 to Repligen Corporation's Annual Report on Form 10-K for the year ended March 31, 1993 and incorporated herein by reference). 10.41 -- Employment Agreement, dated May 8, 1992, between Repligen Corporation and Avery W. Catlin (filed as Exhibit 10.41 to Repligen Corporation's Annual Report 32 on Form 10-K for the year ended March 31, 1995 and incorporated herein by reference). 10.42 -- Plan of Reorganization and Agreement of Merger, dated March 14, 1996, between Repligen Corporation and Glycan Pharmaceuticals, Inc. (omitting schedules and exhibits). 10.43 -- Employment Agreement, dated March 14, 1996, between Repligen Corporation and Walter C. Herlihy. 10.44 -- Employment Agreement, dated March 14, 1996, between Repligen Corporation and James R. Rusche. 10.45 -- Employment Agreement, dated March 14, 1996, between Repligen Corporation and Daniel P. Witt. 10.46 -- Sublease Agreement dated as of May 1, 1996 between T Cell Sciences, Inc. and Repligen Corporation. 22 -- Subsidiaries of Repligen Corporation. Item 14(b) Reports on Form 8-K. No Current Reports on Form 8-K were filed by the Company during the last quarter of the period covered by this report. 33 FINANCIAL STATEMENT SCHEDULE Schedule II - Valuation and Qualifying Accounts 34 CROSS REFERENCE SHEET
Form 10-K Items Incorporated By Page of 1996 Reference Proxy Statement - ---------------- ---------------------- PART III Item 10 Directors and Executive Officers of Registrant Item 11 Executive Compensation Item 12 Security Ownership of Certain Beneficial Owners and Managers Item 13 Certain Relationships and Transactions
35 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE To Repligen Corporation: We have audited in accordance with generally accepted auditing standards, the consolidated financial statements included in this Form 10-K, and have issued our report thereon dated May 8, 1996. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed in Item 14(a)(2) is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. /s/ARTHUR ANDERSEN LLP ARTHUR ANDERSEN LLP Boston, Massachusetts May 8, 1996 36 SCHEDULE II REPLIGEN CORPORATION AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS
Item Balance at Addition Deduction Balance at End Beginning of Period of Period - ----------------------------------------------------------------------------------------------------- Allowance for Doubtful Accounts 1996 $300,000 $102,000 $250,000 $152,000 1995 205,000 95,000 -- 300,000 1994 10,000 195,000 -- 205,000
37 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 Date: June 24, 1996 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby makes, constitutes and appoints Walter C. Herlihy and Daniel P. Witt, and each of them, 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 attorneys-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 attorneys-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 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 June 25, 1996 Alexander Rich, M.D. /s/ Paul Schimmel - -------------------------- Co-Chairman of the Board of Directors June 25, 1996 Paul Schimmel, Ph.D. /s/ Walter C. Herlihy - -------------------------- President, Chief Executive Officer and Director June 24, 1996 Walter C. Herlihy (Principal Financial and Accounting Officer) /s/ Boruch B. Frusztajer - -------------------------- Director June 25, 1996 Boruch B. Frusztajer /s/ G. William Miller - -------------------------- Director June 25, 1996 G. William Miller - -------------------------- Director June ___, 1996 Alfred M. Zeien - -------------------------- Director June ___, 1996 Elizabeth Greetham - -------------------------- Director June ___, 1996 Sandford D. Smith
EXHIBIT INDEX ITEM DESCRIPTION ---- ----------- 10.42 Plan of Reorganization and Agreement of Merger dated March 14, 1996 between Repligen Corporation and Glycan Pharmaceuticals, Inc. (omitting schedules and exhibits). 10.43 Employment Agreement, dated March 14, 1996, between Repligen Corporation and Walter C. Herlihy. 10.44 Employment Agreement, dated March 14, 1996, between Repligen Corporation and James R. Rusche. 10.45 Employment Agreement, dated March 14, 1996, between Repligen Corporation and Daniel P. Witt. 10.46 Sublease Agreement dated as of May 1, 1996 between T Cell Sciences, Inc. and Repligen Corporation. 22 Subsidiaries of Repligen Corporation. 23 Consent of Independent Public Accountants EX-10.42 2 MERGER AGREEMENT EXHIBIT 10.42 PLAN OF REORGANIZATION AND AGREEMENT OF MERGER PLAN OF REORGANIZATION AND AGREEMENT OF MERGER ("this Agreement"), dated as of March 14, 1996, among Repligen Corporation, a Delaware corporation ("Repligen"), Repligen Acquisition Corp., a Delaware corporation ("Newco"), Glycan Pharmaceuticals, Inc., a Delaware corporation ("Glycan") and, solely for the purposes of Article 5 hereof, the additional signatories hereto under the caption "Stockholders" on the signature page hereof (collectively, the "Stockholders"). As used herein, Glycan and Newco shall be referred to, together, as the "Constituent Corporations" and, individually, as a "Constituent Corporation". W I T N E S S E T H: WHEREAS, each of the respective Boards of Directors of the Constituent Corporations and Repligen deem it advisable for the general welfare and advantage of the Constituent Corporations and their respective shareholders that the Constituent Corporations merge into a single corporation pursuant to this Agreement, and the Constituent Corporations respectively desire to so merge pursuant to this Agreement and pursuant to the applicable provisions of the laws of the State of Delaware. WHEREAS, the respective Boards of Directors of the Constituent Corporations and Repligen intend that the transactions contemplated in this Agreement constitute a "reorganization" within the meaning of Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code"). NOW, THEREFORE, in consideration of the premises and of the mutual agreements herein contained, the parties hereby agree as follows: ARTICLE 1 THE MERGER SECTION 1.1. The Merger. (i) Subject to the terms and conditions of this Agreement, at the Effective Time (as defined below), Newco shall be merged with and into Glycan (the "Merger") in accordance with the Delaware General Corporation Law (the "DGCL"), whereupon the separate existence of Newco shall cease, and Glycan shall be the surviving corporation (the "Surviving Corporation") with the name of "Glycan Pharmaceuticals, Inc." (ii) The consummation of the Merger shall take place at the Effective Time (as hereinafter defined). Newco and Glycan shall execute and deliver to the Secretary of State of the State of Delaware a Certificate of Merger in proper form for filing under the DGCL, and the Merger shall become effective upon the filing of the Certificate of Merger with the Secretary of State of the State of Delaware or at such later time as may be specified in the Certificate of Merger, such time being herein called the "Effective Time." (iii) The Merger shall have the effects set forth herein and in the DGCL. Without limiting the generality of the foregoing, at the Effective Time (a) the Surviving Corporation shall possess all assets and property of every description, and every interest therein, wherever located, and the rights, privileges, immunities, powers, franchises, and authority, of a public as well as of a private nature, of each of Glycan and Newco and all obligations belonging to or due each of them shall be vested in the Surviving Corporation without further act or deed; (b) title to any real estate or any interest therein vested in either of Glycan or Newco shall not revert or in any way be impaired by reason of the Merger; (c) all rights of creditors and all liens on any property of Glycan and Newco shall be preserved unimpaired; and (d) the Surviving Corporation shall be liable for all the obligations of Glycan and Newco, and any claim existing, or action or proceeding pending, by or against either of them, may be prosecuted to judgment with the right of appeal, as if the Merger had not taken place. SECTION 1.2. Effect on Capital Stock. Upon consummation of the Merger at the Effective Time and without any action on the part of the holders of any shares of capital stock of Glycan or Newco: (i) Glycan Common Stock. Each share of