-----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, AoKYbTI7oev+vidNHtOWcUJmjdxAr2gDQ9Wvs7Pdkj5LTrUzoqii67jMp2/G3bUp dcmAdof3wftjQVTBvJWNPw== 0001005477-97-002525.txt : 19971113 0001005477-97-002525.hdr.sgml : 19971113 ACCESSION NUMBER: 0001005477-97-002525 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 SROS: NYSE 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: SEC FILE NUMBER: 000-14656 FILM NUMBER: 97716321 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 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 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 (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: (781)-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 X No . Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of October 31, 1997. Common Stock, par value $.01 per share 16,001,785 -------------------------------------- ---------------- Class Number of Shares REPLIGEN CORPORATION Form 10-Q for the Quarter Ending September 30, 1997 INDEX
PAGE ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets as of September 30, 1997 and March 31, 1997 3 Condensed Consolidated Statements of Operations for the Three and Six Months Ended September 30, 1997 and 1996 4 Condensed Consolidated Statement of Cash Flows for the Six Months Ended September 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 None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K 9 (a) Exhibits 27.1 Financial Data Schedule (b) Reports on Form 8-K None Signature 10 Exhibit Index 11 Exhibits 12
2 PART I. FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS REPLIGEN CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
ASSETS September 30, 1997 March 31, 1997 ------------------ -------------- Current assets: Cash and cash equivalents $ 3,080,267 $ 3,465,881 Marketable securities 17,142 72,353 Accounts receivable 268,541 534,929 Inventories 563,169 452,241 Prepaid expenses and other current assets 115,591 165,720 ------------- ------------- Total current assets 4,044,710 4,691,124 Property, plant and equipment, at cost: Equipment 766,903 724,564 Furniture and fixtures 28,820 28,820 Leasehold improvements 442,528 386,199 ------------- ------------- 1,238,251 1,139,583 Less: accumulated depreciation and amortization 469,806 349,112 ------------- ------------- 768,445 790,471 Restricted cash -- 50,087 Other assets, net 88,909 88,909 ------------- ------------- $ 4,902,064 $ 5,620,591 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 63,634 $ 168,269 Accrued expenses 254,015 399,988 Unearned income 33,311 133,313 ------------- ------------- Total current liabilities 350,960 701,570 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 September 30, 1997 and March 31, 1997 160,017 160,017 Additional paid-in capital 128,309,048 128,309,048 Deferred compensation (8,972) (26,447) Accumulated deficit (123,908,989) (123,523,597) ------------- ------------- Total stockholders' equity 4,551,104 4,919,021 ------------- ------------- $ 4,902,064 $ 5,620,591 ============= =============
See accompanying notes to condensed consolidated financial statements. 3 REPLIGEN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended ------------------ ---------------- September 30, September 30, September 30, September 30, 1997 1996 1997 1996 ---- ---- ---- ---- Revenues: Research and development $ 166,085 $ 193,376 $ 424,369 $ 450,460 Product 257,202 394,679 539,385 620,778 Investment income 68,428 75,596 115,106 107,799 Other 11,613 317,719 99,975 642,587 ----------- ----------- ----------- ---------- 503,328 981,370 1,178,835 1,821,624 ----------- ----------- ----------- ---------- Costs and expenses: Research and development 350,544 370,697 714,201 694,460 Selling, general and administrative 315,352 352,505 622,208 1,186,361 Cost of goods sold 79,233 -- 227,818 151,649 ----------- ----------- ---------- ------- 745,129 723,202 1,564,227 2,032,470 ----------- ----------- ----------- ---------- Net (loss) income $ (241,801) $ 258,168 $ (385,392) (210,846) =========== =========== =========== ========== Net (loss) income per common share $ (0.02) $ .02 $ (0.02) $ (0.01) =========== =========== =========== ========== Weighted average common shares outstanding 16,001,785 15,602,542 16,001,785 15,602,542 =========== =========== =========== ===========
See accompanying notes to condensed consolidated financial statements. 4 REPLIGEN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended September 30, ------------------------------------------ 1997 1996 ------------------ -------------- Cash flows from operating activities: Net loss $ (385,392) $ (210,846) Adjustments to reconcile net loss to net cash used in operating activities - Depreciation and amortization 120,692 84,132 Compensation charge from stock options 17,475 10,000 Changes in assets and liabilities - Accounts receivable 266,388 188,647 Amounts due from affiliates -- 37,518 Inventories (110,928) 96,489 Prepaid expenses and other current assets 50,129 105,202 Accounts payable (104,635) (518,203) Accrued expenses (145,972) (3,217,103) Unearned income (100,002) (121,683) ------------ ------------ Net cash used in operating activities (392,245) (3,545,847) ------------ ------------ Cash flows from investing activities: Decrease in marketable securities 55,211 176,349 Purchases of property, plant and equipment, net (98,667) (49,731) Decrease (increase) in restricted cash 50,087 (229,056) ------------ ------------ Net cash provided by (used in) investing activities 6,631 (102,438) ------------ ------------ Net decrease in cash and cash equivalents (385,614) (3,648,285) Cash and cash equivalents, beginning of period 3,465,881 6,944,140 ------------ ------------ Cash and cash equivalents, end of period $ 3,080,267 $ 3,295,855 ============ ============
