RepliGen
Letter from the President
To Our Shareholders:
Repligen has undergone significant changes over the past year culminating in the
acquisition of Glycan Pharmaceuticals on March 15, 1996. Glycan was founded in
1993 by me and two other former senior managers of Repligen, and we have now
assumed responsibility for managing Repligen. As described below, the Glycan
acquisition brings to the Company new drug discovery technology which will
become a cornerstone for future development.
Following the acquisition, our first task has been to stabilize the Company's
financial condition by accelerating the restructuring process begun earlier in
the year. In May 1996, we established a new corporate headquarters in Needham,
Massachusetts, in facilities previously used by Repligen for manufacturing. This
13,000-square-foot facility will meet our office, research and manufacturing
requirements for the next several years, and will result in an annual savings of
more than $2 million. The new facility, coupled with significant reductions in
administrative overhead expenses, has enabled us to restore financial stability
to the Company. Our ongoing operations can be sustained for two years without
additional new sources of revenue or financing.
Currently, Repligen has more technology assets than it can support through
internal funding. Thus, a second critical activity following the merger has been
to review the Company's programs in order to decide which ones warrant further
development and whether that development would be best pursued through an asset
sale, by establishing a collaboration with a pharmaceutical partner, or through
internal funding. This process has now been completed, and we are actively
pursuing the sale or license of several of these assets to ensure they are
properly developed and to improve the Company's financial position. The status
of our programs along with an indication of how we intend to develop them is
summarized below.
Acute Inflammation
Our lead product candidate is a monoclonal antibody to a receptor, CD11b, which
is found on the surface of a type of white blood cell implicated in acute
inflammation. In numerous animal studies, antibodies to CD11b have demonstrated
a powerful, short-term anti-inflammatory effect. This type of pathological
inflammation is observed in many medical conditions including cardiopulmonary
bypass surgery. Repligen's first-generation antibody, RG1010, has been evaluated
in four small clinical studies. Two initial studies demonstrated that the
antibody had an acceptable half-life in the body and was clinically safe.
In a subsequent study, the drug was compared to a placebo (no treatment) for its
ability to block complications in the lung which occur in some patients
following bypass surgery. This study enabled us to assess numerous clinically
important parameters such as the degree of lung injury, time-of-use of breathing
tubes to maintain proper respiration during post-surgical recovery, and length
of post-operative hospitalization. We are encouraged by the results observed in
this study. Enrollment has been completed in a fourth study in patients
undergoing surgery to repair an aneurysm (weakness) in their aorta. We expect to
complete the analysis of the results of this study by the end of 1996 and to
report these findings at an appropriate clinical meeting.
We believe that the data justify further testing of RG1010 or a
second-generation product, RG1014, in which the drug has been modified or
"humanized" in order to further improve its clinical profile. The "humanized"
antibody appears to have equivalent activity to RG1010, and we intend to focus
future development efforts on this product form. Initial activities for this
program will be internally funded; however, to maximize the potential of RG1014,
we will seek a partnership with a pharmaceutical company willing to financially
support multiple clinical trials.
Immune Modulation
A second program which we will seek to develop through a collaboration is
Repligen's immuno-modulation technology, which has the potential to identify new
drug candidates for organ transplant and certain autoimmune diseases. This
technology is focused on a series of cell surface molecules (including B7, CD28,
CTLA4) which have been shown in the past several years to be part of a critical
switch which regulates how the immune system responds, for example, to an organ
transplant. Animal experiments in models of organ transplantation and in models
of autoimmunity have validated the importance of this pathway. Repligen has a
significant collection of reagents which can be used to develop high-throughput
screening assays to identify compounds which may control this immune switch. We
will seek to apply these assays to the screening of a pharmaceutical company's
compound library through a collaboration.
Glyceptor Screens
Through the acquisition of Glycan, Repligen acquired a series of high-throughput
screening assays which facilitate the discovery of new compounds capable of
blocking the interaction of certain proteins, including inflammatory factors,
with a type of cell surface carbohydrate known as a glycosaminoglycan (a
"Glyceptor"). Through our majority-owned subsidiary, ProsCure, Inc., we have
also developed Glyceptor-based assays for the discovery of inhibitors of certain
growth factors implicated in the uncontrolled proliferation of tumor cells. One
of these assays is being used to screen libraries of compounds produced at
Repligen, and a second is currently being evaluated by a pharmaceutical partner.
Our research on a third inflammatory factor is supported by a research contract
with Glaxo Wellcome plc., the world's largest pharmaceutical company. We will
seek additional pharmaceutical collaborations to broaden the application of
these assays to drug discovery.
Combinatorial Chemistry
The Glycan acquisition also brought to Repligen a combinatorial chemistry
technology for the synthesis of libraries of compounds. Combinatorial chemistry
is a new technique for drug discovery capable of producing large collections of
compounds with diverse characteristics. The coupling of combinatorial chemical
libraries with rapid screening assays is a new method for drug discovery which
has been quickly adopted by the pharmaceutical industry.
Repligen's combinatorial chemistry is based on solution phase synthesis in which
three or more starting materials combine in a single step to produce the desired
compound. This "one step" synthesis is accomplished by the simple mixing of
solutions containing the reactive starting materials and can be carried out more
efficiently than many current methods for library construction. This improved
efficiency will enable us to create libraries of compounds whose structures are
customized to the characteristics of the drug discovery target, thereby
increasing the probability of finding lead compounds. Repligen has constructed
libraries for use with its Glyceptor Screens and intends to further develop this
technology with internal funding. Protein A Repligen's principal source of
product revenue is from the sale of Protein A. Products containing Protein A are
used by the pharmaceutical and biotechnology industries as a key component in
the purification of therapeutic monoclonal antibodies. Repligen manufactures and
markets a series of products based on Protein A which in the past year achieved
sales of approximately $1 million. There is an opportunity to substantially
expand our sales volume while maintaining excellent profitability for this
product by working closely with our key customers to provide them with the
product forms, technical support and quantities they require. Profits from the
Protein A business will be used to partially offset expenditures from the
internally funded programs.
Future Outlook
The difficulties of the past year have overshadowed the true potential that
exists in the Company's technology portfolio. By stabilizing our financial
position and focusing on the programs with real promise, we now have a
foundation for increasing shareholder value. Repligen today has a new management
team, significant technological and intellectual property, and a plan to develop
its assets while enhancing its financial stability. Thank you for your ongoing
support. I look forward to keeping you informed of our progress during the
coming year.
All shareholders will receive quarterly reports. If you would also like to
receive news releases, please forward your address in writing, by FAX or by
e-mail to investors@repligen.com.
Sincerely,
Walter C. Herlihy
President & Chief Executive Officer
RepliGen
117 Fourth Ave.
Needham, MA 02194
Telephone: 617-449-9560
Telefax: 617-453-0048 (C) Repligen Corporation, July 1996
This letter contains statements of a forward-looking nature relating to future
events. Shareholders are cautioned that such statements are predictions and that
actual events or results may differ materially.
Repligen Corporation
117 Fourth Avenue
Needham, MA 02194
(617-449-9560)
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 10, 1996
To the Stockholders:
The Annual Meeting of Stockholders of Repligen Corporation (the "Company")
will be held on Tuesday, September 10, 1996, 10:00 A.M. local time, at the
offices of the Company, 117 Fourth Avenue, Needham, Massachusetts, for the
following purposes:
1. To elect a Board of four directors for the ensuing year.
2. To consider and act upon a proposal to ratify the selection of the firm of
Arthur Andersen LLP as the independent auditors of the Company for the
fiscal year ended March 31, 1997.
3. To consider and act upon a proposal to amend the 1992 Repligen Corporation
Stock Option Plan to increase the number of options the Company may grant
to its directors.
