Competition

Our bioprocessing products compete on the basis of quality, performance, cost effectiveness, and application suitability with numerous established technologies. Additional products using new technologies that may be competitive with our products may also be introduced. Many of the companies selling or developing competitive products, which in some cases include GE Healthcare and MilliporeSigma, our two largest customers, have greater financial and human resources, research and development, manufacturing and marketing experience than we do. They may undertake their own development of products that are substantially similar to, or compete with, our products and they may succeed in developing products that are more effective or less costly than any that we may develop. These competitors may also prove to be more successful in their production, marketing and commercialization activities. We cannot be certain that the research, development and commercialization efforts of our competitors will not render any of our existing or potential products obsolete.

Manufacturing

We manufacture seven commercial forms of Protein A, including “native” Protein A for life sciences companies, including GE Healthcare, MilliporeSigma and EMD MilliporePurolite, under long-term supply agreements which expire between 20152019 and 2021.2023. Native Protein A is manufactured in Lund, Sweden, while the recombinant forms are manufactured in Waltham, Massachusetts or in both Waltham, Massachusetts and Lund, Sweden. We currently manufacture our growth factor products in Sweden and ourLund, Sweden. Our OPUS chromatography columns and XCell ATF System products are manufactured in Waltham, Massachusetts. Our OPUSPD columns are manufactured in Ravensburg, Germany, and our Sius TFF products are manufactured in Shrewsbury, Massachusetts. Our KrosFlo line of products is manufactured in Rancho Dominguez, California. Our Spectra/Pro andPro-Connex products are manufactured in Irving, Texas, and our Spectra/Chrom products are manufactured in Houston, Texas.

We generally purchase raw materials from more than one commercially established company and believe that the necessary raw materials are currently commercially available in sufficient quantities necessary to meet market demand. However, there are only a limited number of suppliers of materials related to the XCell ATF System products, one of which is the soleprimary supplier of materials used for consumable XCell ATF System products.

We utilize our own facilities in Waltham, Massachusetts and Lund, Sweden as well as third party contract manufacturing organizations to carry out certain fermentation and recovery operations, while the purification, immobilization, packaging and quality control testing of our bioprocessing products are conducted at our facilities. Our U.S. facility,facilities located in Waltham, MassachusettsMassachusetts; Lund, Sweden; Ravensburg, Germany; and our Sweden facility, located in Lund,Rancho Dominguez, California are both ISO 90019001:2015 certified and maintain formal quality systems to maintain process control, traceability, and product conformance. Additionally, our facility in Irving, Texas is ISO 13485:2012

certified. We practice continuous improvement initiatives based on routine internal audits as well as external feedback and audits performed by our partners and customers. In addition, we maintain a business continuity management system which focuses on key areas such as contingency planning, security stocks andoff-site storage of raw materials and finished goods to ensure continuous supply of our products.

Available Information

We maintain a website with the address www.repligen.com.www.repligen.com. We are not including the information contained on our website as a part of, or incorporating it by reference into, this Annual Report on Form10-K. We make available free of charge through our website our annual reportsAnnual Reports on Form10-K, quarterly reports Quarterly Reports on Form10-Q and current reportsCurrent Reports on Form8-K, and amendments to these reports, as soon as reasonably practicable after we electronically file such materials with, or furnish such materials to, the Securities and Exchange Commission. Our Code of Business Conduct and Ethics is also available free of charge through our website.

In addition, the public may read and copy any materials that we file with the Securities and Exchange Commission at the Securities and Exchange Commission’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at1-800-SEC-0330. Also, our filings with the Securities and Exchange Commission may be accessed through the Securities and Exchange Commission’s Electronic Data Gathering, Analysis and Retrieval (EDGAR) system at www.sec.gov.

Investors should carefully consider the risk factors described below before making an investment decision.

If any of the events described in the following risk factors occur, our business, financial condition or results of operations could be materially harmed. In that case the trading price of our common stock could decline, and investors may lose all or part of their investment. Additional risks and uncertainties that we are unaware of or that we currently deem immaterial may also become important factors that affect Repligen.

This Annual Report on Form10-K contains forward looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward looking statements as a result of certain factors, including the risks faced by us described below and elsewhere in this Annual Report onForm 10-K.

We face competition from numerous competitors, most of whom have far greater resources than we have, which may make it more difficult for us to achieve significant market penetration.

The bioprocessing market is intensely competitive, subject to rapid change and significantly affected by new product introductions and other market activities of industry participants.

Many of our competitors are large, well-capitalized companies with significantly more market share and resources than we have. As a consequence, they are able to spend more aggressively on product development, marketing, sales and other product initiatives than we can. Many of these competitors have:

Our current competitors, including certain of our customers, or other companies may at any time develop additional products that compete with our products. If an existing or future competitorany company develops products that compete with or are superior to our products, our revenue may decline. In addition, some of our competitors may compete by lowering the price of their products. If prices were to fall, we may not be able to improve our gross margins or sales growth sufficiently to maintain and grow our profitability.

We dependDespite our increasingly diversified client base, we have historically depended on, and expect to continue to depend on, a limited number of customers for a high percentage of our revenues.

As a result, theThe loss of, or a significant reduction in orders from, any of these customers, including following any termination or failure to renew a long-term supply contract, would significantly reduce our revenues and harm our results of operations. If a large customer purchases fewer of our products, defers orders or fails to place additional orders with us for any other reason, including for business continuity purposes, our revenue could decline, and our operating results may not meet market expectations. In addition, if those customers order our products, but fail to pay on time or at all, our liquidity and operating results could be materially and adversely affected. Furthermore, if any of our current or future products compete with those of any of our largest customers, these customers may place fewer orders with us or cease placing orders with us, which would could negatively affect our revenues and operating results.

AsIf we evolve from a company dependent on othersare unable to commercialize our products to a company selling directly to end users, we may encounter difficulties in expandingexpand our product portfolio, and our commercial efforts.ability to generate revenue could be adversely affected.

In connection with the Company’s decision to focus our efforts on the growth of our core bioprocessing business, we are increasingly seeking to develop and commercialize our own portfolio of products. Our future financial performance will depend, in part, on our ability to successfully develop and acquire additional bioprocessing products. There is no guarantee that we will be able to successfully acquire or develop additional bioprocessing products, and the Company’s financial performance will likely suffer if we are unable to do so.

If intangible assets and goodwill that we recorded in connection with our acquisitions become impaired, we couldmay have to take significant charges against earnings.

In connection with the accounting for theour acquisitions of Novozymes, Acquisition,Refine, Atoll, TangenX and Spectrum, we recorded a significant amount of intangible assets, including developed technology and customer relationships relating to the growth factor products. In addition, in connection with the accounting for the Refine acquisition, we recorded a significant amount of intangible assets, including developed technologyacquired product lines, and customer relationships relating to the ATF system.goodwill. Under U.S. GAAP, we must assess, at least annually and potentially more frequently, whether the value of intangible assets and goodwill has been impaired. Intangible assets and goodwill will be assessed for impairment in the event of an impairment indicator. Any reduction or impairment of the value of intangible assets and goodwill will result in a charge against earnings, which could materially adversely affect our results of operations and shareholders’ equity in future periods.

Spectrum may have unknown liabilities or liabilities which exceed our estimates. Any such liabilities could adversely affect our financial position.

Spectrum’s business activities may have associated with them various potential liabilities relating to the conduct of its business prior to the Spectrum Acquisition, including, but not limited to, product liability, historical tax matters and other potential liabilities that could adversely affect our financial position. We have assumed these potential liabilities as of the closing of the Spectrum Acquisition on August 1, 2017. The obligations of Spectrum’s former security holders to indemnify us is limited to approximately $36.0 million, subject to limited exceptions. If any liability claims were to arise, we may not be entitled to sufficient, or any, indemnification or recourse from Spectrum’s former security holders, which could have a materially adverse impact on our business and results of operations.

Our exposure to political, economic and other risks that arise from operating a multinational business has and may continue to increase.

We operate on a global basis with offices or activities in Japan, South Korea, China, India, Europe and North America. Our operations and sales outside of the United StatesU.S. have increased as a result of theour acquisitions of Novozymes, AcquisitionRefine, Atoll, TangenX and the Refine AcquisitionSpectrum and the continued expansion of our commercial organization. Risks related to these increased foreign operations include:

Our business success depends in part on our ability to anticipate and effectively manage these and other.other related factors. We cannot assure you that these and other related factors will not materially adversely affect our international operations or business as a whole.

In addition, a deterioration in diplomatic relations between the U.S. and any country where we conduct business could adversely affect our future operations and lead to a decline in profitability.

We may be unable to efficiently manage efficiently having become a larger and more geographically diverse organization.

TheOur acquisitions of Novozymes, Acquisition, the Refine, Acquisition,Atoll, TangenX and Spectrum, the continued expansion of our commercial sales operations, and our organic growth have increased the scope and complexity of our business. We will face

challenges inherent in efficiently managing a more complex business with an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits and compliance programs. Our inability to manage successfully the geographically more diverse (including from a cultural perspective) and substantially larger combined organization could materially adversely affect our operating results and, as a result, the market price of our common stock.

TheOur business is subject to a number of environmental risks of our business have increased dramatically.risks.

Our manufacturing business involves the controlled use of hazardous materials and chemicals and is therefore subject to numerous environmental and safety laws and regulations and to periodic inspections for possible violations of these laws and regulations. In addition to these hazardous materials and chemicals, our facility in

Sweden also uses Staphylococcus aureus and toxins produced by Staphylococcus aureus in some of its manufacturing processes. Staphylococcus aureus and the toxins it produces, particularly enterotoxins, can cause severe illness in humans. The costs of compliance with environmental and safety laws and regulations are significant and have increased since we completed the acquisition of the Novozymes Biopharma Business.significant. Any violations, even if inadvertent or accidental, of current or future environmental, safety laws or regulations and the cost of compliance with any resulting order or fine could adversely affect our operations.

