-----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, QOG54DUQCvwOp6p4wcWrETCtd4ZH3sPcu2IIWoksDzbX+1heR4t1fxxjbtuG2Nez qqA4hCJHYOCghDcpwfypjQ== 0000950146-97-001134.txt : 19970804 0000950146-97-001134.hdr.sgml : 19970804 ACCESSION NUMBER: 0000950146-97-001134 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970801 SROS: NONE 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14656 FILM NUMBER: 97649870 BUSINESS ADDRESS: STREET 1: 117 FOURTH AVE CITY: NEEDHAM STATE: MA ZIP: 02194 BUSINESS PHONE: 6174499560 MAIL ADDRESS: STREET 1: 117 FOURTH AVE CITY: NEEDHAM STATE: MA ZIP: 02194 10-Q 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to ____________________ Commission File number 0-14656 REPLIGEN CORPORATION 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 ----------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) 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 [check mark]_____ No _____. Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of June 30, 1997. Common Stock, par value $.01 per share 16,001,785 -------------------------------------- ---------------- Class Number of Shares REPLIGEN CORPORATION INDEX PART I. FINANCIAL INFORMATION
PAGE ---- Item 1. Financial Statements Condensed Consolidated Balance Sheets as of June 30, 1997 and March 31, 1997 3 Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 1997 and 1996 4 Condensed Consolidated Statement of Cash Flows for the Three Months Ended June 30, 1997 and 1996 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submissions of Matters to a Vote of Security Holders 9 Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K 10 (a) Exhibits 27.1 Financial Data Schedule (b) Reports on Form 8-K None Signature 11 Exhibit Index 12 Exhibits 13
2 PART I. FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS -------------------- REPLIGEN CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
ASSETS June 30, 1997 March 31, 1997 ------------- -------------- Current assets: Cash and cash equivalents $ 3,478,279 $ 3,465,881 Marketable securities 17,142 72,353 Accounts receivable 375,205 534,929 Inventories 461,467 452,241 Prepaid expenses and other current assets 132,529 165,720 ------------- ------------- Total current assets 4,464,622 4,691,124 Property, plant and equipment, at cost: Equipment 766,903 724,564 Furniture and fixtures 28,820 28,820 Leasehold improvements 386,199 386,199 ------------- ------------- 1,181,922 1,139,583 Less: accumulated depreciation and amortization 408,005 349,112 ------------- ------------- 773,917 790,471 Restricted cash 17,773 50,087 Other assets, net 88,909 88,909 ------------- ------------- $ 5,345,221 $ 5,620,591 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 78,862 $ 168,269 Accrued expenses 397,700 399,988 Unearned income 83,312 133,313 ------------- ------------- Total current liabilities 559,874 701,570 Commitments and contingencies 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 -- 16,001,785 shares at June 30, 1997 and March 31, 1997 160,017 160,017 Additional paid-in capital 128,309,048 128,309,048 Deferred compensation (16,529) (26,447) Accumulated deficit (123,667,189) (123,523,597) ------------- ------------- Total stockholders' equity 4,785,347 4,919,021 ------------- ------------- $ 5,345,221 $ 5,620,591 ============= =============
See accompanying notes to consolidated financial statements. 3 REPLIGEN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended June 30, -------------------------------- 1997 1996 ------------- ------------- Revenues: Research and development $ 258,284 $ 257,085 Product 282,183 226,099 Investment income 46,678 32,203 Other 88,362 324,868 ------------- ------------- 675,507 840,255 ------------- ------------- Costs and expenses: Research and development 363,658 323,763 Selling, general and administrative 306,856 833,857 Cost of goods sold 148,585 151,649 ------------- ------------- 819,099 1,309,269 ------------- ------------- Net loss $ (143,592) $ (469,014) ============= ============= Net loss per common share $ (0.01) $ (0.03) ============= ============= Weighted average common shares outstanding 16,001,785 15,602,542 ============= =============
See accompanying notes to consolidated financial statements. 4 REPLIGEN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended June 30, --------------------------------- 1997 1996 ------------- -------------- Cash flows from operating activities: Net loss $ (143,592) $ (469,014) Adjustments to reconcile net loss to net cash used in operating activities - Depreciation and amortization 58,893 36,887 Compensation charge from stock options 9,918 -- Changes in assets and liabilities - Accounts receivable 159,724 76,080 Amounts due from affiliates -- 42,284 Inventories (9,226) 151,430 Prepaid expenses and other current assets 33,191 96,133 Accounts payable (89,408) (369,546) Accrued expenses (2,287) (3,117,159) Unearned income (50,001) (48,348) ------------- ------------- Net cash used in operating activities (32,788) (3,601,253) ------------- ------------- Cash flows from investing activities: Decrease in marketable securities 55,211 60,705 Purchases of property, plant and equipment, net (42,339) (53,598) Decrease (increase) in restricted cash 32,314 (250,000) ------------- ------------- Net cash provided by (used in) investing activities 45,186 (242,893) ------------- ------------- Net increase (decrease) in cash and cash equivalents 12,398 (3,844,146) Cash and cash equivalents, beginning of period 3,465,881 6,944,140 ------------- ------------- Cash and cash equivalents, end of period $ 3,478,279 $ 3,099,994 ============= =============
