Repligen Annual Report 2008

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FY2008 Annual Report · Repligen

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Acquire.

Develop.

Capture Value.

ANNUAL REPORT 2008

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Preclinical

Phase I

Phase II

Phase III

Market

CTLA4-lg Intellectual Property/Orencia®
Rheumatoid Arthritis

Protein A Products
Antibody Purification

Significant value has been created by...

Preclinical

Phase I

Phase II

Phase III

Market

RG1068
Pancreatic Imaging

RG2417
Bipolar Disorder

RGFA
Friedreich’s Ataxia

ANNUAL REPORT 2008

Acquire. Develop. Capture Value.

Our business strategy is to acquire proprietary product candidates, establish their efficacy

in proof-of-concept clinical trials and complete clinical development and product commercialization

either through partnerships in large markets or directly in niche markets.

We are seeking to acquire programs that complement our neurology pipeline and which have the

potential to address a clinically significant unmet medical need. Our acquisition candidates must have

a clear path to demonstrating efficacy and the potential for meaningful patent protection.

We then leverage our core competencies in manufacturing, in vivo studies and clinical

trials to advance our programs through proof-of-concept clinical trials. Our product development

experience and flexible infrastructure enable us to reach this important milestone efficiently.

Finally, we will capture the value of our product candidates either through partnerships with

biopharmaceutical companies with global commercial infrastructures or through our own

commercialization efforts in niche markets. Our strategy guides all aspects of our business and

has resulted in significant progress in the past year. As described below, we have acquired

a new program, reported positive data in two Phase 2 clinical trials, achieved record revenue

and captured the value from two mature assets through licensing.

RG1068

RG2417

By granting Fast Track Designation to our

Over the six-week treatment period in our

RG1068 for MRI imaging of the pancreas

Phase 2a study in patients with bipolar dis-

development program, the FDA has recognized

order, there was a statistically significant

the urgent need for a safe procedure to assess

improvement in the symptom of depression

pancreatic abnormalities. We expect to com-

in the RG2417-treated patients compared to

plete enrollment in our Phase 3 trial this year,

the placebo-treated patients. These results

and if successful, file an NDA in 2009.

will be further evaluated in a larger number

of patients this year.

...consistent progress and results.

Patents

$19.3 Million

Success in licensing our intellectual property

Our position as a leading supplier of Protein A

assets has resulted in substantial proceeds

translated into record-level revenues this year.

and new sources of revenue. We received a

We expect continued growth in the monoclo-

one time cash settlement of approximately

nal antibody market to drive demand for our

$40 million from ImClone Systems, Inc. for

Protein A based products.

intellectual property covering Erbitux®. We

also licensed our patent covering the use of

CTLA4-Ig in rheumatoid arthritis to Bristol-

Myers Squibb, resulting in a $5 million cash

payment and royalties on U.S. sales of

Orencia® through 2013.

ANNUAL REPORT 2008

Financial Highlights

We achieved our financial goals for fiscal year 2008, delivering record-level revenues and a strong

balance sheet. Our revenues, comprised primarily of Protein A product sales, increased by 37%

to $19.3 million. In addition, we reported a net profit of $37.1 million, reflecting a one-time

cash payment of approximately $40 million from ImClone Systems related to our license agreement

for Erbitux®. We continued to maintain a strong financial position and ended the year with over

$60 million in cash and cash equivalents. Importantly, we have created an operating structure and

secured the cash resources to fund and sustain our product development initiatives.

(In thousands except per share amounts)

2008

2007

2006

Total revenue

Net income (loss)

Cash and investments

Net income (loss) per share—diluted

$ 19,296 $ 14,074 $ 12,911

37,107

(889)

697

60,589

22,627

23,408

$ 1.18 $

(0.03) $ 0.02

Total Revenue
$ in millions

Cash & Investments
$ in millions

2006

2007

2008

2006

2007

2008

20000

15000

10000

5000

72000

54000

36000

18000

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REPLIGEN CORPORATION

President’s Letter

The past year represented a major inflection point for Repligen. We reported progress across

all areas of our business and continued to execute our strategy to acquire programs with the opportunity

to create meaningful value, develop our product candidates through proof-of-concept clinical trials

and create significant value for patients and our shareholders.

In the past year, we have taken a significant step

fastest growing class of therapeutic drugs, with

forward in our mission which has established a

approximately 20 marketed drugs and more than

solid foundation for future growth. A key differenti-

200 in various stages of clinical development. We

ator of Repligen is our commer cial assets, which

anticipate that the long-term demand for Protein A

continue to provide us with the financial resources

will continue to grow in tandem with the mono-

to invest in our pipeline without the need for dilu-

clonal antibody market.

tive financings. Our development pipeline now

spans preclinical to Phase 3 clinical development,

addressing underserved but well-defined markets

—areas where we can have a meaningful impact

on patient care and create significant value.

Commercial Assets

This past year, we achieved record total revenue

of $19.3 million while maintaining our position as

a leading supplier of Protein A, a key consumable

used in the manufacture of most monoclonal anti-

bodies. Monoclonal antibodies are the largest and

We have also secured a new source of revenue

through the successful licensing of our patent cov-

ering the use of CTLA4-Ig in rheumatoid arthritis.

Our agreement with Bristol-Myers Squibb resulted

in a $5 million payment and tiered royalties on

Bristol’s U.S. sales of Orencia®, recently launched

for refractory rheumatoid arthritis. We estimate

that our royalty income will exceed $100 million

over the life of the agreement, providing an addi-

tional source of funding for continued expansion

and development of our pipeline.

Strength in Our Commercial Assets

As the leading supplier of Protein A, our revenue growth

is tied to the monoclonal antibody market, the largest and

fastest growing class of drug in the biopharmaceutical

industry. We also receive royalties on the U.S. sales of

Orencia which could translate into aggregate royalties

of more than $100 million.

Advancing Our Pipeline

RG1068 enhanced MRI imaging provides physicians a

detailed, safe procedure to assess patients with suspected

pancreatic disease such as acute and chronic pancreatitis.

RG2417 is designed to address the symptoms of bipolar

disorder, which affects more than two million adults in

the U.S., without the problematic side effects of currently

marketed therapies.

ANNUAL REPORT 2008

Finally, we reached an agreement in our patent

conducted in the U.S. each year that could benefit

infringement lawsuit related to the manufacture

from enhancement with secretin.

and sale of Erbitux®. ImClone Systems received a

non-exclusive license to certain patents, and we

received net proceeds of approximately $40 mil-

lion, significantly strengthening our balance sheet.

RG1068 for MRI Imaging of
the Pancreas

We reported significant progress with our most

advanced clinical program, RG1068 (synthetic

human secretin) as an agent to improve the assess-

ment of pancreatic duct structures by magnetic

resonance imaging (MRI). In our Phase 2 trial,

RG1068 improved the ability to detect structural

abnormalities of the pancreatic ducts by approxi-

mately 20% with no loss in specificity. Detailed

visual assessment of the pancreatic ducts and

identification of structural abnormalities is impor-

tant in the assessment, diagnosis and treatment

of diseases such as acute and chronic pancreatitis.

The use of a noninvasive procedure such as MRI

is attractive for patient care as it can obviate the

need for more risky invasive procedures.

Due to the risks to patients associated with an

invasive endoscopic procedure, the current method

for imaging the pancreatic ducts, the FDA has

recognized the critical need to improve imaging of

the pancreas by granting our program Fast Track

designation. Further, we have received Orphan

Drug Designation from the FDA for the use of

RG1068 with MRI imaging, which qualifies us for

seven years of marketing exclusivity in the U.S.

if we are the first to receive marketing approval.

RG2417 for Bipolar Disorder

Our lead neurology program is RG2417, an oral

formulation of uridine for the treatment of bipolar

disorder. We have completed a positive Phase 2a

multi-center trial of RG2417 in 83 patients with

bipolar disorder. Over the six-week treatment

period, the study demonstrated a statistically

significant improvement in the symptom of

depression in the patients receiving RG2417 when

compared to placebo on a widely used rating

scale. In addition, RG2417 significantly improved

These data helped to guide the design of our

the patients’ overall symptoms of bipolar disorder

Phase 3 trial, which we initiated in March 2008.

compared to those receiving a placebo. Based on

This study is expected to enroll 250 patients across

these compelling results and feedback from the

30 clinical sites in the U.S. and Canada. We expect

FDA, we plan to advance RG2417 into a larger

to have results from this trial in early 2009. There

proof-of-concept clinical trial in bipolar disorder

are approximately 150,000 pancreatic MRI’s

later this year.

ANNUAL REPORT 2008

HDAC Inhibitors for Friedreich’s Ataxia

In April 2007, we established a development pro-

Financial Strength and Continued
Value Creation

gram for Friedreich’s ataxia, an inherited neuro-

We ended the year with over $60 million in cash

degenerative disease in which low levels of the

and cash equivalents. Our strong balance sheet,

protein frataxin result in progressive damage to

together with the profits from our Protein A busi-

the nervous system and loss of muscle function.

ness and royalty income, provides us with the

We secured an exclusive license from The Scripps

financial strength to continue to fully execute our

Research Institute for intellectual property cov-

product acquisition and development strategy.

ering a series of compounds that may increase

frataxin levels in patients. Over the past year, we

have made significant progress in advancing this

program resulting in the identification of advanced

compounds with improved potency and specificity.

During the next year, we plan to further character-

ize these leads to determine their appropriateness

as a clinical product candidate as well as evaluate

this family of compounds for activity in preclinical

models of other neurodegenerative diseases.

We have received grants from two patient-based

foundations which help support this program. We

believe that establishing relationships with these

non-profit organizations will result in a number of

mutual benefits as the program evolves and we

prepare for human clinical trials. Approximately one

in every 50,000 people in the U.S. has Friedreich’s

ataxia, and there is currently no treatment for the

disorder.

We have a clear vision for value creation. We will

invest the proceeds from our Commercial Assets

into the acquisition of promising product candidates

that complement our neurology pipeline, drive our

programs forward through proof-of-concept studies

and determine the appropriate partnering and com-

mercialization arrangements to maximize the value

of the programs. We believe this will provide a

platform for continued success, and we look for-

ward to updating you on our efforts.

Walter C. Herlihy, Ph.D.
President and Chief Executive Officer
July 18, 2008

Index to Business and Financial Information for the Year Ended March 31, 2008

Selected Financial Data

Business

Management’s Discussion and Analysis of Financial Condition
and Results of Operations

Market for Registrant’s Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities

Stock Price Performance Graph

Statements of Operations

Balance Sheets

Statements of Cash Flows

Statements of Stockholders’ Equity

Notes to Financial Statements

F-2

F-3

F-11

F-23

F-24

F-25

F-26

F-27

F-28

F-29

Report of Independent Registered Public Accounting Firm F-46

Management’s Annual Report on Internal Control Over Financial Reporting

F-47

Attestation Report of the Independent Registered Public Accounting Firm F-48

F-1

Selected Financial Data

The following selected financial data are derived from the audited financial statements of Repligen.
The selected financial data set forth below should be read in conjunction with our financial state-
ments and the related notes thereto and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” included elsewhere in this report and our Annual Report on
Form 10-K for the years ended March 31, 2008, 2007, 2006, 2005 and 2004.

Years ended March 31,

2008(2)

2007

2006

2005

2004

(In thousands except per share amounts)

Revenue:
Product revenue
Other revenue

Total revenue
Operating Expenses:
Cost of product revenue
Research and development

Selling, general and administrative
Net gain from litigation settlement
Impairment of long-lived asset

Total operating expenses
Income (loss) from operations

Interest expense
Investment income
Other income

Income (loss) before income taxes
Provision for income taxes

Net income (loss)

Earnings Per Share:
Basic

Diluted

Weighted Average Shares Outstanding:
Basic

Diluted

Balance Sheet Data:
Cash and marketable securities(1)
Working capital
Total assets
Long-term obligations
Accumulated deficit
Stockholders’ equity

$ 18,587 $ 13,074 $ 12,529 $
1,000

709

382

9,360 $
—

19,296

14,074

12,911

9,360

6,160
7,241
10,173
(40,170)
—

(16,596)
35,892

(9)
2,051
—

37,934
827

3,615
5,924
6,360
—
—

15,899
(1,825)

(11)
947
—

(889)
—

3,551
5,163
5,417
—
—

14,131
(1,220)

(3)
750
1,170

697
—

6,843
71

6,914

3,248
6,484
4,710
—
2,413

3,888
5,037
4,597
—
—

13,522
(4,162)

16,855
(9,941)

—
428
750

—
390
—

(2,984)
—

(9,551)
—

$ 37,107 $

(889) $

697 $

(2,984) $

(9,551)

1.20 $

(0.03) $

0.02 $

(0.10) $

(0.32)

1.18 $

(0.03) $

0.02 $

(0.10) $

(0.32)

30,834

31,321

30,379

30,125

30,691

30,062

29,686

As of March 31,

2008

2007

2006

2005

2004

(In thousands)

$ 60,589 $ 22,627 $ 23,408 $ 23,523 $ 24,269
13,684
29,615
86
(154,507)
27,164

49,831
68,840
143
(120,577)
64,107

22,394
29,076
200
(157,683)
25,538

18,575
28,599
231
(156,794)
25,433

15,673
27,607
120
(157,491)
24,290

(1) Excludes restricted cash of $200 restricted as part of our headquarters lease arrangement for all years presented.
(2) 2008 includes $40,170 net gain from litigation settlement.

F-2

F-3

Business

The following discussion of our business con-
tains forward-looking statements that involve
risks and uncertainties. When used in this report,
the words “ intend,” “anticipate,” “ believe,”
“estimate,” “plan” and “expect” and similar
expressions as they relate to us are included to
identify forward-looking statements. Our actual
results could differ materially from those antici-
pated in these forward-looking statements and
are a result of certain factors, including those set
forth under “Risk Factors” and elsewhere in our
Annual Report on Form 10-K.

Repligen Corporation (“Repligen,” the “Com-
pany” or “we”) is developing novel therapeutics
primarily for the treatment of diseases of the
central nervous system. Our business strategy
is to maintain full commercial rights to our prod-
uct candidates through “proof of principle” clini-
cal studies after which we may seek corporate
partners for further development and marketing.
For the next several years, we expect to fund
the development of our proprietary therapeutic
product candidates primarily through royalty
payments received from Bristol-Myers Squibb
Company (“Bristol”) based on their United
States sales of Orencia® and the profits from the
sales of our Protein A products which are used
in the production of many therapeutic monoclo-
nal antibodies. This will enable us to indepen-
dently advance our product candidates through
“proof of principle” clinical trials with reduced
financial risk.

We were incorporated in May 1981, under the
laws of the State of Delaware. Our principle
executive offices are at 41 Seyon Street,
Waltham, Massachusetts 02453 and our tele-
phone number is (781) 250-0111.

Currently Marketed Products
We currently sell a line of commercial products
based on Protein A, which is used in the produc-
tion of monoclonal antibodies, and SecreFlo®, a
synthetic form of the hormone secretin, which is
used as an aid in the diagnosis of certain dis-
eases of the pancreas.

Protein A Products for Antibody Manufacturing
Protein A is widely used in the purification of
therapeutic monoclonal antibodies. Most thera-
peutic monoclonal antibodies are manufactured
by the fermentation of mammalian cells that
express the monoclonal antibody. The monoclo-
nal antibody is typically produced by a process
in which an impure fermentation broth contain-
ing the desired monoclonal antibody is passed
over a solid support to which Protein A has
been chemically attached or “immobilized.” The
immobilized Protein A binds the monoclonal anti-
body while other impurities are washed away.
The monoclonal antibody is then recovered from
the support in a substantially purified form.

We manufacture and market several products
based on recombinant forms of Protein A. Our
primary customers incorporate our Protein A
products into their proprietary monoclonal anti-
body purification systems that they sell directly
to the biotechnology and pharmaceutical indus-
try. We supply Protein A products to GE Health-
care (“GEHC”) under a supply agreement which
extends through 2010 and to Applied Biosystems,
Inc. under a supply agreement that extends until
2011. The majority of our product sales for the
last three years have been sales of Protein A
products.

Sales of therapeutic monoclonal antibodies have
increased from $300 million in 1997 to approxi-
mately $25 billion in 2007. This growth is based
on the increasing use of therapeutic antibodies,
including Avastin® for colon cancer, Synagis® for
RSV infection and Remicade® for Crohn’s dis-
ease and arthritis. There are more than 150 addi-
tional monoclonal antibodies in various stages of
clinical testing which may lead to additional
growth of the antibody market and in turn,
increased demand for Protein A.

SecreFlo® for Pancreatic Diagnosis
In fiscal year 2008, we also recorded sales of
SecreFlo ®, a synthetic form of porcine (pig-
derived) secretin. SecreFlo® is approved by the
U.S. Food and Drug Administration (“FDA”) as
an aid in the diagnosis of chronic pancreatitis

F-2

F-3

Business (continued)

and gastrinoma (a form of cancer) and as an aid
during endoscopic retrograde cholangiopancre-
atography (“ERCP”), a gastrointestinal proce-
dure. We will discontinue distribution of SecreFlo®
in the first half of fiscal year 2009 when our
product supply will cease.

Intellectual Property on Monoclonal Antibody
and Antibody Fusion Products

Erbitux®
Erbitux® is a monoclonal antibody developed
by ImClone Systems Incorporated (“ImClone”)
which was approved by the FDA in February
2004 for the treatment of certain forms of colon
cancer and in March 2006 for the treatment of
head and neck cancer. Erbitux® is manufactured
with a cell line which contains certain genetic
technologies (“DNA enhancers”) which increase
the productivity of a cell line. This U.S. patent
covering the use of DNA enhancers, which
expired in May of 2004, was assigned to The
Massachusetts Institute of Technology (“MIT”)
and exclusively licensed to Repligen. In May
2004, Repligen and MIT jointly filed a lawsuit
against Imclone in U.S. District Court for Massa-
chusetts alleging that Imclone has infringed our
patent rights in its production of Erbitux®. In
September 2007, Repligen and MIT entered into
a settlement agreement under which ImClone
was granted a license to the DNA enhancer pat-
ent and certain other intellectual property in
exchange for a payment of $65,000,000.

