Repligen Corp. (RGEN) filed Quarterly Report for the period ended 2008-12-31.
Repligen Corporation develops new drugs based on naturally occurring peptides and proteins for autism organ transplantation and immunesystem diseases. The company's lead therapeutic products are secretin for autism and CTLA4-Ig for organ transplantation and autoimmune diseases. The company manufactures and markets products based on Protein A for the purification of antibodies and it owns commercial rights to products based on synthetic forms of secretin for the diagnosis of pancreatic function. Repligen Corp. has a market cap of $116.94 million; its shares were traded at around $4.35 with a P/E ratio of 26.7 and P/S ratio of 6.06. Repligen Corp. had an annual average earning growth of 1.4% over the past 10 years.
Highlight of Business Operations:
Research and development expenses were approximately $3,579,000 and $1,592,000 for the three-month periods ended December 31, 2008 and December 31, 2007, respectively, an increase of $1,987,000 or 125%. Patient enrollment continues to progress in our phase 3 clinical trial for RG1068, evaluating the use of human secretin in aiding pancreatic imaging, and as a result spending on this program has increased approximately $493,000 compared to the prior period. We have begun patient enrollment and engaged a clinical research organization to help lead our phase 2b clinical trial for RG2417, evaluating the use of uridine to treat bi-polar depression. As a result, we have increased spending by $836,000 compared to the prior period. Finally, our Friedreich’s ataxia spending has also increased by $270,000 as we continue our research efforts to identify a clinical candidate. Significant fluctuations in research and development expenses may occur from period to period depending on the nature, timing, and extent of development activities over any given period of time.
Selling, general and administrative expenses were approximately $1,404,000 and $2,341,000 for the three-month periods ended December 31, 2008 and December 31, 2007, respectively, a decrease of $937,000 or 40%. This decrease is largely attributable to a $1,157,000 decrease in litigation expenses related to our patent infringement settlements with both ImClone and Bristol, offset by increased headcount and recruiting costs as we expand our business development and other functions to support the business.
The Company had losses before taxes of approximately $66,000 and $242,000 for the three month periods ended December 31, 2008 and 2007, respectively. The Company had an income tax benefit of $85,000 for the three month periods ended December 31, 2008, due largely to the recognition of approximately $40,000 in research and development tax credits. Prior to the $40.2 million litigation gain in the second quarter of fiscal 2008, the Company had net operating losses and other research credits that reduced our effective tax rate to zero. For fiscal year 2009, we anticipate an effective tax rate of approximately 2.49%. The effective tax rate differs from the statutory tax rate due to the continued utilization of prior year net operating losses and credits, offset by the effects of the alternative minimum tax (“AMT”) on income derived during the fiscal year.
Research and development expenses were approximately $8,127,000 and $4,883,000 for the nine-month periods ended December 31, 2008 and December 31, 2007, respectively, an increase of $3,244,000 or 66%. The increase is due primarily to increased overall activity, in comparison to the prior period, in our two clinical trials as well as ongoing research and development costs incurred investigating potential clinical candidates to be used in the treatment of Friedreich’s ataxia. Specifically, as patient enrollment continues to progress in our phase 3 clinical trial for RG1068, evaluating the use of human secretin in aiding pancreatic imaging, we have increased spending versus the prior period by $1,140,000. In addition, we have engaged a clinical research organization to assist in the deployment of our phase 2b clinical trial for RG2417, evaluating the use of uridine to treat bi-polar depression, and otherwise increased overall clinical trial efforts, adding an incremental $1,120,000 of spending compared to the prior period. Finally, our Friedreich’s ataxia spending has also increased by $934,000 as we continue our research efforts. Significant fluctuations in research and development expenses may occur from period to period depending on the nature, timing, and extent of development activities over any given period of time.
The Company had income before taxes of approximately $8,614,000 and $41,132,000 for the nine-month periods ended December 31, 2008 and 2007, respectively. The Company had an income tax provision of $175,000 and $827,000 for the nine-month periods ended December 31, 2008 and 2007, respectively. In the current year, the tax provision was benefited by the recognition of approximately $40,000 in research and development tax credits. Prior to the $40.2 million litigation gain in the second quarter of fiscal 2008, the company had net operating losses and other research credits that reduced our effective tax rate to zero. For fiscal year 2009, we anticipate an effective tax rate of approximately 2.49%. The effective tax rate differs from the statutory tax rate due to the continued utilization of prior year net operating losses and credits, offset by the effects of the alternative minimum tax (“AMT”) on income derived during the fiscal year.
Our operating activities provided cash of approximately $6,402,000 for the nine-month period ended December 31, 2008. Cash provided by operations is primarily due to net income of $8,439,000, plus certain non-cash expenses such as $783,000 for depreciation and $579,000 in stock-based compensation expense, and a $282,000 increase in inventory, offset by a $2,114,000 increase in royalties receivable, a $641,000 increase in accounts receivable, and a $796,000 decrease in accounts payable and accrued liabilities. Royalties receivable increased primarily as a result of the $1,924,000 royalty revenue from Bristol for Orencia® sales for the three-months ended December 31, 2008 which were recognized when earned but is not due until after quarter end. Accounts receivable increased as a result of the timing of customer payments, most of which were received just subsequent to our period end. The decrease in accounts payable and accrued expenses from year end was largely the result of the payment of outstanding legal invoices associated with the Bristol litigation that was completed in April 2008 offset by the timing of payments related to increased research, development and clinical activities.
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