-----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, CSLzpfv8sWPQoqislDgN32xeOoP/5H4tXuOKx0lUMRdSLxNHJ6NzdNtADZIw6g4z L1kHsS1MATvdNNKl2YIlrQ== 0001169232-03-005066.txt : 20030812 0001169232-03-005066.hdr.sgml : 20030812 20030812162243 ACCESSION NUMBER: 0001169232-03-005066 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030812 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: 03837846 BUSINESS ADDRESS: STREET 1: 41 SEYON STREET STREET 2: BUILDING 1, SUITE 100 CITY: WALTHAM STATE: MA ZIP: 02453 BUSINESS PHONE: 7814499560 MAIL ADDRESS: STREET 1: 41 SEYON STREET STREET 2: BUILDING 1, SUITE 100 CITY: WALTHAM STATE: MA ZIP: 02453 10-Q 1 d56536_10-q.txt 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, 2003 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.) 41 Seyon Street, Bldg. 1, Suite 100 Waltham, MA 02453 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (781) 250-0111 ------------------------------------------------------------------ (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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X| Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of August 12, 2003. Common Stock, par value $.01 per share 29,859,173 Class Number of Shares REPLIGEN CORPORATION INDEX PART I. FINANCIAL INFORMATION PAGE Item 1. Financial Statements (Unaudited) Balance Sheets as of June 30, 2003 and March 31, 2003 3 Statements of Operations for the Three Months Ended June 30, 2003 and 2002 4 Statements of Cash Flows for the Three Months Ended June 30, 2003 and 2002 5 Notes to Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Item 3. Quantitative and Qualitative Disclosures About Market Risk 15 Item 4. Controls and Procedures 16 PART II. OTHER INFORMATION Item 1. Legal Proceedings 16 Item 2. Changes in Securities and Use of Proceeds 17 Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K 18 Signature 19 Exhibit Index 20 Certification 27 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS REPLIGEN CORPORATION BALANCE SHEETS
ASSETS June 30, March 31, 2003 2003 ---- ---- Current assets: Cash and cash equivalents $ 15,249,180 $ 6,108,004 Marketable securities 12,837,198 9,417,224 Accounts receivable, net 899,940 907,501 Inventories 698,009 889,924 Prepaid expenses and other current assets 370,094 522,569 ------------- ------------- Total current assets 30,054,421 17,845,222 ------------- ------------- Property, plant and equipment, at cost: Leasehold improvements 2,589,150 2,585,152 Equipment 1,406,785 1,317,086 Furniture and fixtures 368,020 360,003 ------------- ------------- 4,363,955 4,262,241 Less: accumulated depreciation and amortization (2,108,663) (2,013,828) ------------- ------------- 2,255,292 2,248,413 Long-term marketable securities 1,108,260 3,183,727 Restricted cash 200,000 200,000 Other assets 3,188,362 3,315,894 ------------- ------------- Total assets $ 36,806,335 $ 29,793,256 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 376,382 $ 968,551 Accrued expenses 1,974,483 1,274,837 Unearned revenue 22,838 -- ------------- ------------- Total current liabilities 2,373,703 2,243,388 ------------- ------------- Stockholders' equity: Preferred stock, $.01 par value - authorized, 5,000,000 shares,-- outstanding, none -- -- Common stock, $.01 par value- authorized, 40,000,000 shares, -- outstanding, 29,857,073 shares at June 30, 2003 and 27,338,973 shares at March 31, 2003 298,571 273,390 Additional paid-in capital 181,187,160 169,232,975 Deferred compensation (68,750) -- Accumulated deficit (146,984,349) (144,956,497) ------------- ------------- Total stockholders' equity 34,432,632 24,549,868 ------------- ------------- Total liabilities and stockholders' equity $ 36,806,335 $ 26,793,256 ============= =============
See accompanying notes. 3 REPLIGEN CORPORATION STATEMENTS OF OPERATIONS Three months ended June 30, 2003 2002 ---------------------------- Revenue Product revenue $ 2,042,528 $ 1,619,442 Licensing and research revenue 18,433 -- ------------ ------------ Total revenue 2,060,961 1,619,442 Cost of revenue 855,590 669,646 ------------ ------------ Gross profit 1,205,371 949,796 Operating expenses: Research and development 1,428,674 1,227,257 Selling, general and administrative 1,902,677 882,257 ------------ ------------ Total operating expenses 3,331,351 2,109,514 Loss from operations (2,125,980) (1,159,718) ------------ ------------ Investment and interest income 98,128 168,579 ------------ ------------ Net loss $ (2,027,852) $ (991,139) ============ ============ Basic and diluted net loss per share $ (.07) $ (.04) ============ ============ Basic and diluted weighted average common shares outstanding 28,987,443 26,642,750 ============ ============ See accompanying notes. 4 REPLIGEN CORPORATION STATEMENTS OF CASH FLOWS (Unaudited)
As of June 30, 2003 2002 ------------ ------------ Cash flows from operating activities: Net loss $ (2,027,852) $ (991,139) Adjustment to reconcile net loss to net cash used in operating activities: Issuance of common stock warrants for payment for services 52,300 -- Amortization of deferred compensation 13,750 -- Depreciation and amortization 222,367 161,594 Changes in assets and liabilities: Accounts receivable 7,561 469,216 Inventories 191,915 (112,162) Prepaid expenses and other current assets 152,475 30,244 Other assets -- (1,250,000) Accounts payable (687,110) (286,368) Accrued expenses 699,646 (138,742) Unearned revenue 22,838 -- ------------ ------------ Net cash (used in) provided by operating activities (1,352,110) (2,117,357) ------------ ------------ Cash flows from investing activities: Purchases of marketable securities (5,883,024) (1,079,774) Redemptions of marketable securities 4,538,517 4,101,545 Purchases of property, plant and equipment (6,773) (845,063) ------------ ------------ Net cash (used in) provided by investing activities (1,351,280) 2,176,708 ------------ ------------ Cash flows from financing activities: Exercise of stock options 19,531 -- Proceeds from issuance of common stock and warrants, net of issuance cost 11,825,035 -- ------------ ------------ Net cash provided by (used in) financing activities 11,844,566 -- ------------ ------------ Net increase in cash 9,141,176 59,351 Cash and cash equivalents, beginning of period 6,108,004 8,696,194 ------------ ------------ Cash and cash equivalents, end of period $ 15,249,180 $ 8,755,545 ============ ============ Supplemental disclosure of non cash activities: Non cash purchases of property and equipment $ 94,941 $ -- Common stock issued for payment of license $ -- $ 2,576,025