Our acquisitions expose us to risks that could adversely affect our business, and we may not achieve the anticipated benefits of acquisitions of businesses or technologies.

In addition to theour acquisitions of Novozymes, AcquisitionRefine, Atoll, TangenX and the Refine Acquisition,Spectrum, and as a part of our growth strategy, we may make selected acquisitions of complementary products and/or businesses. Any acquisition involves numerous risks and operational, financial, and managerial challenges, including the following, any of which could adversely affect our business, financial condition, or results of operations:

In addition, the successful integration of acquired businesses requires significant efforts and expense across all operational areas, including sales and marketing, research and development, manufacturing, finance, legal, and information technologies. There can be no assurance that any of the acquisitions we may make will be successful or will be, or will remain, profitable. Our failure to successfully address the foregoing risks may prevent us from achieving the anticipated benefits from any acquisition in a reasonable time frame, or at all.

Servicing our debt will require a significant amount of cash, and we may not have sufficient cash flow from our business to make payments on our debt.

We incurred significant indebtedness in the amount of $115.0 million in aggregate principal with additional accrued interest under our 2.125% Convertible Senior Notes due 2021 (the “Notes”). Our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our indebtedness, including the Notes, depends on our future performance, which is subject to economic, financial, competitive and other factors that may be beyond our control. Our business may not generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. In addition, in the event of a fundamental change or a default under the Notes, the holders and/or the trustee under the indentures governing the Notes may accelerate the payment obligations or trigger the holders’ repurchase rights under the Notes. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations, including the Notes.

If a make-whole fundamental change, such as an acquisition of our company, occurs prior to the maturity of the Notes, under certain circumstances, the conversion rate for the Notes will increase such that additional shares of our common stock will be issued upon conversion of the Notes in connection with such make-whole fundamental change. The increase in the Refine Acquisition,conversion rate will be determined based on the date on which the make-whole fundamental change occurs or becomes effective and the price paid (or deemed paid) per share of our common stock in such transaction. Upon conversion of the Notes, unless we entered into a transition services agreement whereby the sellers agreedelect to provide transitional services that were reasonablydeliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to operatemake cash payments in respect of the Refine BusinessNotes being converted. We may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of Notes surrendered therefor or notes being converted. Our failure to repurchase Notes at a time when the repurchase is required by the indenture or to pay any cash payable on future conversions of the Notes as required by the indenture would constitute a default under the indenture. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the notes or make cash payments upon conversions thereof.

In addition, our significant indebtedness, combined with our other financial obligations and contractual commitments, could have other important consequences. For example, it could:

Any of these factors could materially and adversely affect our business, financial condition orand results of operations. Furthermore,In addition, if we expectincur additional indebtedness, the risks related to our business and our ability to service or repay our indebtedness would increase.

Future strategic transactions or acquisitions may require us to seek additional financing, which we may not be able to secure on favorable terms, if at all.

We plan to continue a portionstrategy of growth and development for our future revenue growthbioprocessing business, and we actively evaluate various strategic transactions on an ongoing basis, including licensing or acquiring complementary products, technologies or businesses that would complement our existing portfolio of development programs. In order to come from existingcomplete such strategic transactions, we may need to seek additional financing to fund these investments and new ATF System products and technologies. The commercial success will dependacquisitions. Should we need to do so, we may not be able to secure such financing, or obtain such financing on among other factors, our successful integrationfavorable terms because of the Refine Business, and the acceptancevolatile nature of the ATF System products and technologies bybiotechnology marketplace. In addition, future acquisitions may require the life science and biopharmaceutical industries. As aissuance or sale of additional equity or debt securities, which may result there can be no assurance that these products and technologies, even if successfully developed and introduced, will be accepted by customers. If customers do not adoptin additional dilution to our ATF products and technologies, our results of operations may suffer and, as a result, the market price of our common stock may decline.stockholders.

The ATF System business reliesWe rely on a limited number of suppliers or, in some cases,for certain of our products, one supplier, and we may not be able to find replacements or immediately transition to alternative suppliers, which could have a material adverse effect on the ATF System business and our financial condition, results of operations and reputation.

There are only a limited number of suppliers of materials related to the ATF System products, one of which is the sole supplier of materials used for consumableXCell ATF System products. An interruption in operations of the business related to these products could occur if we encounter delays or difficulties in securing thesethe required materials, or if we cannot then obtain an acceptable substitute. Any such interruption could significantly affect the business related to these products and our financial condition, results of operations and reputation.

WeFor example, we believe that only a small number of suppliers are currently qualified to supply materials for the XCell ATF system.System. The use of materials furnished by these replacement suppliers would require us to alter our operations related to the XCell ATF system.System. Transitioning to a new supplier for our products would be time consuming and expensive, may result in interruptions in our operations, could affect the performance specifications of the ATF systemour product lines or could require that we revalidate the materials. There can be no assurance that we will be able to secure alternative materials, and bring such materials on line and revalidate them without experiencing interruptions in our workflow. If we should encounter delays or difficulties in securing, reconfiguring or revalidating the materials required for ATF Systemour products, our business related to these products and our financial condition, results of operations and reputation could be adversely affected.

Our royalty agreement with Bristol-Myers SquibbAs we evolve from a company dependent on sales of Orencia expired on December 31, 2013.

Our royalty agreement with Bristol provided for usothers to receive payments from Bristol based on their net sales of their Orencia^® product in the United States through December 31, 2013. Ascommercialize our products to a result, we no longer receive royalty payments under this agreement as of December 31, 2013. If we are unablecompany selling directly to replace these royalty payments with an alternative source of revenue and related income, our operating results will decline and, as a result,end users, we may experience a declineencounter difficulties in the price ofexpanding our common stock.

Our license agreement with Pfizer will expire on April 26, 2015.

Our licensing agreement with Pfizer provided for us to potentially receive payments from Pfizer based on milestones related to clinical developmentproduct portfolio and initialour commercial sales in specific geographies, as well as royalty payments from Pfizer based on its future sales of RG3039 or any SMA compounds developed under the license agreement. On January 26, 2015, Pfizer issued to us a notice of its termination of the License Agreement for convenience, effective as of April 26, 2015. As a result, we will no longer receive milestone payments under this agreement.

We have limited sales and marketing capabilities.

We have a small sales force and, historically,Prior to 2016, we have generated most of our revenues through sales of bioprocessing products to a limited number of life sciences companies, such as GE Healthcare, EMD Millipore, Sigma-Aldrich, Life TechnologiesMilliporeSigma and through other individual distributors. However, due in part to the Refine Acquisition,our recent strategic acquisitions, an increasing amount of our revenue is attributable to our commercialization of bioprocessing products that we sell directly toend-users such as biopharmaceutical companies and contract manufacturing organizations. This has required and will continue to require us to invest additional resources in our sales and marketing capabilities. We may not be able to attract and retain additional sales and marketing professionals, and the cost of building the sales and marketing function may not generate our anticipated revenue growth. In addition, our sales and marketing efforts may be unsuccessful. Our failure to manage these risks may have a negative impact on our financial condition, or results of operations and may cause our stock price to decline.

If we are unable to obtain or maintain our intellectual property, we may not be able to succeed commercially.

We endeavor to obtain and maintain patent and trade secret protection for our products and processes when available in order to protect them from unauthorized use and to produce a financial return consistent with the significant time and expense required to bring our products to market. Our success will depend, in part, on our ability to:

We consider trade secrets,know-how and other forms of market protection to be among the most important elements of our proprietary position. We also own or have exclusive rights to a number of U.S. patents and U.S. pending patent applications as well as corresponding foreign patents and patent applications. We cannot be sure that any patent applications relating to our products that we will file in the future or that any currently pending applications will issue on a timely basis, if ever. Since patent applications in the United StatesU.S. filed prior to November 2000 are maintained in secrecy until patents issue and since publication of discoveries in the scientific or patent literature often lag behind actual discoveries, we cannot be certain that we were the first to make the inventions covered by each of our pending patent applications or that we were the first to file patent applications for such inventions. Even if patents are issued, the degree of protection afforded by such patents will depend upon the:

The patent position of life sciences companies is often highly uncertain and usually involves complex legal and scientific questions. Patents which may be granted to us in certain foreign countries may be subject to opposition proceedings brought by third parties or result in suits by us, which may be costly and result in adverse consequences for us.

In some cases, litigation or other proceedings may be necessary to assert claims of infringement, to enforce patents issued to us or our licensors, to protect trade secrets,know-how or other intellectual property rights we own or to determine the scope and validity of the proprietary rights of third parties. Such litigation could result in substantial cost to us and diversion of our resources. An adverse outcome in any such litigation or proceeding could have a material adverse effect on our business, financial condition and results of operations.

If our competitors prepare and file patent applications in the United StatesU.S. that claim technology also claimed by us, we may be required to participate in interference proceedings declared by the U.S. Patent and Trademark Office to determine priority of invention, which would result in substantial costs to us.

Since someWhile one of our U.S. patents covering recombinant Protein A had its term adjusted to expire in 2028, our other U.S. patents covering recombinant Protein A have expired, and as a result, we may face increased competition, which could harm our results of operations, financial condition, cash flow and future prospects.

Other companies could begin manufacturing and selling native or some of the commercial forms of recombinant Protein A in the U.S. and may directly compete with us on certain Protein A products. This may induce us to sell Protein A at lower prices and may erode our market share, which could adversely affect our results of operations, financial condition, cash flow and future prospects.

Our freedom to develop our products may be challenged by others, and we may have to engage in litigation to determine the scope and validity of competitors’ patents and proprietary rights, which, if we do not prevail, could harm our business, results of operations, financial condition, cash flow and future prospects.

There has been substantial litigation and other proceedings regarding the complex patent and other intellectual property rights in the life sciences industry. We have been a party to, and in the future may become a party to, patent litigation or other proceedings regarding intellectual property rights.