See accompanying notes to condensed 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 prior year condensed consolidated financial statements to conform with the current year's presentations. 2. Net Loss/Income Per Common Share Net loss/income per common share has been computed by dividing net loss/income 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 beginning with the annual financial statements for year ended March 31, 1998, as early adoption is not permitted. 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 September 30, 1997 are approximately $80,000 of money market funds and approximately $2,800,000 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 September 30, March 31, 1997 1997 ------------- -------------- Raw materials and work-in-process $305,000 $298,000 Finished goods 258,000 154,000 -------- -------- Total $563,000 $452,000 ======== ======== Work in process and finished goods inventories consist of material, labor, outside processing and manufacturing overhead. 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 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 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. 7 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 periods ended September 30, 1997 and 1996 were $503,000 and $981,000, respectively, a decrease of approximately 49%. Year to date total revenues decreased approximately 35% to $1,179,000 at September 30, 1997 from $1,822,000 at September 30, 1996. This decrease is largely attributable to the one-time sales of securities and equipment for approximately $505,000 reported as "Other Income" in the six month period ended September 30, 1996. Research and development revenues for the three month period ended September 30, 1997 were $166,000 compared to $193,000 in the comparable fiscal 1997 period. In the first six months of fiscal 1998, the Company recorded research and development revenues totaling $424,000 consisting primarily of approximately $264,000 from contracted research and development programs and $160,000 from licensing revenues. In the first six months of fiscal 1997, research and development revenues were $450,000. Product revenues for the three months ended September 30, 1997 and 1996 were $257,000 and $395,000, respectively, and were $539,000 and $621,000 for the six months ended September 30, 1997 and 1996, respectively. This decrease is attributed to the timing of large production scale orders of Protein A. Investment income decreased in fiscal 1998 over the comparable three month period in fiscal 1997 primarily due to lower average funds available for interest. In the first six months of fiscal 1998 investment income is $115,000 compared to $108,000 in the six months ended September 30, 1996 primarily due to the sale of marketable securities held by the Company during the six months ending September 30, 1997. Other revenues for the three and six month periods ended September 30, 1997 decreased from the comparable fiscal 1997 periods primarily due to the Company's one-time sales of equipment and furnishings of approximately $205,000 and non-investment securities of approximately $300,000 during fiscal 1997. Expenses Total expenses for the three month periods ended September 30, 1997 and 1996 increased 3% to $745,000 from $723,000 and decreased 23% to $1,564,000 from $2,032,000 for the six months ended September 30, 1997 and 1996, respectively. Research and development expenses for the three months ended September 30, 1997 and 1996 were $351,000 and $371,000, a decrease of 5%. For the six months ended September 30, 1997 and 1996, research and development expenses were $714,000 and $694,000, an increase of 3%. This increase is largely attributable to increased staffing levels during fiscal 1998 offset by decreases in rent generated by the move to a new facility in fiscal 1997. Selling, general and administrative expenses for the three month and six month periods ended September 30, 1997 were $315,000 and $622,000, respectively, which reflects a decrease of $37,000 and $564,000 from the comparable 1997 periods. These decreases resulted from the reduction of administrative personnel and related expenses as part of the Company's cost reduction 8 efforts during the first six months of fiscal 1997. Cost of goods sold for the three month and six month periods ended September 30, 1997 were $79,000 and $228,000 respectively, as compared to $0 and $152,000 for the three and six months ended September 30, 1996. Cost of goods sold in the three month periods ended September 30, 1997 and 1996 were 31% and 0% of product revenues. The decrease in cost of goods sold from the quarter ended June 30, 1997 of 53% to 31% at the three month period at September 30, 1997 is attributable to product mix. In the six month periods ended September 30, 1997 and 1996, cost of goods sold was 42% and 24% of product sales. The increase in cost of sales as a percentage of revenue is primarily a result of the realization of inventory that had been previously reserved for in the three month and six month period ended September 30, 1996. Liquidity and Capital Resources The Company's total cash, cash equivalents and marketable securities decreased to $3,097,000 at September 30, 1997 from $3,538,000 at March 31, 1997, a decrease of $441,000 or 12%. The decrease reflects net losses during the six month period ended September 30, 1997 of approximately $385,000, an increase in inventory of $111,000, the reduction of accounts payable and accrued expenses of $251,000, offset in part by the reduction in accounts receivables and prepaid expenses of $317,000. Working capital decreased to $3,694,000 at September 30, 1997 from $3,990,000 at March 31, 1997. During the quarter, the Company entered into a $450,000 note receivable with a licensee for past due licensing fees. As the Company has historically recorded licensing fees under this agreement on a cash basis, the Company has not recorded this note receivable as an asset. The note requires full payment of principal and interest in August 1998. The Company will continue to record this license fee on a cash basis. 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 its 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 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. 9 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. SIGNATURE REPLIGEN CORPORATION (Registrant) Date: November 13, 1997 By: /S/ Walter C. Herlihy --------------------- Chief Executive Officer Signing on behalf of the Registrant and as Principal Financial and Accounting Officer 10 REPLIGEN CORPORATION AND SUBSIDIARIES EXHIBIT INDEX EXHIBIT NO. DESCRIPTION PAGE ----------- ----------- ---- 27.1 Financial Data Schedule 12 11 EX-27.1 2 FINANCIAL DATA SCHEDULE
5 1000 6-MOS MAR-31-1998 SEP-30-1997 3,080 17 269 0 563 4,465 1,238 470 4,902 351 0 0 0 160 4,391 4,902 539 1179 228 1564 0 0 0 (385) 0 0 0 0 0 (385) (.02) (.02)
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