SEC Company Response from REPLIGEN CORP (RGEN) (CIK 0000730272) (RGEN) — Jan 20, 2015
REPLIGEN CORP (RGEN) (CIK 0000730272)
Date: Jan. 20, 2015 · CIK: 0000730272 · Accession: 0001193125-15-014374
AI Filing Summary & Sentiment
File numbers found in text: 000-14656
Referenced dates: February 12, 1999, March 15, 2013
Show Raw Text
CORRESP 1 filename1.htm Correspondence January 20, 2015 Via EDGAR Jeffrey Riedler Assistant Director Division of Corporation Finance U.S. Securities and Exchange Commission 100 F Street, N.E. Washington, DC 20549 Re: Repligen Corporation Form 10-K for the fiscal year ended December 31, 2013 Filed March 14, 2014 File No. 000-14656 Dear Mr. Riedler: This letter is submitted on behalf of Repligen Corporation (the “Company”) in response to comments of the staff of the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission (the “Commission”) with respect to the Company’s Form 10-K for the fiscal year ended December 31, 2013 (the “Form 10-K”) as set forth in your letter, dated December 23, 2014 (the “Comment Letter”). For reference purposes, the Staff’s numbered comments have been reproduced in italics herein with responses immediately following such comment. Page references in the responses refer to the pages in the Form 10-K as filed with the Commission. Our Products for the Manufacturing of Biologic Drugs, page 2 1. We note that your Strategic Supplier Alliance Agreement with GE Healthcare appears to be a material agreement as it has been filed as an exhibit pursuant to Item 601(b)(10) of Regulation S-K. Please expand your disclosure regarding the agreement to provide the material terms, including the parties’ rights and obligations, the duration of the agreement, termination provisions, and any payment provisions. Mr. Jeffrey Riedler Securities and Exchange Commission January 20, 2015 Page 2 Response to Comment No. 1: The Company acknowledges the Staff’s comment. In future filings, the Company will expand its disclosure regarding the GE Healthcare Strategic Supplier Alliance Agreement substantially as set forth below in italicized and underlined text, which disclosure the Company respectfully notes was included in its Current Report on Form 8-K announcing its entry into the agreement. The Company respectfully directs the Staff’s attention to the application for confidential treatment, dated February 12, 1999, and the application for continued confidential treatment, dated December 16, 2008, in which the Company petitioned the Staff for confidential treatment for, in addition to other things, certain payment provisions and terms under the GE Healthcare Strategic Supplier Alliance Agreement. Our Products for the Manufacturing of Biologic Drugs Repligen is a leading developer and manufacturer of certain consumable bioprocessing products used in the production of monoclonal antibodies and other biologic drugs. The Company manufactures multiple forms of Protein A ligand, a critical component of Protein A media that is used in the downstream purification process for monoclonal antibodies, on behalf of several major life sciences companies. We also manufacture and sell growth factors, used to increase cell growth and productivity during upstream fermentation, and chromatography products. Our chromatography products include OPUS pre-packed columns for biologics purification, proprietary Protein A media and quality test kits. These products are sold to life sciences companies, contract manufacturing organizations and biopharmaceutical companies for use in the biologic drug production. Demand for our bioprocessing products has grown in concert with the expanding global market for biologics, particularly monoclonal antibodies, and also as a result of new product offerings through our acquisition of the Novozymes Biopharma business in December 2011. In 2012, the global biologics market was valued at approximately $175 billion and is expected to grow at a rate in the high single digits annually. Market research indicates that the monoclonal antibody segment comprised over 40% of the overall biologics market in 2012 and is growing more rapidly than the overall market. Six of the ten worldwide best-selling drugs in 2012 were monoclonal antibodies, including blockbuster products such as Enbrel® and Remicade® for the treatment of rheumatoid arthritis and other inflammatory disorders, Rituxan® for non-Hodgkin’s lymphoma and Herceptin® for the treatment of breast cancer. There are more than 35 approved monoclonal antibody products and over 350 product candidates currently in clinical development, most of which are manufactured using Protein A. Repligen has been a leading manufacturer of Protein A for over fifteen years and manufactures multiple forms of Protein A for major life sciences companies including GE Healthcare and EMD Millipore under long-term supply agreements which extend to dates between 2016 and 2021. Pursuant to Repligen’s Strategic Supplier Alliance Agreement with GE Healthcare, Repligen has agreed to manufacture and sell to GE Healthcare two forms of GE Healthcare proprietary recombinant Protein A through January 28, 2015, with a right to extend the agreement through 2021. Repligen’s Strategic Supplier Alliance Agreement with GE Healthcare