- Adds to Repligen a leader in bioprocess filtration with expertise in hollow fiber technology
- Strengthens flagship XCell™ ATF product line with an extensive filtration consumables portfolio
- Diversifies markets beyond monoclonal antibody manufacturing into vaccine, recombinant protein and gene therapy
production
- Expands global commercial organization and adds direct sales in the US, Europe and Asia
- Deal expected to be accretive to Repligen earnings per share in fiscal 2018
WALTHAM, Mass., June 23, 2017 (GLOBE NEWSWIRE) -- Repligen Corporation (NASDAQ:RGEN), a life sciences company focused on
bioprocessing technology leadership, today announced that it has entered into a definitive merger agreement with privately-held
Spectrum, Inc. (“Spectrum”) for approximately $359 million, comprised of $120 million in cash plus 6,154,000 shares of Repligen
stock. Spectrum recorded revenue of $40.2 million in 2016, with greater than 90% coming from its filtration product portfolio. The
addition of Spectrum is expected to accelerate the growth of Repligen’s filtration business, provide access to new customers, and
greatly expand its commercial footprint, strengthening Repligen’s position as a leader in single-use and continuous manufacturing
technologies for bioprocessing.
Spectrum is a diversified filtration company with a differentiated portfolio of hollow fiber cartridges, bench-top to commercial
scale filtration and perfusion systems and an expansive portfolio of single-use solutions. Spectrum’s products are used for the
filtration, isolation, purification and concentration of monoclonal antibodies, vaccines, recombinant proteins, diagnostic products
and cell therapies where Spectrum offers both standard and customized solutions to its bioprocessing customers. With a strong
commercial team and a reputation for R&D innovation, we believe Spectrum is well-positioned to expand Repligen’s global market
presence in bioprocess filtration and continuous manufacturing.
Tony J. Hunt, President and CEO of Repligen said, “This is a pivotal transaction for Repligen that meets all of our acquisition
criteria and is a major step forward in building Repligen as a global leader in bioprocessing and achieving our long term financial
goals. We look forward to joining forces with the Spectrum team, with whom we are closely aligned in our commitments to delivering
innovative products and exceptional customer service.”
Roy Eddleman, Chairman and CEO of Spectrum said, “Spectrum has developed world-class products delivered with first-class
customer service. Repligen has a proven track record of unlocking additional value and accelerating growth in previous
acquisitions. I am excited for the opportunities our combined businesses will bring to our customers, employees and other
stakeholders.”
Tony MacDonald, President of Spectrum said, “This is a great synergistic pairing, as both companies share a real drive and
vision to bring flexible and customer tailored solutions to the rapidly growing bioprocessing industry. With Spectrum’s leadership
in hollow fiber filtration, we see clear opportunities to accelerate our combined success and we look forward to joining the
Repligen team.”
Expected Strategic and Financial Benefits of the Transaction
- Adds a market leader in bioprocess filtration with expertise in hollow fiber technology
Spectrum is a technology and market leader in bioprocess filtration with hollow fiber (HF) tangential flow
filtration (TFF) products and associated systems and consumables. The Spectrum portfolio is expected to complement and strengthen
Repligen’s position in the filtration market, where its existing filtration products are established in upstream and downstream
monoclonal antibody production.
- Strengthens flagship XCell™ ATF product line with a filtration consumable portfolio
The addition of Spectrum hollow fiber TFF products and associated R&D expertise directly addresses the
consumable gap in Repligen’s XCell™ ATF filtration portfolio and provides Repligen with a unique opportunity to develop new
products that address customer needs in bioprocessing. Repligen currently purchases hollow fiber filters for use in its XCell™
ATF systems through OEM agreements, with Spectrum as its main supplier. The proposed acquisition significantly expands Repligen’s
filtration product offering.
- Diversifies markets beyond monoclonal antibody production into vaccine, recombinant protein and gene therapy
production
Spectrum has diversified its customer base as hollow fiber technology is well established in vaccine, recombinant
protein and gene therapy markets, as well as monoclonal antibody production. We believe that access to broader markets will
provide opportunities for Repligen to cross-sell chromatography and filtration products into these areas.
- Extends our global commercial organization and adds a direct sales presence in Asia
The proposed acquisition is expected to more than double Repligen’s sales force of 15 direct reps, adding Spectrum
direct reps with deep experience in filtration and bioprocessing. Spectrum has invested significantly in building out their
commercial team in the US, Europe and Asia, which we believe will help Repligen to accelerate its market penetration in these
regions.
- Positive Projected Financial Impact
Spectrum recorded $40.2 million of revenue for 2016, including sales of Spectrum products to Repligen, and has grown
its revenue at an annual CAGR of approximately 15% since 2014. Spectrum is expected to add $17 to $18 million to Repligen
revenue in 2017, based on assumed revenue for 5 months of Repligen ownership, and adjusting for intercompany sales of Spectrum
filters to Repligen. For the full year 2018, Spectrum is expected to grow double-digit and contribute $47 to $50 million in
incremental revenue (adjusted for intercompany sales), at gross margins that are above Repligen’s corporate average of 55.5% to
56.5% per Repligen’s most recent 2017 guidance. Repligen expects the deal to be breakeven to adjusted EPS in 2017 and accretive
to both GAAP and adjusted EPS in 2018. Three-year total synergies are expected to be in the range of $20 to $25 million,
comprised of revenue synergies of $15 to $20 million at gross margins above Repligen’s corporate average and cost synergies of
greater than $5 million.