CTLA4-Ig
CTLA4 is a key regulator of the activity of the
immune system. CTLA4 “turns off” the immune
system after it has successfully cleared a bacte-
rial or viral infection by blocking the activation of
T-cells, the immune cells responsible for initiat-
ing an immune response. In the 1990s, our col-
laborators at the University of Michigan and the
U.S. Navy demonstrated in animal models that a
fusion protein consisting of fragments of CTLA4
and an antibody (“CTLA4-Ig”) could be used to
treat certain autoimmune diseases. This research
finding resulted in the granting of U.S. patent
No. 6,685,941 (“the ‘941 Patent”) covering the

treatment of certain auto-immune disorders
including rheumatoid arthritis with CTLA4-Ig.
The ‘941 Patent is owned by the University of
Michigan and exclusively licensed to Repligen.
CTLA4-Ig’s mechanism of action is different
from the current therapies for autoimmune dis-
ease or organ transplant rejection, thus it may
provide a treatment for patients who are refrac-
tory to existing therapies.

In December 2005, the FDA approved Bristol’s
application to market CTLA4-Ig, under the brand
name Orencia®, for treatment of rheumatoid
arthritis. In January 2006, Repligen and the
University of Michigan jointly filed a lawsuit
against Bristol in the United States District Court
for the Eastern District of Texas for patent
infringement. In April 2008, Repligen and the
University of Michigan entered into a settlement
agreement with Bristol pursuant to which, Bristol
made an initial payment of $5 million to Repligen
and will pay us royalties on the U.S. net sales of
Orencia® for any clinical indication at a rate of
1.8% for the first $500 million of annual sales,
2.0% for the next $500 million and 4% of annual
sales in excess of $1 billion for each year from
January 1, 2008 until December 31, 2013.

Development Stage Products

Secretin for MRI
Secretin is a well-known hormone produced in
the small intestine that regulates the function of
the pancreas as part of the process of digestion.
We are currently evaluating secretin for improve-
ment of MRI imaging of structural abnormalities
of the pancreas.

Several reports published in the literature sup-
port the use of secretin with abdominal MRI
imaging to improve visualization of pancreatico-
biliary structures and to increase diagnostic sen-
sitivity relative to unenhanced abdominal MRI.
MRI technology images water thus the use of
secretin during MRI harnesses the natural bio-
logic properties of secretin, which signals the
release of water-rich fluids into the ducts of the
pancreas. Improvement in the detection and

F-4

F-5

Business (continued)

delineation of normal and abnormal structures
with MRI is attractive for patient care as it can
obviate the need for more risky invasive endo-
scopic procedures.

In June 2006, we initiated a Phase 2 clinical trial
to evaluate the use of RG1068, synthetic human
secretin, as an agent to improve the detection of
structural abnormalities of the pancreatic ducts
during MRI imaging of the pancreas. This was a
multi-center, baseline controlled, single dose
study in which 76 patients with a history of pan-
creatitis received a secretin-enhanced MRI and
an unenhanced MRI of the pancreas.

In May 2007, we announced positive results
from this Phase 2 clinical trial to evaluate the
use of RG1068 to improve the assessment of
pancreatic duct structures by MRI. The study
showed an improvement in sensitivity of detec-
tion of structural abnormalities of the pancreatic
duct of approximately 20% with no loss in spec-
ificity. In addition, the study showed highly
significant increases in the following three
assessments: physician confidence in their abil-
ity to identify structural abnormalities, the num-
ber of pancreatic duct segments visualized and
improvement in the overall quality of the MRI
images. Detailed visual assessment of the pan-
creatic ducts and identification of structural
abnormalities is important in the assessment,
diagnosis and treatment of diseases such as
acute and chronic pancreatitis.

Our Phase 2 data was reviewed by the FDA and
has served as the basis for the design of a piv-
otal, Phase 3 study. The Phase 3 study will seek
to recruit approximately 250 patients at 25 clini-
cal sites in the United States and Canada. The
primary objective of the Phase 3 study is to
demonstrate that secretin improves the ability to
detect structural abnormalities of the pancreas
by MRI. We believe that a successful Phase 3
study will provide the basis for filing a New Drug
Application (“NDA”) with the FDA for approval
to market secretin for this use in the United
States. We have received an Orphan Drug des-
ignation from the FDA for this use of secretin,

which means we will have seven years of mar-
keting exclusivity in the United States following
approval of the NDA. We also have received
“fast track” designation from the FDA which
means our NDA will receive expedited review by
the FDA.

Uridine for Bipolar Depression
Uridine is a biological compound essential for
multiple biosynthetic processes including the
synthesis of DNA and RNA, the basic hereditary
material found in all cells and numerous other
factors essential for cell metabolism. Uridine is
synthesized by the power plant of the human
cell known as the mitochondria. The rationale
for uridine therapy in central nervous system,
or CNS, disorders is supported by pre-clinical
and clinical research. Researchers at McLean
Hospital previously demonstrated that uridine is
active in a well-validated animal model of depres-
sion. Recent reports indicate that certain genes
that encode for mitochondrial proteins are sig-
nificantly down-regulated in the brains of bipolar
patients. This insight suggests that the symp-
toms of bipolar disorder may be linked to dys-
regulation of energy metabolism of the brain.

Bipolar disorder, also known as manic depres-
sion, is marked by extreme changes in mood,
energy and behavior in which a person can alter-
nate between mania (highs) and depression
(lows). Bipolar disorder affects more than 2
million adults in the United States. Current drug
therapy for bipolar disorder includes the use of
lithium and anti-psychotic drugs. However, side
effects are frequent and troublesome, and
patients do not respond fully, leading to poor
patient compliance with therapy and frequent
recurrences of mania and depression.

In March 2006, we initiated a Phase 2a clinical
trial of RG2417, an oral formulation of uridine, in
patients with bipolar depression. This was a
multi-center, dose escalating study in 82 patients
which compared daily, oral dosing with either
RG2417 or a placebo for six weeks. Patients
were evaluated weekly for the safety and effec-
tiveness of RG2417 on the symptoms of bipolar

F-4

F-5

Business (continued)

depression. The study showed a statistically
significant improvement in the symptoms of
depression over the six-week course of treat-
ment in the patients treated with RG2417 com-
pared to placebo. In addition, the patients treated
with RG2417 showed a greater improvement in
a global assessment of their overall symptoms
of bipolar disorder compared to placebo-treated
patients. RG2417 was well tolerated by patients
and had a good safety profile. This study was
partially supported by the Stanley Medical
Research Institute. We are currently planning a
larger Phase 2b trial to reproduce and extend
the results of the Phase 2a study.

Transcription Enhancers for Friedreich’s Ataxia
Symptoms of Friedreich’s ataxia typically emerge
between the ages of five and 15 and often prog-
ress to severe disability, incapacitation or loss
of life in early adulthood. Friedreich’s ataxia is
caused by a single gene defect that results in
inadequate production of the protein frataxin.
The protein frataxin appears to be essential for
the proper functioning of the mitochondria, the
power plant of both neural and muscle cells.
Low levels of frataxin leads to degeneration of
both the nerves controlling muscle movements
in the arms and legs and the nerve tissue in the
spinal cord. Approximately one in every 50,000
people in the United States has Friedreich’s
ataxia.

In April 2007, we entered into an exclusive com-
mercial license (the “Scripps License Agree-
ment”) with The Scripps Research Institute
(“Scripps”) for intellectual property covering
compounds which may have utility in treating
Friedreich’s ataxia. Research in cells derived
from patients, as well as in mice indicates that
the licensed compounds increase production of
the protein frataxin, which suggests potential
utility of these compounds in slowing or stop-
ping progression of the disease. There is cur-
rently no treatment for Friedreich’s ataxia.

We have chemically synthesized several libraries
of compounds related to the initial compounds
licensed from Scripps. Some of these compounds
have higher potency or improved specificity in
laboratory assays. These compounds are cur-
rently being evaluated in a variety of animal
models for safety and efficacy to determine if
one may be a suitable candidate for clinical tri-
als. Preliminary data also suggests that these
compounds may have utility in treating other dis-
orders such as Spinal Muscular Atrophy and
Huntington’s disease.

Sales and Marketing
We sell our Protein A products primarily through
value-added resellers including GEHC and
Applied Biosystems, Inc., as well as through dis-
tributors in certain foreign markets. We market
SecreFlo® directly to hospital-based gastroenter-
ologists in the United States.

Significant Customers and
Geographic Reporting
Customers for our Protein A products include
chromatography companies, diagnostics compa-
nies, biopharmaceutical companies and labora-
tory researchers. During fiscal years 2008, 2007
and 2006, the customers that accounted for
more than 10% of our total revenue were GEHC
and Applied Biosystems, Inc.

Of our fiscal 2008 product revenue, 36% is
attributable to U.S. customers and 64% is attrib-
utable to foreign customers, of which 74% is
attributable to two customers. Of our fiscal 2007
product revenue, 47% is attributable to U.S. cus-
tomers and 53% is attributable to foreign cus-
tomers, of which 72% is attributable to two
customers. Of our fiscal 2006 revenue, 48% is
attributable to U.S. customers and 52% is attrib-
utable to foreign customers, of which 75% is
attributable to two customers.

F-6

F-7

Business (continued)

Employees
As of May 27, 2008, we had 56 employees. Of
those employees, 43 were engaged in research,
development and manufacturing and 13 in
administrative and marketing functions. Twenty
of our employees hold doctorates or other
advanced degrees. Each of our employees has
signed a confidentiality agreement. None of our
employees are covered by collective bargaining
agreements.

Patents, Licenses and Proprietary Rights
Our policy is to seek patent protection for our
therapeutic product candidates. We pursue pat-
ent protection in the United States and file cor-
responding patent applications in relevant foreign
jurisdictions. We believe that patents are an
important element in the protection of our com-
petitive and proprietary position, but other ele-
ments, including trade secrets, orphan drug
status and know-how, are also important. We
own or have exclusive rights to more than 15
issued U.S. patents and corresponding foreign
equivalents. The terms of such patents expire
at various times between 2009 and 2021. No
patent material to our business expires before
2009. In addition, we have rights to more than
20 U.S. pending patent applications and corre-
sponding foreign applications. The invalidation of
key patents owned or licensed by us or the fail-
ure of patents to issue on pending patent appli-
cations could create increased competition, with
potential adverse effects on our business pros-
pects. For each of our license agreements where
we license the rights to patents or patent appli-
cations, the license will terminate on the day
that the last to expire patent covered by each
such license agreement expires.

We also rely upon trade secret protection for our
confidential and proprietary information. Our
policy is to require each of our employees, con-
sultants, business partners and significant scien-
tific collaborators to execute confidentiality

agreements upon the commencement of an
employment, consulting or business relationship
with us. These agreements generally provide
that all confidential information developed or
made known to the individual during the course
of the individual’s relationship with us is to be
kept confidential and not disclosed to third
parties except in specific circumstances. In the
case of employees and consultants, the agree-
ments generally provide that all inventions
conceived by the individual in the course of ren-
dering services to Repligen shall be our exclu-
sive property.

CTLA4-Ig
We are the exclusive licensee of all CTLA4-Ig
patent rights owned by the University of Michigan.
In February 2004, the ‘941 patent issued, to which
we own the exclusive rights through license
agreements with the University of Michigan and
the U.S. Navy. The ‘941 patent has claims that
cover the use of CTLA4-Ig to treat rheumatoid
arthritis, multiple sclerosis and certain other
autoimmune disorders and is assigned to the
University of Michigan and the U.S. Navy. This
patent is exclusively sub-licensed by Repligen to
Bristol-Myers Squibb as of April 2008.

Uridine
In November 2000 and December 2000,
Repligen entered into two license agreements
(the “UCSD Uridine License Agreements”) with
the University of California, San Diego (“UCSD”)
for certain patent applications pertaining to the
use of uridine and uridine derivatives for the
treatment of mitochondrial disease and purine
autism. On June 21, 2001, Pro-Neuron, Inc. filed
a complaint (the “Pro - Neuron Complaint”)
against the Regents of the University of California
(the “Regents”) and Repligen in the Superior
Court of California, County of San Diego seeking
to void the UCSD Uridine License Agreement
relating to treatment of mitochondrial disease
entered into between Repligen and the UCSD.

F-6

F-7

Business (continued)

Pro-Neuron, Inc. subsequently amended the
complaint to include the UCSD Uridine License
Agreement related to purine autism and claims
for misappropriation of trade secrets.

discussed herein. We spent $7,241,000 in fiscal
2008, $5,924,000 in fiscal 2007, and $5,163,000
in fiscal 2006 on company-sponsored research
and development activities.

In June 2003, Repligen agreed to restructure
the UCSD License Agreements to exclude
the field of acylated pyrimidines, including
triacetyluridine.

In April 2004, a U.S. patent was issued to
Repligen and UCSD, which claims methods
of treating certain developmental disorders,
including certain forms of autism, with uridine
compositions which expires in October 2020.
Foreign equivalents of this patent are pending.
A patent with similar claims has been recently
issued in Australia.

Protein A
We own a U.S. patent covering recombinant
Protein A, which expires in September 2009, as
well as significant know-how in the manufacture
of high-purity Protein A. We also own a U.S. pat-
ent covering modified forms of Protein A, which
was non-exclusively licensed to Amersham
Biosciences (now GEHC) in 1998 as part of a
ten-year agreement, which was amended and
extended in 2005 until 2010, covering the sup-
ply of Protein A to GEHC.

In addition to its utility in monoclonal antibody
manufacturing, Protein A may also be useful in
human therapy based on its activity as a B-cell
toxin. Repligen has exclusively licensed rights
from UCSD to a U.S. patent application which
claims a variety of potential therapeutic uses of
Protein A. Foreign equivalents of this patent
application are also pending.

Research and Development
For the past three years, we have devoted sub-
stantial resources to the research and develop-
ment of therapeutic product candidates and our
commercial products and product candidates

Competition
Our Protein A and SecreFlo ® products com-
pete on the basis of quality, performance, cost
effectiveness, and application suitability with
numerous established technologies. Additional
products using new technologies that may be
competitive with our products may also be intro-
duced. Many of the companies selling or devel-
oping competitive products have financial,
manufacturing and distribution resources signifi-
cantly greater than ours.

The field of drug development is characterized
by rapid technological change. New develop-
ments are expected to continue at a rapid pace
in both industry and academia. There are many
companies, both public and private, including
large pharmaceutical companies, chemical com-
panies and specialized biotechnology compa-
nies, engaged in developing products competitive
with products that we have under development.
Many of these companies have greater capital,
human resources, research and development,
manufacturing and marketing experience than
we do. They may succeed in developing prod-
ucts that are more effective or less costly than
any that we may develop. These competitors
may also prove to be more successful than we
are in production and marketing. In addition, aca-
demic, government and industry-based research
groups compete intensely with us in recruiting
qualified research personnel, in submitting pat-
ent filings for protection of intellectual property
rights and in establishing corporate strategic alli-
ances. We cannot be certain that research, dis-
coveries and commercial developments by
others will not render any of our programs or
potential products noncompetitive.

F-8

F-9

Business (continued)

Manufacturing

Protein A for Antibody Manufacturing
We manufacture Protein A products from recom-
binant strains of bacteria. We manufacture
Protein A for GEHC under a supply agreement
which extends through 2010. In addition, we
have a long-term supply agreement with Applied
Biosystems, Inc. that provides that Repligen will
be the preferred provider of recombinant protein
A to Applied Biosystems, Inc. until 2011. We uti-
lize our own facility and third parties to carry out
certain fermentation and recovery operations,
while the purification, immobilization, packaging
and quality control testing of Protein A are con-
ducted at our facilities. We maintain an active
quality assurance effort to support the regu-
latory requirements of our customers. We pur-
chase raw materials from more than one
commercially established company and believe
that the necessary raw materials are currently
commercially available in sufficient quantities
necessary to meet market demand.

Therapeutic Product Candidates
We currently rely, and will continue to rely, for at
least the next few years, upon contract manu-
facturers for both the procurement of raw mate-
rials and the production of our product candidates
for use in our clinical trials. Our product candi-
dates will need to be manufactured in a facility
and by processes that comply with the FDA’s
good manufacturing practices and other similar
regulations. It may take a substantial period of
time to begin manufacturing our products in
compliance with such regulations. If we are
unable to establish and maintain relationships
with third parties for manufacturing sufficient
quantities of our product candidates and their
components that meet our planned time and
cost parameters, the development and timing of
our clinical trials may be adversely affected.

We purchase raw materials from more than one
commercially established company. Our neces-
sary raw materials are currently commercially
available in quantities that far exceed the scale
required to complete all of our future planned
clinical trials.

Government Regulation
The development of drug candidates is subject
to regulation in the United States by the FDA
and abroad by foreign equivalents. Product devel-
opment and approval within the FDA regulatory
framework usually takes a significant number of
years and involves the expenditure of substantial
capital resources. Timelines for development are
uncertain.

Before clinical testing in the United States of any
drug candidate may begin, FDA requirements
for preclinical efficacy and safety must be com-
pleted. Required toxicity testing typically involves
characterization of the drug candidate in several
animal species. Safety and efficacy data are sub-
mitted to the FDA as part of an Investigational
New Drug Application (“IND”) and are reviewed
by the FDA prior to the commencement of
human clinical trials.

Clinical trials involve the administration of the
drug to human volunteers or patients under the
supervision of a qualified investigator, usually
a physician, with an FDA-approved protocol.
Human clinical trials are typically conducted in
three sequential phases:

• Phase 1 clinical trials represent the initial
administration of the investigational drug to
a small group of human subjects to test for
safety (adverse effects), dose tolerance,
absorption, biodistribution, metabolism, excre-
tion and clinical pharmacology and, if possible,
to gain early evidence regarding efficacy.

F-8

F-9

Business (continued)

• Phase 2 clinical trials typically involve a small
sample of the actual intended patient popula-
tion and seek to assess the efficacy of the
drug for specific targeted indications, to deter-
mine dose tolerance and the optimal dose
range, and to gather additional information
relating to safety and potential adverse effects.