4. To consider and act upon such other business and matters or proposals as
may properly come before said Annual Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on July 18, 1996 as
the record date for determining the stockholders having the right to receive
notice of and to vote at said Annual Meeting. A list of stockholders entitled
to vote at the Annual Meeting will be open to examination by stockholders
during ordinary business hours for a period of ten (10) days prior to the
Annual Meeting at the offices of the Company set forth above. The list will
also be available at the Meeting.
By Order of the Board of Directors
/s/ Daniel P. Witt
Daniel P. Witt, Secretary
1
All stockholders are cordially invited to attend the meeting in person. To
ensure your representation at the meeting, however, you are urged to sign and
return the enclosed proxy card as promptly as possible in the enclosed
postage-paid envelope. You may revoke your proxy in the manner described in the
accompanying Proxy Statement at any time before it has been voted at the Annual
Meeting. Any stockholder attending the Annual Meeting may vote in person even if
he or she has returned a proxy.
Needham, Massachusetts
July 25, 1996
______________________________________________________________________________
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE REQUESTED TO SIGN AND
DATE AND MAIL PROMPTLY THE ENCLOSED PROXY WHICH IS BEING SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS. A RETURN ENVELOPE WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES IS ENCLOSED FOR THAT PURPOSE.
______________________________________________________________________________
2
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 10, 1996
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by
and on behalf of the Board of Directors (the "Board") of Repligen Corporation, a
Delaware corporation (the "Company"), of Proxies for use at the Annual Meeting
of Stockholders of the Company to be held, pursuant to the accompanying Notice
of Annual Meeting, on Tuesday, September 10, 1996, and at any adjournments
thereof (the "Annual Meeting" or the "Meeting"). Only stockholders of record as
of July 18, 1996 (the "Record Date") will be entitled to vote at the Meeting and
any adjournments thereof. As of that date, 15,602,542 shares of Common Stock,
$.01 par value (the "Common Stock") of the Company were issued and outstanding.
The holders of Common Stock are entitled to one vote per share on any
proposal presented at the Annual Meeting. Stockholders may vote in person or by
proxy. Execution of a proxy will not in any way affect a stockholder's right to
attend the Annual Meeting and vote in person. Any proxy given pursuant to this
solicitation may be revoked by the person giving it at any time before it is
voted. Proxies may be revoked by: (1) filing with the Secretary of the Company,
before the taking of the vote at the Annual Meeting, a written notice of
revocation bearing a later date then the proxy; (2) duly executing a later-dated
proxy relating to the same shares and delivering it to the Secretary of the
Company before the taking of the vote at the Annual Meeting; or (3) attending
the Annual Meeting and voting in person (although attendance at the Annual
Meeting will not in and of itself constitute a revocation of a proxy). Any
written notice of revocation or subsequent proxy should be sent so as to be
delivered to Repligen Corporation; 117 Fourth Avenue; Needham, Massachusetts
02194; Attention: Secretary, at or before the taking of the vote at the Annual
Meeting.
The persons named as attorneys in the proxies are directors and/or officers
of the Company. All properly-executed proxies returned in time to be counted at
the Annual Meeting will be voted and, with respect to the election of the Board
of Directors, will be voted as stated below under "Election of Directors." Any
stockholder submitting a proxy has the right to withhold authority to vote for
any individual nominee to the Board of Directors by writing that nominee's name
on the space provided on the proxy. In addition to the election of Directors,
the stockholders will consider and vote upon a proposal to ratify the selection
of auditors, as further described in this Proxy Statement. Where a choice has
been specified on the proxy with respect to the foregoing matters, the shares
represented by the proxy will be voted in accordance with the specification and
will be voted FOR if no specification is made.
The representation in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to establish a quorum for the transaction of business. Votes withheld
from any nominee, abstentions, and broker non-votes are counted as present or
represented for purposes of determining the presence or absence of a quorum. A
"non-vote" occurs when a broker holding shares for a beneficial owner votes on
one proposal but does not vote on another proposal because the broker does not
have discretionary voting power and has not received instructions from the
beneficial owner. Directors are elected by a plurality of the votes cast by
stockholders entitled to vote
3
at the Meeting. All other matters being submitted to the stockholders require
the affirmative vote of the majority of shares present in person or
represented by proxy at the Annual Meeting. An automated system administered
by the Company's transfer agent tabulates the votes. The vote on each matter
submitted to stockholders is tabulated separately. Abstentions are included
in the number of shares present or represented and voting on each matter and,
therefore, with respect to votes on specific proposals, will have the effect
of negative votes. Broker "non-votes" are not so included.
The Board of Directors knows of no other matter to be presented at the
Annual Meeting. If any other matter should be presented at the Annual Meeting
upon which a vote properly may be taken, shares represented by all proxies
received by the Company will be voted with respect thereto in accordance with
the judgment of the persons named as attorneys in the proxies.
The Company's Annual Report, containing financial statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations for the fiscal year ended March 31, 1996 is being mailed
contemporaneously with this Proxy Statement to all stockholders entitled to
vote. This Proxy Statement and the form of proxy were first mailed to
stockholders on or about the date hereof.
The Company's principal executive offices are located at 117 Fourth Avenue,
Needham, Massachusetts 02194. The Company intends to mail this Proxy Statement
and related form of Proxy on or about July 25, 1996 to its stockholders of
record at the close of business on July 18, 1996.
EXECUTIVE OFFICERS
The executive officers of the Company are identified in the table below.
Each executive officer of the Company serves at the pleasure of the Board or
until the next annual meeting of the Board of Directors.
Name Age Positions
- -------------------- --- --------------------------------------------
Walter C. Herlihy 44 President and Chief Executive Officer
James R. Rusche 42 Vice President, Research and Development
Daniel P. Witt 48 Vice President, Business Development
Biographical Information
Walter C. Herlihy, Ph.D. joined the Company in March 1996 as President,
Chief Executive Officer and Director in connection with the Company's merger
with Glycan Pharmaceuticals, Inc. ("Glycan"). From 1993 to 1996, Dr. Herlihy was
the President and CEO of Glycan. From 1981 to 1993, he held numerous research
positions at the Company, most recently as Senior Vice President, Research and
Development. Dr. Herlihy holds an A.B. degree in chemistry from Cornell
University and a Ph.D. in chemistry from MIT.
James R. Rusche, Ph.D. joined the Company in March 1996 as Vice President,
Research and Development in connection with the Company's merger with Glycan.
From 1994 to 1996, Dr. Rusche was a Vice President, Research and Development of
Glycan. From 1985 to 1993, he held numerous research positions at the Company,
most recently as Vice President, Discovery Research. Dr. Rusche holds a B.S.
degree in microbiology from the University of Wisconsin, LaCrosse and a Ph.D. in
immunology from the University of Florida.
4
Daniel P. Witt, Ph.D. joined the Company in March 1996 as Vice President,
Business Development in connection with the Company's merger with Glycan. From
1993 to 1996, Dr. Witt was Vice President, Business Development of Glycan. From
1981 to 1993, he held numerous research positions at the Company, most recently
as Vice President, Technology Acquisition. Dr. Witt holds a B.A. degree in
chemistry from Gettysberg College and a Ph.D. in biochemistry from the
University of Vermont.
ELECTION OF DIRECTORS
At the Annual Meeting, four directors are to be elected to serve until
their successors are elected and qualified. The Board has designated the
individuals named below as nominees. Proxies received from stockholders of the
Company will be voted, unless authority to so vote is withheld, for the election
of the Board's nominees. Authority to vote for any or all of the nominees may be
withheld in the manner indicated on the enclosed Proxy. If for any reason any of
the nominees for election to the Board becomes unavailable for election, the
Proxies solicited will be voted for such other nominees as are selected by the
Board. The Board has no reason to believe that any of the nominees will not be
available or will not serve if elected. In March 1996, the Company acquired and
merged with Glycan Pharmaceuticals, Inc. ("Glycan") and in connection with this
merger, Walter C. Herlihy was elected as a director by the Board at that time.