Common Stock, par value $.01 per share, of Glycan issued and outstanding immediately prior to the Effective Time (including shares of Common Stock which shall then be held in the treasury of Glycan) shall thereupon be exchanged for .280 shares of Common Stock, par value $.01 per share, of Repligen. Options and warrants issued prior to the date of this Agreement by Glycan shall be assumed by Repligen in the manner, and shall be exercisable by the holders thereof to the extent, as provided in Sections 4.2 and 4.3 hereof. At the Effective Time, all shares of Common Stock of Glycan outstanding immediately prior to the effective Time shall cease to exist and all certificates representing such shares shall be deemed cancelled. (ii) Newco Common Stock. Each share of Common Stock of Newco outstanding immediately prior to the Effective Time shall become an issued and outstanding share of Common Stock of Glycan at the Effective Time. Each certificate representing immediately prior to the Effective Time issued and outstanding shares of Common Stock of Newco shall, immediately upon the Effective Time, evidence ownership of the same number of fully paid, nonassessable shares of Common Stock of "Glycan Pharmaceuticals, Inc." (iii) Treasury Stock. At the Effective Time all shares of Common Stock of Glycan that shall be then held in its treasury shall cease to exist, and all certificates representing such shares shall be cancelled. (iv) By-laws. The by-laws of Glycan as in effect at the Effective Time shall, from and after the Effective Time, be and continue to be the by-laws of the Surviving Corporation unless and until changed as therein provided. (v) Officers and Directors. At the Effective Time, the persons named in Exhibit A hereto shall be the directors and officers of the Surviving Corporation until their successors have been duly elected and qualified or until earlier death, resignation or removal in accordance with Certificate of Incorporation and elected in accordance with the by-laws of the Surviving Corporation. Walter Herlihy will be elected to the Board of Directors of Repligen, effective as of the Effective Time of the Merger. (vi) Further Action. From time to time, as and when reasonably requested by the Surviving Corporation, or by its successors or assigns, Glycan shall execute and deliver or cause to be executed and delivered all such necessary deeds and other instruments, and shall take or cause to be taken all such further actions, as the Surviving Corporation, or its successors or assigns may deem necessary or desirable in order to vest in and confirm to the Surviving Corporation, and its successors or assigns, title to and possession of all the property, rights, privileges, powers and franchises referred to herein and otherwise to carry out the intent and purposes of this Agreement. (vii) Appraisal Demands. Notwithstanding anything in this Agreement to the contrary, shares of Glycan Common Stock which are outstanding immediately prior to the Effective Time, the holders of which shall have delivered to Glycan a written demand for appraisal of such shares in the manner provided in Section 262 of the DGCL ("Dissenting Shares"), shall not be converted into the right to receive, or be exchangeable for, the shares of Repligen otherwise issuable in exchange for such shares of Glycan Common Stock pursuant to this Section 1.2 but, instead, the holders thereof shall be entitled to payment of the appraised value of such Dissenting Shares in accordance with the provisions of Section 262 of the DGCL; provided, however, that (i) if any holder of Dissenting Shares shall subsequently deliver a written withdrawal of his demand for appraisal of such shares (with the written approval of the Surviving Corporation, if such withdrawal is not tendered within 60 days after the Effective Time), or (ii) if any holder fails to establish his entitlement to appraisal rights as provided in such Section 262 of the DGCL, or (iii) if neither any holder of Dissenting Shares nor the Surviving Corporation has filed a petition demanding a determination of the value of all Dissenting Shares within the time provided in Section 262 of the DGCL, such holder or holders (as the case may be) shall forfeit the right to appraisal of such shares of Glycan Common Stock and each of such shares shall thereupon be deemed to have been converted into the right to receive, and to have become exchangeable for, as of the Effective Time, the shares of Repligen otherwise issuable in exchange for such shares of Glycan Common Stock pursuant to this Section 1.2, without any interest thereon. SECTION 1.3 . Exchange of Certificates. (i) Exchange Agent. As of the Effective Time, Repligen shall deposit with Bank of Boston (the "Exchange Agent"), for the benefit of the holders of shares of Glycan's Common Stock for exchange in accordance with this Article I, through the Exchange Agent, certificates representing the shares of Repligen's Common Stock (such shares, together with any dividends or distributions with respect thereto, being hereinafter referred to as the "Exchange Fund") issuable pursuant to the Merger in exchange for outstanding shares of Glycan's Common Stock. The Exchange Agent shall, pursuant to irrevocable instructions from Repligen, deliver the Common Stock of Repligen contemplated to be issued pursuant to the Merger to the (non-dissenting) Stockholders out of the Exchange Fund. The Exchange Fund shall not be used for any other purpose. (ii) Exchange Procedures. As soon as reasonably practicable after the Effective Time, the Exchange Agent shall mail to each holder of record of a certificate or certificates which immediately prior to the Effective Time represented outstanding shares of Glycan's common stock (the "Certificates") (a) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent and shall be in such form and have such other provisions as Repligen and Glycan may reasonably specify) and (b) instructions for use in effecting the surrender of the Certificates in exchange for certificates representing shares of Repligen's common stock. Upon surrender of a Certificate for cancellation to the Exchange Agent or to such other agent or agents as may be appointed by Repligen and Newco, together with such letter of transmittal, duly executed, and any other required documents (including a signed counter-part of this Agreement indicating the intention of such holder to be bound by the provisions of Article 5 hereof applicable to it), the holder of such Certificate shall be entitled to receive in exchange therefor a certificate representing that number of whole shares of Repligen's common stock which such holder has the right to receive in the Merger pursuant to the provisions of this Article I, and the Certificate so surrendered shall forthwith be canceled. In the event of a transfer of ownership of Glycan common stock which is not registered in the transfer records of Glycan, a certificate representing the proper number of shares of Repligen common stock may be issued to a transferee if the Certificate representing such Glycan common stock is presented to the Exchange Agent, accompanied by all documents required to evidence and effect such transfer and by evidence that any applicable stock transfer taxes have been paid. Until surrendered as contemplated by this Section 1.3, each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the certificate representing shares of Repligen common stock as contemplated by this Section 1.3. The Exchange Agent shall not be entitled to vote or exercise any rights of ownership with respect to the Repligen common stock held by it from time to time hereunder, except that it shall receive and hold all dividends or other distributions paid or distributed with respect thereto for the account of persons entitled thereto. (iii) Distributions with Respect to Unexchanged Shares. No dividends or other distributions declared or made after the Effective Time with respect to Repligen's common stock with a record date after the Effective Time shall be paid to the holder of any unsurrendered Certificate with respect to the shares of Repligen common stock represented thereby until the holder of record of such Certificate shall surrender such Certificate, as provided above. Subject