• Once an investigational drug is found to have
some efficacy and an acceptable safety profile
in the targeted patient population, Phase 3
clinical trials are initiated to establish further
clinical safety and efficacy of the investiga-
tional drug in a broader sample of the general
patient population at multiple study sites in
order to determine the overall risk-benefit ratio
of the drug and to provide an adequate basis
for product approval. The Phase 3 clinical
development program consists of expanded,
large-scale studies of patients with the target
disease or disorder to obtain definitive statisti-
cal evidence of the efficacy and safety of the
proposed product.

All data obtained from a comprehensive devel-
opment program are submitted in an NDA to the
FDA and the corresponding agencies in other
countries for review and approval. The NDA
includes information pertaining to clinical studies
and the manufacture of the new drug. Review of
an NDA by the FDA can be a time-consuming
process and the FDA may request that we
submit additional data or carry out additional
studies.

Available Information
We maintain a website with the address
www.repligen.com. We are not including the
information contained on our website as a part
of, or incorporating it by reference into, our
annual report on Form 10-K. We make available
free of charge through our website our annual
reports on Form 10-K, quarterly reports on Form
10-Q and current reports on Form 8-K, and
amendments to these reports, as soon as rea-
sonably practicable after we electronically file
such materials with, or furnish such materials to,
the Securities and Exchange Commission.

In addition, the public may read and copy any
materials that we file with the Securities and
Exchange Commission at the Securities and
Exchange Commission’s Public Reference Room
at 100 F Street, NE, Washington, D.C. 20549.
The public may obtain information on the opera-
tion of the Public Reference Room by calling the
Securities and Exchange Commission at
1-800-SEC-0330. Also, our filings with the
Securities and Exchange Commission may be
accessed through the Securities and Exchange
Commission’s Electronic Data Gathering,
Analysis and Retrieval system at www.sec.gov.

F-10

F-11

Management’s Discussion and Analysis of Financial Condition and
Results of Operations

This annual report contains forward-looking state-
ments which are made pursuant to the safe
harbor provisions of Section 27A of the Securities
Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as
amended (“the Exchange Act”). The forward-
looking statements in this annual report do not
constitute guarantees of future performance.
Investors are cautioned that statements in this
annual report that are not strictly historical state-
ments, including, without limitation, statements
regarding current or future financial performance,
potential impairment of future earnings, manage-
ment’s strategy, plans and objectives for future
operations and product candidate acquisition,
clinical trials and results, litigation strategy, prod-
uct research and development, research and
development expenditures, intellectual property,
development and manufacturing plans, avail-
ability of materials and product and adequacy of
capital resources and financing plans constitute
forward-looking statements. Such forward-look-
ing statements are subject to a number of risks
and uncertainties that could cause actual results
to differ materially from those anticipated, includ-
ing, without limitation, the risks identified under
the caption “Risk Factors” and other risks
detailed in our annual report on Form 10-K and
our other filings with the Securities and Exchange
Commission. We assume no obligation to update
any forward-looking information contained in this
annual report.

Overview
We are a biopharmaceutical company focused
primarily on the development of novel therapeu-
tics for diseases that affect the central nervous
system. A number of drug development pro-
grams are currently being conducted to evaluate
our drug candidates in diseases such as bipolar
disorder and neurodegeneration. In addition, we
sell two commercial products, Protein A for
monoclonal antibody purification and SecreFlo®
for assessment of pancreatic disorders. In fiscal

2008, we experienced growth in sales and prof-
its from our commercial products business. Our
business strategy is to deploy the profits from
our current commercial products and patent
licensing revenues to enable us to invest in the
development of our therapeutic product candi-
dates while reducing our financial risk.

Critical Accounting Policies and Estimates
While our significant accounting polices are
more fully described in notes to our financial
statements, we have identified the policies and
estimates below as critical to our business oper-
ations and the understanding of our results of
operations. The impact and any associated risks
related to these policies on our business opera-
tions is discussed throughout “Management’s
Discussion and Analysis of Financial Condition”
and “Results of Operations” where such poli-
cies affect our reported and expected financial
results.

Revenue Recognition
We apply Staff Accounting Bulletin No. 104,
“Revenue Recognition” (“SAB No. 104”) to our
revenue arrangements. We generate product
revenues from the sale of our Protein A prod-
ucts to customers in the pharmaceutical and
process chromatography industries and from the
sale of SecreFlo® to hospital-based gastroenter-
ologists. In accordance with SAB No. 104, we
recognize revenue related to product sales upon
delivery of the product to the customer as long
as there is persuasive evidence of an arrange-
ment, the sales price is fixed or determinable
and collection of the related receivable is rea-
sonably assured. Determination of whether
these criteria have been met are based on man-
agement’s judgments primarily regarding the
fixed nature of the fee charged for product deliv-
ered, and the collectibility of those fees. We
have a few longstanding customers who com-
prise the majority of our revenue and have excel-
lent payment history. We have had no significant

F-10

F-11

Management’s Discussion and Analysis of Financial Condition and
Results of Operations (continued)

write-offs of uncollectible invoices in the peri-
ods presented. Should changes in conditions
cause management to determine that these cri-
teria are not met for certain future transactions,
revenue recognized for any reporting period
could be adversely affected.

At the time of sale, we also evaluate the need to
accrue for warranty and sales returns. The sup-
ply agreements we have with our customers
and related purchase orders identify the terms
and conditions of each sale and the price of the
goods ordered. Due to the nature of our sales
arrangements, inventory produced for sale is
tested for quality specifications prior to ship-
ment. Since the product is manufactured to
order and in compliance with required specifica-
tions prior to shipment, the likelihood of sales
returns, warranty or other issues is largely dimin-
ished. Sales returns and warranty issues are
infrequent and have had nominal impact on our
financial statements historically. Should changes
in conditions cause management to determine
that warranty, returns or other sale-related
reserves are necessary for certain future trans-
actions, revenue recognized for any reporting
period could be adversely affected.

During the fiscal years ended March 31, 2008
and March 31, 2007, we recognized $365,000
and $825,000, respectively, of revenue from a
sponsored research and development project
under an agreement with the Stanley Medical
Research Institute (“SMRI”). Research revenue
is recognized on a cost plus fixed-fee basis when
the expense has been incurred and services
have been performed. Determination of which
costs incurred qualify for reimbursement under
the terms of our contractual agreement and
the timing of when such costs were incurred
involves the judgment of management. Our cal-
culations are based upon the agreed-upon terms
as stated in our arrangement. However, should
our estimated calculations change or be chal-
lenged by SMRI, research revenue may be

adjusted in subsequent periods. Our calculations
have not historically changed or been challenged
and we do not anticipate any subsequent change
in our revenue related to this sponsored research
and development project.

Additionally, during fiscal years 2008 and 2007,
the Company earned and recognized approxi-
mately $244,000 and $175,000, respectively in
royalty revenue from ChiRhoClin for their sales
of secretin. Revenues earned from ChiRhoClin
royalties are recorded in the periods when they
are earned based on royalty reports sent by
ChiRhoClin to the Company.

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

Inventories
Inventories relate to our Protein A business. We
value inventory at cost or, if lower, fair market
value. We determine cost using the first-in, first-
out method. We review our inventories at least
quarterly and record a provision for excess and
obsolete inventory based on our estimates of
expected sales volume, production capacity and
expiration dates of raw materials, work-in pro-
cess and finished products. Expected sales vol-
umes are determined based on supply forecasts
provided by our key customers for the next three
to twelve months. We write down inventory that
has become obsolete, inventory that has a cost
basis in excess of its expected net realizable
value, and inventory in excess of expected
requirements to cost of product revenue.
Manufacturing of Protein A finished goods is
done to order and tested for quality specifica-
tions prior to shipment.

A change in the estimated timing or amount of
demand for our products could result in addi-
tional provisions for excess inventory quantities
on hand. Any significant unanticipated changes
in demand or unexpected quality failures could

F-12

F-13

Management’s Discussion and Analysis of Financial Condition and
Results of Operations (continued)

have a significant impact on the value of our
inventory and reported operating results. During
all periods presented in the accompanying finan-
cial statements, there have been no material
adjustments related to a revised estimate of
inventory valuations.

Accrued Liabilities
We prepare our financial statements in accor-
dance with accounting principles generally
accepted in the United States. These principles
require that we estimate accrued liabilities. This
process involves identifying services, which
have been performed on our behalf, and esti-
mating the level of service performed and the
associated cost incurred for such service as of
each balance sheet date. Examples of estimated
accrued expenses include: 1) Fees paid to our
contract manufacturers in conjunction with the
production of clinical materials. These expenses
are normally determined through a contract
or purchase order issued by the Company;
2) Service fees paid to organizations for their
performance in conducting our clinical trials.
These expenses are determined by contracts in
place for those services and communications
with project managers on costs which have
been incurred as of each reporting date; and
3) Professional and consulting fees incurred with
law firms, audit and accounting service provid-
ers and other third-party consultants. These
expenses are determined by either requesting
those service providers to estimate unbilled ser-
vices at each reporting date for services incurred,
or tracking costs incurred by service providers
under fixed fee arrangements. We have pro-
cesses in place to estimate the appropriate
amounts to record for accrued liabilities, which
principally involve the applicable personnel
reviewing the services provided. In the event
that we do not identify certain costs which have
begun to be incurred or we under or over-
estimate the level of services performed or the
costs of such services, our reported expenses

for that period may be too low or too high. The
date on which certain services commence, the
level of services performed on or before a given
date, and the cost of such services are often
judgmental. We make these judgments based
upon the facts and circumstances known to us
at the date of the financial statements.

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

Stock-Based Compensation
Effective April 1, 2006, we adopted the fair value
recognition provisions of Statement of Financial
Accounting Standards No. 123R, “Share-Based
Payment—An Amendment of FASB Statements
No. 123 and 95,” or SFAS No. 123R, using the
modified prospective transition method. Under
this transition method, compensation cost rec-
ognized in the statement of operations for the
year ended March 31, 2007 includes: (a) com-
pensation cost for all share-based payments
granted prior to, but not yet vested as of April 1,
2006, based on the grant-date fair value esti-
mated in accordance with the original provisions
of SFAS No. 123 and (b) compensation cost for
all share-based payments granted, modified or
settled subsequent to April 1, 2006, based on
the grant-date fair value estimated in accordance
with the provisions of SFAS No. 123R. In accor-
dance with the modified prospective transition
method, results for prior periods have not been
restated.

Effective with the adoption of SFAS No. 123R,
we have elected to use the Black-Scholes option
pricing model to calculate the fair value of share-
based awards on the grant date.

F-12

F-13

Management’s Discussion and Analysis of Financial Condition and
Results of Operations (continued)

The expected term of options granted repre-
sents the period of time for which the options
are expected to be outstanding and is derived
from our historical stock option exercise expe-
rience and option expiration data. For option
grants made subsequent to the adoption of
SFAS No. 123R, the expected life of stock
options granted is based on the simplified
method allowable under SAB No. 107. Accord-
ingly, the expected term is presumed to be the
midpoint between the vesting date and the end
of the contractual term. In addition, for purposes
of estimating the expected term, we have aggre-
gated all individual option awards into one group
as we do not expect substantial differences in
exercise behavior among its employees. The
expected volatility is a measure of the amount
by which our stock price is expected to fluctuate
during the expected term of options granted.
We determined the expected volatility based
upon the historical volatility of our common
stock over a period commensurate with the
option’s expected term, exclusive of any events
not reasonably anticipated to recur over the
option’s expected term. The risk-free interest
rate is the implied yield available on U.S. Treasury
zero-coupon issues with a remaining term equal
to the option’s expected term on the grant date.
We have never declared or paid any cash divi-
dends on any of our capital stock and do not
expect to do so in the foreseeable future.
Accordingly, we use an expected dividend yield
of zero to calculate the grant-date fair value of a
stock option.

We recognize compensation expense on a
straight-line basis over the requisite service
period based upon options that are ultimately
expected to vest, and accordingly, such com-
pensation expense has been adjusted by an
amount of estimated forfeitures. Forfeitures rep-
resent only the unvested portion of a surren-
dered option. SFAS No. 123R requires forfeitures
to be estimated at the time of grant and revised,
if necessary, in subsequent periods if actual for-
feitures differ from those estimates. Prior to the
adoption of SFAS No. 123R, we accounted for

forfeitures upon occurrence as permitted under
SFAS No. 123. Based on an analysis of historical
data, we have calculated an 8% annual forfei-
ture rate for non-director level employees, a 3%
annual forfeiture rate for director level employ-
ees, and a 0% forfeiture rate for non-employee
members of the Board of Directors, which we
believe is a reasonable assumption to estimate
forfeitures. However, the estimation of forfei-
tures requires significant judgment, and to the
extent actual results or updated estimates differ
from our current estimates, such amounts will
be recorded as a cumulative adjustment in the
period estimates are revised.

Prior to April 1, 2006, we applied the pro forma
disclosure requirements under SFAS No. 123
and accounted for our stock-based employee
compensation plans using the intrinsic value
method under the recognition and measurement
provisions of Accounting Principles Board Opin-
ion No. 25, “Accounting for Stock Issued
to Employees,” (“APB No. 25”) and related
interpretations. Accordingly, no stock-based
employee compensation cost was recognized in
the statement of operations for the year ended
March 31, 2006, as all stock options granted
under our existing stock plans had an exercise
price equal to the market value of the underlying
common stock on the date of grant.

For the years ended March 31, 2008 and 2007,
we recorded stock-based compensation expense
of approximately $ 524,0 0 0 and $ 8 37,0 0 0,
respectively, for stock options granted under the
Amended and Restated 2001 Repligen Corpora-
tion Stock Plan.

As of March 31, 2008, there was $1,030,000 of
total unrecognized compensation cost related
to unvested share-based awards. This cost is
expected to be recognized over a weighted aver-
age remaining requisite service period of 2.39
years. The Company expects approximately
539,000 of unvested shares of common stock
pursuant to outstanding options to vest over the
next five years.

F-14

F-15

Management’s Discussion and Analysis of Financial Condition and
Results of Operations (continued)

Results of Operations
The following discussion of the financial condition and results of operations should be read in conjunc-
tion with the accompanying financial statements and the related footnotes thereto.

Revenues: Total revenue for fiscal 2008, 2007 and 2006 were $19,296,000, $14,074,000, and
$12,911,000, and were primarily comprised of sales of our commercial products, Protein A and
SecreFlo®. During fiscal 2008, 2007 and 2006 sales of our commercial products were:

Protein A
SecreFlo®

Product revenue

Year ended March 31

% Change

2008

2007

2006

2008 vs. 2007

2007 vs. 2006

(In thousands, except percentages)

$16,321
2,266

$11,127
1,947

$10,540
1,989

$18,587

$13,074

$12,529

47%
16%

42%

6%
(2)%

Substantially all of our products based on recom-
binant Protein A are sold to customers who
incorporate our manufactured products into their
proprietary antibody purification systems to be
sold directly to the pharmaceutical industry.
Monoclonal antibodies are a well-established
class of drug with applications in rheumatoid
arthritis, asthma, Crohn’s disease and a variety
of cancers. Sales of Protein A are therefore
impacted by the timing of large-scale production
orders and on the regulatory approvals for such
antibodies, which may result in significant quar-
terly fluctuations.

During fiscal 2008, Protein A sales increased by
$5,194,000 or 47% over fiscal 2007. We shipped
45% more volume of Protein A in fiscal 2008
compared to fiscal 20 07 due to increased
demand by our customers as the monoclonal
antibody market continues to grow. The increase
in volume predominantly drove the increase in
Protein A revenue, with price increases com-
prising the difference. The Company sells differ-
ent Protein A products at different price points.
The mix of products sold varies and impacts the
fluctuations in total product revenue from year
to year.

During fiscal 2007, Protein A sales increased by
$587,000 or 6% over fiscal 2006. We shipped
13% less volume of Protein A in fiscal 2007
compared to fiscal 2006. The decrease in vol-
ume however did not reduce revenue compared

to fiscal 2006, as the mix of products sold had
more favorable pricing resulting in a 19% posi-
tive impact on total product revenue.

We anticipate that sales of Protein A will decline
moderately in fiscal 2009 and continue to be
subject to quarterly fluctuations due to timing of
large-scale production orders.

Sales of SecreFlo® increased $319,000 in fiscal
2008 primarily as a result of increased sales to
new customers and higher prices.

Sales of SecreFlo® decreased $42,000 or 2% in
fiscal 2007 primarily as a result of direct com-
petition with ChiRhoClin, our sole supplier of
SecreFlo ® and reduced sales and marketing
efforts. Decreases in sales volume impacted
sales by 1% of the prior year’s total. To remain
competitive with ChiRhoClin, we reduced sales
prices, which resulted in an unfavorable impact
of 1% on SecreFlo® revenues.

The settlement in fiscal 2005 with our sole sup-
plier of SecreFlo® provides for a certain amount
of vials of product that we can ultimately ship.
The last shipment of SecreFlo® to the Company
from ChiRhoClin was received in fiscal 2008 and
is expected to allow us to fill sales orders into
fiscal 2009. We expect SecreFlo® revenues will
decline by ninety percent in fiscal 2009 as we
expect to sell our remaining inventory in the first
half of the year.

F-14

F-15

Management’s Discussion and Analysis of Financial Condition and
Results of Operations (continued)

During the fiscal 2008 and 2007, we recognized
$365,000 and $825,000, respectively, of reve-
nue from a sponsored research and develop-
ment project under a cost plus fixed -fee
agreement with the Stanley Medical Research
Institute (“SMRI”). During fiscal 2008, we rec-
ognized $100,000 under an agreement with the
Friedreich’s Ataxia Research Alliance. Research
revenue is recognized for costs plus fixed-fee

contracts as costs are incurred. Additionally, dur-
ing fiscal 2008 and 2007, we earned and recog-
nized approximately $244,000 and $175,000,
respectively, in royalty revenue from ChiRhoClin.
We expect that total research and license reve-
nues will decrease slightly in fiscal 2009 as we
conclude our SMRI agreement. Royalty revenues
should increase significantly as we will begin to
receive payments from Bristol as a result of
sales of their Orencia® product in fiscal 2009.

Costs and Operating Expenses: Total costs and operating expenses for fiscal 2008, 2007 and 2006
were approximately ($16,596,000), $15,900,000, and $14,131,000, respectively.