Mr. Herlihy is being nominated for election by the stockholders of the Company
for the first time. All of the other nominees for election at this Annual
Meeting are currently directors of the Company and were previously elected by
the Company's stockholders as directors of the Company.
The nominees for directors of the Company are as follows:
Year First
Became
Name Age Director
------------------------------ --- --------------
Alexander Rich, M.D. (2) 71 1981
Paul Schimmel, Ph.D. (1) (3) 55 1981
Walter C. Herlihy (3) 44 1996
G. William Miller (2) (3) 71 1982
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
(3) Member of the Executive Committee.
The Board recommends a vote FOR each of the nominees for election as
directors.
BIOGRAPHICAL INFORMATION
Certain information about the nominees for director is set forth below.
This information has been furnished to the Company by the individual nominees.
Alexander Rich, M.D., Co-Founder and Co-Chairman of the Board of Directors
of the Company, has been on the faculty of MIT since 1958 and is the Sedgwick
Professor of Biophysics. Internationally recognized for his contributions to the
molecular biology of nucleic acids, he has determined their three-dimensional
structure and has investigated their activity in biological systems. He is
widely known for his work in elucidating the three-dimensional structure of
transfer RNA, which is a component of the pro-
5
tein synthesizing mechanism and for his discovery of a novel, left-handed
form of DNA. He is a member of the National Academy of Sciences, the American
Philosophical Society, the Pontifical Academy of Sciences, Rome and a foreign
member of the French Academy of Sciences, Paris. Dr. Rich has been a Director
of the Company since 1981. Dr. Rich is a director of Alkermes, Inc., a
biotechnology company.
Paul Schimmel, Ph.D., Co-Founder and Co-Chairman of the Board of Directors
of the Company, has been on the faculty of MIT since 1967 and is a Professor of
Biochemistry and Biophysics. He is well known for his work in biophysical
chemistry and molecular biology. His field of specialty is the mechanism of
action of proteins and the manner in which they act upon the nucleic acids in
the cell. This work involves broad applications of recombinant DNA technology.
He is a member of the National Academy of Sciences, received the 1978 ACS/Pfizer
award for excellence in enzyme research, and is co-author of a widely read
textbook on biophysical chemistry. He also previously served as the Chairman,
Director of Biological Chemistry, American Chemical Society. Dr. Schimmel has
been a Director of the Company since 1981. Dr. Schimmel is a director of
Alkermes, Inc. and Cubist Pharmaceuticals, Inc., a biotechnology company.
Walter C. Herlihy, Ph.D., see biographical information above under
"Executive Officers".
G. William Miller has served as a Director of the Company since January
1982. Mr. Miller is the Chairman of the Board, G. Miller & Co. Inc., a private
merchant banking firm. He has served in that capacity for over five years. From
January 1990 until February 1992, Mr. Miller was Chairman and Chief Executive
Officer of Federated Stores, Inc., an owner and operator of retail department
stores, supermarkets and real estate interests. Mr. Miller is a former Chairman
of the Board of Governors of the Federal Reserve System and served as Secretary
of the Treasury under President Carter. Mr. Miller is Chairman and a director of
Waccamaw Corporation, an operator of specialty retail stores, and a director of
the DeBartolo Realty Corporation, a real estate investment trust, GS Industries,
Inc., a steel and related products company and Kleinwort Benson Australian
Income Fund, Inc., a mutual fund.
No family relationship exists among the officers and directors of the
Company or nominees for director.
INFORMATION WITH RESPECT TO THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors met ten times during the fiscal year ended March 31,
1996. Each of the incumbent directors, except for Messrs. Miller and Zeien,
attended at least 75% of the aggregate number of meetings of the Board and the
committees of which he was a member held during the period in which he served on
the Board or such committee.
The Board has a standing Audit Committee, Compensation Committee and
Executive Committee. The Audit Committee, currently consisting of Mr. Miller and
Dr. Rich, is responsible for determining the adequacy of the Company's internal
accounting and financial controls. It met once with management and the Company's
independent public accountants in 1996 to review matters pertaining to the 1995
fiscal year audit. No member of the Audit Committee is a member of the Company's
management. The Compensation Committee, currently consisting of Mr. Frusztajer
and Dr. Schimmel, is responsible for reviewing matters pertaining to the
compensation of the Company's officers and the granting of stock options (other
than stock options which are automatically granted to certain members of the
Board pursuant to the Company's stock option plan) and contributions to the
Company's Employee Stock Ownership Plan. See "Compen-
6
sation of Directors" and "Compensation Committee Report on Executive
Compensation." It met four times during fiscal 1996. No member of the
Compensation Committee is a member of the Company's management. The Executive
Committee, currently consisting of Mr. Miller, Dr. Schimmel and Mr. Herlihy
(an employee of the Company), is authorized to exercise certain powers of the
Board not specifically reserved to the Board by the Company's By-Laws or
Delaware law. It did not meet during fiscal 1996. The Board does not have a
standing nominating committee.
SUMMARY OF EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information with respect to the
annual and long-term compensation for services in all capacities to the Company
for the fiscal years ended March 31, 1996, 1995, and 1994, of the Company's
"named executive officers", its Chief Executive Officer (the "CEO"), the four
other most highly paid executive officers of the Company, and another person who
would be among the four most highly compensated executive officers (other than
the CEO) but for the fact that such person was not serving as an executive
officer of the Company at the end of the last completed year, in each case whose
total salary and bonus exceeded $100,000 during the year ended March 31, 1996,
(collectively, the "Named Executive Officers") within the meaning of Item
402(a)(3) of Regulation S-K of the Securities Act of 1933, as amended.
All Other
Long-Term Compensation
Annual Compensation ($)
Compensation (1) Awards (3)
---------------- ------------ --------------
Bonus Options/SARs
Name and Fiscal Salary ($) (#)
Principal Position Year ($) (2) (4)
---------------------------- ---------- ------ ------ ------------
Walter C. Herlihy (5) 1996 $ 6,667 -- 100,000 --
President and Chief
Executive Officer
Sandford D. Smith (6) 1996 293,422 $73,399 -- $ 2,490
Former President and Chief 1995 277,659 -- 256,738 4,100
Executive Officer 1994 269,250 -- 24,000 15,110
Leslie Hudson, Ph.D. (7) 1996 201,861 84,340 -- 3,720
Former Executive Vice 1995 67,083 -- 125,000 --
President and Chief
Operating Officer
Eric M. Bonnem, M.D. (8) 1996 118,061 52,606 -- 5,130
Former Vice President, 1995 203,654 -- 50,225 4,500
Medical Research 1994 198,627 -- 5,000 15,110
Avery W. Catlin (9) 1996 143,699 36,120 -- 3,756
Former Vice President, 1995 112,500 -- 42,000 3,168
Finance and Chief Financial 1994 94,583 6,700 -- 7,907
Officer
7
___________________________
(1) The aggregate amount of perquisites and other personal benefits for each
of the Named Executive Officers did not exceed the lesser of either
$50,000 or 10% of the total of such individual's base salary and bonus,
as reported herein, for the applicable fiscal years, and is not reflected
in the table.
(2) No bonuses were awarded to the Named Executive Officers for Fiscal Years
1995 and 1994, except that a $6,700 bonus was awarded to Mr. Catlin in
Fiscal 1994.