Other types of situations in which we may become involved in patent litigation or other intellectual property proceedings include:

The cost to us of any patent litigation or other proceeding, even if resolved in our favor, could be substantial. Some of our competitors may be able to sustain the cost of such litigation or proceedings more effectively than we can because of their substantially greater financial resources. If a patent litigation or other intellectual property proceeding is resolved in a way that is unfavorable to us, we or our collaborative or strategic partners may be enjoined from manufacturing or selling our products and services without a license from the other party and be held liable for significant damages. The failure to obtain any required license on commercially acceptable terms or at all may harm our business, results of operations, financial condition, cash flow and future prospects.

Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. Patent litigation and other proceedings may also absorb significant management time, attention and resources.

We may become involved in litigation or other proceedings with collaborative partners, which may be time consuming, costly and could result in delays in our development and commercialization efforts.

In connection with the Company’s decision to focus its efforts on the growth of its core bioprocessing business, we will seeksought development and commercialization partnerships for our remaining portfolio of clinical stage assets. Any disputes with such partners, such as BioMarin, that lead to litigation or similar proceedings may result in us incurring legal expenses, as well as facing potential legal liability. Such disputes, litigation or other proceedings are also time consuming and may cause delays in our development and commercialization efforts. If we fail to resolve these disputes quickly and with terms that are no less favorable to us than the current terms of the arrangements, our business, results of operations, financial condition, cash flow and future prospects may be harmed.

If we are unable to continue to hire and retain skilled personnel, then we will have trouble developing and marketing our products.

Our success depends largely upon the continued service of our management and scientific staff and our ability to attract retain and motivate highly skilled technical, scientific, management and marketing personnel. We also

face significant competition in the hiring and retention of such personnel from other companies, research and academic institutions, government and other organizations who have superior funding and resources. The loss of key personnel or our inability to hire and retain skilled personnel could materially adversely affect our product development efforts and our business.

The market may not be receptive to our new bioprocessing products upon their introduction.

We expect a portion of our future revenue growth to come from introducing new bioprocessing products, such as a larger size version ofincluding line extensions and new features for our OPUS disposable chromatography products, thecolumns, our XCell ATF System, we acquired from Refine,our Sius TFF product line, our Spectrum hollow fiber modules and newTFF systems and our growth factors. The commercial success of theseall of our products as well as the products acquired in the Novozymes Acquisition and the Refine Acquisition, will depend upon their acceptance by the life science and biopharmaceutical industries. Many of the bioprocessing products that we are developing are based upon new technologies or approaches. As a result, there can be no assurance that these new products, even if successfully developed and introduced, will be accepted by customers. If customers do not adopt our new products and technologies, our results of operations may suffer and, as a result, the market price of our common stock may decline.

If our newOur products do not achieve sufficient market acceptance, our resultsare subject to quality control requirements.

Whether a product is produced by us or purchased from outside suppliers, it is subjected to quality control procedures, including the verification of operationsporosity and competitive position could suffer.

There can be no assurance that unforeseen problems will not occur with respectcertain products, the complete validation for good manufacturing practices, U.S. Food and Drug Administration, CE and ISO 2001 compliance, prior to final packaging. Quality control is performed by a staff of technicians utilizing calibrated equipment. In the development, performance or market acceptance of new products or thatevent we, will otherwise be able to successfully develop and market new products. Failure of our new products to gain market acceptance or our failuremanufacturers, produce products that fail to successfully developcomply with required quality standards, it may incur delays in fulfilling orders, write-downs, damage to our reputation and market new products could reduce our margins, which would have an adverse effect on our business, financial condition and results of operations.damages resulting from product liability claims.

If our products do not perform as expected or the reliability of the technology on which our products are based is questioned, we could experience lost revenue, delayed or reduced market acceptance of our products, increased costs and damage to our reputation.

Our success depends on the market’s confidence that we can provide reliable, high-quality bioprocessing products. We believe that customers in our target markets are likely to be particularly sensitive to product defects and errors. Our reputation and the public image of our products and technologies may be impaired if our products fail to perform as expected. Although our products are tested prior to shipment, defects or errors could nonetheless occur in our products. Furthermore, the Protein A that we manufacture is subsequently incorporated into products that are sold by other life sciences companies and we have no control over the manufacture and production of those products.

In the future, if our products experience, or are perceived to experience, a material defect or error, this could result in loss or delay of revenues, delayed market acceptance, damaged reputation, diversion of development resources, legal claims, increased insurance costs or increased service and warranty costs, any of which could harm our business. Such defects or errors could also narrow the scope of the use of our products, which could hinder our success in the market. Even after any underlying concerns or problems are resolved, any lingering concerns in our target market regarding our technology or any manufacturing defects or performance errors in our products could continue to result in lost revenue, delayed market acceptance, damaged reputation, increased service and warranty costs and claims against us.

If we are unable to manufacture our products in sufficient quantities and in a timely manner, our operating results will be harmed, our ability to generate revenue could be diminished and our gross margin may be negatively impacted.

Our revenues and other operating results will depend in large part on our ability to manufacture and assemble our products in sufficient quantities and in a timely manner. Any interruptions we experience in the manufacturing or shipping of our products could delay our ability to recognize revenues in a particular quarter. Manufacturing

problems can and do arise, and as demand for our products increases, any such problems could have an increasingly significant impact on our operating results. While we have not generally experienced problems with, or delays in, our production capabilities that resulted in delays in our ability to ship finished products, there can be no assurance that we will not encounter such problems in the future. We may not be able to quickly ship products and recognize anticipated revenues for a given period if we experience significant delays in the manufacturing process. In addition, we must maintain sufficient production capacity in order to meet anticipated customer demand, which carries fixed costs that we may not be able to offset if orders slow, which would adversely affect our operating margins. If we are unable to manufacture our products consistently, in sufficient quantities, and on a timely basis, our bioprocessing revenue, gross margins and our other operating results will be materially and adversely affected.

Our operating results may fluctuate significantly, our customers’ future purchases are difficult to predict and any failure to meet financial expectations may result in a decline in our stock price.

Our quarterly operating results may fluctuate in the future as a result of many factors such as the impact of seasonal spending patterns, changes in overall spending levels in the life sciences industry, the inability of some of our customers to consummate anticipated purchases of our products due to changes inend-user demand, and other unpredictable factors that may affect ordering patterns. Because our revenue and operating results are difficult to predict, we believe thatperiod-to-period comparisons of our results of operations are not a good indicator of our future performance. Additionally, if revenue declines in a quarter, whether due to a delay in recognizing expected revenue, adverse economic conditions or otherwise, our results of operations will be harmed because many of our expenses are relatively fixed. In particular, a large portion of our manufacturing costs, our research and development, sales and marketing and general and administrative expenses are not significantly affected by variations in revenue. If our quarterly operating results fail to meet investor expectations, the price of our common stock may decline.

Our future revenues pursuant to our asset purchase agreement with BioMarin regarding the HDACiHDAC program dependsdepend significantly on BioMarin’s development and commercialization activities, over which we have no control. If BioMarin is unable or determines not to further develop or commercialize the HDACiHDAC program, or experiences significant delays in doing so, we may see a delay in receiving any potential milestone or royalty payments or fail to receive any additional financial benefits from the program.

We entered into an asset purchase agreement with BioMarin on January 21, 2014, related to the histone deacetylase inhibitor (“HDACi”HDAC”) portfolio, which includes the Friedreich’s ataxia program. We are dependent on BioMarin for the future success of this development program. We have no control over the conduct and timing of

development efforts with respect to the HDACiHDAC program. BioMarin’s failure to devote sufficient financial and other resources to the development plan may result in the delayed or unsuccessful development of the program, which could lead to thenon-payment or delay in payment of milestones under the asset purchase agreement and may preclude or delay commercialization of any product under the HDACiHDAC program and any royalties we could receive on future commercial sales. Our future financial results may be harmed if BioMarin does not commercialize the HDACiHDAC program successfully or on a timely basis prior to the achievement of any milestones or the payment of any royalties to us.

Health care reform measures could adversely affect our business.

The efforts of governmental and third-party payors to contain or reduce the costs of health care may adversely affect the business and financial condition of pharmaceutical and biotechnology companies, including us.ours. Specifically, in both the United States andU.S.and some foreign jurisdictions, there have been a number of legislative and regulatory proposals to change the health care system in ways that could affect our ability to sell our products profitably. The U.S. Congress passed the America Affordable Health Choices Act of 2009 and the Patient Protection and Affordable Care Act This Act and is considering a number of proposals that are intended to reduce or limit the growth of health care costs and which could significantly transform the market for pharmaceuticals products. We expect furtherother federal and state proposals and health care reforms to continue to be proposed by legislators, which could limit the prices that can be charged for the products we develop and may limit our commercial opportunity. In the United States,

U.S., the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, also called the Medicare Modernization Act (the “MMA”) changed the way Medicare covers and pays for pharmaceutical products. These cost reduction initiatives and other provisions of this legislation could decrease the coverage and price that we receive for any approved products and could seriously harm our business. While the MMA applies only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates, and any reduction in reimbursement that results from the MMA may result in a similar reduction in payments from private payors. The continuing efforts ofEfforts by the government and other third-party payors to contain or reduce the costs of health care through various means may limit our commercial opportunities. In addition, the pendency or approval of such proposals couldopportunities and result in a decrease in the price of our common stock or limit our ability to raise capital.

Recent federal government efforts have been aimed at amending or repealing all or portions of existing health care reform legislation, including the Affordable Care Act. Changes in existing health care reform measures may result in uncertainty with respect to legislation, regulation and government policy that could significantly impact our business and the life sciences industry.

Comprehensive tax reform legislation could adversely affect our business and financial condition.