Approvals and Financing
The transaction is expected to be completed during the third quarter of 2017, subject to the satisfaction of customary closing
conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino (HSR) Antitrust Improvements
Act of 1976. To fund the transaction, Repligen intends to use its cash on hand, which totaled approximately $142 million on
March 31, 2017, and potentially a committed debt financing of $30 million that it has obtained from JPMorgan Chase Bank, N.A.
Perella Weinberg Partners LP is acting as financial advisor to Repligen and Goodwin Procter LLP is serving as legal counsel to
Repligen. JPMorgan Chase Bank, N.A. is serving as initial lender, lead arranger and the sole administrative agent under the
committed debt financing and Simpson Thatcher serves as its legal advisor.
Use of Non-GAAP Financial Measures
For the purposes of addressing the financial impact of the proposed addition of the Spectrum business, this release and the slide
deck that accompanies today’s webcast include discussions of expectations for non-GAAP adjusted earnings per diluted share (EPS).
Adjusted EPS excludes gains or losses that are either isolated or cannot be expected to occur again with any regularity or
predictability, including due to the impact of acquisitions, tax provisions/benefits related to the previous items, benefits from
tax credit carryforwards, and the impact of tax audits or events. We exclude these items because they are outside of our normal
operations and/or, in certain cases, are difficult to forecast accurately for future periods. We believe that the use of non-GAAP
adjusted EPS helps investors to gain a better understanding of our core operating results and future prospects, consistent with how
management measures and forecasts the company's performance, especially when comparing such results to previous periods or
forecasts.
Conference Call and Webcast
Repligen management will host a conference call and webcast at 8:30 am ET today to provide more information on this
announcement. The webcast and accompanying slides can be accessed in the Investor Events & Presentations section of Repligen’s website. An audio archive of the
call will be available for a limited period of time following the event.
Live event webcast with slides:
URL: http://edge.media-server.com/m/p/ccekwwd8
Live event dial-in:
Domestic: (844) 835-7432
International: (404) 537-3372
Conference ID: 45284567
Archived event dial-in:
Domestic: (855) 859-2056
International: (404) 537-3406
Conference ID: 45284567
About Repligen Corporation
Repligen Corporation (NASDAQ:RGEN) is a bioprocessing company focused on the development, manufacture and commercialization of
highly innovative products used to manufacture biologic drugs. Our bioprocessing products are sold to major life sciences
companies, biopharmaceutical development companies and contract manufacturing organizations worldwide. We are the leading
manufacturer of Protein A affinity ligands, a critical component of Protein A resins that are used to separate and purify
monoclonal antibody-based therapeutics. In upstream processes, our XCell™ ATF systems and growth factors are used to accelerate and
increase productivity during the cell culture stage of biologic drug manufacturing. In downstream processes, we developed and
market our innovative line of OPUS® chromatography columns that we deliver pre-packed with our customers’ choice of resin for their
bench-scale through clinical production-scale purification needs. With the acquisition of TangenX, we also manufacture single-use
Sius™ TFF cassettes and hardware, used in downstream protein concentration and filtration processes. Repligen’s corporate
headquarters are in Waltham, MA (USA) and our manufacturing facilities are located in Waltham, MA, Shrewsbury, MA, Lund, Sweden and
Weingarten, Germany.
Forward-Looking Statements
The following constitutes a “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release
contains forward-looking statements, which are made pursuant to the safe 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. Investors are cautioned that statements in
this press release which are not strictly historical statements, constitute forward-looking statements, including, without
limitation, express or implied statements or guidance regarding the expected results of the acquisition on Repligen’s future
financial performance, , including the accretive nature and the timing of the accretive nature of the Spectrum acquisition,
expected synergies following the acquisition of Spectrum, customer adoption of Spectrum products, the expected expansion of
Repligen’s product lines and growth into foreign markets, the anticipated funding for the acquisition, and the timing of the
closing of the acquisition, and other statements identified by words like “believe,” “expect,” “may,” “will,” “should,” “seek,”
“anticipate,” or “could” and similar expressions. Such forward-looking statements are subject to a number of risks and
uncertainties that could cause actual results to differ materially from those anticipated, including, without limitation, risks
associated with: the risk that the proposed acquisition may not be completed in a timely manner, or at all; the occurrence of any
event, change or other circumstance that could give rise to the termination of the acquisition; our ability to integrate Spectrum’s
business and personnel and to achieve expected synergies; our ability to maintain or expand Spectrum’s historical sales; our
ability to accurately forecast the acquisition, related restructuring costs and allocation of the purchase price, goodwill and
other intangibles acquisition related and other asset adjustments; our ability to develop and commercialize products and the market
acceptance of our products; reduced demand for single-use or disposable bioprocessing products that adversely impacts our future
revenues, cash flows, results of operations and financial condition; our volatile stock price; and other risks detailed in
Repligen’s most recent Annual Report on Form 10-K on file with the Securities and Exchange Commission and the other reports that
Repligen periodically files with the Securities and Exchange Commission. Actual results may differ materially from those Repligen
contemplated by these forward-looking statements. These forward looking statements reflect management’s current views and Repligen
does not undertake to update any of these forward-looking statements to reflect a change in its views or events or circumstances
that occur after the date hereof except as required by law.
Contact: Sondra Newman investors@repligen.com