to the effect of applicable laws, following surrender of any such Certificate, there shall be paid to the record holder of the Certificates representing shares of Repligen common stock issued in exchange therefor, without interest, (a) the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such shares of Repligen common stock, and (b) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time but prior to surrender and a payment date subsequent to surrender payable with respect to such shares of common stock. (iv) No Further Ownership Rights in Glycan Common Stock. All shares of Repligen common stock issued upon the surrender for exchange of shares of Glycan common stock in accordance with the terms hereof (including any cash paid pursuant to Section 1.3(iii)) shall be deemed to have been issued in full satisfaction of all rights pertaining to such shares of Glycan common stock, subject, however, to the Surviving Corporation's obligation to pay any dividends or make any other distributions with a record date prior to the Effective Time which may have been declared or made by Glycan on such shares prior to the Effective Time and which remain unpaid at the Effective Time, and after the Effective Time there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Glycan common stock which were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as provided herein. (v) No Fractional Shares. No fractional shares of Common Stock of Repligen shall be issued in the Merger. The number of shares of Repligen's common stock issuable in exchange for shares of common stock of Glycan in the Merger shall in each case be rounded up to the nearest whole number. (vi) Termination of Exchange Fund. Any portion of the Exchange Fund which remains undistributed to the former stockholders of Glycan upon the first anniversary of the Effective Time shall be delivered to Repligen upon demand, and any stockholders of Glycan who have not theretofore complied with this Section 1.3 shall thereafter look only to Repligen in respect of their claim for Repligen common stock in connection with the Merger and any dividends or distributions with respect thereto. (vii) No Liability. Neither Repligen nor Glycan shall be liable to any stockholder of Glycan or Repligen, as the case may be, for any shares of common stock of Repligen or Glycan (or dividends or distributions with respect thereto) delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. Any amounts remaining unclaimed by holders of any such shares two years after the Effective Time (or such earlier date immediately prior to such time as such amounts would otherwise escheat to or become property of any governmental entity) shall, to the extent permitted by applicable law, become the property of Repligen free and clear of any claims or interest of any such holders or their successors, assigns or personal representatives previously entitled thereto. ARTICLE 2 REPRESENTATIONS OF GLYCAN Glycan hereby represents and warrants to, and agrees with, Repligen and Newco as follows: SECTION 2.1. Organization, Standing and Power. Glycan is a corporation duly organized, validly existing and in good standing under the laws of Delaware, has the corporate power to own and lease its properties and to carry on its business as now being conducted and is duly qualified to do business and is in good standing in every jurisdiction (including foreign countries) in which the properties owned or leased by it make such qualification necessary, except where failure to so qualify is not reasonably likely to have a material adverse effect on the business operations or prospects of Glycan, such jurisdictions being set forth in Schedule 2.1 hereto. Glycan has the statutory power to enter into and perform the terms and provisions of this Agreement. SECTION 2.2. Due Execution. The execution, delivery and performance of this Agreement by Glycan and the consummation by it of the transactions contemplated hereby have been approved by all necessary corporate action on the part Glycan and this Agreement and any other agreement or instrument delivered in connection herewith constitutes the valid and binding obligation of Glycan enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws from time to time in effect which affect creditors' rights generally and by legal and equitable limitations on the availability of specific performance and other equitable remedies against Glycan under or by virtue of this Agreement or such other agreement or instrument. SECTION 2.3. No Consents, No Defaults. The execution, delivery and performance of this Agreement by Glycan and the consummation by it of the transactions contemplated hereby (i) do not require the consent, waiver, approval, license or authorization of any person or entity or public authority which has not been obtained, (ii) do not violate, with or without the giving of notice or the passage of time or both, in any material respect any provision of law applicable to Glycan or any of the "Glycan Subsidiaries" (as hereinafter defined), and (iii) do not conflict with or result in a breach or termination of any provision of, or constitute a default in any material respect under, or result in the creation of any lien, charge or encumbrance upon any of the property or assets of Glycan or the Glycan Subsidiaries pursuant to their respective certificates of incorporation or by-laws or any mortgage, deed or trust, indenture or other agreement or instrument, or any order, judgment, decree, statute, regulation or any other restriction of any kind or character, to which Glycan or any of the Glycan Subsidiaries (as hereinafter defined) is a party or by which Glycan or any of the Glycan Subsidiaries may be bound, except where such conflict, breach or termination is not reasonably likely to have a material adverse effect on Glycan and its Subsidiaries taken as a whole. SECTION 2.4. Subsidiaries. Glycan owns, directly or indirectly, all or a majority of the outstanding shares of the corporations set forth on Schedule 2.4 hereto. The authorized capital stock, the number of shares duly issued and outstanding and the number thereof held by Glycan, the jurisdiction of incorporation and the jurisdictions (including foreign countries) of qualification of each such corporation are as set forth on Schedule 2.4. The shares of each such corporation owned by Glycan are fully paid and nonassessable, and Glycan owns outright all such shares free and clear of all mortgages, liens or other encumbrances, whatsoever, and none of such shares is subject to any covenant or other restriction, preventing or limiting the right to transfer such shares. Each such corporation is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, has the corporate power to own and lease its properties and to carry on its business as now being conducted and is duly qualified to do business and is in good standing in every jurisdiction (including foreign countries) in which the character of the properties owned or leased by it makes such qualification necessary, except where failure to so qualify is not reasonably likely to have a material adverse effect on the business operations or prospects of Glycan. Such corporations, including ProsCure, Inc. ("ProsCure"), are hereinafter collectively referred to as the "Glycan Subsidiaries". Glycan does not control, directly or indirectly, or own any capital stock or other proprietary interest in, any corporation, partnership, joint venture or other entity except as described in Schedule 2.4 hereto. Glycan has delivered to Repligen true and complete copies of the certificate of incorporation and by-laws of Glycan and each of the Glycan Subsidiaries as in effect on the date hereof, certified by the Secretary of the respective corporations in the case of by-laws and by the Secretary of State or other appropriate governmental official of the appropriate jurisdiction in the case of certificates of incorporation. SECTION 2.5. Capitalization. The total authorized capital stock of Glycan consists solely of 2,000,000 shares of Common Stock, par value $.01 per share, warrants to acquire a total of 75,000 shares of Common Stock, and options outstanding to purchase a total of 8,000 shares of Common Stock. As of this date, there are 870,000 shares