The U.S. government has recently enacted comprehensive tax legislation that includes significant changes to the taxation of business entities. These changes include, among others, a permanent reduction to the corporate income tax rate, limiting interest deductions, allowing for the expensing of capital orexpenditures, and putting into effect the migration from a “worldwide” system of taxation to enter into collaborations or license rightsa territorial system. The overall impact of this tax reform is uncertain, and it is possible that our business and financial condition could be adversely affected. We continue to examine the impact this tax reform legislation may have on our products.business.

We compete with life science, pharmaceutical and biotechnology companies who are capable of developing new approaches that could make our products and technology obsolete.

The market for therapeutic and commercial products is intensely competitive, rapidly evolving and subject to rapid technological change. LifeWe compete with several medium and small companies in each of our product categories, as well as, several large companies such as GE Healthcare, Pall, MilliporeSigma and Sartorius. These competitors, as well as other life science, pharmaceutical and biotechnology companies may have substantially greater financial, manufacturing, marketing, and research and development resources than we have. Newhave, as well as stronger name recognition, longer operating histories and benefits derived from greater economies of scale. These factors, among others, may enable our competitors to market their products at lower prices or on terms more advantageous to customers than what we can offer. Competition may result in price reductions, reduced gross margins and loss of market share, any of which could have a material adverse effect on our business, financial condition and results of operations. Additionally, new approaches by these competitors may make our products and technologies obsolete or noncompetitive.

We may become subject to litigation, which could result in substantial costs and divert management’s attention and resources from our business.

From time to time, we may become involved in litigation or other legal proceedings relating to claims arising from the ordinary course of business. Litigation is subject to inherent risks and uncertainties that may cause actual results to differ materially from our expectations. If we receive an adverse judgment in any litigation, we could be required to pay substantial damages. With or without merit, litigation can be complex, can extend for a protracted period of time, can be very expensive and the expense can be unpredictable. Litigation initiated by us could also result in counter-claims against us, which could increase the costs associated with the litigation and result in our payment of damages or other judgments against us. In addition, litigation, and any related publicity, may divert the efforts and attention of some of our management and key personnel, which could adversely affect our business.

We may be exposed to liabilities under the Foreign Corrupt Practices Act, and any determination that we violated the Foreign Corrupt Practices Act could have a material adverse effect on our business.

We are subject to the Foreign Corrupt Practice Act (the “FCPA”) and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute for the purpose of obtaining or retaining business. We have operations, agreements with third parties and make sales in jurisdictions outside of the U.S., which may experience corruption. Our activities in jurisdictions outside of the U.S. create the risk of unauthorized payments or offers of payments by one of our employees, consultants, sales agents or distributors, because these parties are not always subject to our control. These risks have increased following the Novozymes Acquisition.our recent acquisitions of overseas operations and facilities. It is our policy to implement safeguards to discourage these practices by our employees. However, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants, sales agents or distributors of our Company may engage in conduct for which we might be held responsible. Violations of the

FCPA may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition. In addition, the government may seek to hold us liable for successor liability FCPA violations committed by any companies in which we invest or that we acquire.

Our stock price could be volatile, which could cause shareholders to lose part or all of their investment.

The market price of our common stock, like that of the common stock of many other companies with similar market capitalizations, is highly volatile. In addition, the stock market has experienced extreme price and volume fluctuations. This volatility has significantly affected the market prices of securities of many life sciences, biotechnology and pharmaceutical companies for reasons frequently unrelated to or disproportionate to the operating performance of the specific companies. These broad market fluctuations may adversely affect the market price of our common stock.

Our growth potential is changing as we evolve from an organization that was heavily involved in research and development to an organization with a strategic focus on our bioprocessing business.

In connection with the Company’s decision to focus its efforts on the growth of its core bioprocessing business, the Company has terminated its therapeutic product development activities. The core bioprocessing business on which the Company now focuses will provide growth opportunities that are different than those of a research and development oriented biotechnology company. As a result, the price of the Company’s common stock may behave differently than it has historically and, during the shift in our business, may behave in a manner not expected by securities analysts and investors. If the Company’s future business focused on bioprocessing generates results that fall below the revised expectations of securities analysts and investors, the trading price of the Company’s common stock could decline.

As a result of these risks, we may not be able to achieve the expected benefits of any such transaction or deliver the value thereof to our shareholders. If we are unsuccessful in consummating any such transaction, we may be required to reevaluate our business only after we have incurred substantial expenses and devoted significant management time and resources.

Anti-takeover provisions in our charter documents, certain of our contracts with third parties, and under Delaware law could make an acquisition of us, even one that may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our certificate of incorporation andby-laws may delay or prevent an acquisition of us or a change in our management. These provisions include the ability of our board of directors to issue preferred stock without stockholder approval. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock to merge or combine with us. Although we believe these provisions collectively provide for an opportunity to obtain greater value for stockholders by requiring potential acquirers to negotiate with our board of directors, they would apply even if an offer rejected by our board were considered beneficial by some stockholders. In addition, theseAdditionally, certain of our contracts with third parties allow for termination upon specified change of control transactions. Anti-takeover provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management.management, and anti-takeover or change of control contract termination rights may frustrate or prevent any attempts by a third party to acquire or attempt to acquire the Company.

Changes in accounting standards and subjective assumptions, estimates, and judgments by management related to complex accounting matters could significantly affect our financial results or financial condition.

Generally accepted accounting principles and related accounting pronouncements, implementation guidelines, and interpretations with regard to a wide range of matters that are relevant to our business, such as

revenue recognition, asset impairment and fair value determinations, inventories, business combinations and intangible asset valuations, leases, and litigation, are highly complex and involve many subjective assumptions, estimates,

and judgments. Changes in these rules or their interpretation or changes in underlying assumptions, estimates, or judgments could significantly change our reported or expected financial performance or financial condition.

The Company’sOur results of operations could be negatively affected by potential fluctuations in foreign currency exchange rates.

The Company conductsWe conduct a large portion of itsour business in international markets. For the fiscal year ended December 31, 2014, 37%2017, 23% of the Company’s revenueour revenues and 31%24% of itsour costs and expenses were denominated in foreign currencies, primarily the Swedish Kroner,Krona, the British pound sterling, and the Euro. The Company isWe are exposed to the risk of an increase or decrease in the value of the foreign currencies relative to the U.S. Dollar, which could increase the value of our expenses and decrease the value of our revenue when measured in U.S. Dollars. As a result, our results of operation may be influenced by the effects of future exchange rate fluctuations and such effects may have an adverse impact on our common stock price.

Our ability to use net operating loss and tax credit carryforwards and certainbuilt-in losses to reduce future tax payments is limited by provisions of the Internal Revenue Code, and it is possible that certain transactions or a combination of certain transactions may result in material additional limitations on our ability to use our net operating loss and tax credit carryforwards.

Section 382 and 383 of the Internal Revenue Code of 1986, as amended, contain rules that limit the ability of a company that undergoes an ownership change, which is generally any change in ownership of more than 50% of its stock over a three-year period, to utilize its net operating loss and tax credit carryforwards and certainbuilt-in losses recognized in years after the ownership change. These rules generally operate by focusing on ownership changes involving stockholders owning directly or indirectly 5% or more of the stock of a company and any change in ownership arising from a new issuance of stock by the company. Generally, if an ownership change occurs, the yearly taxable income limitation on the use of net operating loss and tax credit carryforwards and certainbuilt-in losses is equal to the product of the applicable long term tax exempt rate and the value of the company’s stock immediately before the ownership change. We may be unable to offset our taxable income with losses, or our tax liability with credits, before such losses and credits expire and therefore would incur larger federal income tax liability. We have completed a number of financings sinceWhile our inception which may have resulted in a change in control as defined by Section 382 analysis completed during 2017 did not show any current exposure, future transactions or couldcombinations of future transactions may result in a change in control under Section 382 in the future.

If we identify a material weaknesses in our internal control over financial reporting, our ability to meet our reporting obligations and the trading price of our stock could be negatively affected.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Accordingly, a material weakness increases the risk that the financial information we report contains material errors.

We regularly review and update our internal controls, disclosure controls and procedures, and corporate governance policies. In addition, we are required under the Sarbanes-Oxley Act of 2002 to report annually on our internal control over financial reporting. Any system of internal controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. For example, in 2012, we updated our internal controls to include our operations in Sweden. If we, or our independent registered public accounting firm, determine that our internal controls over financial reporting are not effective, or we discover areas that need improvement in the future, these shortcomings could have an adverse effect on our business and financial results, and the price of our common stock could be negatively affected.

If we cannot conclude that we have effective internal control over our financial reporting, or if our independent registered public accounting firm is unable to provide an unqualified opinion regarding the effectiveness of our internal control over financial reporting, investors could lose confidence in the reliability of our financial statements, which could lead to a decline in our stock price. Failure to comply with reporting requirements could also subject us to sanctions and/or investigations by the SEC, The NASDAQNasdaq Stock Market or other regulatory authorities.

If we fail to maintain an effective system of internal controls, we may not be able to accurately report financial results or prevent fraud.

Effective internal controls are necessary to provide reliable financial reports and to assist in the effective prevention of fraud. Any inability to provide reliable financial reports or prevent fraud could harm our business. We must annually evaluate our internal procedures to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which requires management and our independent registered public accounting firm to assess the effectiveness of internal control over financial reporting.

We are implementing a new enterprise resource planning (“ERP”) system and have recentlypreviously implemented several significant ERP modules and expect to implement additional ERP modules in the future. The implementation of the ERP system represents a change in our internal control over financial reporting. Although we continue to monitor and assess our internal controls in the new ERP system environment as changes are made and new modules are implemented, and have taken additional steps to modify and enhance the design and effectiveness of our internal control over financial reporting, there is a risk that deficiencies may occur that could constitute significant deficiencies or in the aggregate a material weakness.

If we fail to remedy any deficiencies or maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties or shareholder litigation. In addition, failure to maintain adequate internal controls could result in financial statements that do not accurately reflect our operating results or financial condition.

None.