(3) Amounts reported under this column include the dollar value of the
following:
Contributions
to Contributions
401(k) to
Employee Employee Stock
Savings Plan Ownership Plan
Name Year ($) ($)
-------------------- --- ------------ --------------
Sandford D. Smith 1996 $2,490 --
1995 4,100 --
1994 4,497 $10,613
Leslie Hudson, Ph.D. 1996 3,720 --
1995 -- --
Eric M. Bonnem, M.D. 1996 5,130 --
1995 4,500 --
1994 4,497 10,613
Avery W. Catlin 1996 3,756 --
1995 3,168 --
1994 3,145 4,762
(4) The Company did not grant any restricted stock awards or stock
appreciation rights ("SARs") or make any long-term incentive plan payouts
during the fiscal years ended March 31, 1996, 1995 or 1994.
(5) In March 1996, Mr. Herlihy became an officer of the Company in connection
with the Company's acquisition and merger with Glycan.
(6) In March 1996, Mr. Smith left the Company to pursue other interests.
(7) In January 1996, Dr. Hudson left the Company to pursue other interests.
Dr. Hudson joined the Company in December 1994.
(8) In September 1995, Dr. Bonnem left the Company to pursue other interests.
(9) In April 1996, Mr. Catlin left the Company to pursue other interests.
8
Option Grants in Last Fiscal Year
OPTIONS/SARs GRANTED IN LAST FISCAL YEAR
Individual Grants
The following table sets forth certain information regarding individual
grants of stock options to purchase shares of Common Stock made to the Named
Executive Officers during the fiscal year ended March 31, 1996.
Potential
Realizable Value
at Assumed
Annual Rates of
Stock Price
Appreciation for
Option Term ($) (1)
--------------------------
Percent of
Total Options/
Options/ SARs Exercise
SASRs Granted to or Base
Granted Employees in Price Expiration
Name (#) Fiscal Year ($/Share) Date 5% 10%
- -------------------------- -------- ------------------------ ---------- ---------- ---------- ------------
Walter C. Herlihy 100,000 22.0% $1.25 3/4/06 $203,612 $324,218
____________________________
(1) Amounts represent hypothetical gains that could be achieved from the
exercise of the respective options and the subsequent sale of the Common
Stock underlying such options if the options were exercised immediately
prior to the end of the option term. These gains are based on assumed
rates of stock price appreciation of 5% and 10% compounded annually from
the date the respective options were granted. These rates of appreciation
are mandated by the rules of the Securities and Exchange Commission and
do not represent the Company's estimate or projection of the future
Common Stock price.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
AGGREGATE OPTIONS/SARs GRANTED IN LAST FISCAL YEAR
The following table sets forth certain information regarding stock options
held as of March 31, 1996 by the Named Executive Officers.
Number of Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Shares Year-End at Fiscal Year-End
Acquired Value Exercisable/ Exercisable/
Name on Exercise ($) (1) Realized ($) Unexercisable (2) Unexercisable ($) (3)
- -------------------------- ------------------- ------------------ ------------------------ --------------------------
Walter C. Herlihy -- -- -- 100,000 -- --
Sandford D. Smith -- -- 85,083 167,655 -- --
Leslie Hudson, Ph.D. -- -- 5,000 20,000 -- --
Eric M. Bonnem, M.D. -- -- -- -- -- --
Avery W. Catlin --
-- -- 8,785 25,715 --
______________________________
(1) None of the Named Executive Officers exercised any stock options during
the fiscal year ended March 31, 1996.
(2) Represents the aggregate number of stock options held as of March 31,
1996 which can and cannot be exercised pursuant to the terms and
provisions of the applicable stock option agreements and the Plan.
(3) All of the unexercised stock options held by the Named Executive Officers
at fiscal year end were "out of the money", i.e., the exercise price of
the options exceeded the fair market value of the Common Stock.
9
Compensation of Directors
Outside directors who are not officers of the Company or representatives of
one of the Company's major corporate shareholders receive $1,500 for each Board
and Committee meeting which they attend. Drs. Schimmel and Rich, the Co-Chairmen
of the Board of Directors, are compensated pursuant to consulting agreements
described below and receive no separate compensation for attendance at meetings
or otherwise as directors.
Under the terms of the 1992 Repligen Corporation Stock Option Plan dated
as of April 17, 1992 (as currently in effect) (the "Plan"), each non-employee
director, other than the Co-Chairmen of the Board of Directors, is entitled
to receive every three years, beginning in fiscal year 1993, an option to
purchase 5,000 shares of Common Stock at an option price equal to the fair
market value of the Common Stock on the date of grant, determined in
accordance with the terms of the Plan (the "Board Options"). Additionally,
each non-employee director who has joined the Board after the effective date
of the Plan is entitled to receive a Board Option to purchase 10,000 shares
of Common Stock on the date he or she joins the Board. The Board Options vest
in equal annual installments of 20% of the underlying shares commencing on
the one year anniversary of the date of grant. Board Options have a term of
ten years, subject to early termination in the event of death or removal or
resignation from the Board. No director is entitled to receive Board Options
covering more than an aggregate of 20,000 shares. In September 1995, Messrs.
Frusztajer, Miller and Zeien each received a Board Option to purchase 5,000
shares of Common Stock at an exercise price of $1.625 per share.
The Company paid to each of Drs. Schimmel and Rich $43,200 during the
fiscal year ended March 31, 1996 pursuant to consulting agreements which have
similar terms. These agreements are automatically extended for successive
one-year terms unless terminated by either party at least 90 days prior to
the next anniversary date. Dr. Schimmel's agreement will expire on September
30, 1996 and Dr. Rich's agreement will expire on October 31, 1996. Drs.
Schimmel and Rich have advised the Company that they have no present
intention of terminating their agreements prematurely. The Company's
subsidiary, Amira, Inc., also has a consulting arrangement with Dr. Schimmel
under which he was paid $6,000 for the fiscal year ended March 31, 1996.
Executive Employment Agreements
On August 28, 1986, the Company entered into a letter agreement with
Sandford D. Smith pursuant to which he became the President, Chief Executive
Officer and a Director of the Company (the "Smith Agreement"). Under the terms
of the Smith Agreement, Mr. Smith was entitled to a minimum salary of $150,000
per annum, subject to periodic increases at the discretion of the Board of
Directors. Mr. Smith's salary was set by the Board at $278,000 per annum for the
fiscal year ended March 31, 1996. Additionally, Mr. Smith was eligible to
receive discretionary bonuses and to participate in all of the Company's
welfare, profit sharing, retirement and savings plans on the same basis as other
employees of the Company. Mr. Smith received a stock option to purchase 175,000
shares of Common Stock pursuant to the Smith Agreement. In March 1996, Mr. Smith
resigned his position with the Company to pursue other interests and under the
terms of the Smith Agreement he received a severance payment of $22,088.
On May 9, 1992, the Company entered into a letter agreement with Avery W.
Catlin pursuant to which he joined the Company (the "Catlin Agreement").
Under the terms of the Catlin Agreement, Mr. Catlin was
10
entitled to a minimum salary of $85,000 per annum, subject to periodic
increases at the discretion of the Board of Directors. Mr. Catlin's salary
was set by the Board at $140,000 per annum for the fiscal year ended March
31, 1996. Additionally, Mr. Catlin was eligible for participation in the
Company's Senior Staff Initiative Plan and in all of the Company's welfare,
profit sharing, retirement and savings plans on the same basis as other
employees of the Company. Mr. Catlin received a stock option to purchase
12,500 shares of Common Stock pursuant to the Catlin Agreement. On February
17, 1995, the Catlin Agreement was amended to provide that, if Mr. Catlin's
employment was terminated, he would be entitled to continue receiving his
salary for a period of nine months following termination. In April 1996, Mr.