Year ended March 31,

% Change

2008

2007

2006

2008 vs. 2007

2007 vs. 2006

(In thousands)

Costs and operating expenses:
Cost of product revenue
Research and development
Selling, general and administrative
Net gain from litigation settlement

$ 6,160
7,241
10,173
(40,170)

$ 3,615
5,925
6,360
—

$ 3,551
5,163
5,417
—

70%
22%
60%
—

Total operating expenses

$ (16,596) $ 15,900

$ 14,131

(204)%

2%
15%
17%
—

13%

The increase in cost of product revenue of
$2,545,000 or 70% in fiscal 2008 is attributable
primarily to a 42% increase in product sales. In
addition, fiscal 2008 revenue growth was driven
by lower margin products, resulting in a greater
increase in cost of product revenue. Specifically,
these newer products are produced on a lower
scale, resulting in higher overall production and
quality costs per unit sold. Further, depreciation
costs have increased $197,000 associated with
expansion of our fermentation facility, and occu-
pancy costs have increased $136,000 due to our
expanded facilities.

The increase in cost of product revenue of
$64,000 or 2% in fiscal 2007 is attributable to
several factors. These include a decrease in
Protein A material costs of $267,000 related to
lower volume of Protein A production in fiscal
2007 compared to fiscal 2006 and lower costs
of $39,000 related to SecreFlo® sales. These
decreases were offset by an increase of

$163,000 in consulting costs and a $128,000
increase in occupancy and depreciation costs.
Consulting, occupancy and depreciation costs
increased due to the costs associated with
implementation of our fermentation facility in
fiscal 2007, as well as spending to improve our
quality and redundancy systems to meet cus-
tomer expectations. Additionally, we incurred
$26,000 in stock-based compensation expense
pursuant to the adoption of SFAS No. 123R and
had an increase in labor costs of $147,000 com-
pared to fiscal 2006.

Research and development costs primarily
include costs of internal personnel, external
research collaborations, clinical trials and the
costs associated with the manufacturing and
testing of clinical materials. We currently have
ongoing research and development programs
that support our product candidates of secretin
and uridine. In addition, we are involved with a
number of early stage programs that may or

F-16

F-17

Management’s Discussion and Analysis of Financial Condition and
Results of Operations (continued)

may not be further developed. Due to the small
size of the Company and the fact that these vari-
ous programs share personnel and fixed costs
such as facility costs, depreciation, and supplies,
we do not track all our expenses by program.

Each of our research and development programs
is subject to risks and uncertainties, including
the requirement to seek regulatory approvals
that are outside of our control. For example, our
clinical trials may be subject to delays based on
our inability to enroll patients at the rate that we
expect to meet the schedule for our planned
clinical trials. Moreover, the product candidates
identified in these research programs, particu-
larly in our early stage programs must overcome
significant technological, manufacturing and
marketing challenges before they can be suc-
cessfully commercialized. For example, results
from our preclinical animal models may not be
replicated in our clinical trials with humans. As a
result of these risks and uncertainties, we are
unable to predict with any certainty the period in
which material net cash inflows from such proj-
ects could be expected to commence or the
completion date of these programs.

These risks and uncertainties also prevent us
from estimating with any certainty the specific
timing and future costs of our research and
development programs, although historical
trends within the industry suggest that expenses
tend to increase in later stages of development.
Collaborations with commercial vendors and
academic researchers accounted for 45%, 40%,
and 36% of our research and development
expenses for fiscal 2008, 2007 and 2006, respec-
tively. The outsourcing of such services provides
us flexibility to discontinue or increase spending
depending on the success of our research and
development programs.

Research and development expenses increased
by $1,316,000, or 22%, during fiscal 2008. This
increase is largely attributable to a $1,133,000
increase in spending related to Friedreich’s

ataxia as we continue to search for a drug candi-
date. This increase in spending for Friedreich’s
ataxia includes $300,000 relating to common
stock issued to the Scripps Research Institute
and its designees for the acquisition of a license
to use, commercialize and sublicense certain
patented technology and improvements thereon,
owned or licensed by Scripps. Spending related
to uridine for bipolar disorder also increased
$261,000 as we continue our Phase 2 trials.
Spending related to secretin for diagnostic imag-
ing decreased by $54,000 as we completed our
Phase 2 trial and begin preparations for Phase 3
in early fiscal 2009.

Research and development expenses increased
by $761,000, or 15%, during fiscal 2007. This
increase is largely attributable to higher clinical
trial expenses of $959,000, as the Company
enrolled the majority of the patients in our two
clinical trial programs for uridine for bipolar disor-
der and secretin for diagnostic imaging. Addi-
tionally, there were increased personnel expenses
of $66,000 due to a slightly higher headcount.
The Company incurred stock-based compensa-
tion expense pursuant to the adoption of SFAS
No. 123R in fiscal 2007 of $229,000. These
increases were offset by reductions in external
research expenses of $465,000. This was due
to a reduction in activities related to secretin
drug manufacturing compared to fiscal 2006.

Future research and development expenses are
dependent on a number of variables, including
the cost and design of clinical trials and external
costs such as manufacturing of clinical materi-
als. We expect our research and development
expenses in fiscal 2009 to increase due to clin-
ical trial expenses as we continue studies of
secretin for diagnostic imaging, continue drug
manufacturing activities for secretin and begin
the Friedreich’s ataxia research and develop-
ment program which was recently licensed by
us. Additionally, there may be further increases
in expenses if we acquire additional product
candidates.

F-16

F-17

Management’s Discussion and Analysis of Financial Condition and
Results of Operations (continued)

Selling, general and administrative expenses
(SG&A) include the associated costs with sell-
ing our commercial products and costs required
to support our research and development efforts
including legal, accounting, patent, shareholder
services and other administrative functions. In
addition, SG & A expenses have historically
included costs associated with various litigation
matters.

During fiscal 2008, SG&A costs increased by
approximately $3,813,000 or 60%. This increase
was mainly the result of $3,361,000 incremental
litigation costs associated with our patent
infringement lawsuits against Bristol and other
patent prosecution costs. As noted below, the
Company also incurred an additional $13,830,000
of litigation costs associated with the ImClone
settlement. The Company also incurred addi-
tional recruiting and related costs of $263,000
due to the turnover of certain board of director
and employee positions.

During fiscal 2007, SG&A costs increased by
approximately $943,000 or 17%. This increase
was mainly the result of the stock-based com-
pensation expense recorded pursuant to the
adoption of SFAS No. 123R of $582,000 and per-
sonnel expenses which increased by $287,000
due to compensation and benefit increases.
Investor relation expenses also increased $78,000
due to expanded outreach to the investment
community. Legal expenses were consistent
with fiscal 2006 as we continue to prosecute
patent infringement lawsuits against Bristol and
ImClone.

Net Gain From Litigation Settlement: On Septem-
ber 10, 2007, Repligen and MIT entered into the
ImClone Settlement relating to the lawsuit
against ImClone for infringement of the ‘281
patent. Pursuant to the ImClone Settlement,
ImClone made a payment of $ 65 million to
Repligen and MIT that resulted in net proceeds
to Repligen of $40,170,000 after litigation costs
of $13,8 3 0,0 0 0 and proceeds to MIT of
$11,000,000. The ImClone Settlement served
as the basis to dismiss the lawsuit against
ImClone and for Repligen to grant ImClone a
non-exclusive sublicense to the ‘281 patent and
certain other intellectual property.

Investment Income: Investment income includes
income earned on invested cash balances.
Investment income for fiscal 2008, 2007 and
2006 was approximately $2,051,000, $948,000
and $750,000, respectively. The increase of
$1,104,000 or 116% in fiscal 2008 is attributable
to higher overall cash and marketable securities,
up $37,962,000 due primarily to the proceeds
from the ImClone litigation. The increase of
$198,000 or 21% in fiscal 2007 is attributable to
higher interest rates. We expect interest income
to vary based on changes in the amount of funds
invested and fluctuation of interest rates.

Provision for Income Taxes: As a result of the
significant increase in net income in fiscal 2008,
the Company was liable for Alternative Minimum
Tax, for which net operating loss carryforwards
are only partially deductible. As a result, the com-
pany had an effective tax rate of 2% as we pro-
vided $827,000 for income taxes in fiscal 2008.

We expect SG&A expenses to decrease signifi-
cantly in fiscal 2009 due to anticipated decreases
in litigation expenses as the Bristol and ImClone
cases have been successfully concluded, offset
by slightly higher headcount and related person-
nel expenses.

Liquidity and Capital Resources
We have financed our operations primarily through
sales of equity securities, revenues derived from
product sales, grants, and proceeds from liti-
gation settlements. Our revenue for the fore-
seeable future will be limited to our Protein A

F-18

F-19

Management’s Discussion and Analysis of Financial Condition and
Results of Operations (continued)

product revenue, royalties from Bristol, and
research and development grants. Revenues
derived from the sales of SecreFlo™ vials are
expected only through March 2009. Given the
uncertainties related to pharmaceutical product
development, we are currently unable to reliably
estimate when, if ever, our therapeutic product
candidates or our patents will generate revenue
and cash flows.

At March 31, 2008, we had cash and market-
able securities of $ 60,589,000 compared to
$22,627,000 at March 31, 2007. Deposits for
leased office space of $200,000 is classified
as restricted cash and is not included in cash
and marketable securities total for either 2008
or 2007.

Cash Flows:

Cash provided by (used in)

Operating Activities
Investing Activities
Financing Activities

Operating Activities: In fiscal 2008, our operat-
ing activities provided cash of $38,467,000 which
reflects net income of approximately $37,107,000
which includes non - cash charges totaling
approximately $1,659,000 including deprecia-
tion, amortization, stock-based compensation
charges and the acquisition of the Scripps
license for stock. The remaining cash flow from
operations resulted from unfavorable changes in
various working capital accounts.

In fiscal 2007, our operating activities provided
cash of $405,000 which reflects a net loss of
approximately $889,000 which includes non-
cash charges totaling approximately $1,376,000
including depreciation, amortization and stock-
based compensation charges. The remaining
cash flow from operations resulted from unfa-
vorable changes in various working capital
accounts.

Year ended March 31,

2008

Increase/
(Decrease)

2007

Increase/
(Decrease)

$ 38,467
(14,229)
598

$ 38,062
(16,004)
480

(In thousands)
$ 405
1,775
118

$ (10)
311
(215)

2006

$ 415
1,464
333

Investing Activities: In fiscal 2008, our investing
activities consumed $14,229,000 of cash, which
is primarily due to net purchases of marketable
equity securities of $13,126,000. We also spent
$1,103,000 in capital expenditures as we con-
tinue to upgrade both our research and develop-
ment and manufacturing capabilities. In fiscal
2007, investing activities included capital spend-
ing of $1,327,000 mainly related to the new fer-
mentation facility in Waltham, Massachusetts.
We place our marketable security investments
in high quality credit instruments as specified in
our investment policy guidelines.

Financing Activities: In fiscal 2008, exercises of
stock options provided cash receipts of $638,000.
In fiscal 2007, exercises of stock options pro-
vided cash proceeds of $158,000.

Off-Balance Sheet Arrangements: We do not
have any special purpose entities or off-balance
sheet financing arrangements.

F-18

F-19

Management’s Discussion and Analysis of Financial Condition and
Results of Operations (continued)

Contractual Obligations: As of March 31, 2008, we had the following fixed obligations and commitments:

Operating lease obligations
Capital lease obligations
Purchase obligations (1)
Contractual obligations (2)

Total

Payments Due by Period

Less than
1 Year

1–3
Years

3–5
Years

More than
5 Years

Total

$ 2,015
94
784
329

$ 523
49
784
138

(In thousands)
$ 1,083
45
—
96

$409
—
—
72

$ 3,222

$1,494

$ 1,224

$481

$ —
—
—
23

$23

(1) This amount represents minimum commitments due under a third-party manufacturing agreement.
(2) These amounts include payments for license, supply and consulting agreements.

Capital Requirements: Our future capital require-
ments will depend on many factors, including
the following:

• the success of our clinical studies;

• the scope of and progress made in our

research and development activities;

• our ability to acquire additional product

candidates;

• the success of any proposed financing efforts;

and

• the ability to sustain sales and profits of our

commercial products.

Absent an acquisition of another product candi-
date, we believe our current cash balances are
adequate to meet our cash needs for at least the
next twenty-four months. We expect to incur an
increased level of expense in fiscal 2009 com-
pared to those incurred in fiscal 2008. This is
due to anticipated increases in clinical study
expenses as well as increased personnel
expenses, offset by decreased legal fees as we
have successfully concluded our litigation activi-
ties. Our future capital requirements include, but
are not limited to, continued investment in our
research and development programs, capital
expenditures primarily associated with pur-
chases of equipment and continued investment
in our intellectual property portfolio.

We plan to continue to invest in key research
and development activities. We continue to seek
to acquire such potential assets that may offer
us the best opportunity to create value for our
shareholders. In order to acquire such assets,
we may need to seek additional financing to
fund these investments. This may require the
issuance or sale of additional equity or debt
securities. The sale of additional equity may
result in additional dilution to our stockholders.
Should we need to secure additional financing to
acquire a product, fund future investment in
research and development, or meet our future
liquidity requirements, we may not be able to
secure such financing, or obtain such financing
on favorable terms because of the volatile nature
of the biotechnology marketplace.

Net Operating Loss Carryforwards: At March 31,
2008, we had net operating loss carryforwards
of approximately $ 63,517,000, research and
development credit carryforwards of approx-
imately $2,205,000, and other tax credits of
$733,000 available to reduce future federal
income taxes, if any. The net operating loss and
tax credit carryforwards will begin to and will
continue to expire at various dates, beginning in
fiscal 2009, if not used. Net operating loss car-
ryforwards and available tax credits are subject
to review and possible adjustment by the Internal

F-20

F-21

Management’s Discussion and Analysis of Financial Condition and
Results of Operations (continued)

Revenue Service and may be limited in the event
of certain changes in the ownership interest of
significant stockholders. We did not record a tax
provision in fiscal 2007 and 2006 statement of
operations as we did not generate taxable
income. In fiscal 2008, we utilized our net oper-
ating loss carryforwards to reduce our income
tax provision.

Effects of Inflation: Our assets are primarily mon-
etary, consisting of cash, cash equivalents and
marketable securities. Because of their liquidity,
these assets are not directly affected by infla-
tion. Since we intend to retain and continue to
use our equipment, furniture and fixtures and
leasehold improvements, we believe that the
incremental inflation related to replacement
costs of such items will not materially affect our
operations. However, the rate of inflation affects
our expenses, such as those for employee com-
pensation and contract services, which could
increase our level of expenses and the rate at
which we use our resources.

Recent Accounting Pronouncements
In December 2007, the Financial Accounting
Standards Board (“FASB”) issued SFAS No.
141( R ) , “Business Combinations” ( “SFAS
141(R)”) and SFAS No. 160, “Accounting and
Reporting of Noncontrolling Interests in Consoli-
dated Financial Statements—an amendment of
ARB No. 51” (“SFAS 160”). These standards
will significantly change the accounting and
reporting for business combination transactions
and noncontrolling (minority) interests in finan-
cial statements, including capitalizing at the
acquisition date the fair value acquired in pro-
cess research and development projects, and
remeasuring and writing down these assets, if
necessary, in subsequent periods during their
development. The new standards will be applied
prospectively for business combinations that
occur for the Company on or after April 1, 2009,

except that presentation and disclosure require-
ments of SFAS 160 regarding minority interests
shall be applied retrospectively.

In December 2007, the FASB ratified EITF No.
07-1, “Accounting for Collaborative Agreements”
(“EITF 07-1”). EITF 07-1 provides guidance
regarding financial statement presentation and
disclosure of collaborative arrangements, as
defined, which includes arrangements the
Company has entered into regarding develop-
ment and commercialization of products. EITF
07-1 is effective for the Company as of April 1,
2009. The Company has not yet completed its
evaluation of EITF 07-1, but does not currently
believe that adoption will have a material impact
on its results of operations, financial position or
cash flows.

In June 2007, the FASB ratified EITF No. 07-3,
“Accounting for Nonrefundable Advance
Payments for Goods or Services to Be Used in
Future Research and Development Activities”
(“EITF 07-3”), which requires that nonrefund-
able advance payments for goods and services
that will be used or rendered in future R&D
activities pursuant to executory contractual
arrangements be deferred and recognized as an
expense in the period that the related goods are
delivered or services are performed. EITF No.
07-3 is effective for the Company as of April 1,
2008. The Company has not yet completed its
evaluation of EITF 07-3, but does not currently
believe that adoption will have a material impact
on its results of operations, financial position or
cash flows.

In February 2007, the FASB issued FASB State-
ment No. 159, “The Fair Value Option for Finan-
cial Assets and Financial Liabilities” (SFAS No.
159). SFAS No. 159 provides companies with an
option to report selected financial assets and
liabilities at fair value. The objective of SFAS No.
159 is to reduce both complexity in accounting

F-20

F-21

Management’s Discussion and Analysis of Financial Condition and
Results of Operations (continued)

We generally place our marketable security
investments in high quality credit instruments,
as specified in our investment policy guidelines.
A hypothetical 100 basis point decrease in inter-
est rates would result in an approximate
$209,000 decrease in the fair value of our invest-
ments as of March 31, 2008. However, the con-
servative nature of our investments mitigates
our interest rate exposure, and our investment
policy limits the amount of our credit exposure
to any one issue, issuer (with the exception of
U.S. treasury obligations) and type of instru-
ment. We do not expect any material loss from
our marketable security investments due to
interest rate fluctuations and therefore believe
that our potential interest rate exposure is lim-
ited. We intend to hold these investments to
maturity, in accordance with our business plans.

for financial instruments and the volatility in
earnings caused by measuring related assets
and liabilities differently. SFAS No. 159 is effec-
tive for the Company as of April 1, 2008. The
Company has not yet completed its evaluation
of SFAS No. 159 , but does not currently believe
that adoption will have a material impact on
its results of operations, financial position or
cash flows.