See accompanying notes. 5 REPLIGEN CORPORATION NOTES TO FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation The financial statements included herein have been prepared by Repligen Corporation (the "Company," "Repligen" or "we"), in accordance with accounting principles generally accepted in the United States and 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 accounting principles generally accepted in the United States. These financial statements should be read in conjunction with the audited financial statements and accompanying notes thereto included in our Form 10-K for the year ended March 31, 2003 In the opinion of management, the accompanying unaudited financial statements include all adjustments, consisting of only normal, recurring adjustments, necessary for a fair presentation of the 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 accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. We have reclassified certain prior-year information to conform to the current year's presentation. 2. Revenue Recognition We apply Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition" to our revenue arrangements. We generate product revenues from the sale of our Protein A products to customers in the pharmaceutical and process chromatography industries and from the sale of SecreFlo(TM), the first synthetic version of the hormone secretin, to hospital-based gastroenterologists. In accordance with SAB 101, we recognize revenue related to product sales upon shipment of the product to the customer as long as there is persuasive evidence of an arrangement, the fee is fixed or determinable and collection of any related receivable is probable. License and research revenue derived from collaborative arrangements is recognized as earned under cost plus fixed-fee contracts, or on a straight-line basis over the term of contract, which approximates when work is performed and costs are incurred. Research expenses in the accompanying statements of operations include funded and unfunded expenses. In addition, under certain contracts, we recognize research and development milestones as they are achieved, assuming such milestone is deemed to be substantive. 6 3. Net Loss Per Share We apply Statement of Financial Accounting Standard ("SFAS") No. 128, "Earnings per Share." SFAS No. 128 establishes standards for computing and presenting earnings per share. Basic net loss per share represents net loss divided by the weighted average number of common shares outstanding during the period. The dilutive effect of potential common shares, consisting of outstanding stock options and warrants, is determined using the treasury stock method in accordance with SFAS No. 128. Diluted weighted average shares outstanding for the periods presented in the accompanying financial statements do not include the potential common shares from warrants and stock options because to do so would have been antidilutive for the periods presented. Accordingly, basic and diluted net loss per share is the same. At June 30, 2003, there were outstanding options to purchase 2,125,950 shares of our common stock at a weighted average exercise price of $2.58 per share and warrants to purchase 429,946 shares of our common stock at a weighted average exercise price of $5.11 per share not included in the calculation of earnings per share. At June 30, 2002, there were outstanding options to purchase 1,846,900 shares of our common stock at a weighted average exercise price of $2.69 per share and warrants to purchase 404,946 shares of our common stock at a weighted average exercise price of $5.24 per share not included in the calculation of earnings per share. 4. Impairment of Long-Lived Assets At March 31, 2003, in accordance with the provisions of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," we performed an impairment analysis of our licensing agreement with ChiRhoClin, Inc. in order to determine if an impairment loss existed and should be recognized. The impairment analysis consisted of an evaluation of the expected cash flows from the sale of SecreFlo(TM) over the term of the license and also included various assumptions and estimates concerning selling price, cost and volume of unit sales. We concluded that there was no impairment loss as of March 31, 2003 and no events have occurred since that time that would give rise to an impairment loss. We believe that our assumptions and estimates are reasonable. However, actual results could differ from these estimates. 5. Recent Accounting Pronouncements In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." This Statement establishes standards for how an issuer classifies and measures in its statement of financial position certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances) because that financial instrument embodies an obligation of the issuer. This Statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatorily redeemable financial instruments of nonpublic entities. We do not expect that the adoption of this Statement will have a significant impact on our financial position or results of operations. 7 6. Stock Based Compensation We account for stock-based compensation under SFAS No. 123 "Accounting for Stock-Based Compensation." We continue to apply APB No. 25 for employee stock options awards and elected the disclosure-only alternative for the same under SFAS No. 123. We have computed the pro forma disclosures required under SFAS Nos. 123 and 148 for all stock options granted to employees using the Black-Scholes option-pricing model prescribed by SFAS No. 123. If compensation expense for our stock option plan had been determined consistent with SFAS No. 123, the pro forma net loss and net loss per share would have been as follows:
Three months ended June 30, 2003 2002 ----------- ----------- Net Loss as reported ................................................. $(2,027,852) $ (991,139) Add: Stock-based employee compensation expense included in reported net loss ................................................. 13,750 -- Deduct: Stock-based employee compensation expense determined under fair value based method for all employee awards ............ (181,292) (142,937) ------------ ------------ Pro forma net loss ................................................... $(2,195,394) $(1,134,076) =========== =========== Basic and diluted net loss per share: As reported .......................................................... $ (.07) $ (.04) Pro forma ............................................................ $ (.07) $ (.04)
7. Cash, Cash Equivalents and Marketable Securities We apply SFAS No. 115, "Accounting for Certain Investments in Debt and equity Securities." At June 30, 2003, our cash equivalents and marketable securities are classified as held-to-maturity, as we have the positive intent and ability to hold to maturity. As a result, these investments are recorded at amortized cost. Cash equivalents are short-term, highly liquid instruments with original maturities of 90 days or less. Marketable securities are investments with original maturities of greater than 90 days. Long-term marketable securities are investment grade securities with maturities of greater than one year. We have not realized any gains or losses on our marketable securities for the three-month periods ending June 30, 2003 and 2002. Cash, cash equivalents and marketable securities consist of the following:
June 30, March 31, 2003 2003 ---- ---- Cash and cash equivalents Cash $12,999,890 $ 6,108,004 Commercial paper and corporate bonds 2,249,290 -- ----------- ----------- Total cash and cash equivalents $15,249,180 $ 6,108,004 =========== =========== Marketable securities U.S. Government and agency securities $ 1,243,755 $ 715,459 Corporate and other debt securities 11,593,443 8,701,765 ----------- ----------- (Average remaining maturity, 6 months at June 30, 2003) $12,837,198 $ 9,417,224 =========== =========== Long-term marketable securities U.S. Government and agency securities $ 600,340 $ 1,101,264 Corporate and other debt securities 507,920 2,082,463 ----------- ----------- (Average remaining maturity, 13 months $ 1,108,260 $ 3,183,727 at June 30, 2003) =========== ===========