See accompanying notes to consolidated financial statements. 5 REPLIGEN CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation The condensed consolidated financial statements included herein have been prepared by Repligen Corporation (the "Company" or "Repligen"), pursuant to the rules and regulations of the Securities and Exchange Commission for quarterly reports on Form 10-Q and do not include all of the information and footnote disclosures required by generally accepted accounting principles. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Form 10-K for the year ending March 31, 1997. In the opinion of management, the accompanying unaudited financial statements include all adjustments consisting of only normal, recurring adjustments necessary to present fairly, the consolidated financial position, results of operations and cash flows. The results of operations for the interim periods presented are not necessarily indicative of results to be expected for the entire year. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications have been made in condensed consolidated financial statements to conform with the current year's presentations. 2. Net Loss Per Common Share 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 period, as the amounts would be antidilutive. In February 1997 the Financial Accounting Standard Board issued SFAS No. 128 Earnings Per Share, which requires a new method of calculating earnings per share (EPS). The Company will be required to use this method for fiscal 1998. The Company anticipates that reported EPS will be unchanged from amounts presented in the statement of operations. 3. Cash Equivalents and Marketable Securities The Company considers all highly liquid investments with a maturity of three months or less at the time of acquisition to be cash equivalents. Included in cash equivalents at June 30, 1997 are $200,000 of money market funds and approximately $3,180,000 of commercial paper. Investments with a maturity period of greater than three months are classified as marketable securities. 4. Inventories Inventories are stated at the lower of cost (first-in, first-out) or market and consist of the following: 6
June 30, March 31, 1997 1997 ------------- ------------- Raw materials and work-in-process $ 140,000 $ 298,000 Finished goods 321,000 154,000 ------------- ------------- Total $461,000 $ 452,000 ============= =============
Work in process and finished goods inventories consist of material, labor, outside processing and manufacturing overhead. 5. Restructuring of Operations During the fiscal year ended March 31, 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. During the first quarter of fiscal 1997, ended June 30, 1996, the Company paid approximately $3,300,000 in settlement fees to the facility landlord and equipment lessors, which included 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. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF --------------------------------------- FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- Cautionary Statement Regarding Forward-Looking Statements Statements in this Quarterly Report on Form 10-Q under this caption, "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 facts constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1996. 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. Certain Factors That May Affect Future Results The Company's future operating results are subject to risks and uncertainties and are dependent upon many factors, including, without limitation, the Company's ability to (i) meet its working capital and future liquidity needs, (ii) successfully implement its restructuring and strategic growth strategies, (iii) understand, anticipate and respond to rapidly changing technologies and market trends, (iv) develop, manufacture and deliver high quality, technologically advanced products on a timely basis to withstand competition from competitors which may have greater financial, information gathering and marketing resources than the Company, (v) obtain and protect licensing and intellectual property rights necessary for the Company's technology and product development on 7 terms favorable to the Company, and (vi) recruit and retain highly talented professionals in a competitive job market. Each of these factors, and others, are discussed from time to time in the filings made by the Company with the Securities and Exchange Commission. Overview Repligen Corporation ("Repligen" or the "Company") redirected its focus in March of 1996 from the clinical development of biological products to the development of enabling technology for the discovery of new drugs. The Company is developing technology to increase the efficiency of the process by which new drug candidates are identified. These technologies include rapid methods for the synthesis of chemical compound libraries, novel detection technology for identifying active compounds in drug screening and specific screening assays based on defined biological targets. In selected therapeutic areas, Repligen is applying its technology to the discovery of proprietary drug leads capable of blocking biologically important protein-protein and protein-carbohydrate interactions. Repligen also manufactures and markets a line of products for the production of monoclonal antibodies intended for human clinical use. These products are based on a recombinant form of Protein A for which Repligen holds patents in the United States and major foreign markets. In addition, the Company is seeking to license to third parties certain intellectual property and other assets of the Company pertaining to its earlier research and clinical development programs. Results of Operations Revenues Total revenues for the three month period ended June 30, 1997 and 1996 were $676,000 and $840,000, respectively, a decrease of approximately 20%. This decrease is largely attributable to the one-time sale for approximately $300,000 of non-investment securities held by the Company reported as other income in the three month period ending June 30, 1996. Research and development revenues for the three month period ended June 30, 1997 were $258,000 compared to $257,000 in the comparable fiscal 1997 period. Research and development revenue was generated under research agreements with Pfizer Inc., Cambridge NeuroScience, Inc. and Glaxo