In September 2006, the FASB issued SFAS No.
157, “Fair Value Measurement” (“SFAS 157”).
SFAS 157 defines fair value, provides guidance
for measuring fair value in U.S. generally
accepted accounting principles and expands dis-
closures about fair value measurements. SFAS
157 is effective for the Company as of April 1,
2008. The Company has not yet completed its
evaluation of SFAS 157, but does not currently
believe that adoption will have a material impact
on its results of operations, financial position or
cash flows.

Quantitative and Qualitative Disclosures About
Market Risk

Interest Rate Risk: We have investments in com-
mercial paper, U.S. Government and agency
securities as well as corporate bonds and other
debt securities. As a result, we are exposed to
potential loss from market risks that may occur
as a result of changes in interest rates, changes
in credit quality of the issuer or otherwise.

F-22

F-23

Market for Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities

Market Information
Our common stock is traded on the Nasdaq
Global Market under the symbol “RGEN.” The
following table sets forth for the periods indi-
cated the high and low closing prices for the
common stock as reported by Nasdaq.

Fiscal Year
2008

Fiscal Year
2007

High

Low

High

Low

$3.94
$5.01
$6.55
$6.86

$3.14
$3.74
$4.12
$4.32

$3.82
$3.40
$3.41
$3.30

$2.58
$2.27
$2.70
$2.80

First Quarter
Second Quarter
Third Quarter
Fourth Quarter

Stockholders and Dividends
As of June 1, 2008 there were approximately
748 stockholders of record of our common
stock. We have not paid any dividends since our
inception and do not intend to pay any dividends
on our common stock in the foreseeable future.
We anticipate that we will retain all earnings, if
any, to support our operations and our proprie-
tary drug development programs. Any future
determination as to the payment of dividends
will be at the sole discretion of our board of
directors and will depend on our financial condi-
tion, results of operations, capital requirements
and other factors our board of directors deems
relevant.

F-22

F-23

200

180

160

140

120

100

Stock Price Performance Graph

The following graph compares the yearly per-
centage change in the cumulative total stock-
holder return (change in stock price plus
reinvested dividends) on Repligen’s common
stock with the cumulative total return for the
Nasdaq Stock Market Index (U.S.) (the “Nasdaq
Composite Index”) and the Nasdaq Pharmaceu-
tical Stock Index (the “Nasdaq Pharmaceutical
Index”). The comparisons in the graph are
required by the SEC and are not intended to
forecast or be indicative of possible future per-
formance of Repligen’s common stock.

* Assumes $100 invested on March 31, 2003 in each of Repligen
Corporation’s common stock, the securities comprising the
Nasdaq Composite Index and the securities comprising the
Nasdaq Pharmaceutical Index.

$200

180

160

140

120

100

189.95

181.40

151.07

152.56

177.20

133.41

125.74

100

150.50

79.23

138.36

130.70

103.21

64.88

67.67

36.40

3/03

3/04

3/05

3/06

3/07

3/08

Repligen Corporation

Nasdaq Composite

Nasdaq Pharmaceutical

F-24

F-25

Statements of Operations

Revenue:
Product revenue
Other revenue

Total revenue
Operating expenses:(1)
Cost of product revenue
Research and development
Selling, general and administrative
Net gain from litigation settlement

Total operating expenses
Income/(loss) from operations
Investment income
Interest expense
Other income

Income/(loss) before income taxes
Provision for income taxes

Net income (loss)

Basic earnings (loss) per share

Diluted earnings (loss) per share

Weighted average shares outstanding:
Basic

Diluted

(1) Includes non-cash stock-based compensation as follows:

Cost of product revenue
Research and development
Selling, general and administrative

See accompanying notes.

F-24

F-25

Years ended March 31,

2008

2007

2006

$ 18,587,376
708,905

$ 13,073,894
1,000,345

$ 12,529,404
382,000

19,296,281

14,074,239

12,911,404

6,160,245
7,240,812
10,173,400
(40,170,000)

(16,595,543)
35,891,824
2,051,258
(9,097)
—

37,933,985
827,471

$ 37,106,514

1.20

1.18

3,614,837
5,924,439
6,360,292
—

15,899,568
(1,825,329)
947,547
(11,481)
—

(889,263)
—

3,550,861
5,163,098
5,417,339
—

14,131,298
(1,219,894)
750,156
(3,010)
1,169,608

696,860
—

(889,263) $

696,860

(0.03) $

0.02

30,834,491

30,379,350

30,125,041

31,320,997

30,379,350

30,690,941

28,134
106,870
389,383

25,655
228,597
582,280

—
20,650
—

Balance Sheets

Assets
Current assets:
Cash and cash equivalents
Marketable securities
Accounts receivable, less reserve of $10,000

Inventories

Prepaid expenses and other current assets

Total current assets

Property and equipment, at cost:
Leasehold improvements
Equipment
Furniture and fixtures

Total property and equipment
Less: accumulated depreciation

Property, plant and equipment, net

Long-term marketable securities
Restricted cash

Total assets

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
Accrued liabilities

Total current liabilities

Long-term liabilities

Total liabilities

Commitments and contingencies (Notes 5, 10 and 11)
Stockholders’ equity:
Preferred stock, $.01 par value, 5,000,000 shares authorized,

no shares issued or outstanding

Common stock, $.01 par value, 40,000,000 shares authorized,

issued and outstanding 31,072,934 shares at March 31,
2008 and 30,477,635 shares at March 31, 2007

Additional paid-in capital
Accumulated deficit

Total stockholders’ equity

As of March 31,

2008

2007

$ 32,562,138
17,221,653
1,125,801
2,804,247
707,347

7,726,505
14,900,840
1,143,694
1,514,571
445,415

54,421,186

25,731,025

3,333,098
3,271,446
226,655

6,831,199
(3,417,941)

3,413,258
10,805,263
200,000

3,212,916
2,353,667
191,356

5,757,939
(2,613,081)

3,144,858
—
200,000

$ 68,839,707

$ 29,075,883

2,721,909
1,867,901

4,589,810
143,043

4,732,853

1,161,504
2,175,739

3,337,243
200,342

3,537,585

—

310,729
184,372,945
(120,576,820)

304,776
182,916,856
(157,683,334)

64,106,854

25,538,298

Total liabilities and stockholders’ equity

$ 68,839,707

$ 29,075,883

See accompanying notes.

F-26

F-27

Statements of Cash Flows

Cash flows from operating activities:
Net income (loss)

Adjustments to reconcile net income to net cash
provided by operating activities:

Issuance of common stock for license
Issuance of common stock for services

Depreciation
Stock-based compensation expense
Loss on disposal of assets
Bad debt reserve

Changes in assets and liabilities:

Accounts receivable

Inventories

Prepaid expenses and other current assets
Accounts payable
Accrued liabilities
Long-term liabilities

Years ended March 31,

2008

2007

2006

$ 37,106,514

(889,263) $

696,860

300,000
—
824,626
524,387
9,559
—

17,893
(1,289,676)
(261,932)
1,560,405
(267,876)
(57,299)

—
—
539,032
836,532
—
—

(549,969)
(48,979)
106,827
95,059
346,419
(30,176)

405,482

—
85,750
398,434
20,650
18,369
(5,000)

175,507
(832,278)
133,906
49,487
(327,805)
1,504

415,384

Net cash provided by operating activities

38,466,601

Cash flows from investing activities:
Purchases of marketable securities
Redemptions of marketable securities
Purchases of property and equipment

Net cash provided by (used in) investing
activities

Cash flows from financing activities:
Exercise of stock options
Principal payments under capital lease obligation

Net cash provided by financing activities

(54,797,953)
41,671,877
(1,102,585)

(13,973,896)
17,075,000
(1,326,529)

(11,383,595)
13,583,000
(735,495)

(14,228,661)

1,774,575

1,463,910

637,655
(39,962)

597,693

158,000
(40,029)

117,971

340,111
(7,609)

332,502

Net increase in cash and cash equivalents
Cash and cash equivalents, beginning of period

24,835,633
7,726,505

2,298,028
5,428,477

2,211,796
3,216,681

Cash and cash equivalents, end of period

$ 32,562,138

$ 7,726,505

$ 5,428,477

Supplemental disclosure of non-cash activities:
Purchase of capital lease equipment

Non-cash tender of common stock to exercise
stock options

Reclassification of deferred compensation

Recording of deferred compensation

Disposal of fully depreciated equipment

— $

133,261

564,003

— $

61,950

—

— $

82,600

— $

109,339

See accompanying notes.

F-26

F-27

Statements of Stockholders’ Equity

Common Stock

Number of
Shares

Amount

Additional
Paid-in Capital

Deferred
Compen-
sation

Accumulated
Deficit

Stockholders’
Equity

Balance at

March 31, 2005

30,094,435 $ 300,944 $ 181,479,645 $

— $ (157,490,931) $ 24,289,658

Issuance of common
stock for services
Deferred compensation
related to employee
stock options

Amortization of deferred

compensation

25,000

250

85,500

20,000

200

82,600

(82,600)

20,650

Exercise of stock options
Net income

238,200
—

2,382
—

337,529
—

696,860

85,750

200

20,650
339,911
696,860

Balance at

March 31, 2006

30,377,635

303,776

181,985,274

(61,950)

(156,794,071)

25,433,029

Reclassification of

deferred compensation

Stock-based compensa-

tion expense

Repurchase and retire-

ment of treasury stock
Exercise of stock options
Net loss

Balance at

(10,000)
110,000

(100)
1,100

(61,950)

61,950

836,532

100
156,900

—

836,532

—
158,000
(889,263)

(889,263)

March 31, 2007

30,477,635

304,776

182,916,856

— (157,683,334)

25,538,298

Stock-based compensa-

tion expense

Issuance of common
stock for license

Exercise of stock options
Net income

Balance at

87,464
507,835

875
5,078

524,387

299,125
632,577

524,387

300,000
637,655
37,106,514

37,106,514

March 31, 2008

31,072,934 $ 310,729 $ 184,372,945 $

— $ (120,576,820) $ 64,106,854

See accompanying notes.

F-28

F-29

Notes to Financial Statements

1. Organization and Nature of Business
Repligen Corporation (“Repligen” or the “Com-
pany”) is a biopharmaceutical company focused
on the development of novel therapeutics
primarily for the treatment of diseases of the
central nervous system. A number of drug devel-
opment programs are currently being conducted
to evaluate the Company’s drug candidates in
diseases such as pancreatitis, bipolar disorder
and neurodegeneration. In addition, Repligen
sells two commercial products, Protein A, for
monoclonal antibody purification, and SecreFlo®,
for assessment of pancreatic disorders.

The Company’s business strategy is to deploy
the profits from its commercial products and any
revenue that it may receive from its patents to
enable the Company to invest in the develop-
ment of product candidates in the treatment
area of neuropsychiatric diseases.

The Company is subject to a number of risks
typically associated with companies in the bio-
technology industry. Principally those risks are
associated with the Company’s dependence on
collaborative arrangements, development by the
Company or its competitors of new technologi-
cal innovations, dependence on key personnel,
protection of proprietary technology, compliance
with the U.S. Food and Drug Administration and
other governmental regulations and approval
requirements, as well as the ability to grow the
Company’s business and obtain adequate fund-
ing to finance this growth.

2. Summary of Significant Accounting Policies

Use of Estimates
The preparation of financial statements in con-
formity with accounting principles generally
accepted in the United States requires manage-
ment to make estimates and assumptions that
affect the reported amounts of assets and liabili-
ties and disclosure of contingent assets and lia-
bilities at the date of the financial statements
and the reported amounts of revenues and
expenses during the reporting period. Actual
results could differ from those estimates.

Revenue Recognition
The Company applies Staff Accounting Bulletin
No. 104, “Revenue Recognition” (“SAB No.
104”) to its revenue arrangements.

The Company generates product revenues from
the sale of Protein A products to customers in
the pharmaceutical and process chromatogra-
phy industries and from the sale of SecreFlo®
to hospital-based gastroenterologists. In accor-
dance with SAB No. 104, the Company recog-
nizes revenue related to product sales upon
delivery of the product to the customer as long
as there is persuasive evidence of an arrange-
ment, the sales price is fixed or determinable
and collection of the related receivable is rea-
sonably assured. Determination of whether
these criteria have been met are based on man-
agement’s judgments primarily regarding the
fixed nature of the fee charged for product deliv-
ered, and the collectibility of those fees. The
Company has a few longstanding customers
who comprise the majority of product revenue
and have excellent payment histor y. The
Company has had no significant write-offs of
uncollectible invoices in the periods presented.
Should changes in conditions cause manage-
ment to determine that these criteria are not
met for certain future transactions, revenue rec-
ognized for any reporting period could be
adversely affected.

At the time of sale, the Company also evaluates
the need to accrue for warranty and sales
returns. The supply agreements the Company
has with its customers and related purchase
orders identify the terms and conditions of each
sale and the price of the goods ordered. Due
to the nature of the sales arrangements, inven-
tory produced for sale is tested for quality speci-
fications prior to shipment. Since the product
is manufactured to order and in compliance with
required specifications prior to shipment, the
likelihood of sales return, warranty or other
issues is largely diminished. Sales returns and
warranty issues are infrequent and have had
nominal impact on the Company’s historical

F-28

F-29

Notes to Financial Statements (continued)

financial statements. Should changes in condi-
tions cause management to determine that war-
ranty, returns or other sale-related reserves are
necessary for certain future transactions, reve-
nue recognized for any reporting period could be
adversely affected.

During the fiscal years ended March 31, 2008
and 2007, the Company recognized $365,000
and $825,000, respectively, of revenue from a
sponsored research and development project
under an agreement with the Stanley Medical
Research Institute (“SMRI”). In fiscal 2008, the
Company recognized $100,000 under an agree-
ment with the Friedreich’s Ataxia Research
Alliance. Research revenue is recognized on a
cost plus fixed-fee basis when the expense
has been incurred and services have been per-
formed. Determination of which costs incurred
qualify for reimbursement under the terms of
the contractual agreement and the timing of
when such costs were incurred involves the
judgment of management. The Company
believes its calculations are based upon the
agreed-upon terms as stated in the contracts.
However, should the estimated calculations
change or be challenged, research revenue may
be adjusted in subsequent periods. The calcula-
tions have not historically changed or been chal-
lenged and the Company does not anticipate
any subsequent change in its revenue related to
sponsored research and development projects.

Additionally, during fiscal 2008 and 2007, the
Company earned and recognized approximately
$ 244,000 and $175,000 in royalty revenue,
respectively, from ChiRhoClin, Inc. (“ChiRhoClin”)
based on their sales of secretin. Revenues
earned from ChiRhoClin royalties are recorded in
the periods when they are earned based on roy-
alty reports sent by ChiRhoClin to the Company.

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

Risks and Uncertainties
The Company evaluates its operations periodi-
cally to determine if any risks and uncertainties
exist that could impact its operations in the near
term. The Company does not believe that there
are any significant risks which have not already
been disclosed in the financial statements. A
loss of certain suppliers could temporarily dis-
rupt operations, although alternate sources of
supply exist for these items. The Company has
mitigated these risks by working closely with
key suppliers, identifying alternate sources and
developing contingency plans.

Comprehensive Income (Loss)
The Company applies the standards established
in Statement of Financial Accounting Standards
(“SFAS”) No. 130, “Reporting Comprehensive
Income.” SFAS No. 130 requires disclosure of all
components of comprehensive income on an
annual and interim basis. Comprehensive income
is defined as the change in equity of a business
enterprise during a period from transactions and
other events and circumstances from nonowner
sources. The Company’s comprehensive income
(loss) is equal to its reported net income (loss)
for all periods presented.

Cash Equivalents and Marketable Securities
The Company applies the standards established
in SFAS No. 115, “Accounting for Certain Invest-
ments in Debt and Equity Securities.” At March
31, 2008, the majority of the Company’s cash
equivalents and marketable securities are clas-
sified as held-to-maturity investments as the
Company has the positive intent and ability to
hold to maturity. As a result, these investments
are recorded at amortized cost. Marketable
securities are investments with original maturi-
ties of greater than 90 days. Long-term market-
able securities are investment grade securities
with maturities of greater than one year.

At March 31, 2008 and 2007, marketable securi-
ties also include investment grade auction rate
securities, which provide higher yields than

F-30

F-31

Notes to Financial Statements (continued)

money market and other cash equivalent invest-
ments. Auction rate securities have long-term
underlying maturities, but have interest rates
that are reset every 90 days or less, at which
time the securities can typically be purchased or
sold. The Company does not intend to hold
these securities to maturity, but rather to use
the securities to provide liquidity as necessary.
Auction rate securities are classified as available-

for-sale and reported at fair value. Due to the
reset feature and their carrying value equaling
their fair value, there are no unrealized gains or
losses from these short-term investments.
Subsequent to March 31, 2008, the Company
successfully sold $825,000 of our auction rate
securities without incurring a loss, leaving only
$75,000 remaining in our portfolio.

Cash and cash equivalents and marketable securities consist of the following at March 31, 2008
and 2007:

Type of Security

Cash and cash equivalents
Marketable securities:
Auction rate securities
U.S. Government and agency securities
Corporate and other debt securities

Long-term marketable securities:
Corporate and other debt securities

Total

The average of remaining maturity of long-term
marketable securities at March 31, 2008 is
approximately one-and-one-half years.

Fair Value of Financial Instruments
The carrying amounts of the Company’s finan-
cial instruments which represent cash, cash
equivalents, marketable securities, and accounts
receivable generally approximate fair value due
to the short-term nature of these instruments.

Concentrations of Credit Risk and
Significant Customers
Financial instruments that subject the Company
to significant concentrations of credit risk primar-
ily consist of cash and cash equivalents, market-
able securities and accounts receivable. The
Company’s cash equivalents and marketable
securities are invested in financial instruments

Unrealized Gain (Loss)

As of March 31,

2008

2007

2008

2007

$ 32,562,138

$ 7,726,505

— $

—

900,000
—
16,321,653

475,000
3,460,665
10,965,175

—
—
106,137

—
(8,273)
(9,877)

17,221,653

14,900,840

106,137

(18,150)

10,805,263

—

140,761

—

$ 60,589,054

$ 22,627,345

$ 246,898

$ (18,150)

with high credit ratings and by policy limits the
amount of its credit exposure to any one issue,
issuer, (with the exception of U.S. treasury obli-
gations) and type of instrument. At March 31,
2008, the Company has no investments such
as those associated with foreign exchange con-
tracts, options contracts or other foreign hedg-
ing arrangements.