Restricted cash of $200,000 is related to our facility lease obligation. 8 8. Inventories Inventories are stated at the lower of cost (first in, first out) or market and consists of the following: June 30, March 31, 2003 2003 --------- --------- Raw materials $ 111,123 $ 114,130 Work-in-process 144,350 303,631 Finished goods 442,536 472,163 --------- --------- Total $ 698,009 $ 889,924 ========= ========= Raw materials, work in process and finished goods inventories consist of material, labor, outside processing costs and manufacturing overhead. 9. Comprehensive Income We apply SFAS No. 130, "Reporting Comprehensive Income." SFAS No. 130 requires disclosure of all components of comprehensive income on an annual and interim basis. Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from nonowner sources. Our comprehensive loss is equal to our reported net loss for all periods presented. 10. Segment Reporting We apply SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." SFAS No. 131 establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information for those segments to be presented in interim financial reports issued to stockholders. SFAS No. 131 also establishes standards for related disclosures about products and services and geographic areas. The chief operating decision maker, or decision-making group, in making decisions how to allocate resources and assess performance, identifies operating segments as components of an enterprise about which separate discrete financial information is available for evaluation. To date, we have viewed our operations and manage our business as principally one operating segment. As a 9 result, the financial information disclosed herein represents all of the material financial information related to our principal operating segment. The following table represents percentage of total revenue classified by geographic area: Three months ended June 30, 2003 2002 ---- ---- US 55% 25% Europe 42% 74% Other 3% 1% --- --- Total 100% 100% During the three months ended June 30, 2003 two customers each accounted for approximately 31% and 16% of revenues, respectively. During the three months ended June 30, 2002 two customers accounted for approximately 54% and 20% of revenues, respectively. At June 30, 2003, two customers accounted for 34% and 27%, respectively, of accounts receivable. At June 30, 2002, two customers accounted for 57% and 14%, respectively of accounts receivable. 11. Other Assets In April 2002, the United States Food and Drug Administration granted approval to market SecreFlo(TM) (synthetic porcine secretin), the first synthetic version of the hormone secretin. SecreFlo(TM) has been approved for stimulation of pancreatic secretions to aid in the diagnosis of pancreatic exocrine dysfunction, or chronic pancreatitis, stimulation of gastrin secretion to aid in the diagnosis of gastrinoma, a gastrointestinal tumor and to aid during a gastrointestinal procedure called Endoscopic Retrograde Cholangiopancreatography ("ERCP"). Under the terms of our licensing agreement with ChiRhoClin, Inc. (ChiRhoClin), we made a milestone payment to ChiRhoClin during April 2002 of $1,250,000 in cash. We also issued 696,223 shares of our unregistered common stock to ChiRhoClin in October 2002 related to the same milestone. During the quarter ended June 30, 2002, we recorded the fair value of these shares, $2,576,025, and the cash of $1,250,000, as a long-term intangible asset. Beginning in April 2002, this amount is being amortized to cost of revenue over the remaining term of the license, approximately seven years. We amortized $127,532 during the quarter ended June 30, 2003. In addition, under the terms of the licensing agreement with ChiRhoClin, if the FDA approves the new drug application ("NDA") for human secretin diagnostic, we will be required to pay ChiRhoClin future milestones in cash. We will also be required to pay royalties on sales of both synthetic porcine and human products. 12. Private Placement On May 1, 2003, we issued and sold 2,500,000 shares of our common stock to The Riverview Group, LLC for aggregate consideration of $12,500,000. As a part of the transaction, we filed a registration statement on Form S-3 with the Securities and Exchange Commission on June 13, 2003, covering the resale of the shares of common stock issued in connection with this private placement. We received net proceeds of approximately $11.8 million after deducting the estimated expenses of the transaction. 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview We are engaged in the development of new products for profound pediatric developmental disorders. Our therapeutic product candidates are secretin for autism and schizophrenia, CTLA4-Ig for autoimmune disorders and uridine for neurologic and metabolic diseases. These products are synthetic forms of naturally-occurring substances which may correct improperly regulated biological processes with minimal toxicity or side-effects. Our product candidates have the potential to produce clinical benefits not attainable with any existing drug in diseases for which there are few alternative therapies or treatments. Our business strategy is to partially fund the development of our proprietary therapeutic products with the profits derived from the sales of our specialty pharmaceutical products: Protein A and SecreFlo(TM). This will enable us to independently advance our proprietary drug development programs while at the same time minimizing our operating losses. We may also seek corporate partners for development or marketing of our therapeutic product candidates. Critical Accounting Policies and Estimates The Securities and Exchange Commission requires that reporting companies discuss their most "critical accounting policies" in management's discussion and analysis of financial condition and results of operations. The SEC indicated that a "critical accounting policy" is one that is important to the portrayal of a company's financial condition and operating results and requires management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We have identified the policies and estimates below as critical to our business operations and the understanding of our results of operations. The impact and any associated risks related to these policies on our business operations is discussed throughout Management's Discussion and Analysis of Financial Condition and Results of Operations where such policies affect our reported and expected financial results. For a detailed discussion on the application of these and other accounting policies, see the Notes to Financial Statements of this report. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition We apply Staff Accounting Bulletin No. 101, "Revenue Recognition" ("SAB 101") to our revenue arrangements. We generate product revenues from the sale of our Protein A products to customers in the pharmaceutical and process chromatography industries, and from the sale of SecreFlo(TM), the first synthetic version of the hormone secretin, to hospital-based gastroenterologists. In accordance with SAB 101, we recognize revenue related to product sales 11 upon shipment of the product to the customer as long as there is persuasive evidence of an arrangement, the fee is fixed or determinable and collection of the related receivable is probable. License and research revenue derived from collaborative arrangements is recognized as earned under cost plus fixed-fee contracts, or on a straight-line basis over the term of contract, which approximates when work is performed and costs are incurred. Research expenses in the statements of operations in Item 1 include funded and unfunded expenses. In addition, under certain contracts, we recognize research and development milestones