Wellcome plc. Revenues for the quarter ending June 30, 1997 include a licensing fee received from Immunomedics, Inc. pursuant to an agreement to license certain of Repligen's technology for production of antibodies. Under this licensing agreement, Repligen will receive royalties if a product using this technology is commercialized by Immunomedics. Product revenues for the three month period ended June 30, 1997 and 1996 were $282,000 and $226,000, respectively, a 25% increase in product sales. The increase in product sales is attributable to an increase in sales of the Protein A product line. Investment income increased in fiscal 1998 over the comparable three period in fiscal 1997 primarily due to higher interest generated on funds available for investment. Other revenues for the three month period ended June 30, 1997 decreased from the comparable fiscal 1996 period primarily due to the sale of non-investment securities held by the Company for approximately $300,000 reported as other income in the three month period ending June 30, 1996. Expenses Total expenses for the three month period ended June 30, 1997 and 1996 decreased 37% to $819,000 from $1,309,000. In May 1996, the Company relocated its headquarters operations from Cambridge, Massachusetts to approximately 13,000 square feet of subleased office and laboratory space in Needham, Massachusetts. This move resulted in savings in rent and related facility costs. 8 Research and development expenses for the three months ended June 30, 1997 and 1996 were $364,000 and $324,000. The increase in expenses in fiscal 1998 from the comparable period in fiscal 1997 reflects increased staffing in research and development. Selling, general and administrative expenses for the three month period ended June 30, 1997 were $354,000 which reflects a decrease of $524,000 from the comparable fiscal 1997 period. These decreases resulted from the reduction of administrative personnel and related expenses as part of the Company's cost reduction efforts during fiscal 1997 Cost of goods sold for the three month period ended June 30, 1997 were $149,000 compared to $152,000 for the three month period ended June 30, 1996. Cost of goods sold in the three months ended June 30, 1997 and 1996 were 53% and 67% of product revenues. This decrease is attributable to the cost efficiencies gained in the new manufacturing facility opened in late 1996. Liquidity and Capital Resources The Company's total cash, cash equivalents and marketable securities decreased to $3,495,000 at June 30, 1997 from $3,538,000 at March 31, 1997, a decrease of $43,000 or 1%. The decrease reflects net losses during the three month period ended June 30, 1997 of approximately $143,000, the reduction of accounts payable and accrued expenses of $95,000, offset in part by the reduction in accounts receivables and prepaid expenses of $193,000. Working capital decreased to $3,905,000 at June 30, 1997 from $3,990,000 at March 31, 1997. The Company has funded operations primarily with cash derived from the sales of its equity securities, revenue derived from research and development contracts, product sales, investment income and the sale of the Company's share of a joint venture. The Company believes it has sufficient cash equivalents and marketable securities to satisfy working capital and capital expenditure requirements for the next twenty-four months. Should the Company need to secure additional financing to meet its future liquidity requirements, there can be no assurances that the Company will be able to secure such financing, or that such financing, if available, will be on terms favorable to the Company. Management believes that the Company's current operations are not materially impacted by the effects of inflation. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The Company's Annual Meeting of Stockholders (the "Annual Meeting") was held on July 24, 1997. At the Annual Meeting, the stockholders of the Company (i) elected Alexander Rich, M.D., Paul Schimmel, Ph.D., Walter C. Herlihy, Ph.D., and G. William Miller to serve as Directors of the Company until the 1998 Annual Meeting of Stockholders and (ii) ratified the selection of Arthur Andersen LLP as auditors for the fiscal year ending March 31, 1998. The Company had 16,001,785 shares of Common Stock of the Company issued and outstanding and entitled to vote as of June 9, 1997, the record date for the Annual Meeting. At the Annual Meeting, holders of a total of 13,910,871 shares of Common Stock or approximately 86.9% were present in person or represented by proxy. The following sets forth the information regarding the results of the voting of the Annual Meeting: 9 Proposal 1. Election of Directors: Directors Shares Voting Shares Voting In Favor Against ------------- ------------- Alexander Rich, M.D. 13,416,793 490,652 Paul Schimmel, Ph.D. 13,422,118 485,327 Walter C. Herlihy, Ph.D. 13,436,502 470,943 G. William Miller 13,495,718 411,727 Proposal 2. Ratification of Selection of Arthur Andersen LLP as independent auditors: Votes in favor: 13,795,249 Votes against: 57,344 Abstention: 54,852 No Votes -- Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits EXHIBIT DESCRIPTION ------- ----------- 27.1 Financial Data Schedule (b) Reports on Form 8-K No current reports on Form 8-K were filed by the Company during the quarter covered by this report. 10 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. REPLIGEN CORPORATION (Registrant) Date: July 31, 1997 By: /S/ Walter C. Herlihy --------------------- Chief Executive Officer Signing on behalf of the Registrant and as Principal Financial and Accounting Officer 11 REPLIGEN CORPORATION AND SUBSIDIARIES EXHIBIT INDEX EXHIBIT NO. DESCRIPTION PAGE 27.1 Financial Data Schedule 13 12 EX-27.1 2 FDS
5 0000730272 Repligen 1,000 3-MOS MAR-31-1998 JUN-30-1997 3,478 17 375 0 461 4,465 1,182 408 5,345 560 0 0 0 0 4,785 5,345 282 676 149 819 0 0 0 0 0 0 0 0 0 (144) (.01) (.01)
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