Catlin resigned his position with the Company to pursue other interests and
under the terms of the Catlin Agreement he will receive severance payments of
$11,667 per month through January 1997.
On March 14, 1996, the Company entered into letter agreements with Messrs.
Herlihy, Rusche and Witt in connection with the Company's acquisition and
merger with Glycan (the "Herlihy Agreement", the "Rusche Agreement" and the
"Witt Agreement", respectively). Under terms of the Herlihy Agreement, Mr.
Herlihy is entitled to a minimum salary of $160,000 per annum, subject to
periodic increases at the discretion of the Board of Directors. Additionally,
Mr. Herlihy is eligible for participation in all of the Company's welfare,
profit sharing, retirement and savings plans on the same basis as other
employees of the Company. Mr. Herlihy received a stock option to purchase
100,000 shares of Common Stock at $1.25 per share, vesting at 20% per annum
over five years pursuant to the Herlihy Agreement. Mr. Herlihy's employment
by the Company may be terminated, with or without cause, by either party upon
30 days prior written notice. In such event, Mr. Herlihy would be entitled to
continue receiving his salary for a period of eight months or until he finds
other employment, whichever occurs first.
Under terms of the Rusche Agreement, Mr. Rusche is entitled to a minimum
salary of $115,000 per annum, subject to periodic increases at the discretion
of the Board of Directors. Additionally, Mr. Rusche is eligible for
participation in all of the Company's welfare, profit sharing, retirement and
savings plans on the same basis as other employees of the Company. Mr. Rusche
received a stock option to purchase 60,000 shares of Common Stock at $1.25
per share, vesting at 20% per annum over five years pursuant to the Rusche
Agreement. Mr. Rusche's employment by the Company may be terminated, with or
without cause, by either party upon 30 days prior written notice. In such
event, Mr. Rusche would be entitled to continue receiving his salary for a
period of six months or until he finds other employment, whichever occurs
first.
Under terms of the Witt Agreement, Mr. Witt is entitled to a minimum
salary of $115,000 per annum, subject to periodic increases at the discretion
of the Board of Directors. Additionally, Mr. Witt is eligible for
participation in all of the Company's welfare, profit sharing, retirement and
savings plans on the same basis as other employees of the Company. Mr. Witt
received a stock option to purchase 60,000 shares of Common Stock at $1.25
per share, vesting at 20% per annum over five years pursuant to the Witt
Agreement. Mr. Witt's employment by the Company may be terminated, with or
without cause, by either party upon 30 days prior written notice. In such
event, Mr. Witt would be entitled to continue receiving his salary for a
period of six months or until he finds other employment, whichever occurs
first.
11
Compensation Committee Interlocks and Insider Participation
The Compensation Committee currently consists of Mr. Frusztajer and Dr.
Schimmel. No member of the Compensation Committee is a current or former
employee of the Company. There are no Compensation Committee interlocks
between the Company and any other entities involving any of the executive
officers or directors of such entities.
STOCK OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information as of July 18, 1996
concerning beneficial ownership by (i) all shareholders known by the Company
to own more than five percent of the Company's outstanding voting securities,
(ii) each of the Named Executive Officers, (iii) all directors and nominees,
and (iv) all directors and executive officers as a group. The number of
shares beneficially owned by each director or executive officer is determined
under rules of the Securities and Exchange Commission, and the information is
not necessarily indicative of beneficial ownership for any other purpose.
Under such rules, beneficial ownership includes any shares as to which the
individual has the right to acquire within 60 days of July 18, 1996 through
the exercise of any stock option or other right. Unless otherwise indicated,
each person has sole investment and voting power (or shares such power with
his or her spouse) with respect to the shares set forth in the following
table. The inclusion herein of any shares deemed beneficially owned does not
constitute an admission of beneficial ownership of those shares.
Amount of Beneficial Ownership
Percentage
of
Number of Shares Common
Name and Address of Beneficial Owners Beneficially Owned (1) Stock (2)
--------------------------------------------- ------------------------- ----------
Paul Schimmel, Ph.D. 536,732 (3) 3.4%
Massachusetts Institute of Technology
77 Massachusetts Avenue
Cambridge, MA 02139
Alexander Rich, M.D. 439,700 (4) 2.8%
Massachusetts Institute of Technology
77 Massachusetts Avenue
Cambridge, MA 02139
Walter C. Herlihy 74,868 *
Repligen Corporation
117 Fourth Avenue
Needham, MA 02194
Boruch B. Frusztajer 49,500 (5) *
BBF Corporation
275 Wyman Street
Waltham, MA 02154
12
Amount of Beneficial Ownership
Percentage
of
Number of Shares Common
Name and Address of Beneficial Owners Beneficially Owned (1) Stock (2)
--------------------------------------------- ------------------------- ----------
G. William Miller 24,000 (6) *
G. Miller & Co.
1215 19th Street NW
Washington, DC 20036
Avery W. Catlin 17,070 (7) *
241 Central Street
Hingham, MA 02043
Sandford D. Smith 8,388 *
17 Pier Seven
Charlestown, MA 02129
Alfred M. Zeien 4,000 (8) *
The Gillette Company
Prudential Tower Building
Boston, MA 02199
Elizabeth M. Greetham 2,000 (9) *
Weiss, Peck & Greer
One New York Plaza
New York, NY 10004
All directors and executive
officers as group (13 persons) 1,156,258 (10)(11) 7.6%
_____________________________________
* Represents less than 1% of the outstanding shares.
(1) Except as otherwise indicated, the persons named in the table have sole
voting and investment power with respect to all shares of Common Stock
beneficially owned by them. The number of shares of Common Stock deemed
outstanding includes shares issuable pursuant to options held by the
respective person or group, which may be exercised within 60 days after
the date of this Proxy Statement ("presently exercisable stock
options"), as set forth below.
(2) As of July 18, 1996, there were 15,602,542 shares of the Company's
Common Stock outstanding. Pursuant to the rules of the Securities and
Exchange Commission, presently exercisable stock options held by a
person or group are deemed outstanding for the purpose of computing the
percentage ownership of such person or group.
(3) Includes shares held jointly with Dr. Schimmel's spouse; also includes
26,650 shares held in a charitable trust of which Dr. Schimmel is a
trustee; excludes shares held by Dr. Schimmel's adult children. Dr.
Schimmel disclaims beneficial ownership of the shares held by these
children.
(4) Includes 60,000 shares held by Dr. Rich's spouse; excludes shares held
by Dr. Rich's adult children. Dr. Rich disclaims beneficial ownership of
the shares held by these children.
(5) Excludes shares held by Mr. Frusztajer's adult children. Mr. Frusztajer
disclaims beneficial ownership of the shares. Includes 4,000 shares
beneficially owned by Mr. Frusztajer which may be acquired within 60
days of the date of this Proxy Statement pursuant to Board Options. See
"Compensation of Directors".
(footnotes continued on following page)
13
(6) Includes 4,000 shares beneficially owned by Mr. Miller which may be
acquired within 60 days of the date of this Proxy Statement pursuant to
Board Options. See "Compensation of Directors".
(7) Includes 13,570 shares beneficially owned by Mr. Catlin which may be
acquired within 60 days of the date of this Proxy Statement pursuant to
an option.
(8) Excludes 421,408 shares of Common Stock held by The Gillette Company, of
which Mr. Zeien is the Chairman and Chief Executive Officer. See
"Biographical Information". Includes 4,000 shares which may be acquired
within 60 days of the date of this Proxy Statement pursuant to two
non-statutory stock options held by Mr. Zeien for the benefit of The
Gillette Company. Mr. Zeien disclaims beneficial ownership of these
shares.