as they are achieved, assuming such milestone is deemed to be substantive. Impairment Analysis of Long-lived Assets During 2002, under the terms of a 1999 licensing agreement with ChiRhoClin, Inc. (ChiRhoClin) we made a milestone payment to ChiRhoClin that consisted of $1,250,000 in cash and 696,223 shares of our common stock. We have recorded the fair value of the shares issued, $2,576,025, and the cash paid of $1,250,000, as a long-term intangible asset. Beginning in April 2002, we began to amortize this intangible asset to cost of revenue over the remaining term of the license, approximately seven years. In October 2002, we commenced commercial shipment of SecreFlo(TM), our synthetic version of the hormone secretin. We amortized $127,532 during the quarter ended June 30, 2003. At March 31, 2003, in accordance with the provisions of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," we performed an impairment analysis of this intangible asset in order to determine if an impairment loss existed and should be recognized. The impairment analysis consisted of an evaluation of the expected cash flows from the sale of SecreFlo(TM) over the term of the license and also included various assumptions and estimates concerning selling price, cost and volume of unit sales. We concluded that there was no impairment loss as of March 31, 2003 and no events have occurred since that time that would give rise to an impairment loss. We believe that our assumptions and estimates are reasonable, however, actual results could differ from these estimates. Clinical Trial Estimates Our clinical development trials related to our proprietary drug products are primarily performed by outside parties. It is not unusual at the end of each accounting period to estimate both the total cost of the trials and the percent completed as of that accounting date. We then need to adjust our estimates when final invoices are received. To date, these adjustments have not been material to our financial statements, and we believe that the estimates that we made as of June 30, 2003 are reflective of the actual expenses incurred as of that date. However, investors should be cautioned that the possibility exists that the timing or cost of certain trials might be longer or shorter or cost more or less than we have estimated and that the associated financial adjustments would be reflected in future periods. Results of Operations Three months ended June 30, 2003 vs. June 30, 2002 Total revenue Total revenue for the three-month periods ended June 30, 2003 and June 3, 2002, were approximately $2,061,000 and $1,619,000, respectively, an increase of $442,000 or 27%. During 12 the three-month period ended June 30, 2003, we continued selling SecreFlo(TM), a diagnostic product that is marketed in the U.S., to hospital based gastroenterologists. This increase in total revenue is attributable to increased demand from value-added resellers who incorporate our Protein A products into their proprietary antibody purification systems, which they sell to the biotechnology and pharmaceutical industry and the sales of Secreflo(TM) which we did not sell during the corresponding three-month period in fiscal 2003. Cost of revenue Cost of revenue for the three-month periods ended June 30, 2003 and June 30, 2002, were approximately $856,000 and $670,000, respectively, an increase of $186,000 or 28%. This increase is due primarily to increased costs associated with the increase in volume of product shipments and costs associated with our recently launched SecreFlo(TM). Gross profit for the three-month periods ended June 30, 2003 and 2002 were $1,205,000 or 59% of total revenue and $949,000 or 59% of total revenue, respectively. Operating expenses Total operating expenses for the three-month periods ended June 30, 2003 and June 30, 2002, were approximately $3,331,000 and $2,109,000, respectively, an increase of $1,222,000 or 58%. Research and development expenses for the three-month periods ended June 30, 2003 and June 30, 2002, were approximately $1,428,000 and $1,227,000, respectively, an increase of $201,000 or 16%. This increase is largely attributable to an increase in personnel costs and clinical trial expenses during the three-month period ended June 30, 2003. Selling, general and administrative expenses (SG&A) for the three-month periods ended June 30, 2003 and June 30, 2002, were approximately $1,903,000 and $882,000 respectively, an increase of $1,021,000 or 116%. This increase is largely attributable to litigation expenses and marketing expenses for our Secreflo(TM) product. Investment and interest income Investment income for the three-month periods ended June 30, 2003 and June 30, 2002, were approximately $98,000 and $169,000, respectively, a decrease of $71,000 or 42%. This decrease is attributable to lower interest rates during the three months ended June 30, 2003 as compared to the corresponding three-month period in 2002. We expect investment income to vary based on changes in the amount of funds invested and fluctuation of interest rates. Liquidity and capital resources We have financed our operations primarily through private placements of our common stock and revenues derived from product sales, collaborative research agreements, government grants, and payments received pursuant to licensing and royalty agreements. Total cash, cash equivalents and marketable securities at June 30, 2003 totaled $29,395,000, an increase of $10,486,000 from $18,909,000 at March 31, 2003. Our operating activities used approximately $1,352,000 of cash for the three-month period ended June 30, 2003, consisting of a net loss from operations of approximately 13 $2,028,000 and a decrease in accounts payable of $687,000. These uses of cash were offset by non-cash charges of $222,000 for depreciation and amortization, a decrease in inventories of $192,000, a decrease in prepaid expenses of $152,000, and an increase in accrued expenses of $700,000. Our cash was reduced by capital expenditures of $7,000 for the three-month period ended June 30, 2003. Our investing activities used cash of approximately $1,351,000 primarily for purchases of marketable securities. We do not currently use derivative financial instruments. We generally place our marketable security investments in high quality credit instruments, as specified in our investment policy guidelines. Our investment policy also limits the amount of credit exposure to any one issue, issuer, and type of investment. We do not expect any material loss from our investment in marketable securities. On May 1, 2003, we issued and sold 2,500,000 shares of our common stock to The Riverview Group, LLC for aggregate consideration of $12,500,000. Repligen received net proceeds of approximately $11.8 million after deducting the estimated expenses of the transaction. In connection with our lease agreement, a letter of credit in the amount of $500,000 was issued to our landlord. In October 2002, this letter of credit was reduced to $200,000. The letter of credit is collateralized by a certificate of deposit held by the bank that issued the letter of credit. The certificate of deposit is included as restricted cash in the accompanying balance sheet as of June 30, 2003. During April 2002 and as required by the terms of our license agreement with ChiRhoClin, we made a milestone payment of $1,250,000 in cash in connection with the FDA's approval of SecreFlo(TM), our secretin for injection porcine product. Also pursuant to such license