We currently lease office and occupy approximately 76,000 square feet of space located in Waltham, Massachusetts which servesmanufacturing properties as our corporate headquarters. We also conduct manufacturing, research and development, marketing and administrative operations at this facility. This lease expires on May 31, 2023. We also lease four adjacent buildings in Lund, Sweden totaling approximately 45,000 square feet of space used primarily for manufacturing and administrative operations. The lease for three buildings totaling approximately 41,000 square feet expires on June 30, 2017 while the lease for the fourth building with approximately 4,000 square feet of space expires on September 30, 2019.detailed below:

During the fiscal year ended December 31, 2014,2017, we incurred total rental costs for all facilities of approximately $2,735,000.$3,367,000.

In addition to the above, we own certain of our office and manufacturing properties, as detailed below:

From time to time, we may be subject to 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.

Not applicable.

PART II

Market Information

Our common stock is traded on theThe Nasdaq Global Market under the symbol “RGEN.” The quarterly high and low sales prices for our common stock are shown in the following tables.

Stockholders and Dividends

As of MarchFebruary 15, 2015,2018, there were approximately 480381 stockholders of record of our common stock. We have not paid any dividends since our inception and do not intend to pay any dividends on our common stock in the foreseeable future. We anticipate that we will retain all earnings, if any, to support our operations. Any future determination as to the payment of dividends will be at the sole discretion of our Board of Directors and will depend on our financial condition, results of operations, capital requirements and other factors our Board of Directors deems relevant.

Equity Compensation Plan Information

See Part III, Item 12 forThe following table sets forth information as of December 31, 2017 regarding securities authorized for issuanceshares of common stock that may be issued under ourthe Company’s equity compensation plans.plans, consisting of the Second Amended and Restated 2001 Repligen Corporation Stock Plan, and the Amended and Restated 2012 Stock Option and Incentive Plan.

Issuer Purchases of Equity Securities

In June 2008, the Board of Directors authorized a program to repurchase up to 1.25 million shares of our common stock to be repurchased at the discretion of management from time to time in the open market or through privately negotiated transactions. The repurchase program has no set expiration date and may be suspended or discontinued at any time. We did not repurchase any shares of common stock during the year ended December 31, 2014.2017. In prior years, we repurchased a total of 592,827 shares, leaving 657,173 shares remaining under this authorization.

The graph below matches Repligen Corporation’s cumulative 69-month5-year total shareholder return on common stock with the cumulative total returns of the NASDAQ Composite index, the NASDAQ Pharmaceutical index, and the NASDAQ Biotechnology index. The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from MarchDecember 31, 20092012 to December 31, 2014.2017.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*

Among Repligen Corporation, the NASDAQ Composite Index,

the NASDAQ Pharmaceutical Index and the NASDAQ Biotechnology Index

*$100 invested on 12/31/12 in stock or index, including reinvestment of dividends.

Fiscal year ending December 31.

The information contained in the performance graph shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission, and such information shall not be incorporated by reference into any future filing under the Securities Act of 1933, as amended (the “Securities Act”) or the Securities Exchange Act of 1934 (the “Exchange Act”), except to the extent that Repligen specifically incorporates it by reference into such filing.

Recent Sales of Unregistered Securities and Equity Purchases by the Company

In June 2014, in connection with the Refine Acquisition,August 2017, we issued and sold 215,2856,153,995 unregistered shares of our common stock to Refine Technology, LLC, an accredited investor, in exchangevalued at $247.6 million as part of the consideration for certainour acquisition of Refine’s assets and contract rights related to its ATF System. ThisSpectrum. The issuance was intended to be exempt from the registration requirements pursuant to Section 4(2) ofis not registered under the Securities Act, of 1933 andin reliance upon the exemption from registration provided by Rule 506(b) promulgated underof Regulation D.

ItemITEM 6.

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data are derived from the audited financial statements of Repligen. The selected financial data set forth below should be read in conjunction with our financial statements and the related notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report, and in our Annual Reports on Form10-K for the fiscal years ended December 31, 20132016, 2015, 2014 and 2012, our Transition Report on Form 10-K for the nine months ended December 31, 2011 and our Annual Reports on Form 10-K for the fiscal year ended March 31, 2011.2013.

ItemITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Annual Report on Form 10-K contains forward-looking statements whichRepligen and its subsidiaries, collectively doing business as Repligen Corporation (“Repligen”, “we”, “our”, or “the Company”) is a leading provider of advanced bioprocessing technology and solutions used in the process of manufacturing biologic drugs. Our products are made pursuant to substantially increase biopharmaceutical manufacturing efficiencies and flexibility. As the safe harbor provisionsglobal biologics market continues to experience strong growth and expansion, our customers – primarily large biopharmaceutical companies and contract manufacturing organizations – face critical production cost, capacity, quality and time pressures that our products are made to address. Our commitment to bioprocessing technology innovation and our expanding product platform can create significant value for our customers by facilitating the manufacturing process for manufacture biologic drugs – monoclonal antibodies, recombinant proteins, vaccines and gene therapies. We are dedicated to “inspiring advances in bioprocessing” as a trusted partner in the production of Section 27Abiologic drugs that improve human health worldwide.

We are a leading OEM manufacturer and supplier of Protein A ligands to life sciences companies. Protein A ligands are the Securities Actcritical “binding” component of 1933,Protein A affinity resins that our customers sell to end users (biopharmaceutical manufacturers) for use in downstream purification of monoclonal antibodies. We also manufacture and sell growth factor products used to supplement cell culture media in order to increase cell growth and productivity in a bioreactor.

Our Chromatography products featurepre-packed chromatography columns under our OPUS^® brand. OPUS columns, which we deliver to our customerspre-packed with their choice of chromatography resin, are single-campaign(“single-use”) disposable columns that replace the use of traditional (more permanent) glass columns used in downstream purification processes. By designing OPUS as amended,an advanced and Section 21Eflexible option for the purification of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The forward-looking statementsbiologics from process development through clinical-scale and some commercial manufacturing, Repligen has become a leader in this Annual Report on Form 10-K do not constitute guarantees of future performance. Investors are cautioned that statements in this Annual Report on Form 10-K that are not strictly historical statements, including, without limitation, statements regarding current or future financial performance, potential impairment of future earnings, management’s strategy, plans and objectives for future operations or acquisitions, product development and sales, product candidate research and development, selling, general and administrative expenditures, intellectual property, development and manufacturing plans, availability of materials, and product and adequacy of capital resources and financing plans constitute forward-looking statements. Such forward-looking statements are subject topre-packed columns.

Our Filtration products offer a number of risks and uncertainties that could cause actual resultsadvantages to differ materially from those anticipated, including, without limitation, the risks identified under the caption “Risk Factors” and other risks detailed in this Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission. We assume no obligation to update any forward-looking information contained in this Annual Report on Form 10-K, except as required by law.

Repligen Corporation (“Repligen,” the “Company” or “we”) is a life sciences company that develops, manufactures and markets high-value, bioprocessing products for life sciences and biopharmaceutical companies worldwide. We are a world-leading manufacturer of both native and recombinant forms of Protein A, critical reagents used in biomanufacturing to purify monoclonal antibodies, a typemanufacturers of biologic drug. We also supply several growth factor productsdrugs spanning stages from pilot studies to clinical and cell filtration productscommercial-scale production. XCell ATF^™ systems are used primarily in upstream perfusion (“continuous manufacturing”) processes to increase cell culture productivity during the bioproduction process. In the expanding area of flexible biomanufacturing technologies,concentration and significantly improve biologic product yield from a bioreactor. To address increasing industry demand for“plug-and-play” technology, we have developed and currently marketin 2016 launchedsingle-use formats of the original stainless steel XCell ATF device. In December 2016, we acquired TangenX Technology Corporation (“TangenX”), balancing our upstream XCell ATF offering with a seriesdownstream portfolio of OPUSflat-sheet filters and cassettes used in biologic drug purification and formulation processes. The TangenX portfolio includes thesingle-use Sius™ TFF brand, providing customers with a high-performance,low-cost alternative to reusable TFF products. Most recently, in August 2017, we completed our acquisition of Spectrum. Spectrum brands include the KrosFlo^® family of products, ProConnex^® disposable flow-path products, TFF systems and others. The Spectrum acquisition significantly strengthened our Filtration product line and diversifies our end markets beyond monoclonal antibodies to include vaccine, recombinant protein and gene therapies.

Customers use our products to produce initial quantities of drug for clinical studies, thenscale-up chromatography columnsto larger volumes as the drug progresses to commercial production following regulatory approval. Detailed specifications for usea drug’s manufacturing process are included in clinical-scale manufacturing. These pre-packed, “plug-and-play” columns are uniquely customizable to our customers’ mediathe applications that biopharmaceutical companies file for marketing approval with regulators such as the U.S. Food and size requirements.

On December 20, 2011, we significantly increased the size of our bioprocessing business through a strategic acquisition. We acquired certain assets and assumed certain liabilities of Novozymes Biopharma Sweden, ABDrug Administration (“Novozymes”FDA”) in Lund, Sweden, including the manufacture and supply of cell culture ingredients for use in industrial cell culture, stem and therapeutic cell culture as well as Protein A affinity ligands for use in biopharmaceutical manufacturing (the “Novozymes Biopharma Business” and the acquisitionEuropean Medicines Agency (“EMEA”). Once a drug advances to late-stage clinical trials, the manufacturing process is typically locked down by the company, and this process becomes part of the Novozymes Biopharma Business, the “Novozymes Acquisition”) for a total purchase price of 20,310,000 Euros (~$26,400,000).regulatory approval package. As a result, ofbioprocessing products that are included in these manufacturing specifications can be very “sticky” due to the Novozymes Acquisition, we doubled the size of our bioprocessing business.