Concentration of credit risk with respect to
accounts receivable is limited to customers to
whom the Company makes significant sales.
The Company maintains reserves for the poten-
tial write-off of accounts receivable. To date, the
Company has not written off any significant
accounts. To control credit risk, the Company
performs regular credit evaluations of its cus-
tomers’ financial condition.

F-30

F-31

Notes to Financial Statements (continued)

Revenue from significant customers as a per-
centage of the Company’s total revenue is as
follows:

Customer A
Customer B

Years ended March 31,

2008

2007

2006

61%
14%

49% 49%
23% 26%

Significant accounts receivable balances as a
percentage of the Company’s total trade accounts
receivable balances are as follows:

Customer A
Customer B

As of
March 31,

2008

2007

20%
24%

47%
15%

Inventories
Inventories relate to the Company’s Protein A
business. The Company values inventory at cost
or, if lower, fair market value. Repligen deter-
mines cost using the first-in, first-out method.
The Company reviews its inventories at least
quarterly and records a provision for excess and
obsolete inventory based on its estimates of
expected sales volume, production capacity and
expiration dates of raw materials, work-in pro-
cess and finished products. Expected sales vol-
umes are determined based on supply forecasts
provided by key customers for the next three
to twelve months. The Company writes down
inventory that has become obsolete, inventory
that has a cost basis in excess of its expected
net realizable value, and inventory in excess of
expected requirements to cost of product reve-
nue. Manufacturing of Protein A finished goods
is done to order and tested for quality specifica-
tions prior to shipment.

A change in the estimated timing or amount of
demand for the Company’s products could result
in additional provisions for excess inventory
quantities on hand. Any significant unanticipated
changes in demand or unexpected quality fail-
ures could have a significant impact on the value
of inventory and reported operating results.
During all periods presented in the accompany-
ing financial statements, there have been no

material adjustments related to a revised esti-
mate of inventory valuations.

Work-in-process and finished products invento-
ries consist of material, labor, outside process-
ing costs and manufacturing overhead.
Inventories at March 31, 2008 and 2007 consist
of the following:

Classification

Raw Materials
Work-in-process
Finished products

Total

As of March 31,

2008

2007

$ 1,676,402
676,769
451,076

$ 733,112
616,519
164,940

$ 2,804,247

$ 1,514,571

Depreciation
Depreciation is calculated using the straight-line
method over the estimated useful life of the
asset as follows:

Classification

Estimated Useful Life

Leasehold

Shorter of the term of the lease

improvements

or estimated useful life

Equipment
Furniture and

fixtures

Three to five years
Five years

The Company recorded a charge to operations
for depreciation of property and equipment in
the amount of $824,626, $539,032 and $398,434
in 2008, 2007 and 2006, respectively. Deprecia-
tion includes the depreciation of assets recorded
under capitalized lease agreements which aggre-
gated $42,762, $41,850, and $16,268 in 2008,
2007 and 2006, respectively.

Earnings (Loss) Per Share
The Company applies the standards established
in Statement of Financial Accounting Standard
(“SFAS”) No. 128, “Presenting Earnings Per
Share.” Basic earnings (loss) per share for the
years ended March 31, 2008, 2007 and 2006
were computed on the basis of the weighted
average number of shares of common stock
outstanding during the period. Diluted earnings
(loss) per share were computed on the basis of
the weighted average number of shares of com-
mon stock plus the effect of dilutive potential
common shares outstanding during the period

F-32

F-33

Notes to Financial Statements (continued)

using the treasury stock method in accordance
with SFAS No. 128. Dilutive potential common
shares include outstanding stock options.

Basic and diluted weighted average shares out-
standing were as follows:

Twelve Months ended March 31,

2008

2007

2006

Basic weighted

average
common
shares
outstanding
Dilutive effect
of common
stock
options

Diluted

weighted
average
common
shares
outstanding

30,834,491 30,379,350 30,125,041

486,506

—

565,900

31,320,997 30,379,350 30,690,941

Diluted weighted average shares outstanding for
the year ended March 31, 2007 does not include
2,292,750 potential common shares for stock
options because to do so would be antidilutive.
Accordingly, for the year ended March 31, 2007,
basic and diluted net loss per share is the same.

For the years ended March 31, 2008 and 2006,
options to purchase 4 4 3,000 and 955,400
shares were excluded from the calculation of
diluted earnings per share because the exercise
prices of the stock options were greater than
or equal to the average price of the common
shares.

Segment Reporting
The Company applies the standards established
in SFAS No. 131, “Disclosures about Segments
of an Enterprise and Related Information.” SFAS
No. 131 establishes standards for reporting infor-
mation regarding operating segments in annual
financial statements and requires selected infor-
mation for those segments to be presented in
interim financial reports issued to stockholders.

SFAS No. 131 also establishes standards for
related disclosures about products and services
and geographic areas. The chief operating deci-
sion maker, or decision-making group, in making
decisions how to allocate resources and assess
performance, identifies operating segments as
components of an enterprise about which sepa-
rate discrete financial information is available for
evaluation. To date, the Company has viewed
its operations and manages its business as one
operating segment. As a result, the financial
information disclosed herein represents all of
the material financial information related to the
Company’s principal operating segment.

The following table presents the Company’s rev-
enue by geographic area (based on the location
of the customer):

Sweden
United States
Other

Total

Year ended March 31,

2008

2007

2006

61% 45% 51%
36% 47% 48%
3% 8% 1%

100% 100% 100%

The following table presents the Company’s prod-
uct revenue by product type:

Protein A
SecreFlo®

Total

Year ended March 31,

2008

2007

2006

$16,321
2,266

$11,127
1,947

$10,540
1,989

$18,587

$13,074

$12,529

As of March 31, 2008 and 2007 all of the Com-
pany’s assets are located in the United States.

F-32

F-33

Notes to Financial Statements (continued)

and noncontrolling (minority) interests in finan-
cial statements, including capitalizing at the
acquisition date the fair value of acquired in pro-
cess research and development projects, and
remeasuring and writing down these assets, if
necessary, in subsequent periods during their
development. The new standards will be applied
prospectively for business combinations that
occur for the Company on or after April 1, 2009,
except that presentation and disclosure require-
ments of SFAS 160 regarding minority interests
shall be applied retrospectively.

In December 2007, the FASB ratified EITF No.
07-1, “Accounting for Collaborative Agreements”
(“EITF 07-1”). EITF 07-1 provides guidance regard-
ing financial statement presentation and disclo-
sure of collaborative arrangements, as defined,
which includes arrangements the Company has
entered into regarding development and com-
mercialization of products. EITF 07-1 is effective
for the Company as of April 1, 2009. The Com-
pany has not yet completed its evaluation of
EITF 07-1, but does not currently believe that
adoption will have a material impact on its results
of operations, financial position or cash flows.

In June 2007, the FASB ratified EITF No. 07-3,
“Accounting for Nonrefundable Advance Pay-
ments for Goods or Services to Be Used in
Future Research and Development Activities”
(“EITF 07-3”), which requires that nonrefund-
able advance payments for goods and services
that will be used or rendered in future R&D
activities pursuant to executory contractual
arrangements be deferred and recognized as an
expense in the period that the related goods are
delivered or services are performed. EITF No.
07-3 is effective for the Company as of April 1,
2008. The Company has not yet completed its
evaluation of EITF 07-3, but does not currently
believe that adoption will have a material impact
on its results of operations, financial position or
cash flows.

In February 2007, the FASB issued FASB State-
ment No. 159, “The Fair Value Option for Finan-
cial Assets and Financial Liabilities” (SFAS No.

159). SFAS No. 159 provides companies with
an option to report selected financial assets
and liabilities at fair value. The objective of SFAS
No. 159 is to reduce both complexity in account-
ing for financial instruments and the volatility in
earnings caused by measuring related assets
and liabilities differently. SFAS No. 159 is effec-
tive for the Company as of April 1, 2008. The
Company has not yet completed its evaluation
of SFAS No. 159, but does not currently believe
that adoption will have a material impact on
its results of operations, financial position or
cash flows.

In September 2006, the FASB issued SFAS No.
157, “Fair Value Measurement” (“SFAS 157”).
SFAS 157 defines fair value, provides guidance
for measuring fair value in U.S. generally accepted
accounting principles and expands disclosures
about fair value measurements. SFAS 157 is
effective for the Company as of April 1, 2008.
The Company has not yet completed its evalua-
tion of SFAS 157, but does not currently believe
that adoption will have a material impact on
its results of operations, financial position or
cash flows.

Stock-Based Compensation
In December 2004, the Financial Accounting
Standards Board (“FASB”) issued SFAS No.
123R, “Share-Based Payment—An Amendment
of FASB Statements No. 123 and 95,” (“SFAS
No. 123R”), which requires all companies to
measure compensation cost for all share-based
payments, including employee stock options, at
fair value. Generally, the approach in SFAS No.
123R is similar to the approach described in
SFAS No. 123, “Accounting for Stock-Based
Compensation,” (“SFAS No. 123”). However,
SFAS No. 123R requires all share-based pay-
ments to employees, including grants of
employee stock options, to be recognized in
the financial statements based on their fair value
over the requisite service period. Pro forma
disclosure is no longer an alternative. In March
2005, the SEC issued Staff Accounting Bulletin
( “SA B” ) No. 107 ( “SA B No. 107” ) , which
expressed the views of the SEC regarding the

F-34

F-35

Notes to Financial Statements (continued)

interaction between SFAS No. 123(R) and cer-
tain rules and regulations of the SEC. SAB No.
107 provides guidance related to the valuation of
share-based payment arrangements for public
companies, including assumptions such as
expected volatility and expected term.

Prior to the adoption of SFAS No. 123R, the
Company applied SFAS No. 123, “Accounting for
Stock-Based Compensation,” amended by SFAS
No. 148, “Accounting for Stock-Based Compen-
sation —Transition and Disclosure,” which
allowed companies to apply the existing account-
ing rules under APB Opinion No. 25. Pursuant to
APB Opinion No. 25, the Company accounted
for its stock-based awards to employees using
the intrinsic-value method, under which com-
pensation expense was measured on the date
of grant as the difference between the fair value
of the Company’s common stock and the option
exercise price multiplied by the number of
options granted. Generally, the Company granted
stock options with exercise prices equal to the
fair value of its common stock; however, to the
extent that the fair value of the common stock
exceeded the exercise price of stock options
granted to employees on the date of grant, the
Company recorded deferred stock-based com-
pensation and amortized the expense over the
vesting schedule of the options, generally four
years. During the year ended March 31, 2006, in
accordance with APB Opinion No. 25, the
Company recorded deferred stock-based com-
pensation resulting from the grant of employee
stock options with an exercise price less than
the fair value of common stock. As of March 31,
2006, the Company had $61,950 of deferred
stock-based compensation remaining to be
amortized. Upon the adoption of SFAS No. 123R
on April 1, 2006, the deferred stock-based com-
pensation balance was netted against additional
paid-in capital on the balance sheet and state-
ment of stockholders’ equity.

The following table illustrates the effect on net
income (loss) and net income (loss) per share if
the Company had applied the fair value recog-
nition provisions of SFAS No. 123 to options

granted under the Plans for the fiscal year ended
March 31, 2006. Since stock-based compensa-
tion expense for the fiscal years ended March
31, 2008 and 2007 was calculated under the
provisions of SFAS No. 123R, there is no disclo-
sure of pro forma net income (loss) and net
income (loss) per share for those periods. For
purposes of the pro forma disclosure for the fis-
cal year ended March 31, 2006 set forth in the
table below, the value of the options is esti-
mated using a Black-Scholes option pricing
model and amortized on a straight-line basis to
expense over the options’ vesting periods.

Net income as reported
Add: Stock-based employee

compensation cost included
in reported net income

Deduct: Stock-based employee

compensation cost that would
have been included in the deter-
mination of net loss as reported if
the fair value method had been
applied to all awards

Pro forma net (loss)

Basic and diluted net income per
common share, as reported

Basic and diluted net (loss) per
common share, pro forma

Year ended
March 31, 2006

$ 696,860

20,650

(745,043)

$ (27,533)

$ 0.02

$ —

Effective April 1, 2006, the Company adopted
the fair value recognition provisions of SFAS No.
123R, using the modified prospective transition
method. Under this transition method, compen-
sation cost recognized in the statement of oper-
ations for the fiscal year ended March 31, 2007
includes: (a) compensation cost for all share-
based payments granted prior to, but not yet
vested as of April 1, 2006, based on the grant-
date fair value estimated in accordance with the
original provisions of SFAS No. 123 adjusted
for estimated forfeitures and (b) compensation
cost for all share-based payments granted, mod-
ified or settled subsequent to April 1, 2006,
based on the grant-date fair value estimated in
accordance with the provisions of SFAS No.

F-34

F-35

Notes to Financial Statements (continued)

123R. In accordance with the modified prospec-
tive transition method, results for prior periods
have not been restated.

For the fiscal years ended March 31, 2008 and
2007, the Company recorded stock-based com-
pensation expense of approximately $524,000
and $837,000, respectively, for stock options
granted under the Amended and Restated
2001 Repligen Corporation Stock Plan. Basic
and diluted earnings per share amounts for the
fiscal year ended March 31, 20 07 were
decreased by $0.03 as a result of the adoption
of SFAS No. 123R.

The Company currently has the following stock-
based employee compensation plans which are
subject to the provisions of SFAS No. 123R: the
1992 Repligen Corporation Stock Option Plan,
as amended, and the Amended and Restated
2001 Repligen Corporation Stock Plan (col-
lectively, the “Plans”). The 1992 Repligen
Corporation Stock Option Plan expired on
September 14, 2001, though this had no impact
on outstanding option grants. Options granted
prior to the date of termination remain outstand-
ing and may be exercised in accordance with
their terms.

The Plans allow for the granting of incentive and
nonqualified options and restricted stock and
other equity awards to purchase shares of com-
mon stock. Historically, incentive options granted
to employees under the Plans generally vested
over a four to five-year period, with 20%–25%
vesting on the first anniversary of the date of
grant and the remainder vesting in equal yearly
installments thereafter. Nonqualified options
issued to non-employee directors and consul-
tants under the Plans generally vest over one
year. Options granted under the Plans have a
maximum term of ten years from the date of
grant and generally, the exercise price of the
stock options equals the fair market value of
the Company’s common stock on the date of
grant. At March 31, 2008, options to purchase
1,266,250 shares of common stock were out-
standing under the Amended and Restated 2001
Repligen Corporation Plan and options to pur-
chase 356,500 shares of common stock were
outstanding under the 1992 Repligen Corpo-
ration Stock Option Plan. At March 31, 2008,
442,809 shares were available for future grant
under the Amended and Restated 2001 Repligen
Corporation Stock Plan.

The Company uses the Black-Scholes option pricing model to calculate the fair value on the grant
date of stock-based compensation for stock options granted under the Plans. The fair value of stock
options granted during the fiscal years ended March 31, 2008, 2007 and 2006 were calculated using
the following estimated weighted average assumptions:

Year ended March 31,

2008

2007

2006

Expected term (years)
Volatility
Risk-free interest rate
Expected dividend yield

6.5

6.5
64.46%–76.85% 77.24%–91.86% 90.79%–94.41%
4.44%–5.07%
—

3.83%–4.58%
—

2.81%–4.97%
—

Expected Term: The expected term of options
granted represents the period of time for which
the options are expected to be outstanding and
is derived from the Company’s historical stock
option exercise experience and option expiration
data. For option grants made subsequent to the
adoption of SFAS No. 123R, the expected life
of stock options granted is based on the simpli-
fied method allowable under SAB No. 107.

Accordingly, the expected term is presumed to
be the midpoint between the vesting date and
the end of the contractual term. In addition, for
purposes of estimating the expected term, the
Company has aggregated all individual option
awards into one group as the Company does not
expect substantial differences in exercise behav-
ior among its employees.

F-36

F-37

Notes to Financial Statements (continued)

Expected Volatility: The expected volatility is a
measure of the amount by which the Company’s
stock price is expected to fluctuate during the
expected term of options granted. The Company
determines the expected volatility based upon
the historical volatility of the Company’s com-
mon stock over a period commensurate with
the option’s expected term, exclusive of any
events not reasonably anticipated to recur over
the option’s expected term.

Risk-Free Interest Rate: The risk-free interest
rate is the implied yield available on U.S. Treasury
zero-coupon issues with a remaining term equal
to the option’s expected term on the grant date.

Expected Dividend Yield: The Company has
never declared or paid any cash dividends on
any of its capital stock and does not expect to
do so in the foreseeable future. Accordingly, the
Company uses an expected dividend yield of
zero to calculate the grant-date fair value of a
stock option.

The Company recognizes compensation expense
on a straight-line basis over the requisite service

period based upon options that are ultimately
expected to vest, and accordingly, such com-
pensation expense has been adjusted by an
amount of estimated forfeitures. Forfeitures rep-
resent only the unvested portion of a surren-
dered option. SFAS No. 123R requires forfeitures
to be estimated at the time of grant and revised,
if necessary, in subsequent periods if actual
forfeitures differ from those estimates. Prior to
the adoption of SFAS No. 123R, the Company
accounted for forfeitures upon occurrence as
permitted under SFAS No. 123. Based on an
analysis of historical data, the Company has cal-
culated an 8% annual forfeiture rate for non-
director level employees, a 3% annual forfeiture
rate for director-level employees, and a 0% for-
feiture rate for non-employee members of the
Board of Directors, which it believes is a reason-
able assumption to estimate forfeitures. How-
ever, the estimation of forfeitures requires
significant judgment, and to the extent actual
results or updated estimates differ from the
Company’s current estimates, such amounts
will be recorded as a cumulative adjustment in
the period estimates are revised.