agreement, we issued to ChiRhoClin 696,223 shares of our common stock in October 2002. We have not granted registration rights to ChiRhoClin with respect to the shares pursuant to the license agreement. In addition, under the terms of our license agreement with ChiRhoClin, if the FDA approves the new drug application for the human synthetic secretin diagnostic product, we will be required to make additional milestones payments in cash to ChiRhoClin. We are required to pay royalties on sales of both synthetic porcine and human secretin diagnostic products. Working capital increased to $27,681,000 at June 30, 2003 from $15,602,000 at March 31, 2003 as a result of the sale of common stock to The Riverview Group, LLC. We expect to incur higher operating costs as a result of expanded research and development costs associated with the activities associated with clinical trials and material cost of our proprietary drug candidates. While we anticipate that the cost of operations will increase as we continue to expand our investment in proprietary product development, we believe we have sufficient funding to satisfy our working capital and capital expenditure requirements for the next twenty-four months. Should we need to secure additional financing to meet our future liquidity requirements, there can be no assurances that we will be able to secure such financing, or that such financing, if available, will be on terms favorable to us. Cautionary Statement Regarding Forward-Looking Statements Statements in this Quarterly Report on Form 10-Q, as well as oral statements that may be made by Repligen or by officers, directors or employees of Repligen acting on its behalf, that are not historical facts constitute "forward-looking statements" which are made pursuant to the safe 14 harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements in this Quarterly Report on Form 10-Q do not constitute guarantees of future performance. Investors are cautioned that statements in this Quarterly Report on Form 10-Q which are not strictly historical statements, including, without limitation, statements regarding current or future financial performance, management's strategy, litigation, plans and objectives for future operations, clinical trials and results and product development and manufacturing plans and performance such as the anticipated growth in the monoclonal antibody market and projected growth in product sales, constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause our actual results to be materially different from the historical results or from any results expressed or implied by such forward-looking statements, including, without limitation, risks associated with: the success of current and future collaborative relationships, the success of our clinical trials and our ability to develop and commercialize products, our ability to obtain required regulatory approvals, our compliance with all Food and Drug Administration regulations, our ability to obtain, maintain and protect intellectual property rights for our products, the risk of current and future litigation regarding our patent and other intellectual property rights, the risk of litigation with collaborative partners, our limited sales and marketing experience and capabilities, our limited manufacturing capabilities and our dependence on third-party manufacturers and value-added resellers, our ability to hire and retain skilled personnel, the market acceptance of our products, our ability to compete with larger, better financed pharmaceutical and biotechnology companies that may develop new approaches to the treatment of our targeted diseases, our history of losses and expectation of incurring continued losses, our ability to generate future revenues, our ability to raise additional capital to continue our drug development programs, our volatile stock price, the effects of our anti-takeover provisions. Further information on potential risk factors that could affect our financial results are included in the filings made by us from time to time with the Securities and Exchange Commission including under the section entitled "Certain Factors That May Affect Future Results" in our Annual Report on Form 10-K for the year ended March 31, 2003. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK INTEREST RATE RISK We have investments in commercial paper, U.S. Government and agency securities as well as corporate bonds and other debt securities; as a result, we are exposed to potential loss from market risks that may occur as a result of changes in interest rates, changes in credit quality of the issuer or otherwise. We generally place our marketable security investments in high quality credit instruments, as specified in our investment policy guidelines. Our investment policy also limits the amount of credit exposure to any one issue, issuer (with the exception of US treasury obligations), and type of investment. We intend to hold these investments to maturity, in accordance with our business plans. As of June 30, 2003, we did not have any debt arrangements that were not reflected in our balance sheet. 15 ITEM 4. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Based on an evaluation of our disclosure controls and procedures as of the end of this fiscal quarter (the "Evaluation Date"), the President, Chief Executive Officer and Principal Financial and Accounting Officer, Walter C. Herlihy, has concluded that, as of the Evaluation Date, the disclosure controls and procedures are effective. Changes in Internal Controls There were no significant changes in our internal controls over financial reporting or in other factors that could significantly affect such controls subsequent to the Evaluation Date. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Pro-Neuron, Inc. On June 21, 2001, Pro-Neuron, Inc. filed a complaint (the "Pro-Neuron Complaint") against the Regents of the University of California (the "Regents") and Repligen in the Superior Court of California, County of San Diego seeking to void the License Agreement relating to treatment of mitochondrial disease entered into between Repligen and the University of California, San Diego ("UCSD") in December 2000 (the "UCSD License Agreement"). The Pro-Neuron Complaint, among other things, requests that the court order the Regents to assign all rights licensed to Repligen pursuant to the UCSD License Agreement to Pro-Neuron. Pro-Neuron subsequently amended the complaint to include claims for misappropriation of trade secrets. On June 4, 2003, Repligen, the Regents and Pro-Neuron entered into a binding term sheet for settlement (the "Settlement") under which the Pro-Neuron complaint will be dismissed upon execution of definitive agreements between the parties. Under the terms of the Settlement, Repligen will receive $750,000. Repligen and the Regents agreed to restructure the UCSD License Agreements to exclude the field of acylated pyrimidines, including triacetyluridine ("TAU"). Repligen will discontinue its clinical trial of TAU in mitochondrial disease and will continue its clinical trials of TAU in bipolar disorder/major depression and purine autism for up to two years. Repligen will assign to Pro-Neuron any inventions from these trials, for which it has rights, involving the use of acylated pyrimidines, but will retain the rights to any inventions for all other chemical entities. Repligen may still direct future clinical trials and product development efforts to prodrugs or derivatives of uridine which are not acylated pyrimidines. Bristol-Myers Squibb Repligen is the exclusive licensee of all CTLA4-Ig patent rights owned by the University of Michigan (the "University"). Repligen and the University believe that the University has a rightful claim to ownership of certain patents of Bristol-Myers Squibb ("Bristol") which relate to compositions and uses of CTLA4, arising out of the inventive contributions by one of the University's scientists. Repligen and the University filed a complaint against Bristol in the United States District Court for the Eastern District of Michigan in August 2000 seeking a correction of inventorship. The suit asserts that Dr. Craig Thompson, the scientist from the University, made inventive contributions as part of a collaboration with Bristol scientists and is therefore a rightful inventor on patents issued to Bristol which now name only Bristol scientists as inventors. 