of Glycan Common Stock issued and outstanding. The total authorized capital stock of ProsCure consists solely of 1,700,000 shares of Common Stock, par value $.01 per share, 1,200,000 shares of Preferred Stock, par value $.01 per share and warrants to purchase a total of 150,000 shares of Common Stock. As of this date, there are 140,000 shares of ProsCure Common Stock, 1,060,000 shares of ProsCure Series A Preferred Stock, and 113,334 shares of ProsCure Series B Preferred Stock issued and outstanding. All outstanding shares of capital stock of Glycan and ProsCure have been duly authorized and validly issued and are fully paid and nonassessable and free of pre-emptive rights, and none of them is held in treasury. Except as set forth on Schedule 2.5, there are outstanding (i) no other shares of capital stock or other voting securities of Glycan or ProsCure, (ii) no securities of Glycan or ProsCure convertible into or exchangeable for shares of capital stock or voting securities of Glycan or ProsCure, and (iii) no other options or other rights to acquire from Glycan or ProsCure, and no obligation of Glycan or ProsCure to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of Glycan or ProsCure (the items in clauses (i), (ii) and (iii) being referred to collectively as the "Glycan Securities"). There are no outstanding obligations of Glycan or ProsCure to repurchase, redeem or otherwise acquire or purchase any Glycan Securities. SECTION 2.6. Officers, Directors, Shareholders. Attached hereto as Schedule 2.6 is a list of (i) the officers and directors of Glycan and each of the Glycan Subsidiaries and (ii) all persons owning of record or beneficially shares of capital stock of Glycan and each of the Glycan Subsidiaries (together with their respective stockholdings in such corporations). SECTION 2.7. Financial Statements; Financial Matters. (i) Financial Statements. Glycan has furnished Repligen with the unaudited balance sheet of Glycan and its consolidated subsidiaries as of December 31, 1995 (the "Glycan Interim Balance Sheet"), and the related unaudited consolidated statements of loss and deficit and changes in financial position for the period then ended. Such financial statements (a) are in accordance with the books and records of Glycan and the Glycan Subsidiaries, (b) are correct and complete, (c) fairly present the financial position and the results of operations of Glycan and the Glycan Subsidiaries as of the respective dates indicated (subject, in the case of the unaudited statements, to normal, recurring adjustments, none of which will be material), and (d) have been prepared in accordance with generally accepted accounting principles applied on a consistent basis. (ii) Except as and to the extent set forth on the Glycan Interim Balance Sheet, Glycan and the Glycan Subsidiaries do not have any liability or obligation of any nature (whether accrued, absolute, contingent or otherwise), except for liabilities and obligations incurred since January 31, 1996 which (a) were incurred in the ordinary course of business and (b) would not, individually or in the aggregate, have a material adverse effect on the business of Glycan and the Glycan Subsidiaries, taken as a whole. SECTION 2.8. Taxes. Glycan and the Glycan Subsidiaries have filed all tax returns which are required to be filed by them; and all such returns are true and correct. Glycan and the Glycan Subsidiaries have paid or provided adequate reserves for all taxes which have become due pursuant to such returns or pursuant to any assessments received by them or which any of them is obligated to withhold from amounts owing to any employee, creditor or other third party. The Federal income tax returns of Glycan and the Glycan Subsidiaries have never been audited by the Internal Revenue Service. Neither Glycan nor any of the Glycan Subsidiaries has waived any statute of limitations in respect of taxes, or has agreed to any extension of time with respect to a tax assessment or deficiency. SECTION 2.9. Real Property. Neither Glycan nor any of the Glycan Subsidiaries owns any real estate. SECTION 2.10. Title. Except as shown in the Glycan Interim Balance Sheet or in the notes thereto and except for liens, restrictions or encumbrances which do not interfere with or adversely affect the use of properties and assets owned by Glycan and the Glycan Subsidiaries, Glycan and each of the Glycan Subsidiaries own outright all their respective properties and assets (other than leased properties or assets), free and clear of all mortgages, liens, restrictions, encumbrances, options, rights of first refusal or other claims whatsoever. SECTION 2.11. Intangible Property. Glycan owns, directly or indirectly, all patents, patent licenses, trade names, trademarks, service marks, brand marks, brand names, copyrights, or registrations or licenses thereof or applications therefor or interests therein, or know-how or other proprietary or trade rights, the use of which is necessary for the business of Glycan and the Glycan Subsidiaries as now conducted. As of the date hereof, no suits are pending or to the knowledge of Glycan threatened against Glycan or the Glycan Subsidiaries before any court of the United States or any state thereof in which it is claimed that Glycan or any such subsidiary is in violation or infringement of any United States patent, patent license, trade name, trademark, service mark, brand mark, brand name, copyright, know-how or other proprietary or trade rights of any third party, the outcome of which could have a materially adverse effect on the consolidated financial condition or results of operations of Glycan and the Glycan Subsidiaries. SECTION 2.12. Material Contracts. (i) Except as set forth on Schedule 2.12, neither Glycan nor any of the Glycan Subsidiaries is party to or bound by any (a) material lease or license with respect to any property, real or personal, tangible or intangible, whether as landlord, tenant, licensor or licensee; (b) agreement, contract, or indenture relating to the borrowing of money by Glycan or any of the Glycan Subsidiaries; (c) management agreement, employment, consulting or severance or "parachute" or other similar contract or arrangement; (d) agreement with any present or former officer, director or shareholder of Glycan or any of the Glycan Subsidiaries; or (e) other contract, agreement or other commitment which involve a payment by Glycan or any of such subsidiaries of more than $25,000 in one year. (ii) Neither Glycan nor any of the Glycan Subsidiaries is in material breach or material default under any agreement or commitment required to be set forth in Schedule 2.12 (a "Material Agreement"); and there has not occurred any event which, after the giving of notice, the lapse of time or otherwise, would constitute any such default under, or result in any such breach of, any such Material Agreement. SECTION 2.13. Litigation. Attached as Schedule 2.13 is a brief description of all actions, suits and proceedings pending, or to the best of Glycan's knowledge, threatened against or affecting Glycan and the Glycan Subsidiaries or their respective properties or business, at law or in equity or admiralty and before or by any Federal, state, province or other governmental body or any arbitration board, domestic or foreign. Glycan has no knowledge or notice of, or otherwise has any reason to believe that there exist, any grounds for any other action, suit or proceeding. Neither Glycan nor any of the Glycan Subsidiaries is, to the knowledge of Glycan, subject to or in default with respect to any order, writ, injunction or decree of any court or Federal, state, province or other governmental body, domestic or foreign. SECTION 2.14. Certain Activities. Except as set forth in Schedule 2.14 attached hereto, since December 31, 1995, neither Glycan nor any of the Glycan Subsidiaries has done or agreed to do any of the following: (a) issue any stock (other than pursuant to the exercise of existing stock options or warrants), notes, or other Glycan Securities or debt instruments, or grant any options, warrants or other rights calling for the issue thereof; (b) incur, or become subject to, any indebtedness, obligation, or liability (absolute or contingent) except current liabilities