(9) Includes 2,000 shares beneficially owned by Ms. Greetham which may be
acquired within 60 days of the date of this Proxy Statement pursuant to
Board Options. See "Compensation of Directors".
(10) Includes 27,570 shares beneficially owned by all executive officers and
directors as a group which may be acquired within 60 days of the date of
this Proxy Statement pursuant to various options.
(11) The table does not include the beneficial ownership of Eric M. Bonnem,
M.D., formerly the Vice President, Medical Research of the Company, who
resigned from the Company in September 1995 to pursue other interests.
SECTION 16(A) REPORTING DELINQUENCIES
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers, and persons who own more than ten percent of
the Company's Common Stock, to file with the Securities and Exchange
Commission ("SEC") initial reports of ownership and reports of changes in
ownership of Common Stock of the Company. Officers, directors and greater
than ten-percent shareholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) reports they file. Except as set
forth below, to the Company's knowledge, based solely upon review of the
copies of such reports furnished to the Company and written representations
that no other reports were required, during the fiscal year ended March 31,
1996, all Section 16(a) filing requirements applicable to its officers,
directors and greater than ten-percent beneficial owners were fulfilled in a
timely manner. The table below shows the officers and directors who failed to
file reports required by Section 16(a) during the last fiscal year, showing,
for each of them, the number of late reports, the number of transactions that
were not reported on a timely basis and, to the Company's knowledge, the
number of reports not filed.
Name Late Reports Reports Not Filed Transactions
- ------------------------ ------------- ------------------ ---------------
Alexander Rich, M.D. 2 0 1
Boruch B. Frusztajer 1 1 1
G. William Miller 1 1 1
Alfred M. Zeien 1 1 1
Elizabeth M. Greetham 1 1 1
Walter C. Herlihy 1 1 2
James R. Rusche 1 1 2
Daniel P. Witt 1 1 2
The Company is assisting its officers and directors in bringing their Section
16(a) reports up to date and has taken steps to assist them in complying with
their reporting obligations in the future.
14
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee, which meets on a periodic basis, is currently
comprised of two non-employee members of the Board of Directors (Mr.
Frusztajer and Dr. Schimmel). The Committee formulates and administers the
Company's compensation policies for the President and Chief Executive Officer
and all vice presidents of the Company. The Committee is also responsible for
determining to whom and under what terms stock options should be granted
(other than options which are automatically granted to members of the Board
of Directors) under the Plan and the amount of contributions to the Company's
Employee Stock Ownership Plan.
Compensation Philosophy
In designing its compensation programs, the Company takes into account a
number of considerations, some relevant to companies in general and some
relevant primarily to biotechnology and other research and development
intensive companies. The ultimate goal of the Company's compensation program
is to motivate each employee to enhance stockholder value, to provide a fair
reward for this effort, and to stimulate each employee's professional and
personal growth. In addition, the Company's compensation program attempts to
achieve the following:
(bullet) Provide compensation which is consistent with the Company's
annual and long term objectives and achievements.
(bullet) Promotion and reward of individual initiative, effort and
accomplishment.
(bullet) Establishment of a competitive total compensation package that
enables the Company to attract and retain qualified and motivated
personnel.
Performance Criteria
Since the Company is still in the process of developing its proprietary
products and because of the highly volatile nature of biotechnology stocks in
general, it is not appropriate to use the traditional performance standards,
such as profit levels and stock performance, to measure the success of the
Company and an individual's contribution to that success.
Accordingly, the compensation of executive officers is based, for the most
part, on the achievement of certain goals by the Company as a whole and the
individual (and his or her business unit) concerned. The Committee therefore
examines three specific areas in formulating the compensation packages of its
five most senior executives. Criteria and specific goals within each category
are as follows:
Company Performance:
(bullet) The extent to which key research, clinical, product
manufacturing, product sales and financial objectives of the
Company have been met during the preceding fiscal year.
(bullet) The development, acquisition and licensing of key technology.
15
(bullet) The achievement by the Company of certain milestones, whether
specified in agreements with third party collaborators or
determined internally.
Executive Performance:
(bullet) An executive's involvement in and responsibility for the
development and implementation of strategic planning and the
attainment of strategic objectives of the Company.
(bullet) The participation by an executive in the relationship between the
Company and the investment community.
(bullet) The involvement of an executive in personnel recruitment,
retention and morale.
(bullet) The responsibility of the executive in working within budgets,
controlling costs and other aspects of expense management.
Other Factors:
(bullet) The necessity of being competitive with companies in the
pharmaceutical and biotechnology industries, taking into account
relative company size, stage of development, performance and
geographic location as well as individual responsibilities and
performance.
Mix of Compensation
The Company's executive compensation has four principal components: base
salary; annual cash bonuses; incentive and/or non-qualified stock options;
and miscellaneous benefits.
In each case, the Committee regularly compares the individual elements
comprising the Company's executives' mix of compensation to that of a similar
group of other biotechnology companies.
The comparison group is based on a multi-tiered classification of
representative companies within the biotechnology industry according to
numerous characteristics, including but not limited to company size, the
number of proprietary products, stage of development of the company's
products and total revenues. The tiered classification of biotechnology
companies is reviewed annually and, if appropriate, revised as members of
such tiers change from year to year.
After completing a review of the comparison group's compensation policies,
the Committee determines competitive compensation levels for each executive
position.
Levels of base salary are reviewed on an annual basis by the Committee.
Base salary may be altered in line with changes in compensation amongst the
companies included in the Committee's comparison group and further adjusted
if the committee determines that an executive's contribution to the Company
has increased or decreased.
Annual cash bonuses are generally voted in April and calculated as a
percentage of an executive's base salary as determined by both the bonus
schedule that is established at the beginning of each fiscal year and by the
various criteria set forth above. Stock options are also awarded from time to
time based
16
upon the same criteria and are intended both to retain and reward the
executive and to provide further incentive for him or her to continue
contributing to the long-term success of the Company.
Committee Activities
Sandford D. Smith The base salary for fiscal year 1996 for Sandford D. Smith,
the former President and Chief Executive Officer of the Company, was
$278,000, which represents the same base salary as fiscal 1995. Although many
of the Company's objectives were met or exceeded in fiscal 1996, the
Committee determined not to increase Mr. Smith's base salary in light of the
Company's financial situation.
Stock options covering 22,500 shares of the Company's common stock were
awarded to Mr. Smith under the Plan in May 1995, contingent upon the
completion of a proposed merger with Medco Research, Inc. The merger was not
successfully completed and these options lapsed. During fiscal 1996, the
Committee put in place an Incentive and Retention Program (the "Program") to
retain employees essential to the operations of the Company. Under the terms
of the Program, Mr. Smith received a bonus of $73,399.
Walter C. Herlihy In connection with the Company's acquisition and merger
with Glycan, Mr. Herlihy joined the Company as President and Chief Executive
Officer at a base salary of $160,000 and was awarded stock options covering
100,000 shares of the Company's common stock at $1.25 per share, vesting at
20% per annum over five years. In making such determination, the Committee
viewed the individual components of Mr. Herlihy's compensation package in
light of those of the companies within the comparison group and applied the
various criteria listed above under "Company Performance" and "Executive
Performance."
Respectfully submitted by the Compensation Committee,
Boruch B. Frusztajer
Paul Schimmel
The report of the Compensation Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
STOCK PRICE PERFORMANCE GRAPH
The following graph illustrates a five year comparison of the cumulative
total stockholder return (change in stock price plus reinvested dividends) of
the Company's Common Stock with the NASDAQ Stock Market Index (U.S.) (the
"NASDAQ Composite Index") and the NASDAQ Pharmaceutical Stock Index (the
"NASDAQ Pharmaceutical Index"). The comparisons in the graph are required by
the Securities and Exchange Commission and are not intended to forecast or be
indicative of possible future performance of the Company's Common Stock.
