10-Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number

000-14656

REPLIGEN CORPORATION

(Exact Name of Registrant as Specified in its Charter)


Delaware		04-2729386
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

41 Seyon Street, Bldg. 1, Suite 100 Waltham, MA		02453
(Address of Principal Executive Offices)		(Zip Code)

(781) 250-0111

Registrant’s Telephone Number, Including Area Code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock , par value $0.01 per share	RGEN	The Nasdaq Global Select Market

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

☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule

12b-2

of the Exchange Act.:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act.): Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock on April 30, 2021 was 54,904,466.

Table of Contents


		PAGE

PART I -	FINANCIAL INFORMATION

Item 1.	Financial Statements (interim periods unaudited)

	Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020		3

	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2021 and 2020		4

	Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2021 and 2020		5

	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020		6

	Notes to Unaudited Consolidated Financial Statements		7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		33

Item 4.	Controls and Procedures		33

PART II -	OTHER INFORMATION

Item 1.	Legal Proceedings		34

Item 1A.	Risk Factors		34

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		34

Item 3.	Defaults Upon Senior Securities		34

Item 4.	Mine Safety Disclosures		34

Item 5.	Other Information		34

Item 6.	Exhibits		35

Signatures			36

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PART I – FINANCIAL INFORMATION

ITEM 1.

Financial Statements

REPLIGEN CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited, amounts in thousands, except share data)


	March 31,			December 31,
	2021			2020
ASSETS
Current assets:
Cash and cash equivalents	$	711,318		$	717,292
Accounts receivable, net of reserves of $755 and $762 at March 31, 2021 and December 31, 2020, respectively		90,207			71,389
Inventories, net		109,520			95,025
Prepaid expenses and other current assets		15,290			18,676

Total current assets		926,335			902,382
Noncurrent assets:
Property, plant and equipment, net		72,243			66,870
Intangible assets, net		281,670			287,100
Goodwill		617,517			618,305
Deferred tax assets		2,000			2,481
Operating lease right of use assets		27,033			25,176
Other noncurrent assets		529			573

Total noncurrent assets		1,000,992			1,000,505

Total assets	$	1,927,327		$	1,902,887

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	20,569		$	16,880
Operating lease liability		3,770			5,254
Accrued liabilities		42,428			53,085
Convertible S enior N otes, current portion, net		246,561			243,737

Total current liabilities		313,328			318,956
Noncurrent liabilities:
Deferred tax liabilities		26,709			27,032
Noncurrent o perating lease liability		29,559			26,425
Other noncurrent liabilities		1,515			1,324

Total noncurrent liabilities		57,783			54,781

Total liabilities		371,111			373,737

Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock, $0.01 par value, 5,000,000 shares authorized, no shares issued or outstanding		—			—
Common stock, $0.01 par value; 80,000,000 shares authorized; 54,899,245 shares at March 31, 2021 and 54,760,837 shares at December 31, 2020 issued and outstanding		549			548
Additional paid-in capital		1,467,942			1,460,748
Accumulated other comprehensive (loss) income		(7,494	)		2,085
Retained earnings		95,219			65,769

Total stockholders’ equity		1,556,216			1,529,150

Total liabilities and stockholders’ equity	$	1,927,327		$	1,902,887

The accompanying notes are an integral part of these consolidated financial statements.

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REPLIGEN CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited, amounts in thousands, except per share data)


	Three Months Ended March 31,
	2021			2020
Revenue:
Products	$	142,737		$	76,060
Royalty and other revenue		100			30

Total revenue		142,837			76,090

Costs and operating expenses:
Cost of product revenue		59,747			31,982
Research and development		7,612			4,702
Selling, general and administrative		39,095			27,500

Total costs and operating expenses		106,454			64,184

Income from operations		36,383			11,906

Other income (expenses):
Investment income		52			1,364
Interest expense		(3,106	)		(2,976	)
Other (expenses) income		(224	)		382

Other expenses, net		(3,278	)		(1,230	)

Income before income taxes		33,105			10,676
Income tax provision		3,655			861

Net income	$	29,450		$	9,815

Earnings per share:
Basic	$	0.54		$	0.19

Diluted	$	0.52		$	0.18

Weighted average common shares outstanding:
Basic		54,805			52,139

Diluted		56,869			53,109

Net income	$	29,450		$	9,815
Other comprehensive income (loss):
Foreign currency translation adjustment		(9,579	)		(5,579	)

Comprehensive income	$	19,871		$	4,236

The accompanying notes are an integral part of these consolidated financial statements.

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REPLIGEN CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, amounts in thousands, except share data)


	Three Months Ended March 31, 2021
	Common Stock
	Number of Shares		Par Value		Additional Paid- In Capital		Accumulated Other Comprehensive Income (Loss)			Retained Earnings		Total Stockholders’ Equity
Balance at December 31, 2020		54,760,837	$	548	$	1,460,748	$	2,085		$	65,769	$	1,529,150
Net income		—		—		—		—			29,450		29,450
Issuance of common stock for debt conversion		3		0		1		—			—		1
Exercise of stock options and vesting of stock units		138,405		1		507		—			—		508
Stock-based compensation expense		—		—		6,541		—			—		6,541
True up of costs related to the December 2020 issuance of common stock		—		—		145							145
Translation adjustment		—		—		—		(9,579	)		—		(9,579	)

Balance at March 31, 2021		54,899,245	$	549	$	1,467,942	$	(7,494	)	$	95,219	$	1,556,216


	Three Months Ended March 31, 2020
	Common Stock
	Number of Shares		Par Value		Additional Paid- In Capital		Accumulated Other Comprehensive Loss			Retained Earnings		Total Stockholders’ Equity
Balance at December 31, 2019		52,078,258	$	521	$	1,068,431	$	(15,027	)	$	5,843	$	1,059,768
Net income		—		—		—		—			9,815		9,815
Exercise of stock options and vesting of stock units		199,825		2		1,587		—			—		1,589
Stock-based compensation expense		—		—		4,165		—			—		4,165
Translation adjustment		—		—		—		(5,579	)		—		(5,579	)

Balance at March 31, 2020		52,278,083	$	523	$	1,074,183	$	(20,606	)	$	15,658	$	1,069,758

The accompanying notes are an integral part of these consolidated financial statements.