and obligations incurred in the ordinary course of business; (c) pay any obligation or liability (absolute or contingent) other than current liabilities reflected in or shown on the Glycan Interim Balance Sheet, and current liabilities incurred since January 31, 1996 in the ordinary course of business; (d) declare or make any payment of dividends or distributions of any assets of any kind whatsoever to stockholders or purchase or redeem any of its stock; (e) purchase or lease any real property; (f) mortgage, pledge or subject to lien, charge or any other encumbrance of any of its assets, tangible or intangible; or (g) enter into any transaction other than in the ordinary course of business. SECTION 2.15. Compliance with Laws. Glycan and the Glycan Subsidiaries have complied in all material respects with all laws, ordinances, regulations and orders, which have application to its business, the violation of which is reasonably likely to have a material adverse effect on its financial condition or results of operation, and possess all governmental licenses and permits material to and necessary in the conduct of its business, the absence of which is reasonably likely to have a material adverse effect on its financial condition or results of operation. All such licenses and permits are in full force and effect, no violations are or have been recorded in respect to any such licenses or permits, and no proceeding is pending or threatened to revoke or limit any such licenses or permits. Each such license or permit shall remain valid and in full force and effect upon consummation of the Merger without any restriction or required consent or approval of any third party which will not have been obtained on or prior to the Effective Time. SECTION 2.16. Bank Accounts. Glycan has supplied Repligen with a complete list of all bank accounts maintained by Glycan and the Glycan Subsidiaries and the signatories thereunder. ARTICLE 3 REPRESENTATIONS OF REPLIGEN AND NEWCO Repligen and Newco each hereby represent and warrant to and agree with Glycan as follows: SECTION 3.1. Organization, Standing and Power of Repligen. Repligen and Newco are corporations duly organized, validly existing, and Newco is in good standing under the laws of the State of Delaware, and Repligen and Newco have all requisite corporate power and authority to own, operate and lease their properties, to carry on their businesses as now being conducted and are duly qualified to do business and are in good standing in every jurisdiction (including foreign countries) in which the properties owned or leased by them make such qualification necessary, except where failure to so qualify is not reasonably likely to have a material adverse effect on the business operations or prospects of Repligen or Newco, such jurisdictions being set forth in Schedule 3.1 hereto. Repligen and Newco have the statutory power to enter into this Agreement and perform their obligations hereunder. SECTION 3.2. Due Execution. The execution, delivery and performance of this Agreement by Repligen and Newco and the consummation by each of them of the transactions contemplated hereby have been approved by all necessary corporate action on the part of each of them and this Agreement and any other agreement or instrument delivered in connection herewith constitutes the valid and binding obligation of Repligen and Newco enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws from time to time in effect which affect creditors' rights generally and by legal and equitable limitations on the availability of specific performance and other equitable remedies against Repligen or Newco under or by virtue of this Agreement or such other agreement or instrument. SECTION 3.3. No Consents, No Defaults. The execution, delivery and performance of this Agreement by Repligen and Newco and the consummation by each of them of the transactions contemplated hereby (i) do not require the consent, waiver, approval, license or authorization of any person or entity or public authority which has not been obtained, (ii) do not violate, with or without the giving of notice or the passage of time or both, in any material respect any provision of law applicable to Repligen, Newco, or either of them, and (iii) do not conflict with or result in a breach or termination of any provision of, or constitute a default in any material respect under, or result in the creation of any lien, charge or encumbrance upon any of the property or assets of Repligen or Newco pursuant to their respective certificates of incorporation or by-laws of any mortgage, deed or trust, indenture or other agreement or instrument, or any order, judgment, decree, statute, regulation or any other restriction of any kind or character, to which Repligen or Newco is a party or by which Repligen or any of its Repligen Subsidiaries (as hereinafter defined) may be bound, except where such conflict, breach or termination is not reasonably likely to have a material adverse effect on Repligen and Newco taken as a whole. SECTION 3.4. Subsidiaries. Repligen owns, directly or indirectly, all or a majority of the outstanding shares of the corporations set forth in Schedule 3.4 hereto, including Newco. The authorized capital stock, the number of shares duly issued and outstanding and the number thereof held directly or indirectly by Repligen, the jurisdiction of incorporation and the jurisdiction (including foreign countries) of qualification of each are as set forth in Schedule 3.4. The shares of each such corporation owned, directly or indirectly, by Repligen are fully paid and nonassessable, and Repligen owns, directly or indirectly, all such shares free and clear of all mortgages, liens or other encumbrances whatsoever, and none of such shares is subject to any covenant or restriction preventing or limiting the right to transfer such shares. Each of such corporations is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, has the corporate power to own and lease its properties and to carry on its business as now being conducted and is duly qualified to do business and is in good standing in every jurisdiction (including foreign countries) in which the character of the properties owned or leased by its makes such qualification necessary, except where failure to qualify is not reasonable likely to have a material adverse effect on the business operations or prospects of Repligen and the Repligen Subsidiaries. Such corporations, together with Newco, are hereinafter also collectively referred to as the "Repligen Subsidiaries". Repligen does not control, directly or indirectly, or own any capital stock or other proprietary interest in any corporation, partnership, joint venture, or other entity other than the Repligen Subsidiaries as described in Schedule 3.4. Repligen has delivered to Glycan true and complete copies of the certificate of incorporation and by-laws of Repligen and each of its Repligen Subsidiaries as in effect on the date hereof, certified by the Secretary of the respective corporations in the case of by-laws and by the Secretary of State of the appropriate jurisdiction in the case of certificates of incorporation. SECTION 3.5. Capitalization. The authorized capital stock of Repligen consists of 25,000,000 shares of common stock and 5,000,000 shares of preferred stock. As of February 2, 1996, there were outstanding 15,358,938 shares of common stock; no shares of preferred stock; stock options to purchase an aggregate of 759,401 shares of common stock of which options to purchase an aggregate of 345,070 shares were exercisable; and warrants to purchase 2,160,400 shares of common stock. All outstanding shares of capital stock of Repligen have been duly authorized and validly issued and are fully paid and nonassessable, and none of them is held in the treasury of Repligen. Except as set forth in this Section, there are outstanding (a) no other shares of capital stock or other voting securities of Repligen, (b) no securities of Repligen convertible into or exchangeable for shares of capital stock or voting securities of Repligen, and (c) no other options or other rights to acquire from Repligen, and no obligation of Repligen to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of Repligen (the