On June 2, 2014, we acquired the business of Refine Technology, including Refine’s Alternating Tangential Flow (“ATF”) System, a market-leading device used to significantly increase product yield during the fermentation step of the biologic drug manufacturing process (the “Refine Business”costs and the acquisition of the Refine Business, the “Refine Acquisition”). We purchased all of the assets and assumed certain specified liabilities related to Refine’s ATF System. This acquisition strengthened our bioprocessing business by adding a complementary product line while expanding our sales presence worldwide. The terms of the acquisition included an upfront cash payment of $21,235,937, less $66,277 as a result of the final determination of working capital, issuance of 215,285 of Repligen’s $0.01 par value common stock valued at $4,000,000, future potential milestone and royalty payments totaling up to $10,900,000 if specific sales targets are met for the years 2014, 2015 and 2016, and future potential payments up to $7,500,000 out of any amounts that might be received in connectionregulatory uncertainties associated with the resolution, withdrawal or settlement of certain patent oppositions with a third party.

We generally manufacture and sell Protein A and growth factors to life sciences companies under supply agreements and sell our chromatography columns, as well as media and quality test kits, and our ATF products directly to biopharmaceutical companies or contract manufacturing organizations or through distributors. We refer to these activities as our bioprocessing business.displacing them.

Historically, Repligen also conducted activities aimed at developing proprietary therapeutic drug candidates, often with a potential of entering into a collaboration with a larger commercial stage pharmaceutical or biotechnology company in respect of these programs. As part of our strategic decision in 2012 to focus our efforts on our core bioprocessing business, we reduced our efforts on our clinical development programsCritical Accounting Policies and increased our efforts to find collaboration partners to pursue the development and, if successful, the commercialization of these drug programs.

CRITICAL ACCOUNTING POLICIES AND ESTIMATESEstimates

While our significant accounting policies are more fully described in the notes to our financial statements, we have identified the policies and estimates below as being critical to our business operations and the understanding of our results of operations. The impact of and any associated risks related to these policies on our business operations are discussed throughout “Management’s Discussion and Analysis of Financial Condition,” including in the “Results of Operations” section, where such policies affect our reported and expected financial results.

Revenue recognition

Product Sales

We generate revenue from the sale of bioprocessing products, equipment devices, and related consumables used with these equipment devices to customers in the life science and biopharmaceutical industries. On product sales to end customers, revenue is recognized, net of discounts, when both the title and risk of loss have transferred to the customer, as determined by the shipping terms provided there are no uncertainties regarding acceptance, and all obligations have been completed. Generally, our product arrangements for equipment sales are multiple element arrangements, and may include services, such as installation and training, and multiple products, such as consumables and spare parts. In accordance with ASC605-25, based on terms and conditions of the product arrangements, the Company believeswe believe that these services and undelivered products can be accounted for separately from the delivered product element as the delivered products have value to our customers on a standalone basis. Accordingly, revenue for services not yet performed at the time of product shipment are deferred and recognized as such services are performed. The relative selling price of any undelivered products is also deferred at the time of shipment and recognized as revenue when these products are delivered. For product sales to distributors, the Company recognizeswe recognize revenue for both equipment and consumables upon delivery to the distributor’sdistributors unless direct shipment to the end user’s is requested. In this case, revenue is recognized upon delivery to the end user’s location. In general, distributors are responsible for shipment to the end customer along with installation, training and acceptance of the equipment by the end customer. Shipments to distributors are not contingent upon resale of the product. We have had no significant write-offs of uncollectible invoices in the periods presented. We have a few longstanding customers who comprise the majority of revenue and have excellent payment histories and therefore we do not require collateral. We have had no significant write-offs of uncollectible invoices in the periods presented.

At the time of sale, we also evaluate the need to accrue for warranty and sales returns. The supply agreements we have with our customers and related purchase orders identify the terms and conditions of each sale and the price of the goods ordered. Due to the nature of the sales arrangements, inventory produced for sale is tested for quality specifications prior to shipment. Since the product is manufactured to order and in compliance with required specifications prior to shipment, the likelihood of sales return, warranty or other issues is largely diminished. Furthermore, there is no customer right of return in our sales agreements. Sales returns and warranty issues are infrequent and have not had a nominalmaterial impact on our financial statements historically.

Orencia Royalty

In April 2008, we settled our outstanding litigation with BristolShipping and began recognizing royalty revenue from that settlement in fiscal year 2009 for Bristol’s net sales in the United States of Orencia^®, which is used in the

treatment of rheumatoid arthritis. Pursuant to the settlement with Bristol, we recognized royalty revenue of $17,881,000 and $14,753,000 for the fiscal years ended December 31, 2013 and 2012, respectively, and $8,769,000 for the nine-month fiscal year ended December 31, 2011. Revenue earned from Bristol royalties washandling fees are recorded in the periods when it was earned based on royalty reports sent by Bristol to us. We have no continuing obligations to Bristol as a resultcomponent of this settlement. Our royalty agreementproduct revenue, with Bristol provided that we would receive such royalty payments on salesthe associated costs recorded as a component of Orencia^® by Bristol through December 31, 2013. These royalty payments have ceased.cost of product revenue.

Pfizer License Agreement

In December 2012, we entered into an exclusive worldwide licensing agreement (the “License Agreement”) with Pfizer to advance the SMA program, which is led by RG3039 and also includes backup compounds and enabling technologies. Under the terms of the License Agreement, we received $5 million from Pfizer as an upfront payment on January 22, 2013, a $1 million milestone payment on September 4, 2013 and a $1 million milestone payment on December 28, 2014. On January 26, Pfizer sent us a termination notice. We do not intend to pursue further development or licensing activities for our SMA program.

BioMarin License Agreement

On January 21, 2014, weout-licensed our histone deacetylase inhibitor (“HDACi”HDAC”) portfolio, which includes the Friedreich’s ataxia program, to BioMarin Pharmaceuticals Inc., or BioMarin. (“BioMarin”). Under the terms of the agreement, Repligenwe received an upfront payment of $2 million in January 2014 from BioMarin and a $125,675 payment in September 2014 upon tech transfer, and we have the potential to receive up to $160 million in future milestone payments for the development, regulatory approval and commercial sale of portfolio compounds included in the agreement. In addition, Repligen iswe are eligible to receive royalties on sales of qualified products developed.

Research and Development Agreements

We did not recognize any revenue from sponsored research and development projects in the fiscal year ended December 31, 2014. For the fiscal year ended December 31, 2013, we recognized $1,589,000 of revenue from sponsored research and development projects under agreements with the National Institutes of Health / Scripps Research Institute, the Muscular Dystrophy Association, GoFar and the European Friedrich’s Ataxia Consortium for Translational Studies. In the fiscal year ended December 31, 2012, we recognized $803,000 of revenue from sponsored research and development projects under agreements with the National Institutes of Health / Scripps Research Institute, the European Friedrich’s Ataxia Consortium for Translational Studies, GoFar, and the Friedreich’s Ataxia Research Alliance.

Inventories

Research revenue is recognized when the expense has been incurred and services have been performed. Determination of which incurred costs qualify for reimbursement under the terms of our contractual agreements and the timing of when such costs were incurred involves the judgment of management. Our calculations are based upon the agreed-upon terms as stated in the arrangements. However, should the estimated calculations change or be challenged by other parties to the agreements, research revenue may be adjusted in subsequent periods. The calculations have not historically changed or been challenged, and we do not anticipate any significant subsequent change in revenue related to sponsored research and development projects.

There have been no material changes to our initial estimates related to revenue recognition in any periods presented in the accompanying consolidated financial statements.

Inventories

Inventories relate to our bioprocessing business. We value inventory at cost or, if lower, fair marketnet realizable value, using thefirst-in,first-out method. We review our inventory at least quarterly and record a provision for excess

and obsolete inventory based on our estimates of expected sales volume, production capacity and expiration dates of raw materials,work-in-process and finished products. Expected sales volumes are determined based on supply forecasts provided by key customers for the next three to 12 months. We write down inventory that has become obsolete, inventory that has a cost basis in excess of its expected net realizable value, and inventory in excess of expected requirements to cost of product revenue. Manufacturing of bioprocessing finished goods is done to order and tested for quality specifications prior to shipment.

A change in the estimated timing or amount of demand for our products could result in additional provisions for excess inventory quantities on hand. Any significant unanticipated changes in demand or unexpected quality failures could have a significant impact on the value of inventory and reported operating results. During all periods presented in the accompanying consolidated financial statements, there have been no material adjustments related to a revised estimate of inventory valuations.

Business combinations

Amounts paid for acquisitions are allocated to the assets acquired and liabilities assumed, if any, based on their fair values at the dates of acquisition. The fair value of identifiable intangible assets is based on detailed valuations that use information and assumptions determined by management. Any excess of purchase price over the fair value of the net tangible and intangible assets acquired is allocated to goodwill. The fair value of contingent consideration includes estimates and judgments made by management regarding the probability that future contingent payments will be made, the extent of royalties to be earned in excess of the defined minimum royalties, etc. Management updates these estimates and the related fair value of contingent consideration at each reporting period based on the estimated probability of achieving the earnout targets and applying a discount rate that captures the risk associated with the expected contingent payments. To the extent our estimates change in the future regarding the likelihood of achieving these targets we may need to record material adjustments to our accrued contingent consideration. Changes in the fair value of contingent consideration are recorded in our Statementconsolidated statement of Operations. The largest and most judgmental component of our contingent consideration relates to the contingent consideration tied to Refine sales targets. The maximum potential liability related to Refine’s sales based contingent consideration is $10.9 million and we have accrued $3.3 million as of December 31, 2014 as the estimated fair value. Fair value estimates are based on our projections of future Refine sales.operations.

We use the income approach to determine the fair value of certain identifiable intangible assets including customer relationships and developed technology. This approach determines fair value by estimatingafter-tax cash flows attributable to these assets over their respective useful lives and then discounting theseafter-tax cash flows back to a present value. We base our assumptions on estimates of future cash flows, expected growth rates, expected trends in technology, etc. We base the discount rates used to arrive at a present value as of the date of acquisition on the time value of money and certain industry-specific risk factors. We believe the estimated purchased customer relationships, developed technologies, trademark / tradename, patents, and in process research and development amounts so determined represent the fair value at the date of acquisition and do not exceed the amount a third party would pay for the assets.