17
[GRAPHIC]
RGEN NASDAQ
Closing NASDAQ Composite
Stock Pharmaceutical Index
Year Index Index (U.S.)
- ----- ---------- ------------ -----------
1991 100 100 100
1992 113 138 127
1993 50 95 147
1994 36 96 158
1995 12 96 176
1996 8 169 239
Assumes $100 invested on March 31, 1991 in each of Repligen Corporation
Common Stock, the securities comprising the NASDAQ Composite Index and the
securities comprising the NASDAQ Pharmaceutical Index.
PROPOSAL TO AMEND THE 1992 STOCK OPTION PLAN
Proposed Amendment
The 1992 Repligen Corporation Stock Option Plan (the "1992 Plan") was adopted
by the Company's Board of Directors and approved by the Company's
stockholders in September, 1993. A maximum of 2,403,305 shares of Common
Stock are currently reserved for issuance under the 1992 Plan upon the exer-
18
cise of options. The Board of Directors has approved and recommended to the
stockholders that they approve an amendment to increase the number of stock
options granted automatically to non-employee directors of the Company under
the 1992 Plan.
Under the terms of the 1992 Plan, each non-employee director, other than
the Co-Chairmen of the Board of Directors, is entitled to receive every three
years, beginning in fiscal year 1993, an option to purchase 5,000 shares of
Common Stock at an option price equal to the fair market value of the Common
Stock on the date of grant, determined in accordance with the terms of the
Plan (the "Board Options"). Additionally, each non-employee director who has
joined the Board after the effective date of the Plan is entitled to receive
a Board Option to purchase 10,000 shares of Common Stock on the date he or
she joins the Board. The Plan presently provides for an overall limitation on
Board Options of 20,000 Board Options per eligible director.
The Board proposes to amend the Plan by providing for a grant to
newly-elected, non-employee directors of an option to purchase 24,000 shares
of Common Stock on the date such person becomes a member of the Board of
Directors. The Board proposes that such options vest equally over a
three-year period from the date of grant. Beginning on September 10, 1996,
the Board proposes to grant annually to each of its existing directors an
option to purchase 5,000 shares of Common Stock to vest in full on the first
anniversary of the date of the grant, provided such person is still a
director on such anniversary. Accordingly, the Board also proposes to
increase the overall limitation of Board Options permissible for grant to
50,000.
The Company's management relies on stock options as part of the
compensation packages necessary for the Company to attract and retain
experienced officers, employees and directors. The Board of Directors of the
Company believes that the proposed increase in the number of shares to be
automatically granted to non-employee directors as Board Options will enable
the Company to secure the attraction and retention of superior individuals to
serve as director.
Summary of the 1992 Plan, as Presently in Effect
Types of Options Authorized by the 1992 Plan
The 1992 Plan permits the Company to grant both incentive stock options
("Incentive Stock Options") within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), and other options which do not
qualify as incentive stock options. Of such latter options, certain options
(the "Non-Qualified Options") will be granted in the sole discretion of the
Committee referred to below and certain other options (the "Board Options")
are granted to eligible non-employee members of the Board of Directors.
The aggregate number of shares of Common Stock reserved for issuance under
the 1992 Plan is 2,403,305.
Administration
To the extent that it relates to Incentive Stock Options and Non-Qualified
Options, the 1992 Plan is administered by the members of a committee (the
"Committee") composed of two or more non-employee members of the Board of
Directors who do not receive discretionary options under the 1992 Plan and
who
19
have not at any time within one year prior to their appointment as members of
the Committee received discretionary grants or awards under any other stock
plan of the Company or its subsidiaries. The members of the Committee are
eligible to receive Board Options which are not discretionary in nature. To
the extent that it relates to the granting of Board Options, the 1992 Plan is
designed to operate automatically and does not require administration;
however, to the extent that such administration is necessary it will be
provided by the Committee.
Eligibility
Incentive Stock Options. Incentive stock options are only granted to key
employees of the Company or its subsidiaries.
Non-Qualified Options. Non-Qualified Options are granted under the 1992
Plan to directors and officers of the Company and full or part-time employees
employed on a salaried or commission basis by the Company or its
subsidiaries, as well as any individual performing services for the Company
or any subsidiary as an independent contractor.
Board Options. Board Options are granted only to members of the Board of
Directors of the Company, other than the current co-chairmen of the Board of
Directors, who are not employees of either the Company or its subsidiaries.
Grants Under the 1992 Plan
Incentive Stock Options and Non-Qualified Options. Subject to the terms of
the 1992 Plan, the Committee has full authority to determine the individuals
to whom, and the time or times at which, Incentive Stock Options and
Non-Qualified Options should be and are granted.
Board Options. Each eligible director of the Company is entitled every
three years, beginning in fiscal 1993, to receive an option to purchase 5,000
shares of Common Stock and each person who becomes a non-employee member of
the Board of Directors shall receive at the time such person first becomes a
member of the Board of Directors an option to purchase 10,000 shares of
Common Stock. The Plan provides for an overall limitation that no member of
the Board of Directors shall receive Board Options for in excess of 20,000
shares of Common Stock.
Option Prices
Incentive Stock Options. The purchase price of Common Stock under each
Incentive Stock Option shall not be less than 100% of the fair market value
of the stock at the time of the granting of the option. For purposes of the
1992 Plan, "fair market value" is equal to the average NASDAQ National Market
closing price (or the average closing price on an exchange if the Common
Stock is then traded on an exchange) per share of Common Stock for the thirty
trading days immediately preceding the date of the grant of an option, or
such other amount as shall be determined from time to time by the Committee
pursuant to criteria which it may deem to be appropriate.
Non-Qualified Options. The purchase price of Common Stock under
Non-Qualified Options shall be as determined in the sole discretion of the
Committee, although in no case shall the price per share be less than the par
value per share of Common Stock.
20
Board Options. The purchase price of the Common Stock under each Board
Option shall be equal to the average NASDAQ National Market System closing
price (or the average closing price on an exchange if the Common Stock is
then traded on an exchange) per share of Common Stock for the thirty trading
days immediately preceding the date of the grant of such Board Option.
Term
If not presently exercised, all options granted under the 1992 Plan will
expire no later than ten years after the date of grant thereof.
Adjustments
The 1992 Plan provides for adjustments in the number of shares reserved and
in option prices in the event of a stock dividend or stock split and for
other equitable adjustments in the event of recapitalization, merger or
similar occurrences.
Federal Income Tax Consequences
Incentive Stock Options. The following general rules are applicable under
current Federal income tax law to ISOs under the 1992 Plan:
1. In general, no taxable income results to the optionee upon the grant of
an ISO or upon the issuance of shares to him or her upon the exercise of the
ISO, and no tax deduction is allowed to the Company upon either grant or
exercise of an ISO.
2. If shares acquired upon exercise of an ISO are not disposed of within
(i) two years following the date the option was granted or (ii) one year
following the date the shares are issued to the optionee pursuant to the ISO
exercise, the difference between the amount realized on any subsequent
disposition of the shares and the exercise price will generally be treated as
capital gain or loss to the optionee.
3. If shares acquired upon exercise of an ISO are disposed of before the
expiration of one or both of the requisite holding periods (a "Disqualifying
Disposition"), then in most cases the lesser of (i) any excess of the fair
market value of the shares at the time of exercise of the ISO over the
exercise price or (ii) the actual gain on disposition will be treated as
compensation to the optionee and will be taxed as ordinary income in the year
of such disposition.