items in clauses (a), (b) and (c) being referred to collectively as the "Repligen Securities"). There are no outstanding obligations of Repligen to repurchase, redeem or otherwise acquire any Repligen Securities. The authorized capital stock of Newco consists of 100 shares of common stock, all of which are validly issued and outstanding, fully paid and nonassessable and owned by Repligen. SECTION 3.6. Officers; Directors; Shareholders. Attached hereto as Schedule 3.6 is a list of (i) the officers and directors of Repligen and each of the Repligen Subsidiaries and (ii) all persons owning of record or, to the knowledge of Repligen, beneficially more than 10% of Repligen's common stock. SECTION 3.7. Financial Statements. (i) Repligen has furnished Glycan with the unaudited consolidated balance sheet of Repligen and its consolidated subsidiaries as of January 31, 1996 (the "Repligen Interim Balance Sheet"), and the related unaudited consolidated statements of loss and deficit and changes in financial position for the ten months then ended. Such financial statements (a) are in accordance with the books and records of Repligen and the Repligen Subsidiaries, (b) are correct and complete, (c) fairly present the financial position and the results of operations of Repligen and the Repligen Subsidiaries as of the respective dates indicated (subject, in the case of the unaudited statements, to normal, recurring adjustments, none of which will be material), and (d) have been prepared in accordance with generally accepted accounting principles applied on a consistent basis. (ii) Except as and to the extent set forth on the Repligen Balance Sheet or in the SEC Reports (as defined in Section 3.16), Repligen and the Repligen Subsidiaries do not have any liability or obligation of any nature (whether accrued, absolute, contingent or otherwise), except for liabilities and obligations incurred since January 31, 1996 which (a) were incurred in the ordinary course of business and (b) would not, individually or in the aggregate, have a material adverse effect on the business of Repligen and the Repligen Subsidiaries, taken as a whole. SECTION 3.8. Taxes. Repligen and the Repligen Subsidiaries have filed all tax returns which are required to be filed by them; and all such returns are true and correct. Repligen and the Repligen Subsidiaries have paid or provided adequate reserves for all taxes which have become due pursuant to such returns or pursuant to any assessments received by them or which any of them is obligated to withhold from amounts owing to any employee, creditor or other third party. The Federal income tax returns of Repligen and the Repligen Subsidiaries have never been audited by the Internal Revenue Service. Neither Repligen nor any of the Repligen Subsidiaries has waived any statute of limitations in respect of taxes, or has agreed to any extension of time with respect to a tax assessment or deficiency. SECTION 3.9. Real Property. Neither Repligen nor any of the Repligen Subsidiaries owns any real estate. SECTION 3.10. Title. Except as shown in the SEC Reports or in the Repligen Balance Sheet or in the notes thereto and except for liens, restrictions or encumbrances which do not interfere with or adversely affect the use of properties and assets owned by Repligen and the Repligen Subsidiaries, Repligen and each of the Repligen Subsidiaries own outright all their respective properties and assets (other than leased properties or assets), free and clear of all mortgages, liens, restrictions, encumbrances, options, rights of first refusal or other claims whatsoever. SECTION 3.11. Intangible Property. Except as set forth on Schedule 3.11, Repligen owns, directly or indirectly, all patents, patent licenses, trade names, trademarks, service marks, brand marks, brand names, copyrights, or registrations or licenses thereof or applications therefor or interests therein, or know-how or other proprietary or trade rights, the use of which is necessary for the business of Repligen and the Repligen Subsidiaries as now conducted. As of the date hereof no suits are pending or to the knowledge of Repligen threatened against Repligen or the Repligen Subsidiaries before any court of the United States or any state thereof in which it is claimed that Repligen is in violation or infringement of any United States patent, patent license, trade name, trademark, service mark, brand mark, brand name, copyright, know-how or other proprietary or trade rights of any third party, the outcome of which would have a materially adverse effect on the consolidated financial condition or results of operations of Repligen and the Repligen Subsidiaries. SECTION 3.12. Material Contracts. (i) Except as set forth on Schedule 3.12, neither Repligen nor any of the Repligen Subsidiaries is party to or bound by any (a) material lease or license with respect to any property, real or personal, tangible or intangible, whether as landlord, tenant, licensor or licensee; (b) agreement, contract, or indenture relating to the borrowing of money by Repligen or any of the Repligen Subsidiaries; (c) management agreement, employment, consulting, severance, "parachute" or other similar contract or arrangement; (d) agreement with any present or former officer, director or shareholder of Repligen or any of the Repligen Subsidiaries; or (e) other contract, agreement or other commitment which involve a payment by Repligen or any of the Repligen Subsidiaries of more than $25,000 in one year. (ii) Except as set forth on Schedule 3.12 or as disclosed in the SEC Reports, neither Repligen nor any of the Repligen Subsidiaries is in material breach or material default under any agreement or commitment required to be disclosed in Schedule 3.12 (a "Material Agreement"); and there has not occurred any event which, after the giving of notice, the lapse of time or otherwise, would constitute any such default under, or result in any such breach of, any such Material Agreement. SECTION 3.13. Litigation. Except as set forth in Schedule 3.13 attached hereto, as of the date hereof there are no actions, suits or proceedings pending or, to the best of the knowledge of Repligen, threatened against Repligen or the Repligen Subsidiaries at law or in equity or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, the outcome of which would have a materially adverse effect on the consolidated financial condition or results of operation of Repligen and the Repligen Subsidiaries or have an adverse effect on the Merger. SECTION 3.14. Certain Activities. Except as set forth in Schedule 3.14 attached hereto or in the SEC Reports, since December 31, 1995, neither Repligen nor any of the Repligen Subsidiaries has done or agreed to do any of the following: (a) issue any stock (other than pursuant to the exercise of existing stock options or warrants), notes, or other Repligen Securities or debt instruments, or grant any options, warrants or other rights calling for the issue thereof; (b) incur, or become subject to, any indebtedness, obligation, or liability (absolute or contingent) except current liabilities and obligations incurred in the ordinary course of business; (c) pay any obligation or liability (absolute or contingent) other than current liabilities reflected in or shown on the Repligen Interim Balance Sheet, and current liabilities incurred since January 31, 1996 in the ordinary course of business; (d) declare or make any payment of dividends or distributions of any assets of any kind whatsoever to stockholders or purchase or redeem any of its stock; (e) purchase or lease any real property; (f) mortgage, pledge or subject to lien, charge or any other encumbrance of any of its assets, tangible or intangible; or (g) enter into any transaction other than in the ordinary course of business. SECTION 3.15. Compliance with Laws. Repligen and the Repligen Subsidiaries have complied in all material respects with all laws, ordinances, regulations and orders, which have application to its business, the violation of which is reasonably likely to have a material adverse effect on its financial condition or results of operation, and possess all governmental licenses and permits material to and necessary in the conduct of its business, the absence of