is terminable by either party upon written notice of breach or insolvency. In addition, Mr. Jeffrey Riedler Securities and Exchange Commission January 20, 2015 Page 3 pursuant to the Strategic Supplier Alliance Agreement, or Sweden Supplier Agreement, by and between Repligen Sweden AB (as successor-in-interest to Novozymes Biopharma Sweden AB) and GE Healthcare, Repligen agrees to manufacture and sell to GE Healthcare three forms of GE Healthcare proprietary recombinant Protein A through December 31, 2016. Either party may terminate the Sweden Supplier Agreement unilaterally for convenience upon two years’ written notice or upon written notice of material default or breach of the agreement and bankruptcy or insolvency . GE Healthcare may terminate the Sweden Supplier Agreement if Repligen markets or sells any chromatography media products, transfers control of the Sweden Supplier Agreement or upon delay or defect in the proprietary recombinant Protein A products. To be useful in the monoclonal antibody manufacturing process, Protein A is chemically bound to proprietary microscopic beads that are manufactured by life sciences companies, such as those mentioned above. These beads provide the rigid support required to use Protein A ligands. The combination of Protein A ligands bound to the beads is known as Protein A chromatographic media, which is packed by end-users into cylindrical columns and used to purify monoclonal antibodies. For example, after a fermentation process that produces monoclonal antibodies, the broth containing the monoclonal of interest, as well as numerous fermentation by-products and contaminants, is pumped through a column filled with Protein A chromatographic media. The Protein A media selectively binds to or “captures” the monoclonal antibody. Protein A has a high affinity for the monoclonal antibody and as a result, the antibody remains bound to the Protein A media while impurities flow through the column and are discarded. Once the impurities are removed, a change in pH conditions releases the purified antibody from the Protein A media. As a result, the monoclonal antibody product is highly purified and concentrated from a single purification step. Further purification steps are usually necessary to increase purity to a level greater than 98%. Over the past three years, the majority of our product sales have been sales of Protein A products. Most biopharmaceuticals are produced through mammalian cell fermentation. In order to spur increased cell growth, manufacturers add growth factors and nutrients to the fermentor. As part of the Novozymes Acquisition, the Company acquired four cell culture growth factor products. Among those products is LONG®R3 IGF-I, a growth factor that is more biologically potent than insulin, and that has been shown to significantly increase recombinant protein production in fermentation applications. LONG®R3 IGF-I is currently used in the manufacture of several commercial biopharmaceutical products and is sold under a distribution agreement with Sigma-Aldrich Corporation (“Sigma”) which extends to 2021. Sigma has distribution rights for industrial cell culture applications while Repligen sells the product for use in stem cell and other cell-based therapies. In addition, we acquired long epidermal growth factor (LONG®EGF) and transforming growth factor alpha (LONG®TGF-a) supplements for serum-free or low serum culture in cell-based therapy applications, as well as recombinant transferrin (rTransferrin) which has been developed as an iron supplement for cell culture. There may be applications for these growth factors in stem cell and other cell-based therapies. We also sell a number of products used in purification and quality control applications to contract manufacturers and biopharmaceutical companies. These products include: OPUS pre-packed, disposable chromatography columns, proprietary Protein A chromatography media and Mr. Jeffrey Riedler Securities and Exchange Commission January 20, 2015 Page 4 quality test kits. Our pre-packed chromatography columns are sold in a variety of sizes with the customer’s choice of media. This product line’s smaller sizes consist of proprietary technology that we acquired from BioFlash Partners, LLC (“BioFlash”) in January 2010 while the larger sizes encompass products and technology that we developed as a result of our internal research and development efforts. The OPUS brand stands for “Open Platform, User Specified.” OPUS columns have the potential to improve manufacturing efficiencies and lower costs by reducing labor and time spent on column packing, validation, set-up and cleaning. In addition, because OPUS columns are “plug-and-play” we believe they offer customers significantly greater manufacturing efficiency and flexibility when used with other flexible, disposable technologies. In early 2012, we introduced new, process-scale OPUS chromatography columns with diameters of 20cm and 30cm. These new products are well suited for the production of a broad range of clinical trial material and niche commercial products such as orphan biologics. Our proprietary Protein A chromatography media is used by contract manufacturers and biopharmaceutical companies in a variety of