4. In any year that an optionee recognizes compensation income on a
Disqualifying Disposition of stock acquired by exercising an ISO, the Company
generally should be entitled to a corresponding deduction for income tax
purposes.
5. Any excess of the amount realized by the optionee as the result of a
Disqualifying Disposition over the sum of (i) the exercise price and (ii) the
amount of ordinary income recognized under the above rules will be treated as
capital gain.
6. Capital gain or loss recognized on a disposition of shares will be
long-term capital gain or loss if the optionee's holding period for the
shares exceeds one year.
21
7. An optionee may be entitled to exercise an ISO by delivering shares of
the Company's Common Stock to the Company in payment of the exercise price, if
the optionee's ISO agreement so provides. If an optionee exercises an ISO in
such fashion, special rules will apply.
8. In addition to the tax consequences described above, the exercise of
ISOs may result in a further "minimum tax" under the Code. The Code provides
that an "alternative minimum tax" (at a rate of 26% or 28%) will be applied
against a taxable base which is equal to "alternative minimum taxable
income," reduced by a statutory exemption. In general, the amount by which
the value of the Common Stock received upon exercise of the ISO exceeds the
exercise price is included in the optionee's alternative minimum taxable
income. A taxpayer is required to pay the higher of his or her regular tax
liability or the alternative minimum tax. A taxpayer who pays alternative
minimum tax attributable to the exercise of an ISO may be entitled to a tax
credit against his or her regular tax liability in later years.
Non-Qualified Options and Board Options. The following general rules are
applicable under current Federal income tax law to Non-Qualified Options
under the 1992 Plan:
1. The optionee generally does not realize any taxable income upon the
grant of a Non-Qualified Option, and the Company is not allowed a business
expense deduction by reason of such grant.
2. The optionee generally will recognize ordinary compensation income at
the time of exercise of a Non-Qualified Option in an amount equal to the
excess, if any, of the fair market value of the shares on the date of
exercise over the exercise price. The Company may be required to withhold
income tax on this amount.
3. When the optionee sells the shares, he or she generally will recognize
a capital gain or loss in an amount equal to the difference between the
amount realized upon the sale of the shares and his or her basis in the
shares (generally, the exercise price plus the amount taxed to the optionee
as compensation income). If the optionee's holding period for the shares
exceeds one year, such gain or loss will be a long-term capital gain or
loss.
4. The Company generally should be entitled to a tax deduction when
compensation income is recognized by the optionee.
5. An optionee may be entitled to exercise a Non-Qualified Option by
delivering shares of the Company's Common Stock to the Company in payment of
the exercise price. If an optionee exercises a Non-Qualified Option in such
fashion, special rules will apply.
The Board of Directors recommends a vote FOR the approval of the proposal
to amend the Company's 1992 Stock Plan to increase the grant of Board Options
under the Plan.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Arthur Andersen LLP, certified public accountants, has been appointed by
the Board, upon recommendation of the Audit Committee of the Board, as
independent auditors for the Company to examine and report on its financial
statements for the 1997 fiscal year, which appointment is being submitted to
22
the stockholders for ratification at the Annual Meeting. Representatives of
Arthur Andersen LLP are expected to be present at the Annual Meeting, with
the opportunity to make a statement if they desire to do so, and to be
available to respond to appropriate questions. The appointment of the
independent auditors will be ratified if it receives the affirmative vote of
the holders of a majority of shares of the Common Stock of the Company
present at the Annual Meeting, in person or by proxy. Submission of the
appointment of the auditors to the stockholders for ratification will not
limit the authority of the Board to appoint another accounting firm to serve
as independent auditors if the present auditors resign or their engagement is
otherwise terminated.
The Board recommends a vote FOR ratification of its appointment of Arthur
Andersen LLP as independent auditors for the 1997 fiscal year.
STOCKHOLDERS' PROPOSALS
Any proposal by a stockholder of the Company intended to be presented at
the 1997 Annual Meeting of Stockholders must be received by the Company at its
principal executive office not later than March 31, 1997 for inclusion in the
Company's proxy statement and form of proxy relating to that meeting. Any such
proposal must also comply with the other requirements of the proxy solicitation
rules of the SEC.
OTHER BUSINESS
Management does not know of any other matters to be brought before the
Annual Meeting except those set forth in the notice thereof. If other business
is properly presented for consideration at the Annual Meeting, it is intended
that the Proxies will be voted by the persons named therein in accordance with
their judgment on such matters.
Even if you plan to attend the Annual Meeting in person, please sign, date
and return the enclosed Proxy promptly. A postage-paid return-addressed envelope
is enclosed for your convenience. Your cooperation in giving this matter your
immediate attention and in returning your proxies will be appreciated.
The cost of solicitation of proxies will be borne by the Company, and in
addition to directly soliciting stockholders by mail, the Company may request
banks and brokers to solicit their customers who have stock of the Company
registered in the name of a nominee and, if so, will reimburse such banks and
brokers for their reasonable out-of-pocket costs. Solicitation by officers and
employees of the Company may also be made of some stockholders in person or by
mail or telephone following the original solicitation. The Company may, if
appropriate, retain an independent proxy solicitation firm to assist the Company
in soliciting proxies. If the Company does retain a proxy solicitation firm, the
Company would pay such firm customary fees and expenses.
July 25, 1996
23
[PROXY CARD]
- -----------------------------------------------------------------------------
DETACH HERE REP F
REPLIGEN CORPORATION
P Proxy for the Annual Meeting of Shareholders
R September 10, 1996
O
X THIS PROXY IS SOLICITED BY
Y THE BOARD OF DIRECTORS OF REPLIGEN CORPORATION
The undersigned hereby appoints Walter C. Herlihy and Daniel P. Witt, and
each of them alone, proxies with full power of substitution, to vote all shares
of Common Stock of the Corporation which the undersigned is entitled to vote at
the Annual Meeting of Shareholders of Repligen Corporation to be held on
Tuesday, September 10, 1996, at 10:00 a.m., local time, at the offices of the
Corporation, 117 Fourth Avenue, Needham, Massachusetts 02194, and any
adjournments thereof, upon matters set forth in the Notice of Annual Meeting
of Shareholders and Proxy Statement dated July 25, 1996, a copy of which has
been received by the undersigned. The proxies are further authorized to vote,
in their discretion, upon such other business as may be incidental to the
meeting or any adjournments thereof.
______________
| SEE REVERSE |
CONTINUED AND TO BE SIGNED ON REVERSE SIDE | SIDE |
|______________|
- ------------------------------------------------------------------------------
DETACH HERE REP F
/X/ Please mark
votes as in
this example. _____
|
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR
THE PROPOSALS IN ITEMS 2 AND 3, AND AUTHORITY WILL BE DEEMED GRANTED UNDER
ITEM 4 TO HAVE THE PROXIES VOTE UPON SUCH ADJOURNMENTS THEREOF.
1. To elect a Board of Directors for the ensuing year.
Nominees: Alexander Rich, M.D., Paul Schimmel, Ph.D.,
Walter C. Herlihy, G. William Miller
For Withheld
/ / / /
MARK HERE
/ / _____________________________ FOR ADDRESS
For all nominees except as noted above CHANGE AND / /
NOTE BELOW
2. To ratify the selection of the FOR AGAINST ABSTAIN
firm of Arthur Andersen LLP / / / / / /
as independent auditors of the
Corporation for the fiscal year
ending March 31, 1997.
3. To ratify the proposed FOR AGAINST ABSTAIN
amendments to the Company's / / / / / /
1992 Repligen Corporation
Stock Option Plan.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
(If signing as attorney, executor, trustee, or guardian,
please give your full title as such. If stock is held jointly,
each owner should sign.)
Signature: _____________________________ Date: ___________
Signature: _____________________________ Date: ___________