which is reasonably likely to have a material adverse effect on its financial condition or results of operation. All such licenses and permits are in full force and effect, no violations are or have been recorded in respect to any such licenses or permits, and no proceeding is pending or threatened to revoke or limit any such licenses or permits. Each such license or permit shall remain valid and in full force and effect upon consummation of the Merger without any restriction or required consent or approval of any third party which will not have been obtained on or prior to the Effective Time. SECTION 3.16. SEC Filings. Repligen has timely filed all reports required to be filed with the Securities and Exchange Commission pursuant to the Securities and Exchange Act of 1934, as amended (the "Exchange Act"). Repligen has delivered to Glycan (i) its annual reports on Form 10-K for its fiscal years ended March 31, 1993, 1994 and 1995, (ii) its quarterly reports on Form 10-Q for its fiscal quarters September 30, 1995 and December 31, 1995, (iii) its proxy or information statements relating to its annual meeting of stockholders held on September 14, 1995, and (iv) all of its other reports, statements, schedules and registration statements filed with the SEC since September 14, 1995 (collectively the "SEC Reports"). As of its filing date, no SEC Report contained any untrue statement of material fact or omitted to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading in any material respect. ARTICLE 4 ADDITIONAL AGREEMENTS OF REPLIGEN SECTION 4.1. Certificates for Repligen Common Stock. (i) The shares of Repligen's common stock deliverable to holders of shares of common stock of Glycan pursuant to or as a result of the Merger will not be registered under the Securities Act of 1933, as amended (the "Act"), and are expected to be issued under exemptions from registration provided by Section 4(2) and Section 3(b) and Regulation D thereunder. Accordingly, the certificates representing such shares shall be stamped or imprinted with a legend in substantially the following form: "The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "Act"), and may not be transferred in the absence of an effective registration statement under the Act covering the shares or of an opinion of counsel to the Corporation that such transfer will not require registration of such shares under the Act." SECTION 4.2. Glycan Warrants. At the Effective Time or as soon as reasonably practicable thereafter, Repligen shall deliver to each holder of a valid, outstanding warrant to purchase shares of Glycan's Common Stock a valid and enforceable substitute warrant to purchase such number of shares of Repligen's Common Stock as the holder of such warrant would have received had he exercised such Glycan warrant in full immediately prior to the Effective Time of the Merger. Each substitute warrant shall contain the same basic terms and conditions as the Glycan warrant for which it is substituted; the purchase price per share of Repligen Common Stock under such substitute warrant shall be determined by dividing the aggregate purchase price of all unpurchased shares of Glycan Common Stock under such Glycan warrant by the number of whole shares of Repligen Common Stock covered by the substitute warrant and, if necessary, shall be rounded to the next highest cent; no fractional shares of Repligen Common Stock shall be covered by such substitute warrant; and any such fractions shall be eliminated in calculating the number of shares of Repligen Common Stock covered by each substitute warrant. In order to effectuate the foregoing, Repligen shall reserve out of its authorized but unissued shares of Common Stock sufficient shares to provide for the exercise of the substituted warrants. None of the substituted warrants or the shares of Repligen Common Stock issuable upon the exercise thereof will have been registered under the Act and therefore may not be transferred or sold unless registered under the Act or in the opinion of counsel to Repligen an exemption from registration is available. SECTION 4.3. Glycan Options. At the Effective Time, all rights with respect to Glycan Common Stock pursuant to stock options granted by Glycan under the Glycan Stock Option Plans, including options granted under such Plans pursuant to employment or acquisition agreements ("Glycan Options"), which are outstanding at the Effective Time, whether or not then exercisable, shall be converted into and become rights with respect to Repligen Common Stock and Repligen shall assume each of such Glycan Options, in accordance with the terms of the Stock Option Plan under which it was issued and the stock option or stock appreciation rights agreement by which it is evidenced. From and after the Effective Time, (i) each such Glycan Option may be exercised solely for shares of Repligen Common Stock notwithstanding any contrary provisions of the Glycan Stock Option Plans, (ii) the number of shares of Repligen Common Stock subject to such Glycan Option shall be equal to the number of shares of Glycan Common Stock subject to such Glycan Option immediately prior to the Effective Time multiplied by the Exchange Ratio (with the product rounded down to the next whole share), (iii) the per share exercise price shall be adjusted by dividing the per share exercise price under each such Glycan Option by the Exchange Ratio, and (iv) Repligen and its Compensation Committee shall be substituted for Glycan and the Glycan Board of Directors administering the Glycan Stock Option Plans. It is intended that the foregoing assumption shall be undertaken in a manner that will not constitute a "modification" as defined in Section 424(b) of the Internal Revenue Code as to any stock option which is an "incentive stock option." The Repligen Board of Directors shall take such action as may be required under the Glycan Stock Option Plans to effectuate the foregoing. SECTION 4.4. Agreements. Repligen shall simultaneously herewith enter into employment agreements with each of Messrs. Walter Herlihy, Jim Rusche and Dan Witt; and a Registration Rights Agreement, each in the respective form annexed hereto as Exhibits B, C, D and E, respectively. ARTICLE 5 REPRESENTATION OF STOCKHOLDERS SECTION 5.1. Securities Laws Matters. The Stockholders acknowledge that none of the shares of Common Stock of Repligen to be issued to them pursuant to or as a result of the Merger (collectively, the "Merger Securities") have been registered under the Act, but are expected to be issued under exemptions from registration provided by Sections 4(2) and 3(b) and Regulation D thereunder. The Stockholders understand and acknowledge that the Merger Securities must be held by each of them indefinitely unless registered under the Act or unless, in the opinion of counsel to Repligen, an exemption from such registration is available. The Stockholders understand that only Repligen may file a registration statement with respect to the Merger Securities and that, except as provided in Section 4.1(b), Repligen is under no obligation to do so with respect to the Merger Securities. The Stockholders acknowledge that they have been advised that an exemption from the registration with respect to the Merger Securities may not be available or may not permit the Stockholders to transfer the Merger Securities in the amounts or at the times desired by the Stockholders. In addition, the Stockholders understand and acknowledge that Rule 144 under the Act, which provides for certain limited, routine sales of unregistered securities of public companies through securities brokers, is not presently available with respect to the Merger Securities, may never be available, and in any event requires that the Merger Securities be held for a minimum of two years before they may be resold under Rule 144. Each Stockholder hereby represents and warrants to Repligen and Newco that: (a) he or she is acquiring and will acquire the Merger Securities for his or her own account for investment only and not with a view to, or for sale in connection with, a distribution within the meaning of the Act; (b) he or she has no present intention of selling or otherwise disposing of any portion of the Merger Securities; (c) he or she has