Intangible assets and goodwill

Intangible Assets

We amortize our intangible assets that have finite lives using the straight-line method. Amortization is recorded over the estimated useful lives ranging from 82 to 1520 years. We review our intangible assets subject to amortization to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. Further, we also review our indefinite-lived intangible assets not subject to amortization to determine if any adverse conditions exist or a change in circumstances occurred that would indicate an impairment. If the carrying value of an asset exceeds its estimated undiscounted cash flows, we will write-down the carrying value of the intangible asset to its fair value in the

period identified. In assessing fair value, we must make assumptions regarding estimated future cash flows and discount rates. If these estimates or related assumptions change in the future, we may be required to record

impairment charges. We generally calculate fair value as the present value of estimated future cash flows to be generated by the asset using a risk-adjusted discount rate. If the estimate of an intangible asset’s remaining useful life is changed, we will amortize the remaining carrying value of the intangible asset prospectively over the revised remaining useful life.

Goodwill

We test goodwill for impairment on an annual basis and between annual tests if events and circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying value. Events that would indicate impairment and trigger an interim impairment assessment include, but are not limited to current economic and market conditions, including a decline in market capitalization, a significant adverse change in legal factors, business climate or operational performance of the business, and an adverse action or assessment by a regulator. Our annual impairment test date is the last day of our fiscal year, December 31, 2014. The Company performed its31. While we currently operate as one operating segment, we perform our annual impairment test over each of the Company’s onetwo reporting unitunits and concluded that goodwill was not impaired.

Accrued liabilities

We estimate accrued liabilities by identifying services performed on our behalf, estimating the level of service performed and determining the associated cost incurred for such service as of each balance sheet date. For example, we would accrue for professional and consulting fees incurred with law firms, audit and accounting service providers and other third party consultants. These expenses are determined by either requesting those service providers to estimate unbilled services at each reporting date for services incurred or tracking costs incurred by service providers under fixed fee arrangements.

We have processes in place to estimate the appropriate amounts to record for accrued liabilities, which principally involve the applicable personnel reviewing the services provided. In the event that we do not identify certain costs that have begun to be incurred or we under or over-estimate the level of services performed or the costs of such services, the reported expenses for that period may be too low or too high. The date on which certain services commence, the level of services performed on or before a given date, and the cost of such services often require the exercise of judgment. We make these judgments based upon the facts and circumstances known at the date of the financial statements.

A change in the estimated cost or volume of services provided could result in additional accrued liabilities. Any significant unanticipated changes in such estimates could have a significant impact on our accrued liabilities and reported operating results. There have been no material adjustments to our accrued liabilities in any of the periods presented in the accompanying financial statements.

Stock-based compensation

We use the Black-Scholes option pricing model to calculate the fair value of share-based awards on the grant date.

The expected term of options granted represents the period of time for which the options are expected to be outstanding and is derived from our historical stock option exercise experience and option expiration data. For purposes of estimating the expected term, we have aggregated all individual option awards into one group, as we do not expect substantial differences in exercise behavior among our employees. The expected volatility is a measure of the amount by which our stock price is expected to fluctuate during the expected term of options granted. We determined the expected volatility based upon the historical volatility of our common stock over a period commensurate with the option’s expected term. The risk-free interest rate is the implied yield available on

U.S. Treasuryzero-coupon issues with a remaining term equal to the option’s expected term on the grant date. We have never declared or paid any cash dividends on any of our capital stock and do not expect to do so in the foreseeable future. Accordingly, we use an expected dividend yield of zero to calculate the grant-date fair value of a stock option.

We recognize compensation expense on awards that vest based on service conditions on a straight-line basis over the requisite service period based upon the number of options that are ultimately expected to vest, and accordingly, such compensation expense has been adjusted by an amount of estimated forfeitures. We recognize compensation expense on awards that vest based on performance conditions based on our assessment of the probability that the performance condition will be achieved over the service period. Forfeitures represent only the unvested portion of a surrendered option. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Based on an analysis of historical data, we have calculated an 8% annual forfeiture rate fornon-executive level employees, a 3% annual forfeiture rate for executive level employees, and a 0% forfeiture rate fornon-employee members of the Board of Directors, which we believe are reasonable assumptions to estimate forfeitures. However, the estimation of forfeitures requires significant judgment and, to the extent actual results or updated estimates differ from our current estimates, such amounts will be recorded as a cumulative adjustment in the period estimates are revised.

For the fiscal years ended December 31, 2014, 20132017, 2016 and 2012,2015, we recorded stock-based compensation expense of approximately $1,767,000, $1,060,000$6,747,000, $4,595,000 and $1,024,000,$3,598,000, respectively, for share-based awards granted under all of the Company’s stock plans.

As of December 31, 2014,2017, there was $4,143,883$16,133,000 of total unrecognized compensation cost related to unvested share-based awards. This cost is expected to be recognized over a weighted average remaining requisite service period of 3.262.52 years. We expect 723,010772,791 unvested options and restricted stock units to vest over the next five years.

Income Taxes

PriorDeferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Valuation allowances are provided, if, based upon the endweight of 2012, our U.S. net operating losses (“NOL’s”) and the majority of our other deferred tax assets were fully offset by a valuation allowance primarily because we were in a cumulative loss position and did not have sufficient history of income to conclude thatavailable evidence, it wasis more likely than not that we would be able to realize the tax benefits of those deferred tax assets. As of December 31, 2012 we had incurred three-year cumulative pre-tax income and concluded that it was more likely than not that we would generate sufficient taxable income in 2013 based on our 2013 projections to realize the tax benefit of a portion of our deferred tax assets. As such, we reversed $3,021,000some or all of the deferred tax asset valuation allowanceassets will not be realized. We account for uncertain tax positions using a“more-likely-than-not” threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors including, but not limited to, changes in tax law, the U.Smeasurement of tax positions taken or expected to be taken in tax returns, the fourth quartereffective settlement of 2012. The amount was recorded asmatters subject to audit, new audit activity and changes in facts or circumstances related to a benefittax position. We evaluate our tax position on a quarterly basis. We also accrue for potential interest and penalties related to unrecognized tax benefits in income taxes in the consolidated statementtax expense.

Results of operations. During the year ended December 31, 2013, the Company utilized $8.9 million of Net Operating Losses. As a result of the fact that we no longer receive royalty payments on Bristol’s sales of Orencia, as of December 31, 2013, we concluded that realization of U.S. deferred tax assets beyond December 31, 2013 was not more likely than not, and as such, as of December 31, 2013 we maintained a valuation allowance against the majority of our remaining deferred tax assets. As of December 31, 2014, we concluded that realization of deferred tax assets beyond December 31, 2014 is not more likely than not, and as such, as of December 31, 2014 we maintained a valuation allowance against the majority of our remaining deferred tax assets.

RESULTS OF OPERATIONSOperations

The following discussion of the financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements and the related footnotes thereto.

Revenues

Total revenues for fiscal years 2014, 2013,2017, 2016, and 20122015 were comprised of the following:

Product revenues

TheHistorically, the majority of our bioprocessing products are sold to customers who incorporate our products into their proprietary antibody purification processes for monoclonal antibodies. These customers then sell their products directly to the pharmaceutical industry. Increasingly, we are selling our products directly to the pharmaceutical industry and its contract manufacturers. These direct sales increased to approximately 62% of our product revenue during fiscal 2017. Sales of our bioprocessing products can therefore be impacted by the timing of large-scale production orders and the regulatory approvals for such antibodies, which may result in significant quarterly fluctuations.

Product revenues were comprised of the following (in thousands):

Revenue from protein products includes our Protein A ligands and cell culture growth factors. Revenue from filtration products includes our XCell ATF Systems and consumables, KrosFlo filtration products and Sius filtration products. Revenue from chromatography products includes our OPUS and OPUS PD chromatography columns, chromatography resins and ELISA test kits. Other revenue primarily consists of freight revenues.

For fiscal 2014, bioprocessing2017, product salesrevenues increased by $12,949,000$36,648,000 or 27%35% as compared to fiscal 2013 primarily due to sales of the ATF System following the Refine Acquisition.

For fiscal 2013, bioprocessing2016. The increase in product sales increased by $5,648,000 or 14% as compared to fiscal 2012revenues is due largely to increased volumevolumes in our growth factor, affinity ligandFiltration and OPUSChromatography products, offset by slightly lower pricingfull year of revenue generated from Atoll and TangenX in some2017, and revenues of our more mature products.$19,394,000 generated from the Spectrum Acquisition in 2017. We sell our various bioprocessing products at different price points. The mix of products sold varies and impacts the fluctuations in total product revenue and cost of product revenues from period to period.

Pursuant

For fiscal 2016, bioprocessing product sales increased by $20,904,000 or 25% as compared to the settlement with Bristol, we recognized royalty revenue of $17,881,000fiscal 2015, due largely to increased volumes in our Filtration and $14,753,000 for fiscal 2013 and 2012, respectively. This increase was due to Bristol’s increased U.S. sales of Orencia. As this royalty arrangement with Bristol expired on December 31, 2013, we will not recognize any further royalty revenueChromatography products, as well as from Bristol.

We recognized $2,126,000 of revenue for fiscal 2014revenues generated from the out-licenseAtoll Acquisition. We sell our various bioprocessing products at different price points. The mix of products sold varies and impacts the fluctuations in total product revenue and cost of product revenues from period to period.