16 The evidence phase of the trial took place between April 2 and May 5, 2003 and the parties' submission of proposed findings of fact and conclusions of law from the trial was completed on July 17, 2003. The Court has not indicated that oral argument will be required for it to render a decision. The Court's decision will not be filed under seal. There are seven patents in the suit, five of which claim compositions of matter or methods of use of soluble forms of CTLA4 which may have use in treatment of autoimmune disease and two of which are related to antibodies to CTLA4 which may have use in treatment of diseases such as cancer. Repligen and the University have asked the Court to rule that Dr. Thompson is the sole inventor on United States patent #5,844,095 entitled "CTLA4-Ig fusion proteins" and United States patent #5,434,131 entitled "Chimeric CTLA4 receptor and methods for its use" and a joint inventor on the remaining five patents in suit based on his conceptions that CTLA4 would bind B-7 and that a soluble form of CTLA4 can act as an immunosuppressant. Repligen and the University have also accused Bristol-Myers Squibb of engaging in fraudulent conduct to obtain certain of the patents. A correction of inventorship would result in the University and Repligen having rights to some or all of Bristol's patents on CTLA4-Ig. Repligen's failure to obtain ownership rights in the Bristol patents may restrict Repligen's ability to commercialize CTLA4-Ig. Repligen and the University have also filed their own patent applications related to methods of use of CTLA4-Ig. ChiRhoClin, Inc. On March 14, 2003, ChiRhoClin, Inc. ("ChiRhoClin") filed an arbitration proceeding against Repligen with the American Arbitration Association (Arbitration No. 131810059003). ChiRhoClin alleged that reimbursement of certain marketing expenses breached the license agreement between the parties by lowering the amount of royalties paid to ChiRhoClin. ChiRhoClin claimed damages of approximately $800,000. Repligen believes that ChiRhoClin's arbitration claims had no merit and was prepared to vigorously defend its rights. On July 15, 2003, ChiRhoClin withdrew its arbitration claims without prejudice. The American Arbitration Association closed its file in this matter on July 30, 2003. From time to time, we may be subject to other legal proceedings and claims in the ordinary course of business. We are not currently aware of any such proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS On May 1, 2003, we issued and sold 2,500,000 shares of our common stock to The Riverview Group, LLC for aggregate consideration of $12,500,000 in a private placement pursuant to a stock purchase agreement by and between The Riverview Group, LLC and us. Rodman & Renshaw, Inc. ("Rodman") acted as the placement agent for the transaction and we paid them approximately $625,000 for their services. Based on representations from The Riverview Group, LLC that it was acquiring the shares for investment purposes only, without a view to selling or distributing the shares, and based on the fact that Repligen was issuing the shares to only one entity, Repligen issued the shares without registration and effected the private placement on reliance on Rule 4(2) of the Securities Act of 1933, as amended (the "Securities Act"). 17 On June 25, 2003, pursuant to a Financial Advisory Agreement by and between Repligen and Rodman, Repligen engaged Rodman as a non-exclusive financial adviser until May 31, 2004. In exchange and as consideration for Rodman's financial services, Repligen issued Rodman a warrant to purchase up to an aggregate of 25,000 shares of Common Stock of Repligen (the "Warrant"). The Warrant is exercisable at $5.31 per share at any time prior to June 25, 2005. There were no underwriters involved in the transaction. Based on the fact that Repligen was issuing the warrant to only one entity, Repligen issued the warrant without registration and effected the private placement on reliance on Rule 4(2) of the Securities Act. If Repligen requires investment banking services relating to certain strategic transactions, Repligen and Rodman agreed to enter into a separate agreement setting forth the terms of the engagement and Rodman's fees. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits EXHIBIT DESCRIPTION ------- ----------- 3.1 Restated Certificate of Incorporation, dated June 30, 1992 and amended September 17, 1999 (filed as Exhibit 3.1 to Repligen Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999 and incorporated herein by reference). 3.2 By-laws (filed as Exhibit 3.2 to Repligen Corporation's Annual Report on Form 10-K for the year ended March 31, 2002 and incorporated herein by reference). 4.1 Common Stock Purchase Warrant dated June 25, 2003, issued to Rodman & Renshaw, Inc (filed herewith). 31.1 Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 8-K 1) Current Report on Form 8-K, filed on May 1, 2003, reporting an arbitration proceeding that has been filed against the Company entitled; ChiRhoClin, Inc. vs. Repligen Corporation. 2) Current Report on Form 8-K, filed on May 2, 2003, reporting Repligen's sale of 2,500,000 shares of its common stock to The Riverview Group. 3) Current Report on Form 8-K, filed June 5, 2003 reporting the Regents of the University of California and Pro-Neuron entered into a binding term sheet for settlement. 4) Current Report on Form 8-K, furnished on June 5, 2003 furnishing the Company's fourth quarter and fiscal year earnings for the fiscal year ended March 31, 2003 on Item 9. 18 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: August 12, 2003 By: /s/ Walter C. Herlihy ------------------------------------------ Chief Executive Officer and President, Principal Financial and Accounting Officer 19 Repligen Corporation Exhibit Index EXHIBIT DESCRIPTION ------- ----------- 3.1 Restated Certificate of Incorporation, dated June 30, 1992 and amended September 17, 1999 (filed as Exhibit 3.1 to Repligen Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999 and incorporated herein by reference). 3.2 By-laws (filed as Exhibit 3.2 to Repligen Corporation's Annual Report on Form 10-K for the year ended March 31, 2002 and incorporated herein by reference). 4.1 Common Stock Purchase Warrant dated June 25, 2003, issued to Rodman & Renshaw, Inc. (filed herewith). 