access to all information regarding Repligen and its present and prospective business, assets, liabilities and financial condition and the backgrounds of the executive officers of Repligen as such Stockholder considers important in making the decision to acquire the Merger Securities; (d) he or she recognizes that an investment in the Merger Securities involves special and substantial risks because, among other things, Repligen has incurred significant operating losses since inception, has undergone major restructurings of its operations, several of Repligen's leading clinical candidates, including its rPF4 and CD11b programs, have been terminated or suspended and the economic viability of Repligen's remaining clinical products is uncertain at this time, Repligen has limited financial resources and limited access to new funding sources, and Repligen is presently in default and seeking to restructure several of its long-term commitments, and such other matters as are disclosed in Repligen's Form 10-Q for the quarter ended December 31, 1995 annexed hereto as Exhibit F; (e) he or she is financially capable of bearing a total loss of his or her investment in the Merger Securities and is able to evaluate the merits and risks of his or her investment in the Merger Securities and to protect his or her own interests in this transaction; (f) at no time was he or she presented with, or solicited by any publicly issued or circulated newspaper, magazine, mail, radio or television or any other form or general advertising or solicitation in connection with the acquisition of the Merger Securities; and (g) to the best of his or her knowledge, no commission, discount or other remuneration is due or payable in connection with this transaction. ARTICLE 6 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. SECTION 6.1. Survival. The representations and warranties of the parties hereto shall not survive the Effective Time, except for the representation and warranties of the Stockholders contained in Article 5. ARTICLE 7 MISCELLANEOUS SECTION 7.1. Payment of Expenses. Repligen and Glycan will each pay its own expenses, and Repligen shall pay the expenses of Newco, incident to preparing for entering into and performing this Agreement and to the consummation of the transactions contemplated thereby. SECTION 7.2. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware (without giving effect to its conflict of laws principles) except to the extent that the DGCL and the other laws of the State of Delaware shall govern the Merger. SECTION 7.3. Cooperation, etc. Each of the parties hereto shall cooperate with the others in every way in carrying out the transactions contemplated herein, and delivering instruments to perfect the conveyances, assignments and transfers contemplated herein, and in delivering all documents and instruments deemed reasonably necessary or useful by counsel for any party hereto. SECTION 7.4. Assignability. This Agreement shall not be assignable by either party and cannot be altered or otherwise amended except pursuant to an instrument in writing signed by each of the parties hereto pursuant to authority of their respective Boards of Directors, provided that any party hereto may assign this Agreement at any time after the Effective Time to any entity in connection with a merger of such party with or into such other entity or a sale of all or substantially all of its assets. SECTION 7.5. Notices. Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile transmission or sent by certified, registered or express mail, postage prepaid. Any such notice shall be deemed given when so delivered personally, telegraphed, telexed or sent by facsimile transmission or, if mailed, three days after the date of deposit in the United States mails, as follows: (i) if to Newco or Repligen to: Repligen Corporation One Kendall Square Building 700 Cambridge, MA 02139 (Attn: President) Facsimile: 617-225-6060 with a copy to: Stanley M. Johnson, Esq. Bryan Cave 245 Park Avenue New York, New York 10167 Facsimile: 212-692-1900 (ii) if to Glycan to: One Kendall Square Building 700 Cambridge, MA 02139 (Attn: Walter C. Herlihy Ph.D) Facsimile: with a copy to: Lawrence S. Wittenberg, Esq. Testa, Hurwitz & Thibeault High Street Tower 125 High Street Boston, MA 02110 SECTION 7.6. Execution in Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. SECTION 7.7. Entire Agreement. This Agreement (including the Schedules and Exhibits) and the agreements executed in connection with the consummation of the transactions contemplated herein contain the entire agreement among the parties with respect to the Merger and related transactions, and supersede all prior agreements, written or oral, with respect thereto. SECTION 7.8. Binding Effect; No Third Party Beneficiaries. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors, heirs, and legal representatives upon the execution thereof by Repligen, Newco and Glycan. Nothing contained herein is intended or shall be construed as creating third party beneficiaries to this Agreement. SECTION 7.9. Variations in Pronouns. All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require. SECTION 7.10. Exhibits and Schedules. The Exhibits and Schedules are a part of this Agreement as if fully set forth herein. All references herein to Sections, subsections, clauses, Exhibits and Schedules shall be deemed references to such parts of this Agreement, unless the context shall otherwise require. SECTION 7.11. Headings. The headings in this Agreement are for reference only, and shall not affect the interpretation of this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered as of the day and year first above written. ATTEST: REPLIGEN ACQUISITION CORP. ___________________________ By: _________________________________ Name: Title: ATTEST: GLYCAN PHARMACEUTICALS, INC. ___________________________ By: _________________________________ Name: Title: ATTEST: REPLIGEN CORPORATION ___________________________ By: _________________________________ Name: Title: Executed by the undersigned solely to confirm their agreement with the provisions of Article 5 hereof applicable to them. STOCKHOLDERS ----------------------------------- ----------------------------------- ----------------------------------- EXHIBIT A GLYCAN OFFICERS AND DIRECTORS OFFICERS AND DIRECTORS OF GLYCAN PHARMACEUTICALS, INC. Directors Paul Schimmel, Ph.D. Walter C. Herlihy, Jr. James Robert Rusche Daniel Parker Witt Officers Walter C. Herlihy, Jr., President and Chief Executive Officers James Robert Rusche, Vice President, Research and Development Daniel P. Witt, Vice President, Business Development EX-10.43 3 EMPLOYMENT AGREEMENT EXHIBIT 10.43 DRAFT 1 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: Name: Title: Date: I AGREE TO THE ABOVE: - -------------------------------------- DATED: EX-10.44 4 EMPLOYMENT AGREEMENT EXHIBIT 10.44 DRAFT 2 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: Name: Title: Date: I AGREE TO THE ABOVE: - -------------------------------------- DATED: EX-10.45 5 EMPLOYMENT AGREEMENT EXHIBIT 10.45 DRAFT 3 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: Name: Title: Date: I AGREE TO THE ABOVE: - -------------------------------------- DATED: EX-10.46 6 SUBLEASE AGREEMENT EXHIBIT 10.46 SUBLEASE AGREEMENT This Sublease Agreement is made as of May 1, 1996 and is by and between T Cell 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 subletsublet 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 ascribed 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; (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. By: Alan W. Tuck, President Sublessee: REPLIGEN CORPORATION By: Avery W. Catlin, Vice President, Finance EX-22 7 SUBSIDIARIES OF REPLIGEN CORPORATION Exhibit 22 SUBSIDIARIES OF REPLIGEN CORPORATION RGEN Corporation Amira, Inc. Repligen Development Corporation Glycan Pharmaceuticals, Inc. EX-27 8 ART. 5 FDS FOR 1996 FORM 10-K WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 1,000 12-MOS MAR-31-1996 APR-01-1995 MAR-31-1996 6,944 278 463 152 701 8,576 711 177 9,231 4,422 0 0 0 156 4,652 [TOTAL-LIABILITIES-AND-EQUITY] 9,231 1,874 10,859 1,516 22,322 0 0 58 (11,521) 0 0 0 0 0 (11,521) .75 .75
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