applications, including in the purification of some currently marketed biotherapeutics. Customers use our Protein A and Growth Factor ELISA test kits to ensure that there are minimal levels of residual Protein A and growth factor, respectively, in the final bulk drug product. Research and Development, page 4 2. Please expand your disclosure for your HDAC Agreement with BioMarin to describe the material terms of the agreement, including the parties’ rights and obligations, the duration of the agreement, termination provisions and royalty rates. Also, please file the agreement as an exhibit pursuant to Item 601(b)(10) of Regulation S-K. Response to Comment No. 2: The Company acknowledges the Staff’s comment. In future filings, the Company will expand its disclosure regarding the HDAC Agreement with BioMarin substantially as set forth below in italicized and underlined text. The Company respectfully informs the Staff that because the HDAC Agreement with BioMarin was entered into during the quarter ended March 31, 2014, it is filed as Exhibit 10.01 to the Company’s quarterly report on form 10-Q for the quarter ended March 31, 2014, filed with the Commission on May 9, 2014. The Company respectfully directs the Staff’s attention to the application for confidential treatment, dated May 9, 2014, in which the Company petitioned the Staff for confidential treatment for, in addition to other things, certain provisions and terms under the HDAC Agreement with BioMarin. HDAC Agreement with BioMarin On January 21, 2014, we out-licensed our HDACi portfolio, which includes the Friedreich’s ataxia program, to BioMarin Pharmaceuticals Inc. Friedreich’s ataxia is an inherited Mr. Jeffrey Riedler Securities and Exchange Commission January 20, 2015 Page 5 disease that causes progressive damage to the nervous system resulting in symptoms ranging from impaired walking and speech problems to heart disease. Under the terms of the agreement, Repligen received an upfront payment of $2 million in January 2014 from BioMarin 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. These potential milestone payments are approximately 37% related to clinical development and 63% related to initial commercial sales in specific geographies. In addition, Repligen is eligible to receive royalties on sales of qualified products developed. The royalty rates are tiered and begin in the mid-single-digits for the first HDACi portfolio product and for the first non-HDACi portfolio product with lesser amounts for any backup products developed under the agreement. Repligen’s receipt of these royalties is subject to customary offsets and deductions. There are no refund provisions in this agreement. 3. Please expand your disclosure for your SMA Agreement with Pfizer to describe the termination provisions of the agreement. With regard to the duration of the agreement, we note that the royalty term of the agreement is based on the later of (a) expiration of the licensed patents or (b) a predetermined time after the first commercial sale of the first product in a country. Please revise the duration disclosure to provide the expiration date of the last to expire patent and the “predetermined time” referenced in your disclosure. Response to Comment No. 3: The Company acknowledges the Staff’s comment. In future filings, the Company will expand its disclosure regarding the SMA Agreement with Pfizer substantially as set forth below in italicized and underlined text. The Company respectfully directs the Staff’s attention to the application for confidential treatment, dated March 15, 2013, as amended on May 2, 2013, in which the Company petitioned the Staff for confidential treatment for, in addition to other things, certain royalty adjustment and cessation provisions and terms under the Pfizer Inc. License Agreement. SMA Agreement with Pfizer On December 28, 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 and a $1 million milestone payment on September 4, 2013. We are entitled to receive up to $64 million in potential future milestone payments, a portion of which may be owed to third parties. These potential payments are approximately equally divided between milestones related to clinical development and initial commercial sales in specific geographies. In addition, we are entitled to receive royalties on any future sales of RG3039 or any SMA compounds developed under the License Agreement. The License Agreement also provides for tiered and increasing royalty rates which begin in the high single-digits for RG-3039 or lesser amounts for any backup compounds Mr. Jeffrey Riedler Securities and Exchange Commission January 20, 2015 Page 6 developed under the License Agreement. Our receipt of these royalties is subject to an obligation under an existing in-license agreement and other customary offsets and deductions. Royalties are payable, on a country-by-country basis, for a duration based upon the later of (a) expiration of the licensed patent(s) and (b) a predetermined time after the first commercial sale of the first such product in such country. Pursuant to this License Agreement, Pfizer has assumed full responsibility for the SMA program moving forward, including the conduct of the clinical trials necessary for any p