31.1 Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 20 EX-4.1 4 d56536_ex4-1.txt COMMON STOCK PURCHASE Exhibit 4.1 THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH RESPECT THERETO. COMMON STOCK PURCHASE WARRANT Warrant No.04-01 Number of Shares: 25,000 REPLIGEN CORPORATION Void aftr June 25, 2005 1. Issuance. This Warrant is issued to Rodman & Renshaw on this 25th day of June, 2003 (the "Original Issue Date") by RepliGen Corporation, a Delaware corporation (hereinafter with its successors called the "Company"). 2. Purchase Price; Number of Shares. Subject to the terms and conditions hereinafter set forth, the registered holder of this Warrant (the "Holder"), commencing on the date hereof, is entitled upon surrender of this Warrant with the subscription form annexed hereto duly executed, at the office of the Company, 41 Seyon Street, Building 1, Suite 100, Waltham, MA 02453, or such other office as the Company shall notify the Holder of in writing, to purchase from the Company at a price per share of $5.31 (the "Purchase Price"), 25,000 fully paid and nonassessable shares of Common Stock, $.01 par value per share, of the Company (the "Common Stock"). Until such time as this Warrant is exercised in full or expires, the Purchase Price and the securities issuable upon exercise of this Warrant are subject to adjustment as hereinafter provided. 3. Payment of Purchase Price. The Purchase Price may be paid (i) in cash or by check, (ii) by the surrender by the Holder to the Company of any promissory notes or other obligations issued by the Company, with all such notes and obligations so surrendered being credited against the Purchase Price in an amount equal to the principal amount thereof plus accrued interest to the date of surrender, (iii) through delivery by the Holder to the Company of other securities issued by the Company, with such securities being credited against the Purchase Price in an amount equal to the fair market value thereof, as determined in good faith by the Board of Directors of the Company (the "Board"), or (iv) by any combination of the foregoing. The Board shall promptly respond in writing to an inquiry by the Holder as to the fair market value of any securities the Holder may wish to deliver to the Company pursuant to clause (iii) above. 4. Net Issue Election. The Holder may elect to receive, without the payment by the Holder of any additional consideration, shares equal to the value of this Warrant or any portion hereof by the surrender of this Warrant or such portion to the Company, with the net issue election notice annexed hereto duly executed, at the office of the Company. Thereupon, the Company 21 shall issue to the Holder such number of fully paid and nonassessable shares of Common Stock as is computed using the following formula: X = Y (A-B) ------- A where X = the number of shares to be issued to the Holder pursuant to this Section 4. Y = the number of shares covered by this Warrant in respect of which the net issue election is made pursuant to this Section 4. A = the fair market value of one share of Common Stock, which shall be equal to the average closing price on the Nasdaq National Market of the Common Stock over the ten (10) day period prior to the date the net issue election is made pursuant to this Section 4. B = the Purchase Price in effect under this Warrant at the time the net issue election is made pursuant to this Section 4. The Board shall promptly respond in writing to an inquiry by the Holder as to the fair market value of one share of Common Stock. 5. Partial Exercise. This Warrant may be exercised in part, and the Holder shall be entitled to receive a new warrant, which shall be dated as of the date of this Warrant, covering the number of shares in respect of which this Warrant shall not have been exercised. 6. Issuance Date. The person or persons in whose name or names any certificate representing shares of Common Stock is issued hereunder shall be deemed to have become the holder of record of the shares represented thereby as at the close of business on the date this Warrant is exercised with respect to such shares, whether or not the transfer books of the Company shall be closed. 7. Expiration Date. This Warrant shall expire at the close of business on June 25, 2005, and shall be void thereafter. 8. Reserved Shares; Valid Issuance. The Company covenants that it will at all times from and after the date hereof reserve and keep available such number of its authorized shares of Common Stock, free from all preemptive or similar rights therein, as will be sufficient to permit the exercise of this Warrant in full. The Company further covenants that such shares as may be issued pursuant to the exercise of this Warrant will, upon issuance, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof other than those caused or suffered by the Holder hereof. 9. Dividends. If after the Original Issue Date the Company shall subdivide the Common Stock, by split-up or otherwise, or combine the Common Stock, or issue additional shares of Common Stock in payment of a stock dividend on the Common Stock, the number of shares issuable on the exercise of this Warrant shall forthwith be proportionately increased in the 22 case of a subdivision or stock dividend, or proportionately decreased in the case of a combination, and the Purchase Price shall forthwith be proportionately decreased in the case of a subdivision or stock dividend, or proportionately increased in the case of a combination. 10. Mergers and Reclassifications. If after the Original Issue Date there shall be any reclassification, capital reorganization or change of the Common Stock (other than as a result of a subdivision, combination or stock dividend provided for in Section 9 hereof), or any consolidation of the Company with, or merger of the Company into, another corporation or other business organization (other than a consolidation or merger in which the Company is the continuing corporation and which does not result in any reclassification or change of the outstanding Common Stock), or any sale or conveyance to another corporation or other business organization of all or substantially all of the assets of the Company, then, as a condition of such reclassification, reorganization, change, consolidation, merger, sale or conveyance, lawful provisions shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the Holder, so that the Holder shall thereafter have the right to purchase, at a total price not to exceed that payable upon the exercise of this Warrant in full, the kind and amount of shares of stock and other securities and property receivable upon such reclassification, reorganization, change, consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock which might have been purchased by the Holder immediately prior to such reclassification, reorganization, change, consolidation, merger, sale or conveyance, and in any such case appropriate provisions shall be made with respect to the rights and interest of the Holder to the end that the provisions hereof (including without limitation, provisions for the adjustment of the Purchase Price and the number of shares issuable hereunder) shall thereafter be applicable in relation to any shares of stock or other securities and property thereafter deliverable upon exercise hereof. 11. Fractional Shares. In no event shall any fractional share of Common Stock be issued upon any exercise of this Warrant. If, upon exercise of this Warrant as an entirety, the Holder would, except as provided in this Section 11, be entitled to receive a fractional share of Common Stock, then the Company shall issue the next higher number of full shares of Common Stock, issuing a full share with respect to such fractional share. 