- 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
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 technologySpectrum 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 portfolioThe 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
productionSpectrum 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 AsiaThe 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 ImpactSpectrum
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 FinancingThe 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 MeasuresFor 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)
835-7432International: (404) 537-3372Conference ID: 45284567
Archived event dial-in:Domestic: (855)
859-2056International: (404) 537-3406Conference 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 StatementsThe 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
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