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:
|
|
Valuations based on unadjusted quoted prices in active markets for
identical assets or liabilities that the Company has the ability to
access.
|
|
|
|
|
|
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.
|
|
|
|
|
|
Valuations based on inputs that are unobservable and significant to
the overall fair value measurement.
|
The availability of observable inputs can vary among the various
types of financial assets and liabilities. To the extent that the
valuation is based on models or inputs that are less observable or
unobservable in the market, the determination of fair value
requires more judgment. In certain cases, the inputs used to
measure fair value may fall into different levels of the fair value
hierarchy. In such cases, for financial statement disclosure
purposes, the level in the fair value hierarchy within which the
fair value measurement is categorized is based on the lowest level
input that is significant to the overall fair value
measurement.
As of March 31, 2020 and December 31, 2019, cash and cash
equivalents on the Company’s consolidated balance sheets included
$414.2 million and $415.6 million, respectively, in a
money market account. These funds are valued on a recurring basis
using Level 1 inputs.
In
July 2019
,
the Company issued $
287.5
million aggregate principal amount of the Company’s
0.375
%
Convertible Senior Notes due July
15
,
2024
(the “
2019
Notes”). Interest is payable
semi-annually
in arrears on January
15
and July
15
of each year. The
2019
Notes will mature on
July 15, 2024
unless earlier converted or repurchased in accordance with their
terms. As of March
31
,
2020
,
the carrying value of the
2019
Notes was $
235.5
million, net of
unamortized
discount, and the fair value of the
2019
Notes was $
304.1
million. The fair value of the
2019
Notes is a Level
1
valuation and was determined based on the most recent trade
activity of the
2019
Notes as of March
31
,
2020
.
The
2019
Notes are discussed in more detail in Note
8
,
“Convertible Senior
Notes”
to these consolidated financial statements.
D
uring the three months ended March 31, 2020
t
here were no remeasurements to fair value
of financial assets and liabilities that are not measured at fair
value on a recurring basis.
3.
|
Acquisition of C
Technologies, Inc.
|
On April 25, 2019, Repligen agreed to acquire C Technologies,
pursuant to the terms of a Stock Purchase Agreement (the
“Agreement”), by and among Repligen, C Technologies and Craig
Harrison, an individual and sole stockholder of C Technologies
(such acquisition, the “C Technologies Acquisition”).
C Technologies’ business consists of two major product categories
(i) biotechnology, or Biotech, and (ii) Legacy and Other.
Through its Biotech category, C Technologies sells instruments,
consumables and accessories that are designed to allow
bioprocessing technicians to measure the protein concentration of a
liquid sample using C Technologies’ Slope Spectroscopy
®
method, which eliminates the need for manual sample dilution. C
Technologies’ lead product, the SoloVPE instrument platform, was
launched in 2008 for
off-line
and
at-line
protein concentration measurements conducted in quality control,
process development and manufacturing labs in the production of
biological therapeutics. C Technologies’ FlowVPE platform, an
extension of the SoloVPE technology, was designed to allow end
users to make
in-line
protein concentration measurements in filtration, chromatography
and fill-finish applications, designed to allow for real-time
process monitoring.
Consideration Transferred
The C Technologies Acquisition was accounted for as a purchase of a
business under Accounting Standards Codification No. 805,
. The C Technologies Acquisition was funded through payment of
approximately $195.0 million in cash, $186.0 million of
which is consideration transferred pursuant to ASC 805, and
$9.0 million of which will be compensation expense for future
employment, and 779,221 unregistered shares of the Company’s common
stock totaling $53.9 million for a total purchase price of
$239.9 million. Under the acquisition method of accounting,
the assets of C Technologies were
recorded as of the acquisition date, at their respective fair
values, and consolidated with those of
Repligen
.
The fair value of the net tangible assets acquired
was
$
6.8
million, the fair value of the intangible assets
acquired
was
$
90.8
million, and the residual goodwill
was
$
142.3
million. The consideration and purchase price information has
been prepared using a valuation
that
required the use of significant assumptions and estimates. Critical
estimates included, but were not limited to, future expected cash
flows, including projected revenues and expenses, and the
applicable discount rates. These estimates were based on
assumptions that
Repligen
believes to be reasonable
,
h
owever, actual results may differ from these estimates.