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REPLIGEN CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, amounts in thousands)


	Three Months Ended March 31,
	2021			2020
Cash flows from operating activities:
Net income	$	29,450		$	9,815
Adjustments to reconcile net income to net cash provided by operating activities:
Inventory step-up charges		1,598			—
Depreciation and amortization		8,444			6,390
Amortization of debt discount and issuance costs		2,828			2,691
Stock-based compensation expense		6,541			4,165
Deferred income taxes, net		789			—
Other		6			140
Changes in operating assets and liabilities, excluding impact of acquisitions:
Accounts receivable		(19,779	)		(2,251	)
Inventories		(17,025	)		(7,191	)
Prepaid expenses and other assets		(2,414	)		36
Operating lease right of use assets		(1,864	)		919
Other assets		753			—
Accounts payable		3,725			(709	)
Accrued expenses		(4,906	)		(4,989	)
Operating lease liability		1,649			334
Long-term liabilities		(533	)		180

Total cash provided by operating activities		9,262			9,530

Cash flows from investing activities:
Acquisitions, net of cash acquired		71			—
Additions to capitalized software costs		(1,484	)		(911	)
Purchases of property, plant and equipment		(7,584	)		(4,126	)

Total cash used in investing activities		(8,997	)		(5,037	)

Cash flows from financing activities:
Proceeds from exercise of stock options		508			1,599
Payment of tax withholding obligation on vesting of restricted stock		—			(10	)
Repayment of Convertible Senior Notes		(1	)		—

Total cash provided by financing activities		507			1,589

Effect of exchange rate changes on cash, cash equivalents and restricted cash		(6,746	)		(4,923	)

Net (decrease) increase in cash, cash equivalents and restricted cash		(5,974	)		1,159

Cash, cash equivalents and restricted cash, beginning of period		717,292			537,407

Cash, cash equivalents and restricted cash, end of period	$	711,318		$	538,566

Supplemental disclosure of non-cash investing and financing activities:
Assets acquired under operating leases	$	3,182		$	17

The accompanying notes are an integral part of these consolidated financial statements.

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REPLIGEN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.	Summary of Significant Accounting Policies

Basis

of Presentation

The consolidated financial statements included herein have been prepared by Repligen Corporation (the “Company”, “Repligen”, “our” or “we”) in accordance with generally accepted accounting principles in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), for Quarterly Reports on Form

10-Q

and Article 10 of Regulation

S-X

and do not include all of the information and footnote disclosures required by GAAP. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto included in the Company’s Annual Report on Form

10-K

for the fiscal year ended December 31, 2020 (“Form 10-K”), which was filed with the SEC on February 24, 2021.

The preparation of financial statements in conformity with GAAP 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. The business and economic uncertainty resulting from the novel coronavirus

(“COVID-19”)

pandemic has made such estimates more difficult to calculate. Accordingly, actual results could differ from those estimates.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Repligen Sweden AB, Repligen GmbH, Spectrum

LifeSciences LLC and its subsidiaries (“Spectrum”), C Technologies, Inc. (“C Technologies”), Engineered Molding Technology LLC (“EMT”),

Non-Metallic

Solutions, Inc. (“NMS”), ARTeSYN Biosolutions Holdings Ireland Limited (“ARTeSYN”) and Repligen Singapore Pte. Ltd. All significant intercompany accounts and transactions have been eliminated in consolidation.

The Company made no material changes in the application of its significant accounting policies that were disclosed in its Form

10-K.

In the opinion of management, the accompanying unaudited consolidated 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. Certain prior year balances have been reclassified to conform to current year presentation.

Recent Accounting Standards Updates

We consider the applicability and impact of all Accounting Standards Updates (“ASUs” or “ASU”) on the Company’s consolidated financial statements. Updates not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company’s consolidated financial position or results of operations. Recently issued ASUs that we feel may be applicable to the Company are as follows:

Recently Issued Accounting Standard Updates – Not Yet Adopted

In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU

2020-06,

“

Debt - Debt with Conversion and Other Options (Subtopic

470-20)

and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic

815-40).”

ASU

2020-06

simplifies the accounting for convertible debt instruments and convertible preferred stock by reducing the number of accounting models and the number of embedded conversion features that could be recognized separately from the primary contract. ASU

2020-06

also enhances transparency and improves disclosures for convertible instruments and earnings per share guidance. ASU

2020-06

is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update permits the use of either the modified retrospective or fully retrospective method of transition. The Company is currently evaluating the timing and impact of the adoption of ASU

2020-06

on the Company’s consolidated financial statements.

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2.	Fair Value Measurements

The Company uses various valuation approaches in determining the fair value of its assets and liabilities. The Company employs a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy is broken down into three levels based on the source of inputs as follows:


Level 1 –		Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

Level 2 –		Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly.

Level 3 –		Valu

SEC Form 10-Q filed by Repligen Corporation