Information regarding option activity for the year ended March 31, 2008 under the Plans is summa-
rized below:

Options
Outstanding
(In thousands)

Weighted Average
Exercise Price
Per Share

Weighted Average
Remaining
Contractual Term
(In years)

Aggregate
Intrinsic Value
(In thousands)

Options outstanding at
March 31, 2007

Granted
Exercised
Forfeited/Cancelled

Options outstanding at
March 31, 2008

Options exercisable at
March 31, 2008

Vested and expected to vest at
March 31, 2008 (1)

2,293

327
(647)
(350)

1,623

1,031

1,570

$3.25

4.50
1.86
4.26

$3.85

$3.93

$3.78

5.87

4.45

5.99

$2,364

$1,626

$2,259

(1) This represents the number of vested options as of March 31, 2008 plus the number of unvested options expected to vest as
of March 31, 2008 based on the unvested outstanding options at March 31, 2008 adjusted for the estimated forfeiture rate of
8% for awards granted to non-director level employees and 3% for awards granted to director level employees.

F-36

F-37

Notes to Financial Statements (continued)

The aggregate intrinsic value in the table above
represents the total pre-tax intrinsic value (the
difference between the closing price of the com-
mon stock on March 31, 2008 of $4.82 and the
exercise price of each in-the-money option) that
would have been received by the option holders
had all option holders exercised their options on
March 31, 2008.

The weighted average grant date fair value of
options granted during the fiscal year ended
March 31, 2008 was $3.04. The total fair value
of stock options that vested during the fiscal
years ended March 31, 2008 and 2007 was
approximately $494,000 and $869,000, respec-
tively. The total intrinsic value of options exer-
cised during the years ended March 31, 2008,
2007 and 2006 was $1,672,260, $189,800, and
$852,152, respectively, determined as of the date
of exercise. The Company received $637,655,
$158,000 and $339,911 from stock option exer-
cises during the years ended March 31, 2008,
2007 and 2006, respectively.

As of March 31, 2008, there was $1,030,022 of
total unrecognized compensation cost related
to unvested share-based awards. This cost is
expected to be recognized over a weighted aver-
age remaining requisite service period of 2.39
years. The Company expects approximately
539,000 shares of common stock subject to
unvested outstanding options to vest over the
next five years.

3. Income Taxes
The Company accounts for income taxes under
the provisions of SFAS No. 109, “Accounting for
Income Taxes.”

The Company’s tax provision for the year ended
March 31, 2008, $827,471, is comprised of a
current provision for federal income taxes in the
amount of $736,805 and a current provision for
state income taxes in the amount of $90,666.
The Company did not record a federal or state
tax provision for the years ended March 31,
2007 and 2006 since the Company did not gen-
erate taxable income in such years.

At March 31, 20 08, the Company had net
operating loss carryforwards of approximately
$63,517,000, business tax credits carryforwards
of approximately $2,205,000, and other tax
credits of approximately $733,000 available to
reduce future federal income taxes, if any.
Additionally, at March 31, 2008 the Company
also had business tax credits carryforwards of
approximately $2,665,000 available to reduce
future state income taxes, if any. At March 31,
2008, the Company had utilized all available
state net operating loss carryforwards. Federal
net operating loss carryforwards of approxi-
mately $8,482,000 and $7,533,000 expired in
fiscal 2007 and 2006, respectively. The net oper-
ating loss and business tax credits carryforwards
will continue to expire at various dates through
March 2026. The net operating loss and busi-
ness tax credit carryforwards are subject to
review and possible adjustment by the Internal
Revenue Service and may be limited in the event
of certain changes in the ownership interest of
significant stockholders.

The deferred tax assets consist of the following:

As of March 31,

2008

2007

Temporary timing

differences

$ 5,621,000

$ 6,580,000

Net operating loss
carryforwards
Tax business cred-
its carryforwards

Total deferred
tax assets

Valuation allowance

Net deferred
tax asset

21,596,000

40,060,000

4,697,000

5,270,000

31,914,000
(31,914,000)

51,910,000
(51,910,000)

— $

—

At March 31, 2008 and 2007, a full valuation
allowance has been provided against the deferred
tax assets, as it is uncertain if the Company will
realize the benefits of such deferred tax assets.

F-38

F-39

Notes to Financial Statements (continued)

The reconciliation of the federal statutory rate to the effective income tax rate for the years ended
March 31, 2008, 2007 and 2006, respectively, is as follows:

Years ended March 31,

2008

2007

2006

Income (loss) before income taxes

$ 37,933,985

$ (889,263)

$ 686,860

Expected tax (recovery) at

statutory rate

Adjustments due to:
State income taxes
Utilization of loss carryforwards

and business tax credits

Alternative minimum tax
Permanent differences
Change in valuation allowance

12,897,555

34.0%

(302,349)

34.0%

233,532

34.0%

1,620,725

4.3%

(53,356)

6.0%

41,212

6.0%

(13,987,955)
732,817
191,459
(627,130)

(36.9)%
1.9%
0.5%
(1.6)%

—
—
152,887
202,818

—
—
(17.2)%
(22.8)%

—
—
(5,000)
(269,744)

—
—
(0.7)%
(39.3)%

Provision for income taxes

827,471

2.2%

—

0.0% $

—

0.0%

The Company adopted the provisions of FIN 48,
an interpretation of SFAS No. 109, “Accounting
for Income Taxes,” on April 1, 2007. FIN 48 clari-
fies the accounting for uncertainty in income
taxes recognized in an enterprise’s financial
statements in accordance with SFAS No. 109
and prescribes a recognition threshold and mea-
surement process for financial statement recog-
nition and measurement of a tax position taken
or expected to be taken in a tax return. FIN 48
also provides guidance on de-recognition, clas-
sification, interest and penalties, accounting in
interim periods, disclosure and transition. At the
adoption date and as of March 31, 2008, the
Company had no material unrecognized tax ben-
efits and no adjustments to liabilities or opera-
tions were required.

The Company may from time to time be assessed
interest or penalties by major tax jurisdictions.
The Company recognizes interest and penalties
related to uncertain tax positions in income tax
expense. No interest and penalties have been
recognized by the Company to date.

Fiscal years 2005 through 2008 are subject to
examination by the federal and state taxing
authorities. There are no income tax examina-
tions currently in process.

4. Stockholders’ Equity

Common Stock and Warrants
At March 31, 2008, the Company has reserved
2,065,559 shares of common stock pursuant to
the Plans. As discussed in Note 11, on April 6,
2007, the Company issued warrants to an indi-
vidual at Scripps to purchase up to 150,000
shares of common stock. The warrants have a
7-year term and are exercisable based on perfor-
mance criteria as detailed in the warrant agree-
ment. At this time, the Company does not
believe that the performance criteria are proba-
ble of being achieved in the near future.

Shareholder Rights Plan
In March 2003, the Company adopted a Share-
holder Rights Agreement (the “Rights Agree-
ment”). Under the Rights Agreement, the
Company distributed certain rights to acquire
shares of the Company’s Series A junior partici-
pating preferred stock (the “Rights”) as a divi-
dend for each share of common stock held of
record as of March 17, 2003. Each share of com-
mon stock issued after the March 17, 2003
record date has an attached Right. Under certain
conditions involving an acquisition by any person
or group of 15% or more of the common stock,
each Right permits the holder (other than the
15% holder) to purchase common stock having

F-38

F-39

Notes to Financial Statements (continued)

a value equal to twice the exercise price of the
Right, upon payment of the exercise price of the
Right. In addition, in the event of certain busi-
ness combinations after an acquisition by a per-
son or group of 15% or more of the common
stock (20% in the case of a certain stockholder),
each Right entitles the holder (other than the
15% holder) to receive, upon payment of the
exercise price, common stock having a value
equal to twice the exercise price of the Right.
The Rights have no voting privileges and, unless
and until they become exercisable, are attached
to, and automatically trade with, the Company’s
common stock. The Rights will terminate upon
the earlier of the date of their redemption or
March 2013.

5. Commitments and Contingencies

Lease Commitments
In 2001, the Company entered into a ten-year
lease agreement for approximately 25,000
square feet of space located in Waltham, Massa-
chusetts to be used for its corporate headquar-
ters, manufacturing, research and development,
and marketing and administrative operations.
In connection with this lease agreement, the
Company issued a letter of credit in the amount
of $200,000 to the lessor. The letter of credit
is collateralized by a certificate of deposit held
by the bank that issued the letter of credit. The
certificate of deposit is classified as restricted
cash in the accompanying balance sheet as of
March 31, 2008 and 2007. In 2007, the Company
entered into a five-year lease agreement for
2,500 square feet of space in Waltham, Massa-
chusetts to provide for expanded manufacturing
operations.

In fiscal 2006, the Company entered into a capi-
tal lease agreement to provide the Company
with manufacturing equipment. Repligen received
approximately $171,000 in equipment financing
over a five-year period. In fiscal 2005, the
Company entered into two capital lease agree-
ments to provide the Company with two pieces
of office equipment. Repligen received approx-
imately $33,000 in equipment financing. The

lease terms are three and five years beginning in
June and October of 2004, respectively. Capital
lease obligations are recorded in accrued liabili-
ties and long-term liabilities in the Company’s
balance sheets.

Obligations under non-cancelable operating
leases, including the facility leases discussed
above, and capital equipment leases as of March
31, 2008 are as follows:

Years Ending

March 31, 2009
March 31, 2010
March 31, 2011
March 31, 2012

Minimum lease
payments

Less amount represent-

ing interest

Present value of future

lease payments

Less current obligations

under capitalized
leases

Noncurrent obligations
under capitalized
leases

Operating
Leases

Capitalized
Leases

$ 523,251
541,602
541,602
408,782

$ 48,871
45,211
—
—

$ 2,015,237

94,082

(6,995)

87,087

(44,682)

$ 42,405

Rent expense charged to operations under oper-
ating leases was approximately $512,000 for the
year ended March 31, 2008 and, $452,000 for
the years ended March 31, 2007 and 2006,
respectively. As of March 31, 2008 and 2007,
the Company had deferred rent liability of
$118,900 and $119,000, respectively related to
the escalating rent provisions for our Waltham
headquarters.

Licensing and Research Agreements
The Company licenses certain technologies that
are, or may be, incorporated into its technology
under several agreements and also has entered
into several clinical research agreements which
require the Company to fund certain research
projects. Generally, the license agreements
require the Company to pay annual maintenance

F-40

F-41

Notes to Financial Statements (continued)

fees and royalties on product sales once a prod-
uct has been established using the technologies.
As more fully discussed in Note 11 to these
financial statements, in April 2007 the Company
entered into an exclusive license agreement with
the Scripps Research Institute. The initial license
fee under this agreement aggregated $600,000
in a combination of cash and Company common
stock and was charged to research and devel-
opment expenses in the year ended March 31,
2008. The Company has recorded as research
and development expenses the payments asso-
ciated with license agreements in the amount
of $ 681,000, $ 87,000, and $114,000 for the
years ended March 31, 2008, 2007 and 2006,
respectively.

Purchase Orders, Supply Agreements and
Other Contractual Obligations
In the normal course of business, the Company
has entered into purchase orders and other
agreement with manufacturers, distributors and
others. Outstanding obligations at March 31,
2008 aggregated approximately $1,113,000
and are expected to be substantially completed
within one year.

6. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets con-
sist of the following:

Description

Interest receivable
Prepaid insurance
Equipment and services
Clinical and research
expenses
Other

Total

As of March 31,

2008

2007

$422,678
137,837
108,832

$167,483
124,376
71,656

35,000
3,000

47,636
34,264

$707,347

$445,415

7. Accrued Liabilities
The Company prepares its financial statements
in accordance with accounting principles gen-
erally accepted in the United States. These
principles require that the Company estimate
accrued liabilities. This process involves identify-
ing services, which have been performed on the

Company’s behalf, and estimating the level of
service performed and the associated cost
incurred for such service as of each balance
sheet date. Examples of estimated accrued
expenses include: 1) Fees paid to contract man-
ufacturers in conjunction with the production of
clinical materials. These expenses are normally
determined through a contract or purchase order
issued by the Company; 2) Service fees paid to
organizations for their performance in conduct-
ing clinical trials. These expenses are deter-
mined by contracts in place for those services
and communications with project managers on
costs which have been incurred as of each
reporting date; 3) Professional and consulting
fees incurred with law firms, audit and account-
ing service providers and other third-party con-
sultants. These expenses are determined by
either requesting those service providers to esti-
mate unbilled services at each reporting date for
services incurred, or tracking costs incurred by
service providers under fixed fee arrangements.
The Company has processes in place to esti-
mate the appropriate amounts to record for
accrued liabilities, which principally involve the
applicable personnel reviewing the services
provided. In the event that the Company does
not identify certain costs which have begun to
be incurred or the Company under- or over-
estimates the level of services performed or the
costs of such services, the reported expenses
for that period may be too low or too high. The
date on which certain services commence, the
level of services performed on or before a given
date, and the cost of such services are often
judgmental. The Company makes these judg-
ments based upon the facts and circumstances
known at the date of the financial statements.

F-40

F-41

Notes to Financial Statements (continued)

Accrued liabilities consist of the following:

Description

Employee compensation
Professional fees
Other accrued expenses
Other current liabilities
Research and development
Royalty and license fees
Unearned revenue

Total

As of March 31,

2008

2007

$ 621,982
451,287
217,874
217,162
201,825
87,806
59,965

$ 557,100
400,474
122,836
309,015
602,615
56,529
127,170

$ 1,857,901

$ 2,175,739

In February 2004, the Company terminated its
Licensing Agreement with ChiRhoClin, Inc.
(“ChiRhoClin”). On May 9, 2005, Repligen entered
into a Settlement Agreement with ChiRhoClin,
in full settlement of their arbitration proceedings
described below. Repligen determined that it was
not required to pay approximately $1,170,000 of
unremitted and accrued royalties to ChiRhoClin.
This was recorded as other income in the quar-
ter ended June 30, 2005. Under the terms of
the Settlement Agreement, Repligen also received
a payment of $750,000 and is entitled to con-
tinue to market SecreFlo® under a royalty struc-
ture more favorable to Repligen than under the
Licensing Agreement. ChiRhoClin was obligated
to deliver a certain amount of SecreFlo ® to
Repligen and no further deliveries will be made.
This payment of $750,000 was recorded as
“Accrued Liabilities” at the time of settlement.
The adoption of EITF 02-16 “Accounting by a
Customer (Including a Reseller) for Certain
Consideration Received from a Vendor” (EITF
02-16) in fiscal 2006 has resulted in the Company
reducing cost of goods sold as inventory pur-
chased from ChiRhoClin is sold. Other current
liabilities as of March 31, 2008 include $10,650
related to ChiRhoClin settlement which will be
relieved as a reduction to cost of goods sold as
inventory purchased from ChiRhoClin is sold.

employees over the age of 21 who have com-
pleted four months of service are eligible to
make pre-tax contributions up to a specified per-
centage of their compensation. Under the 401(k)
Plan, the Company may, but is not obligated to
match a portion of the employees’ contributions
up to a defined maximum. The match is calcu-
lated on a calendar year basis. The Company
matched $56,647, $31,353, and $27,278 for the
fiscal years ended March 31, 2008, 2007, and
2006 respectively. Forfeitures of previous par-
ticipants partially funded contributions for fiscal
year 2007. Forfeitures of previous participants
completely funded contributions for fiscal year
2006 and as a result had no impact on the
Company’s operations.

9. Related Party Transaction
The Company paid Drs. Schimmel and Rich, the
Co-Chairmen of the Board of Directors prior to
Dr. Schimmel’s retirement in fiscal 2008, $32,800
and $43,200, respectively, during the fiscal year
ended March 31, 20 0 8, and $ 4 9,20 0 and
$43,200, respectively, during each of the fiscal
years ended March 31, 2007 and 2006 pursuant
to consulting agreements. Pursuant to their
terms, these agreements are automatically
extended for successive one-year terms unless
terminated by either party to the agreement at
least 90 days prior to the next anniversary date.
Dr. Schimmel retired from the Board of Directors
as of the Company’s annual meeting in Sep-
tember 2007, and accordingly, the consulting
agreement with Dr. Schimmel was terminated.
Dr. Rich’s agreement continues until October
31, 2008. Dr. Rich has advised the Company
that he has no present intention of terminating
his agreement. Drs. Schimmel and Rich received
no separate cash compensation for attendance
at meetings of the Board of Directors or other-
wise as directors.

8. Employee Benefit Plan
The Repligen Corporation 401(k) Savings and
Retirement Plan (the “401(k) Plan”) is a qualified
defined contribution plan in accordance with
Section 401(k) of the Internal Revenue Code. All

10. Legal Proceedings

ImClone Systems
In May 2004, Repligen and the Massachusetts
Institute of Technology (“MIT”) filed an action in
the United States District Court for the District

F-42

F-43

Notes to Financial Statements (continued)

of Massachusetts against ImClone Systems,
Incorporated (“ImClone”) for infringement of
U.S. Patent No. 4,663,281 (“the ‘281 patent”)
based on ImClone’s manufacture and sale of
Erbitux®. The ‘281 patent, which covers the use
of certain genetic elements that increase protein
production in a mammalian cell, is assigned to
MIT and exclusively licensed to Repligen.

On September 10, 2007, Repligen and MIT entered
into a settlement agreement (the “ImClone
Settlement”) with ImClone relating to the law-
suit against ImClone for infringement of the ‘281
patent. Pursuant to the ImClone Settlement,
ImClone made a payment of $ 65 million to
Repligen and MIT that resulted in net proceeds
to Repligen of $40.17 million, as follows:

Gross proceeds from settlement

agreement

Less: Amounts paid to MIT
Less: Legal fees and other costs

$ 65,000,000
(11,000,000)
(13,830,000)

Net gain on litigation settlement

$ 40,170,000

The ImClone Settlement served as the basis for
the Company and MIT to dismiss the lawsuit
against ImClone and for the Company to grant
ImClone a non-exclusive sublicense to the ‘281
patent and certain other intellectual property.
There are no further obligations to the Company
with respect to the sublicenses. The net gain on
litigation settlement has been recorded as a
separate component of operating expenses in
the Company’s statement of operations in fis-
cal 2008.