Royalty revenues

Royalty revenues in fiscal 2017 and 2016 relate to royalties received from a third party systems manufacturer associated with our HDACi portfolio to BioMarinOPUS PD chromatography columns. Royalty revenues are variable and are dependent on January 21, 2014. We also recognized $1,000,000, $1,217,000 and $4,876,000 of revenue for fiscal 2014, 2013 and 2012, respectively, from the out-license ofsales generated by our Spinal Muscular Atrophy program to Pfizer on December 28, 2012. In fiscal 2013, we also recognized $1,589,000 of revenue from sponsored research and development projects under agreements with the National Institutes of Health / Scripps Research Institute, the Muscular Dystrophy Association, GoFar and the European Friedrich’s Ataxia Consortium for Translational Studies. In fiscal 2012, we also recognized $803,000 of revenue from sponsored research and development projects under agreements with the National Institutes of Health / Scripps Research Institute, the European Friedrich’s Ataxia Consortium for Translational Studies, GoFar, and the Friedreich’s Ataxia Research Alliance. Going forward we do not expect to recognize any research and license revenue or to receive any incremental funding for our therapeutic development programs.partner.

Costs and operating expenses

Total costs and operating expenses for fiscal years 2014, 2013,2017, 2016 and 20122015 were comprised of the following:

Cost of product revenue

For fiscal 2014,2017, cost of product revenue increased $5,541,000$19,933,000 or 25%42% as compared to fiscal 2013.2016. This increase is primarily due to the increasedincrease in product revenuerevenues noted above, the sale of higher cost Spectrum finished goods inventory due to step up to fair value upon acquisition, and the addition of the Refine Business.costs related to continuing investments in our operations to support future growth. For fiscal 2013,2016, cost of product revenue decreased $2,476,000increased $11,866,000 or 10%34% as compared to fiscal 2012.2015. This decreaseincrease is primarily due to increased manufacturing efficiencies and favorablethe increase in product mix, particularly in our Sweden facility.revenues noted above.

Gross margins were 54%53%, 53%55%, and 40%58% for fiscal 2014, 2013,2017, 2016 and 2012,2015, respectively. During fiscal 2014,2017, gross margins increaseddeclined slightly compared to fiscal 20132016 due to favorable Refineproduct mix, the sale of higher cost Spectrum finished good inventory due to step up to fair value upon acquisition and continuing investments in operations to support future growth. During fiscal 2016, gross margins decreased slightly compared to fiscal 2015 due to product mix and increased capacity utilizationinvestments in operations to support growing demands for the bioprocessing products that we manufacture.

Research and product yield which offset higherdevelopment expenses related additional Waltham facility build-out for Refine manufacturing at the Waltham facility. For fiscal 2013, the Company recognized the benefits of an extensive cost reduction initiative in both the Sweden and Waltham facilities that began in fiscal 2012.

Pursuant to the settlement with Bristol, we remitted 15% of royalty revenue received through the expiration of the agreement in December 2013 to the University of Michigan. For the fiscal years 2014, 2013, and 2012, cost of royalty revenue was $0, $2,682,000, and $2,213,000, respectively. These increases are directly related to the increases in Bristol royalty revenues noted above. As this royalty arrangement with Bristol expired on December 31, 2013, we do not expect to incur any further cost of royalty revenue to the University of Michigan.

During fiscal 20142017, 2016 and 2013,2015, research and development expenses were primarily related to bioprocessing products which included personnel, supplies and other research expenses. In August 2012, we announced a strategic focus on our Bioprocessing business and a simultaneous effort to find partners, out-licensing opportunities or other funding arrangements with external parties to reduce or eliminate the net expenditures on research and development activities for our therapeutic programs. Through this time, research and development costs represent bioprocessing product and therapeutic drug development costs and primarily include costs of internal personnel, supplies, external pharmacology and toxicology research, clinical trials and the costs associated with the manufacturing and testing of clinical materials. In January 2013, we announced that we entered into an outlicensing agreement with Pfizer, Inc. for our Spinal Muscular Atrophy program, under an arrangement that would provide $5.0 million up front and up to $65.0 million in milestone payments, plus royalties. On January 26, 2015, Pfizer notified us that they were terminating this arrangement for convenience effective as of April 26, 2015. In January 2014, we announced that we entered into an outlicensing agreement with BioMarin Pharmaceutical Inc. for our Friedreich’s ataxia portfolio, under an arrangement that would provide $2.0 million up front and up to $160.0 million in future milestones, plus royalties.

Due to the small size of the Company and the fact that these various programs share personnel and fixed costs, we do not track all of our expenses or allocate any fixed costs by program, and therefore, have not provided an estimate of historical costs incurred by project. In addition to the legacy product research and development, the currentsingle-use XCell ATF project incurs expenses related to product development, sterilization, validation testing, and other research related expenses.

For fiscal 2014,2017, research and development expenses decreasedincreased by $1,732,000$1,317,000 or 24%.18% as compared to fiscal 2016. This decreaseincrease is directly related to the increased expenditures related to the continued development of our decisionsingle-use XCell ATF products and other new products in 2012 to exit therapeutic drug development, and is partially offsetas well as expenses incurred by an increase in bioprocessing research and development expense.Spectrum since acquisition.

For fiscal 2013,2016, research and development expenses decreasedincreased by $3,149,000$1,615,000 or 30%28% as compared to fiscal 2012.2015. This decreaseincrease is directly related to the increased expenditures related to the development of oursingle-use XCell ATF products, our decisionOPUS resin recovery port, and other new products in 2012 to cease therapeutic drug development activities.development.

We expect our research and development expenses in the year ending December 31, 2015, which relate primarily to bioprocessing product development,2018 to increase slightly.in order to support new product development.

Selling, general and administrative expenses

Selling, general and administrative (“SG&A”) expenses include the costs associated with selling our commercial products and costs required to support our marketing efforts, including legal, accounting, patent, shareholder services, amortization of intangible assets and other administrative functions.

For fiscal 2014,2017, SG&A costs increased by $4,454,000$20,656,000 or 35%67% as compared to fiscal 2013.2016. This increase is primarily due to costs related to our acquisition of Spectrum, the continuing buildout of our administrative infrastructure to support future growth, the continuing expansion of our sales and marketing activities and closing and transition costs associated with the Refine Acquisition. We expect SG&A expenses to increase in the year ending December 31, 2015 as we continue to expand our customer-facing activities to drive sales of our bioprocessing products.products, a full year of costs related to Atoll and TangenX and costs incurred by Spectrum since acquisition.

For fiscal 2013,2016, SG&A costs decreasedincreased by $526,000$6,154,000 or 4%25% as compared to fiscal 2012.2015. This decreaseincrease is primarily due to the terminationcontinuing buildout of our Secretin commercialization efforts fromadministrative infrastructure to support future growth, the prior yearcontinuing expansion of our customer-facing activities to drive sales of our bioprocessing products, costs related to our acquisitions of Atoll and lower acquisition-related dealTangenX and closing costs associated with the Novozymes Acquisition.expenses incurred by Repligen GmbH (formerly Atoll) post-acquisition.

Contingent Consideration

ForIn fiscal 2014, the2016, we recorded contingent consideration increased approximately $2,196,000 comparedexpense related primarily to fiscal 2013. The increase is primarily attributed to $3,321,000 stemming from theour acquisitions of Refine acquisition. The contingent consideration stems from the Novozymes, BioFlash and Refine acquisitions. The contingent consideration related to the Novozymes Acquisition is based upon actual amounts remaining to be paid to Novozymes Denmark per the Deed of Settlement and Amendment entered into on May 5, 2014. The contingent consideration related to BioFlash is valued using management’s estimates of royalties to be paid to the former shareholders of BioFlash based on sales of the acquired assets. The contingentAtoll. Contingent consideration related to the Refine Acquisition in 2016 is valued using management’s estimates of expected future milestone payments based on forecastedactual 2016 XCell ATF sales of the acquired assets and portion of any receipts that might be received in connection withrelated to the resolution, withdrawal or settlement of certain patent disputes with a third party to be paid to the former shareholders of Refine. Contingent consideration related to Atoll is based on actual 2016 sales growth compared to 2015 sales. The decrease is attributable to recording Refine contingent consideration fair value ofadjustments related to projected 2015 and 2016 XCell ATF sales in the previous year, while in 2016 we only recorded fair value adjustments related to 2016 sales. This decrease is partially offset by contingent consideration atexpense related to our acquisition of Atoll. Because the contingent consideration periods related to our acquisitions of BioFlash, Refine and Atoll all concluded in 2016, we did not incur any contingent consideration expense in fiscal 2017.

Investment income

Investment income for the years ended December 31, 20142017, 2016 and 20132015 was $3,845,000 and $1,649,000, respectively.as follows:

Investment income

Investment income includes income earned on invested cash balances. Investment income for fiscal 2014, 2013, and 2012 was $309,000, $301,000, and $219,000, respectively. The increase of $8,000$25,000 or 3%7% for fiscal 2014 compared to fiscal 20132017 was primarily due to slightly higher interest rates and adjusted investment mix.during 2017 compared to 2016. The increase of $82,000$210,000 or 37%154% for fiscal 20132016 was primarily due to higher invested funds following the issuance of our 2.125% Convertible Senior Notes due 2021 (the “Notes”) during 2016 compared to fiscal 2012 was due to slightly higher interest rates and a higher invested amount as we transferred $10,000,000 from our operating account to our investments in 2013.2015. We expect interestinvestment income to vary based on changes in the amount of funds invested and fluctuation of interest rates.

Interest expense

Interest expense for the years ended December 31, 2017, 2016 and 2015 was as follows:

Interest expense primarily relates to interest related to our issuance of the Notes in May 2016. The increase of $2,673,000 in fiscal 2017 was due to incurring a full year of interest expense on the Notes in 2017. The increase of $3,736,000 in fiscal 2016 was related to the issuance of the Notes in May 2016.

Other income (expense)

Other income (expense) for the years ended December 31, 2017, 2016 and 2015 was as follows:

Other income (expense) primarily relates to foreign currency gains (losses) related to amounts due fromnon-Swedish kronor-based customers and cash balance denominated in U.S. dollars and British pounds held by our Sweden operations.