12. Certificate of Adjustment. Whenever the Purchase Price is adjusted, as herein provided, the Company shall promptly deliver to the Holder a certificate of a firm of independent public accountants setting forth the Purchase Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. 13. Notices of Record Date, Etc. In the event of: (a) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, (b) any reclassification of the capital stock of the Company, capital reorganization of the Company, consolidation or merger involving the Company, or sale or conveyance of all or substantially all of its assets, or (c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company, 23 then and in each such event the Company will mail or cause to be mailed to the Holder a notice specifying (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (ii) the date on which any such reclassification, reorganization, consolidation, merger, sale or conveyance, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record in respect of such event are to be determined. Such notice shall be mailed at least twenty (20) days prior to the date specified in such notice on which any such action is to be taken. 14. Amendment. The terms of this Warrant may be amended, modified or waived only with the written consent of the Company and the Holder hereof. 15. Warrant Register; Transfers, Etc. A. The Company will maintain a register containing the names and addresses of the registered holders of the Warrant. The Holder may change its address as shown on the warrant register by written notice to the Company requesting such change. Any notice or written communication required or permitted to be given to the Holder may be given by certified mail or delivered to the Holder at its address as shown on the warrant register. B. Subject to compliance with applicable federal and state securities laws, this Warrant may be transferred by the Holder with respect to any or all of the shares purchasable hereunder. Upon surrender of this Warrant to the Company, together with the assignment hereof properly endorsed, for transfer of this Warrant as an entirety by the Holder, the Company shall issue a new warrant of the same denomination to the assignee. Upon surrender of this Warrant to the Company, together with the assignment hereof properly endorsed, by the Holder for transfer with respect to a portion of the shares of Common Stock purchasable hereunder, the Company shall issue a new warrant to the assignee, in such denomination as shall be requested by the Holder hereof, and shall issue to such Holder a new warrant covering the number of shares in respect of which this Warrant shall not have been transferred. C. In case this Warrant shall be mutilated, lost, stolen or destroyed, the Company shall issue a new warrant of like tenor and denomination and deliver the same (i) in exchange and substitution for and upon surrender and cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost, stolen or destroyed, upon receipt of evidence reasonably satisfactory to the Company of the loss, theft or destruction of such Warrant (including a reasonably detailed affidavit with respect to the circumstances of any loss, theft or destruction) and of indemnity reasonably satisfactory to the Company. 16. Certain Obligations. This Warrant has been issued subject to certain obligations to register the Common Stock under the Securities Act of 1933, as amended, which obligations are set forth in the Agreement, of even date herewith, between the Company, and Paramount, which are incorporated herein by reference. 17. No Impairment. The Company will not, by amendment of its certificate of incorporation, as amended or through any reclassification, capital reorganization, consolidation, merger, sale or conveyance of assets, dissolution, liquidation, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in 24 the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder. 18. Governing Law. The provisions and terms of this Warrant shall be governed by and construed in accordance with the internal laws of the Commonwealth of Massachusetts. 19. Successors and Assigns. This Warrant shall be binding upon the Company's successors and assigns and shall inure to the benefit of the Holder's successors, legal representatives and permitted assigns. 20. Business Days. If the last or appointed day for the taking of any action required or the expiration of any right granted herein shall be a Saturday or Sunday or a legal holiday in the Commonwealth of Massachusetts, then such action may be taken or right may be exercised on the next succeeding day which is not a Saturday or Sunday or such a legal holiday. Dated: June 25, 2003 REPLIGEN CORPORATION (Corporate Seal) By: /s/ Walter Herlihy Name: Walter Herlihy Attest: Title: President and CEO /s/ Barbara Burnim Day - ------------------------------ Subscription To:____________________ Date:_________________________ The undersigned hereby subscribes for __________ shares of Common Stock covered by this Warrant. The certificate(s) for such shares shall be issued in the name of the undersigned or as otherwise indicated below: ------------------------------ Signature ------------------------------ Name for Registration ------------------------------ Mailing Address 25 Net Issue Election Notice To:____________________ Date:_________________________ The undersigned hereby elects under Section 4 to surrender the right to purchase _______ shares of Common Stock pursuant to this Warrant. The certificate(s) for the shares issuable upon such net issue election shall be issued in the name of the undersigned or as otherwise indicated below. ------------------------------ Signature ------------------------------ Name for Registration ------------------------------ Mailing Address Assignment For value received ____________________________ hereby sells, assigns and transfers unto ______________________________________ - ----------------------------------------------------------------- Please print or typewrite name and address of Assignee - ----------------------------------------------------------------- the within Warrant, and does hereby irrevocably constitute and appoint _______________________ its attorney to transfer the within Warrant on the books of the within named Company with full power of substitution on the premises. Dated:__________________ In the Presence of: - ------------------------ 26 EX-31.1 5 d56536_ex31-1.txt CERTIFICATION Exhibit 31.1 RULE 13a-14(a)/15d-14(a) CERTIFICATION I, Walter C. Herlihy, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Repligen Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) [Paragraph omitted in accordance with SEC transition instructions contained in SEC Release 34-47986.] (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 12, 2003 By: /s/ Walter C. Herlihy ------------------------------------------ Chief Executive Officer and President, Principal Financial and Accounting Officer 27 EX-32.1 6 d56536_ex32-1.txt CERTIFICATION Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Repligen Corporation (the "Company") on Form 10-Q for the period ending June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Walter C. Herlihy, Chief Executive Officer and President of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. Date: August 12, 2003 By: /s/ Walter C. Herlihy ------------------------------------------ Chief Executive Officer and President, Principal Financial and Accounting Officer 28 -----END PRIVACY-ENHANCED MESSAGE-----