Bristol-Myers Squibb Company (“Bristol”)
In January 2006, Repligen and the University of
Michigan jointly filed a complaint against Bristol
in the United States District Court for the Eastern
District of Texas for infringement of U.S. Patent
No. 6,685,941 (“the ‘941 patent”) for the commer-
cial sale of Orencia®. The ‘941 patent, entitled
“Methods of Treating Autoimmune Disease via
CTLA4-Ig,” covers methods of using CTLA4-Ig
to treat rheumatoid arthritis, as well as other
therapeutic methods. Repligen has exclusive
rights to this patent from its owners, the Univer-
sity of Michigan and the U.S. Navy. In February

2006, Bristol answered the complaint and coun-
terclaimed seeking a declaratory judgment that
the ‘941 patent is invalid and unenforceable and
that Bristol does not infringe the patent. See
Note 12 below for further discussion of events
subsequent to year end.

11. Scripps Agreements

License Agreement
On April 6, 2007 (“the Effective Date”), the
Company entered into an exclusive worldwide
commercial license agreement (“License Agree-
ment”) with The Scripps Research Institute
(“Scripps”). Pursuant to the License Agreement,
the Company obtained a license to use, com-
mercialize and sublicense certain patented tech-
nology and improvements thereon, owned or
licensed by Scripps, relating to compounds
which may have utility in treating Friedreich’s
ataxia, an inherited neurodegenerative disease.
Research in tissues derived from patients, as
well as in mice, indicates that the licensed com-
pounds increase production of the protein
frataxin, which suggests potential utility of these
compounds in slowing or stopping progression
of the disease. There are currently no approved
treatments for Friedreich’s ataxia.

Pursuant to the License Agreement, the Com-
pany agreed to pay Scripps an initial license fee
of $300,000, certain royalty and sublicense fees
and, in the event the Company achieves speci-
fied developmental and commercial milestones,
certain additional milestone payments. In addi-
tion, the Company issued Scripps and certain of
its designees 87,464 shares of the Company’s
common stock (the “Shares”) representing
$300,000 as of the Effective Date. The Company
recorded the initial license payment and the
value of the shares issued as research and devel-
opment costs in the Company’s statement of
operations in fiscal 2008.

If the value of the Shares does not equal at least
$300,000 on the one-year anniversary of the
Effective Date, the Company shall make a cash
payment to Scripps equal to the difference. At
March 31, 2008 as well as on April 6, 2008, the

F-42

F-43

Notes to Financial Statements (continued)

one-year anniversary of the Effective Date, the
fair value of the shares exceeded $300,000;
therefore, no liability has been recorded. The
Company issued the Shares in reliance on the
exemption from registration provided by Section
4(2) of the Securities Act of 1933, as amended.
The Shares were issued to Scripps, or to desig-
nees of Scripps on its behalf, as an “accredited
investor” (as such term is defined in Rule 501(a)
of Regulation D) without general solicitation or
advertising and did not involve a public offering.

Furthermore, the Company issued warrants to
an individual at Scripps to purchase up to
150,000 shares of common stock. The warrants
have a 7-year term and are exercisable based on
performance criteria as detailed in the warrant
agreement. No expense has been recorded
related to these warrants in fiscal 2008, as none
of the performance criteria have been achieved.
At this time, the Company does not believe that
the performance criteria are probable of being
achieved in the near future.

The License Agreement with Scripps expires or
may be terminated (i) when all of the royalty
obligations under the License Agreement expire;
(ii) at any time by mutual written consent; (iii) by
Scripps if the Company (a) fails to make pay-
ments under the License Agreement, (b) fails to
achieve certain developmental and commercial
objectives, (c) becomes insolvent, (d) is con-
victed of a felony relating the manufacture, use
or sale of the licensed technology, or (e) defaults
in its performance under the License Agreement;
or (iv) by the Company upon 90 days written
notice.

Research and Funding Agreement
On October 26, 2007, the Company entered into
a research funding and option agreement
(“Funding Agreement”) with Scripps to fund a
research program for the research and develop-
ment of compounds that may have utility in the
treatment of Friedreich’s ataxia. Pursuant to the
Funding Agreement, the Company is required to
fund approximately $140,000 annually, payable
quarterly, which are recorded as research and
development expenses. In exchange for funding

the research, Scripps will grant an exclusive
option to the Company to acquire a sole, world-
wide license, including the right to sublicense,
manufacture and sell products, and services that
result from the research program. There are no
guaranties or warranties that products or ser-
vices may result from the research program and
the Company has ascribed no value to the
license. The Funding Agreement expires or may
be terminated (i) when all of the royalty obliga-
tions under the Funding Agreement expire; (ii) at
any time by mutual written consent; (iii) by
Scripps if the Company (a) fails to make pay-
ments under the Funding Agreement, (b) fails to
achieve certain developmental and commercial
objectives, (c) becomes insolvent, (d) is con-
victed of a felony relating to the manufacture, use
or sale of the licensed technology, or (e) defaults
in its performance under the Funding Agreement;
or (iv) by the Company upon 90 days written
notice. The Company made payments to Scripps
of $105,000 during the year ended March 31,
2008 in connection with the Funding Agreement.

12. Subsequent Event
On April 7, 2008, Repligen and the University of
Michigan entered into a settlement agreement
(the “Bristol Settlement”) with Bristol-Myers
Squibb relating to the lawsuit against Bristol-
Myers Squibb for infringement of the ‘941 pat-
ent. Pursuant to the Bristol Settlement, Bristol-
Myers Squibb made an initial payment of $5
million to Repligen. The settlement further pro-
vides for Bristol-Myers Squibb to pay royalties
on the United States net sales of Orencia® for
any clinical indication at a rate of 1.8% for the
first $500 million of annual net sales, 2.0% for
the next $500 million of annual net sales and
4% of annual net sales in excess of $1 billion for
each year from January 1, 2008 until December
31, 2013. The Bristol Settlement served as the
basis for Repligen and the University of Michigan
to dismiss the lawsuit against Bristol-Myers
Squibb and for Repligen and the University of
Michigan to grant to Bristol Myers-Squibb an
exclusive worldwide license to the ‘941 patent
and certain other intellectual property.

F-44

F-45

Notes to Financial Statements (continued)

13. Selected Quarterly Financial Data (Unaudited)
The following table contains statements of operations information for each quarter of fiscal 2008 and
2007. The Company believes that the following information reflects all normal recurring adjustments
necessary for a fair presentation of the information for the periods presented. The operating results
for any quarter are not necessarily indicative of results for any future period.

Revenue:
Product revenue
Research revenue

Total revenue
Operating expenses:
Cost of revenue
Research and development
Selling, general and

administrative
Net gain from litigation
settlement (1)

Total operating expenses
Income (loss) from operations
Investment income
Interest expense

Income (loss) before taxes
Income tax provision

Net income (loss)

Earning per share:
Basic

Diluted

Weighted average shares

outstanding:
Basic

Diluted

Q4
FY08

Q3
FY08

Q2
FY08

Q1
FY08

Q4
FY07

Q3
FY07

Q2
FY07

Q1
FY07

(In thousands, except per share amounts)

$ 3,137
164

$ 4,563
101

$ 5,156
196

$ 5,731
248

$ 3,397
302

$ 3,633
249

$ 2,680
185

$ 3,364
264

3,301

4,664

5,352

5,979

3,699

3,882

2,865

3,628

1,304
2,357

1,730
1,592

1,412
1,154

1,714
2,138

902
1,452

805
1,674

915
1,583

993
1,215

3,504

2,341

2,186

2,142

1,696

1,660

1,463

1,541

—

— (40,170)

—

7,165
(3,864)
669
(2)

(3,197)
—

5,663
(999)
759
(2)

(242)
—

(35,418)
40,770
366
(3)

41,133
(827)

5,994
(15)
257
(2)

240
—

4,050
(351)
247
(3)

(107)
—

4,139
(257)
240
(3)

(20)
—

3,961
(1,096)
236
(3)

(863)
—

3,749
(121)
225
(3)

101
—

$ (3,197) $ (242) $ 40,306

$ 240

$ (107) $

(20) $ (863) $ 101

$ (0.10) $ (0.01) $

1.31

$ 0.01

$ (0.00) $ (0.00) $ (0.03) $ (0.00)

$ (0.10) $ (0.01) $

1.29

$ 0.01

$ (0.00) $ (0.00) $ (0.03) $ (0.00)

31,064

30,954

30,767

30,564

30,420

30,376

30,364

30,358

31,064

30,954

31,224

31,127

30,420

30,376

30,364

30,828

(1) Second quarter in fiscal 2008 includes $40,170 net gain from litigation settlement (see Note 10).

14. Valuation and Qualifying Accounts

Allowance for Doubtful Accounts:
2006
2007
2008

Balance at
Beginning of
Period

Additions

Reversal
Without
Utilization

Balance at
End of
Period

$15,000
$10,000
$10,000

$ —
$ —
$5,000

$5,000
$ —
$5,000

$10,000
$10,000
$10,000

F-44

F-45

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of
Repligen Corporation:

We have audited the accompanying balance
sheets of Repligen Corporation as of March 31,
2008 and 2007, and the related statements of
operations, stockholders’ equity, and cash flows
for each of the three years in the period ended
March 31, 2008. These financial statements are
the responsibility of the Company’s manage-
ment. Our responsibility is to express an opinion
on these financial statements based on our
audits.

We conducted our audits in accordance with the
standards of the Public Company Accounting
Oversight Board (United States). Those stan-
dards require that we plan and perform the audit
to obtain reasonable assurance about whether
the financial statements are free of material mis-
statement. An audit includes examining, on a
test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit
also includes assessing the accounting princi-
ples used and significant estimates made by
management, as well as evaluating the overall
financial statement presentation. We believe
that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred
to above present fairly, in all material respects,
the financial position of Repligen Corporation at
March 31, 2008 and 2007, and the results of
its operations, and its cash flows for each of
the three years in the period ended March 31,
2008, in conformity with U.S. generally accepted
accounting principles.

As discussed in Note 2 to the financial state-
ments, on April 1, 2006, the Company adopted
the provisions of Statement of Financial Account-
ing Standards No. 123(R), Share-Based Payment.

We also have audited, in accordance with the
standards of the Public Company Accounting
Oversight Board (United States), Repligen Corpo-
ration’s internal control over financial reporting
as of March 31, 2008, based on criteria estab-
lished in Internal Control—Integrated Framework
issued by the Committee of Sponsoring Organi-
zations of the Treadway Commission and our
report dated June 11, 2008 expressed an unqual-
ified opinion thereon.

ERNST & YOUNG LLP

Boston, Massachusetts
June 11, 2008

F-46

F-47

Management’s Annual Report on Internal Control Over Financial Reporting

Management of the Company is responsible for
establishing and maintaining adequate internal
control over financial reporting. Internal control
over financial reporting is defined in Rule
13a-15(f) and 15d-15(f) under the Exchange Act
as a process designed by, or under the super-
vision of, the Company’s principal executive and
principal financial officers and effected by the
Company’s board of directors, management and
other personnel to provide reasonable assurance
regarding the reliability of financial reporting and
the preparation of financial statements for exter-
nal purposes in accordance with U.S. generally
accepted accounting principles and includes
those policies and procedures that:

• pertain to the maintenance of records that in
reasonable detail accurately and fairly reflect
the transactions and dispositions of the assets
of the Company;

• provide reasonable assurance that transac-
tions are recorded as necessary to permit
preparation of financial statements in accord-
ance with generally accepted accounting
principles, and that receipts and expenditures
of the Company are being made only in accord-
ance with authorizations of management and
directors of the Company; and

• provide reasonable assurance regarding pre-
vention or timely detection of unauthorized
acquisition, use or disposition of the Com-
pany’s assets that could have a material effect
on the financial statements.

Because of its inherent limitations, internal con-
trol over financial reporting may not prevent or
detect misstatements. Projections of any eval-
uation of effectiveness to future periods are
subject to the risks that controls may become
inadequate because of changes in conditions, or
that the degree of compliance with the policies
or procedures may deteriorate.

Management assessed the effectiveness of the
Company’s internal control over financial report-
ing as of March 31, 2008. In making this assess-
ment, management used the criteria established
in Internal Control—Integrated Framework, issued
by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO). Based on
this assessment, our management concluded
that, as of March 31, 2008, our internal control
over financial reporting is effective based on
those criteria. Ernst & Young LLP, the indepen-
dent registered public accounting firm that
audited our financial statements included in our
annual report on Form 10-K, has issued an attes-
tation report on our internal control over financial
reporting as of March 31, 2008. Please see Item
9A of our Form 10-K.

REPLIGEN CORPORATION

June 11, 2008

F-46

F-47

Attestation Report of the Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of
Repligen Corporation:

We have audited Repligen Corporation’s internal
control over financial reporting as of March 31,
2008, based on criteria established in Internal
Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the
Treadway Commission (the COSO criteria).
Repligen Corporation’s management is respon-
sible for maintaining effective internal control
over financial reporting, and for its assessment
of the effectiveness of internal control over
financial reporting included in the accompanying
Management’s Annual Report on Internal Control
Over Financial Reporting. Our responsibility is to
express an opinion on the company’s internal
control over financial reporting based on our audit.

We conducted our audit in accordance with the
standards of the Public Company Accounting
Oversight Board (United States). Those stan-
dards require that we plan and perform the audit
to obtain reasonable assurance about whether
effective internal control over financial reporting
was maintained in all material respects. Our
audit included obtaining an understanding of
internal control over financial reporting, assess-
ing the risk that a material weakness exists,
testing and evaluating the design and operating
effectiveness of internal control based on the
assessed risk, and performing such other proce-
dures as we considered necessary in the cir-
cumstances. We believe that our audit provides
a reasonable basis for our opinion.

A company’s internal control over financial
reporting is a process designed to provide rea-
sonable assurance regarding the reliability of finan-
cial reporting and the preparation of financial
statements for external purposes in accordance
with generally accepted accounting principles. A
company’s internal control over financial report-
ing includes those policies and procedures that
(1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets

of the company; (2) provide reasonable assur-
ance that transactions are recorded as neces-
sary to permit preparation of financial statements
in accordance with generally accepted accounting
principles, and that receipts and expenditures of
the company are being made only in accordance
with authorizations of management and direc-
tors of the company; and (3) provide reasonable
assurance regarding prevention or timely detec-
tion of unauthorized acquisition, use, or disposi-
tion of the company’s assets that could have a
material effect on the financial statements.

Because of its inherent limitations, internal con-
trol over financial reporting may not prevent or
detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are
subject to the risk that controls may become
inadequate because of changes in conditions, or
that the degree of compliance with the policies
or procedures may deteriorate.

In our opinion, Repligen Corporation maintained,
in all material respects, effective internal control
over financial reporting as of March 31, 2008,
based on the COSO criteria.

We also have audited, in accordance with the
standards of the Public Company Accounting
Oversight Board (United States), the balance
sheets of Repligen Corporation as of March 31,
2008 and 2007, and the related statements of
operations, stockholders’ equity, and cash flows
for each of the three years in the period ended
March 31, 2008 of Repligen Corporation and our
report dated June 11, 2008 expressed an unqual-
ified opinion thereon.

ERNST & YOUNG LLP

Boston, Massachusetts
June 11, 2008

F-48

Corporate Information

Board of Directors

Transfer Agent and Registrar

Annual Meeting

Karen A. Dawes
Principal
Knowledgeable Decisions, LLC

Alfred L. Goldberg, Ph.D.
Professor of Cell Biology
Harvard Medical School

Earl Webb Henry, M.D.
Sr. Vice President, Medical Affairs
inVentiv Clinical Solutions

Walter C. Herlihy, Ph.D.
President and
Chief Executive Officer
Repligen Corporation

Alexander Rich, M.D., Chairman
Sedgwick Professor of Biophysics
Department of Biology
Massachusetts Institute of Technology

Thomas F. Ryan, Jr.
Retired/Private Investor

Corporate Officers

Walter C. Herlihy, Ph.D.
President and
Chief Executive Officer

William J. Kelly
Vice President,
Finance and Administration

James R. Rusche, Ph.D.
Sr. Vice President,
Research and Development

Daniel P. Witt, Ph.D.
Vice President, Operations

American Stock Transfer
& Trust Company
59 Maiden Lane
Plaza Level
New York, NY 10038

(877) 777-0800, select option 1
www.amstock.com
Investor Relations E-mail:
(Shareholder Inquiries)
info@amstock.com

The Transfer Agent is responsible
for handling shareholder ques-
tions regarding lost certificates,
address changes and changes of
ownership or name in which
shares are held.

General Counsel

Goodwin Procter LLP
Exchange Place
53 State Street
Boston, MA 02109

Independent Accountants

Ernst & Young, LLP
200 Clarendon Street
Boston, MA 02116

The Annual Meeting of
Stockholders will be held on
Friday, September 12, 2008
at 10:00 AM at Repligen’s
corporate offices,
41 Seyon Street
Building #1, Suite 100
Waltham, MA 02453

Market for Repligen
Corporation Stock

Nasdaq Global Market
Common Stock: RGEN

Investor Information

Copies of our annual reports on
Form 10-K, proxy statements,
quarterly reports on Form 10-Q,
and current reports on Form 8-K
are available to stockholders
upon request without charge.
Please visit our website at
www.repligen.com or send
requests to:

Repligen Corporation
41 Seyon Street
Building #1, Suite 100
Waltham, MA 02453
ATTN: Investor Relations

Phone: (781) 250-0111
Fax: (781) 250-0115
E-mail: investors@repligen.com

This annual report contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking state-
ments in this annual report do not constitute guarantees of future performance. Investors are cautioned that statements in this annual
report that are not strictly historical statements, including, without limitation, statements regarding current or future financial performance,
regulatory approvals, management’s strategy, plans and objectives for future operations and product candidate acquisition, clinical trials
and results, litigation strategy, results of litigation, product research and development, product efficacy, R&D expenditures, intellectual
property, development and manufacturing plans, availability of materials and product and adequacy of capital resources and financing
plans constitute forward-looking statements. Such forward-looking statements are subject to a number of risks and uncertainties that
could cause actual results to differ materially from those anticipated, including, without limitation, the risks identified in our annual report
on Form 10-K and our other filings with the Securities and Exchange Commission. We assume no obligation to update any forward-
looking information contained in this annual report.

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41 Seyon Street
Building #1, Suite 100
Waltham, MA 02453
(781) 250-0111
info@repligen.com
www.repligen.com